At last, the euro is born

Click to follow
The Independent Online

For the first time in almost 2,000 years, Europe - or a large part of it - has a single currency.

For the first time in almost 2,000 years, Europe - or a large part of it - has a single currency.

From Prussia to County Kerry, from Lapland to Crete, 300 million people are paying for their daily bread or their daily newspaper using the same kind of banknotes and, with slight artistic variations, the same kind of coins.

World transforming events sometimes happen without us noticing them. Who remembers the precise moment the microchip was invented? Or the internet? Overnight, there occurred a piece of slow-motion history, programmed 10 years in advance. Twelve countries gave up their national currencies – part of their identity, part of their sovereignty, part of their ability to control their own economic and political destiny – voluntarily.

The only precedent in history is the adoption of the dollar by 13 undeveloped, tiny American states in the late 18th century. The only (feeble) precedent in Europe is the coins used before the collapse of the Roman empire.

The first, somewhat insipid, euro notes spat out of cash dispensers in Paris, Dublin, Berlin and Amsterdam and other cities a few seconds after midnight. (The Italians had to wait a little longer). The first euro notes and coins were spent – mostly on alcoholic drinks, given the date – a few minutes later.

The people of the 12 eurozone countries appeared, for the most part, quietly excited by the event. Their leaders appeared strangely subdued.

With one or two exceptions – all-night dancing in Spain, a son et lumière in Belgium, a street party in Dublin – no large, official events of celebration were scheduled.

It was as if the political masters were rather scared by what they had done. They wanted to pretend that this was a technical event, rather than a supremely political one, in the hope that if things go wrong – and they still might – people will blame the technicians, rather than the politicians.

The fact that the arrival of the euro has been so long awaited and so carefully planned – and so vilified by some in Britain – might lead us to underrate its importance. The European Union, née Common Market, has been with us for 44 years but it has been, until now, largely a thing of abstractions and abstruse arguments (unless you were a farmer).

From today, the European Union becomes, for 12 nations out of 15, something real, something everyday, something touchable: as real and as everyday and as touchable as the money in your pocket.

Stubborn economists will argue that the true, historical moment occurred three years ago, when 11 (later 12) national currencies were permanently fused inside the euro and lost their separate identities on the currency markets. This ignores the fact that the ultimate power of the euro is political and psychological rather than technical and economic.

"Most people haven't grasped yet how far the euro, when it is physically in our hands, will help to forge a sense of common identity in Europe," the former German chancellor Helmut Kohl said at the weekend.

In truth, the euro was created for political reasons, not for economic ones. After the collapse of the Soviet bloc, a single European currency was willed by the French government, conceded by the Germans and accepted by the others – but not by the British – as a counterweight to German reunification and the inevitable expansion of the EU to the east. The economic arguments, sound though they may be, were tagged on later.

The intention was to make a leap forward towards European unity, and a palpable sense of European identity, before eastward expansion reduced the whole enterprise to a looser group of free-trading nations.

This tangle of political and economic motives – half admitted and half obscured – is typical of the way the EU has proceeded during the past 44 years. It is the source of its strength but also of its fundamental weakness: the lack of a clear understanding among ordinary, intelligent, voting Europeans of what was being done in their name. European countries are, therefore, playing for high stakes today.

Technically, the transition has been brilliantly managed (although a series of glitches in the next few days is inevitable). Public opinion in all the eurozone countries – even Germany – has swung behind it.

But Brussels and Strasbourg – and now Frankfurt, seat of the European Central Bank – still seem obscure and faraway places to most. The European currency exists from today but the sense of European identity does not yet exist.

There is a danger, in the short term at least, that the psychological and cultural power of the touchable, spendable euro, could be double-edged. The "invisible" euro was launched in January 1999 on to a warm, upward current. But now the euro's 56 billion coins and 14.5 billion notes are being thrown into a chill wind. If European economies continue to falter and unemployment continues to rise, eurozoners may inevitably start to blame – rationally or irrationally – the pallid strangers in their wallets.

On the whole, however, there is every reason to believe the euro will be a success. If European economies pick up, as expected, in the first half of the year, the euro will be associated with good economic news, not bad.

The fact that British Eurosceptics are willing the failure of the euro, and exaggerating its every small problem, is not irrational. They, too, have understood the psychological power of the euro.

From a British point of view, there may be sound economic and political reasons for wishing the euro had never been invented but that is no longer the question that faces us.

From today, inevitably, in the minds of Europeans, but perhaps more importantly in the minds of non-Europeans (and potential investors), there are two divisions of European countries: those which use the euro and those which do not.

The loaded question which now faces Britain – and will probably be put to us formally some time in 2003 – is this: "Given the euro exists, and all our most important political and trading partners are using it, can we afford to stay outside?"

Comments