The summit of European Union leaders has approved Greece as a member of the currency union. Correspondent Breffni O'Rourke reports from Porto on the implications of the decision for the Greeks and for the currency itself, and on the impact it could have on Britain -- which is not a member of the currency union.
Porto, 19 June 2000 (RFE/RL) -- At their summit meeting near the Portuguese city of Porto today, the leaders of the European Union approved Greece's application to join the common currency, the euro.
Greece thus becomes the 12th member of the currency union, and the first to join since the project was launched just 18 months ago. Greeks are jubilant, saying the move represents a recognition of the economic maturity achieved by their country.
Athens-based media commentator Andreas Papageorgopoulos, who was at the summit site in Porto, put it this way:
"For Greece it's a big day, it proves that the Greek people through their government in the last few years have achieved an enormous task. They have overcome a number of obstacles, and now we are not at the door of Europe, but virtually inside."
But not everybody views the Greek accession as positive. The infant euro has had a hard time since its inception, losing almost a quarter of its value against the U.S. dollar because of lack of investor confidence. German bankers and financiers, in particular, have been outspoken in their belief that including in the euro Greece, a country traditionally plagued by economic problems, would send the wrong signal to the markets.
It is true that in the past Greece has had high inflation and interest rates, and a public debt reaching 114 percent of gross domestic product. In the last two years, however, Athens has made monumental efforts to get its economic house in order, and the figures speak for themselves. Inflation is down to 5 percent, interest to 9 percent, and public debt is 104 percent of GNP and falling. If Greece can stay on course and improve further in the coming years, there appears no reason to fear that its presence inside the eurozone will further weaken the common currency.
Ironically, the biggest psychological impact of Greece's accession may be on a country that is not even inside the eurozone, namely Britain. Britain is a major holdout against the common currency, with opinion polls showing that 60 percent of the tradition-minded British public favor keeping the national currency the pound.
The public opposition presents an acute dilemma for the pro-euro government of Prime Minister Tony Blair, which has a "wait and see" policy. Blair says that if the euro proves a success on the continent, and if it benefits British interests, the question of joining the euro will be put to a referendum after the next election.
But the more radical ministers are said to be pushing Blair to take a harder pro-euro line, rather than drift along. British industry is suffering, and workers are losing their jobs because Britain with its strong pound cannot compete with the low euro in the eurozone. The collapse this year of the BMW-led Rover car group is only the most prominent among many recent victims who blame their troubles, at least in part, on the strong pound.
In reply to questions yesterday from RFE/RL and other media in Porto, Blair's spokesman Alistair Campbell went to great lengths to deny the existence of a split in the government. He said:
"There has been a desire, because of the fundamental division on policy which existed under the last government, to pretend there is a similar division in the British government. There isn't. There is not a single minister, there is not a single word you can point to that has been uttered by a single minister that contravenes the policy that Finance Minister Gordon Brown set out in 1997."
In any event, Greek accession to the eurozone is likely to re-awaken debate on joining the euro within the British government.