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The euro could be Europe's undoing

To most Americans, the euro (the common currency to replace the franc, mark, lira, etc.) is a MEGO (My Eyes Glaze Over).

On Saturday, 11 nations will celebrate a marriage of money that they hope will make the continent they call "Euroland" more competitive with North America and Asia.

The new lockstep stability, goes the dream of European bureaucrats, will attract investors and tourists. The device they have created to bring about this new efficiency is a central bank that sets interest rates and determines the money supply.

Shouldn't we be pleased to see Europe adopt the American model?

No. Europe is not one country, but individual peoples with different languages, cultures and politics. They wisely cooperate in a common market, but to give up political sovereignty through an economic back door _ that's not what the citizens of those countries are bargaining for.

The first symbolic strain shows in the naming of their top central banker. The Germans, to whom discipline and austerity come first, want a hard-line Dutchman; the French, to whom welfare and employment come first, want one of their own.

They'll compromise this time, but soon the internal contradiction will manifest itself. One nation, doing well, will want tight money; another, bound to its welfare culture, will want easy money.

Suddenly the loss of national control of national destiny will come clear to those told to suffer in the name of continental discipline. Result: resentment, ethnic unrest, bankerphobia, riots and worse.

These stresses don't tear apart America because we live in one country and can move around. In the Depression, poor Southerners moved north; as the Industrial Belt rusted, tens of millions moved to the Sun Belt. But are hungry Spaniards going to migrate to Denmark, or desperate Danes to Italy? No; they'll be forced to sit tight and suffer.

Many Britons understand this, which is why Tony Blair's Labor government says wait and see to the euro. Thanks to Thatcherism, that country is booming, and the new prime minister is disinclined to give up sovereignty if it risks recession.

The Conservative Party, or what's left of it after being routed last year, is no longer split between Europhiles and Euroskeptics. Last week in the House of Commons I spoke to William Hague, the 37-year old Yorkshireman elected to resuscitate the Tories, and unlike "cool Britannia" Blair, he doesn't straddle at all:

"We want to be in Europe, not run by Europe," this future prime minister, a slam-bang orator, likes to say. He opposes British entry into a single currency in this Parliament and intends to oppose it in the next election. If Hague should win (and Tory political stock is a good gamble at current lows), that would keep Britain free from domination by bankers in Frankfurt until at least 2006.

Where does the U.S. government stand? Aside. Clintonites deliver knee-jerk responses favoring European union, as if the common currency were just another step in getting along together _ and not a divisive act inviting political backlash. Nasty nationalists are already on the upswing in both France and Germany; the winds of the euro will fan the flames of populist resentment.

The only U.S. pol to address the sovereignty giveaway (in speeches appreciated only overseas) is Newt Gingrich. He rightly sees economic diktats from Frankfurt creating crises that could lead to political disaster and angry disunion. He suggests that Britain ally itself with NAFTA.

The coming rise and fall of the euro is America's business, whether we like it or not, and despite the none-of-your-concern attitude of Eurocrats. The Times of London, grateful for Gingrich's attention to the coming blunder, writes: "Belated American intervention to rescue Europe from itself has been the story of this century."

Democracies must put the political horse before the economic cart. First the U.S. colonies formed a political union; decades later came national banking, and a century later our Federal Reserve central bank. The Eurocrats are putting the cart first, using a supranational bank to impose political union.

That's why American supporters of an expanding NATO say to our allies: Beware the euro. It's bad for union, dangerous to democracy.

New York Times News Service