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Western Press Review: The Euro Debuts

  • Joel Blocker
  • Anthony Georgieff



Prague, 5 January 1999 (RFE/RL) -- Western Press commentary is still focusing heavily on the European Union's new single currency, the euro, which made its debut in global currency markets yesterday. There is also some comment on the U.S. and the United Nation's continuing problems with Iraqi President Saddam Hussein.

NEW YORK TIMES: The European Central Bank has demonstrated a tendency toward excessive secrecy

Two U.S. national dailies carry editorials on the euro's appearance on the international scene. The New York Times writes: "The fact that the euro exists at all, and that polls indicate it is popular among citizens of most European countries, is a great accomplishment for a generation of European leaders -- most notably Helmut Kohl of Germany -- that has largely passed from office."

But the paper goes on to say: "Nonetheless, the most important new institution created along with the euro is off to a disturbing start. The European Central Bank (ECB), under the presidency of Wim Duisenberg of the Netherlands, has demonstrated a tendency toward excessive secrecy. The votes of its members on monetary policy changes are to remain confidential indefinitely."

The paper adds: "The ECB was designed to be more independent than even the (U.S.) Federal Reserve or Germany's Bundesbank. But the various national governments retained the authority to choose the bank's top official. By seeming to thumb his nose at that political compromise, Duisenberg has provided a reminder to European voters of just how much sovereignty their governments have given up. That reminder could come back to haunt him if, or when, Europe's economy runs into difficulties and the ECB needs supporters."

WASHINGTON POST: In time 'insulation' from politics may be seen as a failing

In its editorial, the Washington Post is also concerned with the role and character of the EU's new central bank. The paper says that "Europe is trying to reverse the (usual) process -- forcing political unity by giving up its francs, lira and Deutschmarks. It's risky," the editorial continues, "and not primarily because money is such a treasured symbol of nationhood."

The WP argues: "Money is a key component of economic policy-making. If unemployment rises, a central bank can lower interest rates, accepting some inflation or devaluation to spark economic growth. The 11 (EU) nations of Euroland now have forsworn that option. The Frankfurt-based ECB will chart monetary policy for all of them, and the same policy for each -- though unemployment rates range from 2.2 percent in Luxembourg to 18.2 percent in Spain, and growth rates from 1.5 percent in Italy last year to 8.5 percent in Ireland."

The editorial concludes: "If the euro is to succeed, it will certainly force closer cooperation among the 11 countries in fiscal, labor and other policies. But as with all supranational schemes, from world government to an international war crimes court, there is an anti-democratic strand in this ECB. Voters in each of the 11 democracies now are far less able to influence economic actions critical to their well-being. In Euroland today, that is seen as a plus -- an 'insulation' from politics. In time -- especially in hard times -- it may be seen as a failing."

WALL STREET JOURNAL: It is a fascinating experiment

The Wall Street Journal Europe runs a commentary on "What Europe Can Learn from the Federal Reserve Bank" by economic analyst Anna Schwartz. She says that "the ECB has much to learn from the turbulent 84-year history of the Fed." But the commentary notes that "the ECB has no historical precedent. There are," it goes on, "examples of several or many countries using the same currency but, in all previous examples, that was the decision of each country separately, and each country retained the option of changing its monetary standard. With the euro, 11 countries have in effect thrown away the key and committed themselves to the (new currency) and the policies of the ECB."

Schwartz sums up: "It is a fascinating experiment for a student of monetary history, but also one whose outcome cannot be predicted on the basis of historical experience."

SUEDDEUTSCHE ZEITUNG: The European Central Bank can pay no heed to individual countries

Several German newspapers comment briefly on the euro's launching. The Sueddeutsche Zeitung says that "the real test for the euro will come when Europe's economy starts to slow down...The difficulties will arise," the paper goes on, "when in some countries the economy is booming, while in other countries economic stagnation has taken over."

The SZ points out: "In contrast to national central banks, the European Central Bank can pay no heed to individual countries. Its interest-rate policy has to be coordinated with all 11 members of the EU's Economic and Monetary Union."

RHEINISCHE POST: Tensions are inevitable

The Rheinische Post, published in Duesseldorf, remarks on "the impressive start of the euro," but says it "hides upcoming internal conflicts over future common EU monetary policy....Economic cycles in the different EU nations are not necessarily going to be marching to the same step." The paper adds: "Tensions are inevitable in the new council of the ECB. Conflicts between national governments and the ECB could turn out to be far worse (than anything yet seen)."

HANDELSBLATT: The euro could contribute to further European integration

The German financial daily Handelsblatt, also published in Duesseldorf, says that "the public will learn to recognize the euro as a symbol of European identity only after a long process, with coins and bank notes due to be introduced...in the year 2002." The paper adds: "No-one knows for sure how Euroland can use the new money to increase its political influence."

Handelsblatt also says: "The euro would gain a lot if Britain joins the European Monetary Union...If the euro remains a strong currency, it could contribute to further European integration."

POLITIKEN: So far, the Euro is just an artificial currency

Three Scandinavian newspapers today also discuss the euro's arrival. In Denmark, an EU member that has chosen not to join the euro, Adam Hannestad writes in a commentary for the daily Politiken: "The verbal fanfare that accompanied the birth of the euro was in sharp contrast with the new currency's performance during the first days of its existence. This has been at best lukewarm. The new currency appeared on world markets quietly, almost sleepily. There was (relatively) little trading while everyone watched what everybody else was doing."

He adds: "So far, the Euro is just an artificial currency, and will remain so until the year 2002 when the first bills and coins are scheduled to appear."

AKTUELT: The Union should try to integrate Eastern Europe as soon as possible

In another Danish daily, Aktuelt, parliament member Pernille Frahm says that "Eastern Europe will be the greatest political challenge (to the EU) in 1999." He recalls: "When (in 1989) the EU was given the unique chance to gather the whole of Europe under the same roof (as former Soviet president Mikhail Gorbachev had suggested), the West chose to discuss how to install a computerized air-conditioning system (that is, the single currency) while East Europeans needed repairs on the roof of (Gorbachev's) Common European Home. The EU," Frahm continues, "is still on the wrong course, for integration in depth is now in fact no more than integration in breadth."

The commentary goes on: "In Denmark there has long been a consensus that all (10) of the (Central and East European) candidate states should be given an equal chance. But in the EU the talk has always been about the five-plus-one countries (Czech Republic, Estonia, Hungary, Poland and Slovenia, plus Cyprus) that are considered the front-runners."

"This is wrong," Frahm concludes. "It should be our highest priority to get all the candidate states involved in the same processes the EU is now in engaged in. Instead of building new walls around the EU...the Union should try to integrate Eastern Europe (as soon as possible)."

AFTENPOSTEN: For countries that have opted out of Euroland the challenges are threefold

In Norway, which has elected to stay out the EU altogether, the daily Aftenposten writes in an editorial: "The euro poses the greatest (EU) challenge yet to Norway. The initial euphoria created by the euro's birth should not trivialize (the debate about) the problems that will likely arise when the new currency is tested on world markets and under the different political, economic and social conditions in the various EU nations participating in the euro."

The editorial goes on: "(For countries that have opted out of Euroland), the challenges are threefold. In business, they will be faced with a reality where the euro is a strong competitor and where all transactions in and out of Euroland will be accompanied with the usual currency exchange risks. Politically," the paper continues, "the euro shows the EU's determination to go ahead with integration. ....And economically, the euro will have a stabilizing effect on Euroland's economy by eliminating the risks of economic ups and downs."

IRISH INDEPENDENT: Operation Desert Fox is proving an albatross around the necks of the Anglo-American military alliance



Two newspapers, one Irish and one U.S., discuss Washington and the UN's persistent problems with Iraqi leader Saddam Hussein. The Irish Independent writes in an editorial: "Operation Desert Fox (the name given to the December U.S.-British air raids on Iraq) is proving an albatross around the necks of the Anglo-American military alliance, and is looking increasingly ill-judged with each twist and turn in its very uncertain aftermath. Officially concluded on December 19, the military engagement is anything but over." The editorial goes on: "(The operation has resulted in the increasing isolation of) the British and the Americans from wider world support, and (underlined) United Nations uncertainty over any effective mandate for the current military objective of policing the `no-fly' zones in the north and south of Iraqi territories."

The Irish Independent concludes: "(Saddam Hussein's) military and political shrewdness have repeatedly shown him as an effective and skillful enemy of the Americans. And it is they who are his prime target. The combination of lethal weaponry with sensitivities over committing troops makes the bombardment of Iraqi territory look brutal and murderous, without offering any solution that is finite. The United Nations is weakened by uncertainty. The United States is weakened by jingoism, and (Britain), which should have given up such an approach to warfare long ago, looks increasingly out of place in the air-strife over Iraq."

WALL STREET JOURNAL: The strikes have made the Middle East a more dangerous region

The Wall Street Journal Europe is also highly critical of last month's raids, entitling its editorial "Desert Fox-trot." The paper writes: "It increasingly looks as if the strikes, along with (President Bill) Clinton's bullying in the Israeli-Palestinian peace process, have made the Middle East a more dangerous region. 1999 could be a difficult year."

The paper adds: "(To begin with,) it doesn't look as if much of Saddam's capabilities have been degraded...No knowledgeable observer thinks much damage was done to (Saddam's) chemical and biological weapons programs (which) UN inspectors say he could be producing...in quantity by June. As for nuclear weapons, Saddam may be closer than ever."

The WSJ concludes: "Saddam only seems (more) emboldened (now), declaring the no-fly zones...to be violations of international law....That leaves the U.S. and Britain with two options. They could reconcile themselves to Saddam's continued rule in Iraq...settling on a policy of containment....The other choice -- actively working to overthrow Saddam -- is problematic both because of the potential short-term costs and uncertainty over the nature of the replacement regime."
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