Europe took another big step toward economic and political integration this week as the paper version of the new euro currency was launched in 12 countries simultaneously. As an electronic and bookkeeping currency, the euro currency has been in operation for three years, and all twelve eurozone countries had their currencies fixed against the euro. For example, all European corporations in these countries have been reporting their financial statements in euros for the last three years.
European officials are putting 10 billion new banknotes into circulation, mostly through cash machines. Older currency will no longer circulate after 60 days, but can be turned into banks and converted into euros. The nations adopting the euro include Germany, France, Italy, Spain, Austria, Belgium, Holland, Luxembourg, Ireland, Greece, Finland, and Portugal. Holding onto their own currencies and snubbing the euro are Britain, Denmark, and Sweden, and of course the perennial neutrals, the Swiss.
The euro is both an economic and political event. Economically, it allows the complete financial integration of most of developed Europe into one economic region. There will be no need to exchange money when crossing borders, either for travelers, or more importantly, commercial interaction. Along with the Europe-wide free trade zone already in place, Europe is trying to match America’s economic might. The currency will be under the control of the European Central Bank, an institution with tremendous power over the economy of Europe, but beholden to no single state, as it is charged with managing a currency that circulates in 12 countries. The head of the ECB, the European Alan Greenspan if you will, is a Dutchman named Wim Duisenberg. The euro started life three years ago at 1.18 dollars per euro, but it has steadily weakened and now is about 95 cents for a euro, a weakening that is often blamed on Duisenberg’s management. This does make pricing while traveling in Europe for Americans rather easy, as a euro price is very similar to the actual dollar price.
Politically, the euro is even more significant. There is genuine debate over how much the euro will actually affect Europe’s economic role in the world, but there is no debate over the political effect of a single currency. The entire goal of the “Eurocrats” that have led the European Union (EU) since inception is to create such a politically unified Europe that war becomes impossible. This was the original impulse that brought French and German leaders together in the 1950’s to form the forerunner of the EU. Eventually the EU expanded, and now all the countries in Eastern Europe are lining up to join as quickly as possible. Even Turkey wants to be a member of the EU. Currency union is a major step forward toward greater political integration.
Which is precisely why the Euroskeptics in Britain have kept Britain out of the euro project. England retains the British pound, while French francs, German marks, and Italian lira all become history. The British are very skeptical of political integration with the Europeans, and many British thinkers feel closer ties with the US are a better policy than binding Britain to Europe, which many British view as much more foreign than America. Prime Minister Tony Blair is fond of the euro, and would probably join if he could, but his public, especially the conservatives, is of an opposite view. To join, Britain would probably undergo an historic referendum with a direct vote on the issue, something that the British have never done on any issue.
This gradual process of slow but steady voluntary integration of democratic states provides a model for the Muslim world. I often hear Muslims complaining that it is lack of unity that keeps Muslims weak and incapable of defending their own interests. But unity imposed by armies and dictators with the occasional street mob thrown in is not real unity. Real unity is what we are seeing develop in Europe. And that sort takes generations of hard work to achieve.