Where would Dickens be without his pounds sterling? Or Conrad without Belgium francs to grease his way into the Congo's heart of darkness? In the 21st century, the icons of European adventures will need a further stretch of imagination to thicken the plot with m oney. Under the eraser of globalism, age-old currencies will go the way of Spanish doubloons when the European Union begins circulation of its one-size-fits-all currency, the euro. For 11 European countries, that change will begin in less than a year. Never mind that the new money sounds like the latest yo-yo; in continental politics, euro-dynamics are serious-and controversial-business.
The euro became official currency last year for the member states that joined an economic partnership known as the European Monetary Union. The 11 members are Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, and Finland. In January Greece joined the group, collectively referred to as the eurozone.
But in monetary terms, the euro is not yet "scriptural"; that is, banknotes and coins are not available, even though the currency is actively traded in financial markets. For most people, guilders and lira and francs and marks continue to pay the way.
Official circulation of euro banknotes and coins begins Jan. 1, 2002. By the end of February 2002, all members of the eurozone must remove their present national currencies from circulation. That leaves 2001 as a year of transition, according to European Union officials. From Brussels (where the European Union is headquartered) to Frankfurt (home of its central bank), officials are mounting a public relations campaign, touting the security and benefits of a continent-wide currency and reassuring the public about the ease of moving to new money. They are posting mock-ups of the currency on the Internet and in public buildings.
Euro coins will debut in eight denominations-one, two, five, 10, 20, and 50 cents, as well as one- and two-euro coins. Each face has a common dashes-and-stars design, but the obverse side bears an individual national design. One version issued in Spain, for instance, has a bust of King Ferdinand. Regardless of national motif, the coins can be used anywhere in the eurozone.
Euro notes will come in different sizes and colors, and in seven denominations, from five to 500 euros. Unlike coins, they have no national markings. Their faces look symbolic rather than historic-stylized bridges on one side; gates and windows on the other. The architectural forms are meant to symbolize New Europe, bridging communication gaps and opening new vistas.
In reality, national barriers are harder to topple. Currency has long been a sign of sovereignty, and some European partners worry about the reach of a European Central Bank. Will national governments be able to decide their own level of direct taxes and public spending? Will they retain authority to lower unemployment and inflation? Will monetary union deaden a government's ability to respond to foreign policy or defense challenges?
In February eurocrats interfered in just the way critics fear, throwing a yellow card at one European Monetary Union member, Ireland, for cutting taxes and boosting spending. European Union finance ministers publicly censured Ireland at a meeting in Brussels, and said it must trim its budget sails in order to fit eurozone guidelines.
It was the wrong fight to pick, considering that Ireland has the fastest growing economy in Europe. Output is expanding at 12 percent annually, and gross domestic product has increased 9 percent since finance minister Charlie McCreevy launched a $1 billion tax cut. The growth has led to a budget surplus, to reductions in public spending on welfare, and to rising employment. While eurocrats worry that Ireland's economy will overheat, wary euro investors wonder if the eurozone permits prosperity.
Answering to faceless Brussels bureaucrats is giving other European countries second thoughts. In a referendum last year, Denmark voters said no to full participation in the European Monetary Union, 53-47 percent. The vote took europhiles completely by surprise. Danes, usually known as progressive, in this case said they would like to keep their krone. Of those voting no, most (37 percent) said they favored less integration with Europe, one-third said they want to preserve Danish identity, and a smaller percentage (23 percent) said they lacked confidence in the European Union as a governing body.
Those findings are even more surprising, considering that most Danish voters have long known they were headed for the eurozone. For more than a year, the krone has been tied to the euro exchange rate. The negative reaction to the euro dominated in spite of widely publicized benefits. Proponents say adopting the euro will lead to lower interest rates, boost business by reducing the cost of currency swaps among European trading partners, and end the uncertainty about floating exchange rates.
More intense public opposition holds sway in Britain, where lawmakers have steadfastly held out against adopting the euro. But that may be changing. Analysts expect Prime Minister Tony Blair to call for parliamentary elections this spring. He surprised members of parliament in February by promising a nationwide referendum on joining the eurozone shortly after elections. Running high in popularity polls, Mr. Blair is likely to push hard for euro entry in the next two years.
That won't sit well with business leaders. Independent polls show that three-fourths of England's business owners oppose adopting the euro. Business for Sterling, a campaign to block euro entry, has the endorsement of 300 business executives, along with the country's Federation of Small Businesses. Organized in 1999, the group has fine-tuned its arguments as debate in Britain heats up.
The business leaders say sharp differences exist between the British economy and those on the continent-making integration into the European Monetary Union impossible. Unemployment in Britain is 9 percent, while it soars to 30 percent for some euro members. Britain's tax rate is as much as one-third lower than euro members, and it has a much smaller pension system to pay for than most European governments. Private businesses also do not want to pay the price of conversion. Independent accountants say conversion to the euro will cost $52 billion in Britain alone.
"We like to say 'Europe-yes; euro-no,'" said Business for Sterling spokesman Andrew Haldenby. "Britain should stay in the European Union because there are important benefits to coming together on free trade, environmental policy, and immigration. It makes sense for Europe to agree on these things. When it comes to monetary union, however, we are on the right side of history to stay out."
Mr. Haldenby told WORLD the idea of a common currency has been around since after World War II. Technology, he said, has outstripped its supposed benefits, making it possible to track currency fluctuations and make split-second trade decisions without a uniform monetary system.
"One has to understand that the proposal calls for economic and monetary union," said Mr. Haldenby. The censure of Ireland, he said, "demonstrates the extent to which you lose control under that system."
Mr. Haldenby rejects suggestions that economic union would further global integration or the kind of cooperation with the rest of Europe symbolized by Britain's construction of the Chunnel. "Isolated?" he said. "Britain has the fourth largest economy in the world." He believes it is the euro members who will be isolated. The group, he said, "is talking to itself-about a taxing and spending policy in a way that is not conducive to British prosperity." And for now, Sweden and Denmark look poised as the only other European Union members also to remain outside the eurozone. "One can have a great deal of influence by being distinctive," Mr. Haldenby pointed out, "and by using distinctions shrewdly."