Archive / Magazine / History / Euro / Debate | 19/02/2008

The symbolic power of the euro

Fifteen of the 27 EU states belong to the euro zone. While the "old” EU states Britain, Denmark and Sweden have chosen to remain outside the currency union, the new eastern European members are particularly eager to join. How strong is the unifying power of the euro?

The euro has been used for cash transactions in Europe since 1 January 2002, and in the six years since then has become the world's most important currency alongside the dollar. In economic terms at least the euro has proven itself. But do the people who use it every day really accept it?

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In Italy and France the price of every item is given in francs or lira as well as euros, an indication that the euro has yet to become properly established in people's minds. At the same time it brings advantages for European citizens travelling within Europe, who no longer need to change money or convert prices in foreign currencies.

"The euro has certainly been a technical success, facilitating trade and promoting a sense of belonging to a common space," French journalist Pierre Haski wrote in Libération on 28 December 2006, summing up the situation after five years in which the euro had been the common currency. "But it has not exerted as much leverage on the process of European integration as its founding fathers had hoped.” Despite its initial weakness, the euro has been an economic success since it was introduced, but the confidence of Europeans in their new currency has not increased – indeed, the Euro-barometer surveys from 2006 indicated the very opposite. Nevertheless, given current economic recovery and a strong euro, this trend could be reversed.

Perceived inflation

Right from the start, the adoption of the euro was coupled in all the affected countries with fears of rising inflation. Having been forced to say goodbye to their old currencies, people perceived the inflation that would probably have resulted even if the national currencies had been retained as higher than usual – in Germany the euro was nicknamed the 'Teuro' [from the German word "teuer,” meaning expensive]. And when Cyprus and Malta introduced the euro in 2008, the same fears of rising prices, inflation and foreign investors surfaced alongside enthusiasm about finally belonging to the euro club.

The Cyprus Mail reported on 5 January 2008 on Cypriots' first experiences with the euro: "Inevitably, as people began using the euro this week, stories emerged of outrageous profiteering by unscrupulous individuals. ... The fact is, of course, that these are isolated incidents. The access to a massive European market that our participation offers is likely to allow lower prices." The Malta Independent, an English-language daily, advocated throwing old habits overboard: "The faster we learn to appreciate the value of the euro and 'forget' the lira, the faster we will get used to the new currency."

The euro-sceptics

Fears that their economies would become too dependent on the well-being and decisions of others even prompted some of the "old" EU members to reject the euro. Denmark and Britain concluded a formal agreement with the EU on an "opting out” clause, and both countries have continued to make use of their right not to join the euro zone. The Swedes, too, voted with a majority of 56.1 percent in a referendum in September 2003 to keep the Swedish crown. In Denmark, however, euro-sceptics have recently begun to waver: Prime Minister Anders Fogh Rasmussen announced in November 2007 that a referendum would be held on the euro.

In Britain, the land of economic liberalism, scepticism about the EU and the euro has always been stronger. During the discussion about whether Britain should introduce the euro, British politicians and businesspeople expressed fears that a shaky euro would threaten the stability of the British pound. In the meantime the European economy has caught up and the euro is continuing to rise, while the British economy was hit by the run on the British mortgage company Northern Rock that came in the wake of the credit crisis in banking. The liberal Independent commented on 2 January 2008: "The eurozone will grow steadily larger in the coming years. And as it does so it will grow stronger. Our own government's decision to remain on the sidelines along with Denmark and Sweden is looking increasingly bizarre. It should also be noted that the regulators of the single currency seem to have done a rather better job than our own financial authorities..."

Undesirable Eastern Europeans?

The situation seems absurd. While some EU countries do not wish to be part of the currency union, others, notably the EU's new members in Central and Eastern Europe, are determined to gain entry to the euro zone. On 1 January 2007 Slovenia became the first ex-communist country to join the currency union. Mary Dejevsky wrote in the Independent on that occasion: "There was little nostalgia for the discarded national currency. For Slovenes, the euro was an ambition that followed from EU membership. The currency, as much as the flag, was what being real Europeans was all about."

Among the EU's new members in Central and Eastern Europe it is the small, dynamic countries like Estonia, Latvia and Lithuania that are rushing ahead to adopt the euro. They have already tied their national currencies to the euro exchange rate. But for larger economies like those of Poland, Hungary or the Czech Republic which have not been performing so well and which still have a high level of state debt, the introduction of the euro is still some way off.

However, the ambitions of Lithuania and Slovakia to join the euro zone on 1 January 2007 and 1 January 2009, respectively, were thwarted by the European Central Bank (ECB). Lithuania narrowly missed fulfilling the inflation criteria by only 0.1 percent, while the ECB thought that Slovakia might not be able to sustain its efforts to combat inflation "in the long term". The ECB's decision met with criticism not only in the countries affected. Jan Machacek wrote in the Czech newspaper Hospodarské Noviny on 29 June 2007: "This sends a clear message: the 'Easties' are unwelcome in the elite euro club at present."

Double standards

Any country that applies to join the currency union has to ensure that its economy fulfils the convergence criteria laid down in the Maastricht Treaty, and demonstrate its economic stability. In November 2004 it was revealed, however, that Greece, which uses the euro, had not fulfilled the convergence criteria at any time. Economic experts Willem Buiter and Anne Sibert accused the "old," core states of the EU of double standards. Writing in the Financial Times on 4 May 2006, they pointed out that "if they were not already euro zone members, they would not be able to join today, as they do not meet the fiscal criteria." Buiter and Sibert also called for an easing of the inflation criteria.

While the EU subjects euro candidates to a tough admission procedure, some non-EU members have simply introduced the euro of their own accord. One of these countries is Montenegro, which was reprimanded for the move by the EU Council of Ministers and may thus have harmed its status as a candidate for EU membership. Martin Woker asked provocatively in the Neue Zürcher Zeitung on 18 October 2007 what alternatives Montenegro had: "Should it create its own currency? That would be too expensive. ... The only conceivable solution would be to adopt the currency now circulating in Kosovo. Pristina's cash dispensers have long since translated Kosovo's European integration into reality. They spit out what the entire Balkan region wants: the euro."

Controversy over the symbolism of the euro

The euro has thus been a fact of life all over Europe and beyond for some time now. But not every banknote or euro coin is the same. On the front the coins display the twelve stars, the word "euro” and a map of Europe. On the back they depict national symbols – different ones for each country – such as the heads of politicians, portraits of artists or works of architecture. The euro thus also serves as a space for the projection of national and European ambitions, some of which border on the absurd.

Michael Moravec reported with astonishment in the Austrian Standard on 27 September 2007 on the EU commission's proposal for a new euro coin depicting the entire European continent in order to take account of the latest EU expansion: "Turkey was erased and Cyprus was positioned several hundred kilometres to the West, near Crete, so that it fit in with Europe."

With Bulgaria's entry on 1 January 2007 the EU gained its first member that uses the Cyrillic alphabet. Bulgaria insisted – even as a non-euro country – on having the word "euro" written in Cyrillic script on the notes. The Bulgarian newspaper Klassa expressed dismay at this idea on 18 October 2007: "We have been witness to the most foolish battle that Bulgarian politicians have ever fought. Evro oder Euro: Is there a difference? No."

Sabine Seifert

Sabine Seifert was an editor for euro|topics. She studied German studies and History before going on to work as a cultural editor at the tageszeitung ...
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