Money: Who's celebrating the euro?

Review of '99: a new currency lost its way, but financiers, oilmen and internet entrepreneurs struck lucky

If Wim Duisenberg were tempted to hold a party to celebrate next week's first birthday of the euro, it would feel more like a wake. The Governor of the European Central Bank and proud father of the young currency would do his best to generate some festive spirit from the assembled dignitaries who assisted at the euro's birth. But the mood would be dampened by memories of a year of teething troubles for the currency, during which it tumbled 13 per cent against the dollar.

The blame for the euro's sickly start cannot be laid entirely at the door of its many political enemies. A frosty environment combining falling interest rates in Europe and strong growth in the US has exposed the euro to the odd chill. But Mr Duisenberg's bouncers would be instructed to turn away many of the political figures who have conspired to make the youngster's first year as difficult as possible.

For instance, Mr Duisenberg will not have forgotten the role of Oskar Lafontaine, the former German finance minister. His constant calls for lower European interest rates did much to undermine the fledgling currency's ability to stand on its own feet, free from the interference of do-gooding European politicians. Mr Duisenberg has already wreaked his revenge, declaring that he had "no feelings" for Mr Lafontaine. On news of Mr Lafontaine's departure, the euro promptly jumped two cents against the dollar, enabling Mr Duisenberg finally to do Mr Lafontaine's bidding and cut interest rates.

If he has nothing better to do, perhaps Mr Lafontaine could hook up with Gerhard Schroder, the German Chancellor, who would also be at a loose end. These former political allies could take the opportunity to iron out the differences that prompted Mr Lafontaine's resignation from Mr Schroder's government, another incident that blighted the euro's first year.

He quit after his taxation plans incurred the wrath of Germany's corporate sector, but his relationship with Mr Schroder had already been strained by the ongoing feud between Mr Duisenberg and Mr Lafontaine.

That was nine months ago. Mr Schroder has since felt the rough end of Mr Duisenberg's tongue and may feel more sympathy for his former colleague. It was Mr Schroder's decision to offer taxpayers' money to help save Germany's biggest builder, Philip Holzmann, from bankruptcy that caused the problem. The rescue "does not enhance the image we want to have of an increasingly market-driven economy", said Mr Duisenberg, mindful of the debilitating effect that an interventionist policy like this would have on the market's perception of the euro. Mr Schroder's reluctance to accept the supremacy of the global market has further been demonstrated by his stand against Vodafone's attempts to take over Germany's Mannesmann.

Jacques Santer would have to make other plans, too. Confidence in the new currency was hardly helped last March when Mr Santer and the rest of the European Commission resigned over charges of corruption.

Romano Prodi, his successor as head of the Commission, has also managed to undermine a project he so zealously espouses. Last June, in his previous guise as Italian prime minister, Mr Prodi did the euro no favours at all when he suggested that his country would jettison the currency if its competitiveness were affected. His subsequent protestations that he had been misinterpreted failed to ease fears that the currency was falling apart and the euro fell sharply.

With friends like these, it is not as if the euro needs its many enemies. In the UK, they include the massed ranks of right-wing Eurosceptics who have done their best to demean the project. Discounting the influence of William Hague, the beleaguered Tory leader whose chances of forming the next government dwindle by the day, the most important Eurosceptic in Britain is probably Rupert Murdoch. His mouthpiece at The Sun, editor David Yelland, first branded Oskar Lafontaine "The most dangerous man in Europe" and then dubbed Tony Blair "The most dangerous man in Britain". This constant carping has done little to encourage Mr Blair to take the plunge and signal a referendum on sterling membership of the euro - a move that would do wonders for the project's credibility.

At least Slobodan Milosevic is used to being a social pariah. The Yugoslav president would be about as likely to get an invitation to the party as Mr Yelland. His Kosovo campaign, launched shortly after the single currency's inception, prompted the biggest allied military operation in Europe since the Second World War. Between March and June, the euro fell as fast as the Nato bombs, hit by fears of the impact on European budget deficits - and national security.

But enough of the party-poopers. Helping the evening swing would be the exporters whose foreign exchange risk was wiped out in an instant with the birth of the euro. Furthermore, European companies selling goods outside the Continent have prospered from the euro's depreciation, which makes their products more competitive abroad.

There would be a few famous faces present too. Roberto Colaninno, chief executive of Olivetti, managed to raise 9.4bn euros to contribute to his takeover of Telecom Italia. One of the people Mr Colaninno will thank for preventing even further falls in the euro is Kiichi Miyazawa. It was the Japanese finance ministry he runs that prompted the Bank of Japan to buy euros in June, becoming the first central bank to do so. This played a vital part in ensuring that the euro did not fall below parity with the dollar.

Greek prime minister Costas Simitis would be invited as a reward for his achievement in bringing down domestic inflation to 2.1 per cent. That feat should be enough to enable Greece to swap the drachma for the euro within a couple of years. A number of other countries toasting the baby would include Poland, the Czech Republic, Cyprus, Estonia, Slovenia and Hungary.

And perhaps Tony Blair would make an appearance, although he would prefer to come unannounced. The Prime Minister is having to juggle his own enthusiasm for the euro with the antipathy of his electorate, 80 per cent of whom are opp-osed to ditching the pound, according to the annual British Social Attitudes Survey. It would take a masked ball to tempt Mr Blair, although his Chancellor might be more willing.

Siobhan Almond is a staff writer in the London news room of Bloomberg.

A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Financial Analyst - Forecasting - Yorkshire

£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

Business Architect - Bristol - £500 per day

£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

'I'm a realist; I know how hard this business is'

Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Has Ukip’s Glastonbury branch really been possessed by the devil?

Has Ukip’s Glastonbury branch really been possessed by the devil?

Meet the couple blamed for bringing Lucifer into local politics
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup