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Western Press Review: The Launch Of The Euro And Indian-Pakistani Tensions

Prague, 31 December 2001 (RFE/RL) -- On this last day of the year 2001, commentary in the Western press centers largely on the launch of euro single currency notes and coins, scheduled for midnight tonight. While the euro has existed as a "virtual" currency for the past three years, it will now have a physical presence in the lives of many Europeans. The German mark, the French franc, the Portuguese escudo, the Italian lire, and other national currencies within the euro-zone will be entirely phased out by the single currency by the end of February. One columnist calls the introduction of the euro "the high point in the process of European integration to date," and remarks, "In terms of peaceful union and a voluntary ceding of sovereignty, no comparable example exists in recent history." Other discussion today centers on the heightened tensions between India and Pakistan, as both nations continue to mobilize in apparent anticipation of military conflict. Several Western commentators call on the West, and particularly the United States, to take a more active role in mediating a peaceful settlement to the conflict.


In the German "Frankfurter Allgemeine Zeitung," columnist Klaus-Dieter Frankenberger considers the introduction of euro single currency notes and coins, scheduled to take place at midnight. "This year's New Year's fireworks will illuminate the beginning of a new era for 300 million Europeans, who [will] move closer together into a single monetary zone, having entrusted their economic well-being to a common currency."

Monetary union, he says, "has often been described as an economic means to a political end: that of rendering European integration irreversible, of binding states even more tightly together in terms of peace policy. [It] is a politically desired event, one that will, it is hoped, provide a new impetus toward further integration."

Frankenberger goes on to say that the euro's success will require the active participation of the European Central Bank, and calls on euro-zone governments not to allow individual political interests to interfere with the health of the new currency. "Those who want to make a success of the euro and assure it enjoys the confidence of both citizens and the markets must take action to make this happen. The European Central Bank must perform its task of maintaining stability and refuse to comply with political wishes that cannot be fulfilled without surrendering that stability. Above all, politicians must go about their work without confronting the bank with unreasonable monetary policy demands."


In an analysis in the "International Herald Tribune," John Vinocur says that initial hopes the launch of the virtual euro three years ago would challenge the dollar as the world's leading currency were largely unfounded. "As things have turned out," he writes, "the euro has fallen considerably short of expectations that it would be a dollar-beater. It is currently worth less than 89 [U.S.] cents, and its existence hardly has turned Europe into a rival of the United States in terms of political force." But the virtual euro did tend "to simplify business within its area, stop competitive devaluations among participating countries, and provide a palpable reference for hopes for greater European unity." It is also true, he remarks, "that the dollar may be overvalued."

The excess of optimism surrounding the euro was odd, says Vinocur, also because "the deeper economic trends showed Europe's growth rate was declining, while unemployment, particularly in Germany, was heading upwards." He says similar trends characterize the European economy at the outset of 2002. "The new money created neither a spurt of European growth nor jobs. With three years of experience, it is also clear that euros did not rapidly replace dollars in portfolios or official reserves." In fact, investors "put more money in dollars because the existence of the euro meant they could no longer diversify their portfolios by holding several European currencies."


An editorial in today's "The Irish Times" also considers the euro launch, and says that the long-term implications of the switch to the euro are far-reaching. "The initial goal of monetary union was monetary stability, where a strong currency would foster low interest rates," it writes. "The performance of the euro on the financial markets, however, has been mixed and the European Central Bank [has] struggled to build its credibility. It is now evident that the benefits of the euro can only be built in the long term -- and that their emergence cannot be taken for granted."

The move to the single currency also raises more fundamental issues, says the editorial. The challenges of setting interest rate policy are already evident. "[Both] the ECB and the member states will have much to learn in the years ahead about economic management in a single currency area. Inevitably other issues -- such as tax harmonization -- will also come onto the agenda." The advent of the euro, it says, "will throw other issues relating to the future of Europe into sharp focus, pointing to the need for the government here to take a clear and coherent policy approach."


In Belgium's daily "Le Soir," Alain Lallemand looks at the increasing strains between India and Pakistan. Lallemand says that the 4-6 January summit in Nepal of the South Asian Association for Regional Cooperation (SAARC) -- which will be attended by both Pakistani President Pervez Musharraf and Indian Prime Minister Atal Behari Vajpayee -- will not provide an opportunity for bilateral discussions between the two leaders, as had been hoped. India has stated that the circumstances are "not favorable" to dialogue, says Lallemand. The only certain thing, he says, is that terrorism will be a topic of discussion.

"The situation is thus extremely serious, especially as the two camps over the weekend made sure to have the political support of all the parties in the country." Even worse, he says, is that "Islamabad has affirmed that its army is now 'in position, ready for combat.'" India, for its part, has "repositioned its missile system and redeployed [its] men, armored tanks, and heavy artillery on the Pakistani border as well as its border with China, Peking being a traditional ally of Islamabad." Lallemand says the "single hope" seems to lie in India submitting a list to Islamabad of terrorist suspects that it seeks for extradition -- and for Pakistan to comply.


An editorial in Britain's daily "The Independent" says that increasing Indian-Pakistani tensions provide further evidence that "the 'war against terrorism' may become the 'war of unintended consequences.'" U.S. actions in Afghanistan have "disturbed the uneasy equilibrium of the Indian subcontinent, by rewarding Pervez Musharraf's regime in Pakistan," it says. India's Prime Minister Vajpayee is now using the attack on India's parliament "to redress the balance."

"[Vajpayee] is exploiting the rhetoric of the 'war against terrorism' against the Islamic fanatics who are at the forefront of the struggle against Indian rule in Kashmir. [Mr. Vajpayee] is engaged in brinkmanship, trying to provoke Pakistan into a reaction that could be used as an excuse for a short war of popular distraction from troubles at home. [Pakistani President] General Musharraf, heading a military government, is unfortunately all too likely to be provoked," says the paper.

"The Independent" says that the regime of General Musharraf is not doing all it can "to root out the Muslim academies throughout Pakistan that seem to provide the ideological recruiting ground for both Al-Qaeda and Kashmiri separatist groups. [Their] methods are, of course, abhorrent, but their objective is one that ought to be the subject of reasoned debate."

Unfortunately, it says, "India has never accepted that any discussion of the status of Kashmir itself is legitimate."


An editorial in "The Times" of London says that renewed tensions in the subcontinent need strong American diplomacy in order to reach a resolution. It says that until U.S. President George W. Bush "made personal telephone calls to Indian and Pakistani leaders last week, American efforts had been limited to phone calls from senior officials urging calm. Washington officials have mooted sending envoys to the region, perhaps until after [British Prime Minister] Tony Blair's planned visit in January, but nothing has been decided. Yet the need for regional stability around Afghanistan means that all its neighbors must continue to be part of Washington's long-term planning," says "The Times."

In the campaign against terrorism, "constructing a warm relationship with General Musharraf was vital," the paper says. "[It] is no less vital now to help him rein in extremists inside his borders, or prevent local rivalries blowing up into war. It is in America's own interests to ensure that Pakistan does not shift its troops from today's Afghan front to a future Indian front," the paper writes. "The time has never been riper for strong U.S. diplomacy in the sub-continent."