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Europe: Germans Remain Skeptical About The Euro

  • Roland Eggleston

Bonn, 3 April 1998 (RFE/RL) -- The German parliament has overwhelmingly approved the introduction of the new European currency, the euro. But opinion polls published today indicate that many ordinary Germans remain skeptical.

The polls show that between 60-70 per cent of Germans would prefer to retain the D-Mark, the emblem of postwar prosperity, stability and economic power. There is considerable doubt about the stability of a currency whose value will also depend on the economic performance of countries such as Italy and Belgium, which Germans traditionally view with suspicion. The polls show that many doubt the repeated assurances by Chancellor Helmut Kohl that introduction of the new currency will open the way to new jobs and reduce unemployment, now at around 12 per cent or five million jobs.

But yesterday's parliamentary debate gave scant attention to these doubts or to last week's less-than-enthusiastic endorsement by the German central bank.

All major political parties expressed strong support for the euro, which will become legal currency in 11 countries from next year but will not be fully introduced for another three years. The only critical comments came from the PDS, the successor to the old East German communist party.

Yet even in this atmosphere of enthusiasm, considerable differences about the consequences of introducing the euro emerged between the Government parties led by the and the opposition socialists.

Kohl and his ministers said the common currency would step-up competition in European markets and open new sales possibilities for German goods. Kohl told parliament the euro would oblige individual nations to introduce economic, social and political reforms which would make Europe as a whole respond to the challenge of global markets. He claimed this would restore what he called "greater equilibrium" to international finance. Kohl makes no secret of his desire to see the euro become a standard international currency in competition with the U.S. dollar and the Yen.

The opposition SPD socialist party and the environmental Greens had a less dynamic vision of what the euro could and should achieve.

The parliamentary leader of the SPD, Oskar Lafontaine, said the introduction of a common currency in 11 countries must also be matched by common policies to cut unemployment and ensure that everyone in Europe enjoyed social security.

"The euro alone will not create jobs," Lafontaine said. "The economic union must be matched by an employment union which will produce jobs for the 18 million unemployed across Europe." He also argued that the goal was not to agree on high social standards but to agree on minimum standards across Europe which offered everyone a reasonable standard of living.

SPD leader Gerhard Schroeder has been less than enthusiastic about the euro. In several interviews in the last two weeks he has predicted that the introduction of the euro is premature and said it would face a "sickly birth."

Schroeder has warned that Germany's 12 per cent unemployment could worsen if the euro encourages jobs and investors to flee to cheaper-wage areas in the euro zone.

Germany's high wages and complex work regulations have already encouraged hundreds of companies to establish factories in foreign countries where goods can be produced more cheaply.

Even as the politicians were debating, the euro received a boost from the Germany's highest court which dismissed two challenges to the introduction of the euro. In one of them, four professors argued that substituting the euro for the strong German currency would violate the German constitution which stipulates the people's basic right to a stable currency.

The debate and the court decision comes against the less than enthusiastic endorsement by Germany's central bank, the Bundesbank, a week ago. Its 35-page report said that introduction of the euro was "justifiable" but then added that many of the 11 countries which will join in the first round are inadequately prepared to live up to the stability criteria which will regulate their economic performance. It also said that while all 11 countries had made progress against inflation, they had not been able to create a uniform "culture of stability." The Bank also suggested that in some cases, a Government's success in reducing deficits had more to do with one-time measures than with sustainable policy decisions.