Apathy and bad tempers greet dawn of the euro

Click to follow
The Independent Online
"IF THE euro were a person, who would it be?" the Japanese TV journalist asked in broken but excited French. Jacques Santer opened his mouth but words failed him. The smiling European Commission president had rehearsed all the trite soundbites. The dawn of a new era ... a giant economy to rival that of US and Japan ... a catalyst for Europe's economic transformation - but he hadn't thought about an identity.

The awkward moment passed, and the beaming Mr Santer was soon posing for photographers beside a huge cardboard replica of a euro coin. But his failure to characterise the euro for the 300 million people he wants to love it was telling.

So, perhaps, was the bout of undignified squabbling which broke out during the day over a fudged deal on who should run the new European Central Bank (ECB), the body which will control the fortunes of the new currency. It was all sorted out in the end, but as an augury for the future, the day was decidedly mixed.

The citizenry of 11 countries wake up this morning to find their leaders have abandoned such symbols of statehood, sovereignty and national identity as the solid, reliable German mark, the proud franc and the erratic lira. From today, the economic and political destinies of 11 peoples are inextricably intertwined, invested in a new money, the untested euro.

After 30 years of planning and plotting, the federalist vision has become a reality. But the heads of government present in Brussels could not let the moment pass without an 11th-hour crisis - the squalid row over the presidency of the ECB.

After frantic diplomatic activity last night, Tony Blair was a key factor in averting a crisis over the euro as a fudged deal on the presidency began to unravel. Amid total confusion, the Prime Minister held a series of emergency bilateral meetings with Jacques Chirac, the French President, and the German Chancellor, Helmut Kohl, to rescue a gentlemen's agreement to give the job of running the ECB to Germany's candidate, Dutchman Wim Duisenberg, with the French choice - their very own Jean Claude Trichet - stepping in half-way through the eight-year term.

The central bankers were said to be viewing the chaos "with utter dismay". There were fears the row would undermine the euro from the start, and provoke a round of currency instability of exactly the kind the euro is meant to prevent.

Depending on who you listened to, the deal over the ECB job-share was either a shoddy, disgraceful fudge or a skilful compromise to meet the requirements of the Maastricht Treaty as well as French, Dutch and German demands. The row - and its resolution - all seemed very European.

As the dispute rumbled on, outside on the streets of Brussels it was hard to find any sense of enthusiasm. The collective shrugging of shoulders in Belgium summed up the popular indifference, fear and even hostility which have characterised the project from the start.

Huge publicity campaigns are to be launched, but it is difficult to see how hearts will be won. Preparing for monetary union is associated with belt-tightening and sacrifice on a grand scale. People have been told it will all be worth it, but it could take years for the feel- good effect to filter through, and there is no guarantee it will happen.

The danger that they might be sleepwalking their citizens into something they neither need nor want never stopped the men who got us here: Jacques Delors, Francois Mitterand and Helmut Kohl. For Mr Kohl, this weekend was a personal triumph. He has driven the EMU agenda, right down to the detail. He even examined the prototype coins and ruled out the five-sided piece favoured by groups representing the blind as it made him feel "queasy".

Now the dream he has pursued for almost a decade is all but realised. The bilateral conversion rates at which the 11 first-wave currencies will lock as they merge on 1 January 1999 will be settled this weekend. Once on paper, there will be no going back.

It is not the first big currency swap or even the first monetary union Europe has seen. But this one is breathtaking in scale and political significance, a gamble of unimaginable proportions. One money from Dublin to Dresden, the same interest rate for mortgages and bank deposits in Lisbon as in Leipzig.

The decisions taken this weekend mark the end of a journey lasting almost 30 years. Europe's post-war economic history is, in many respects, the history of its currency crises, such as in 1969 when a spectacular collapse was triggered by Bonn's refusal to revalue the mark. The following year saw the first serious proposals for monetary union.

For decades the neighbouring states of the continent have endured exchange rate fluctuations that have often been disastrous in their suddenness and scale. The lira collapses, and French farmers stalk the border overturning lorryloads of tomatoes. German motorists brandishing marks flock to Italy hunting for German cars cheaper than those at home.

But economic necessity alone would never have taken us to this point had it not been for the political bargain struck between Germany and France. The French would hold a stake in a powerful global currency and the Bundesbank's stranglehold over monetary policy would be loosened in a new European Central Bank. Germany would surrender its most potent symbol, the mark, for the prize of European political union.

The Maastricht summit in June 1991 mapped out the route and fixed the details of currency union. Mr Kohl said he would veto the treaty unless it contained the word "irreversible"; behind the scenes he also plotted to spring a deadline on the other leaders. With French and Italian backing, he got his way: the final stage of currency union - locking exchange rates - would begin, at the latest, next January. Yesterday, historic as it was, was only the end of the first phase.

Getting in was tough, but being inside is going to be even tougher. Budgetary discipline is one thing to accept at home, but if the pay demands of French train drivers, Spanish nurses or Irish policemen are being vetoed by a committee in Brussels or Frankfurt, then the possibilities for conflict and the resurgence of new nationalisms are endless. Sterner tests by far are still to come.

Comments