The Week in Europe
By David Jessop

On January 1, 2002 all but three member states of the European Union (EU)
will adopt the Euro (EUR) as their common currency.

The process of changing from French Francs, Lira, Pesetas and nine other of
Europe's currencies is a logistical challenge. It involves the citizens of
all EU states except those in the United Kingdom, Denmark and Sweden. It
will result after February 28th at the latest, in all transactions in the
other twelve EU nations being undertaken in the new common currency.

This involves the production of 14.89 billion Euro banknotes and 250,000
tonnes of Euro coins, all of which have to be exchanged for the existing
European currencies. Once exchanged these old notes and coins have then to
be destroyed rapidly in secure environments across Europe.

The process by which this will happen and the ways in which most Europeans
will obtain the new currency is surprising. While it is expected that most
new banknotes will enter into circulation through automated telling machines
it will be Europe's shopkeepers who will be on the front line for changing
the coinage.

The currency exchange system is to work on the basis that as you purchase
goods with cash using the old currency you will receive your change in the
new currency. The effect is that shopkeepers big and small and major
recipients of cash such as railway stations and taxi drivers will find
themselves undertaking a job that would normally be considered to be in the
realm of Government or the banking sector.

The concerns are many. They range from the obvious issue of security as
billions of dollars worth of both the old and the new currencies have to be
moved physically into and out of every European bank, to issues less
apparent. These include concerns that small value transactions such as the
purchase of a metro ticket or a loaf of bread in a village bakers may take
so long that it may at worst result in the whole public transport system
slowing down or small but essential shops not opening so as to avoid the
confusion of the changeover period.

But the teething troubles that may arise during the period of changeover are
minor issues. The advent of the Euro will have at a practical and even
cultural level the effect of unifying virtually all of Europe, its economies
and the financial transactions of its citizens. Although the people of
Sweden and Denmark voted against the adoption of the new currency there are
already signs, particularly in Denmark, that the process of the free
movement of the Euro into the Danish economy may erode rapidly their desire
to maintain a separate unit of currency. So much so that shops and
businesses in Denmark and to a lesser extent in Sweden are establishing
systems to operate in both currencies.

Only in the United Kingdom, perhaps because of its island status, its
history of standing alone or more recently apart from the rest of Europe,
does anti-Euro sentiment remain strong. In England and Wales but less so in
Scotland and Northern Ireland the pound sterling is still somehow regarded
as a potent symbol of national sovereignty: a fact lost on much of the rest
of the world.

At best currency is more than a vehicle for economic management, it is an
essential symbol of national identity. At worst it can be a part of the
nightmare that the people of Argentina are now facing.

The introduction of the Euro marks an important step towards the creation of
a single European society. The fact that the majority of European states
were prepared to meet the economic convergence criteria to become part of
the European Monetary System and are now prepared to cede responsibility for
significant elements of economic management to the European Central Bank, is
indicative that the political will exists in many EU states to go further.
That is to say to establish some kind of eventual political union.

Despite this such steps will not be easy. Over the weekend of December 15th
European leaders met in Belgium to consider how to simplify the EU's
Byzantine decision making process. This has grown unmanageably over the past
45 years as the EU has gone from six to fifteen member states. Almost all
European states agree that the system has become unworkable and if not
reformed may collapse as the EU grows to a union of having 22 or more
nations embracing the western and parts of Eastern parts of Europe and
beyond. But finding a solution presents even greater difficulties.

The summit was indicative of this. Europe's leaders were able to agree to
establish a Constitutional Convention to try to find a solution but were
unable to achieve much more. So much so that the Belgian Presidency had to
end the meeting when it became apparent that no agreement was possible over
what type of constitution the body should be asked to try to write.

Do these two developments have messages for the Caribbean? Are they in some
way relevant to a region making slow and at moments, difficult progress
towards the completion of its own internal integration process?

The acceptance of the Euro and its implications for European integration
shows that it is possible for this process to work between economies at
different stages of development. It also suggests that with vision,
leadership and a viable if sometimes-controversial body possessing real
executive power - the European Commission - the politics of nationalism and
language can be set aside without the loss of national identity.
Unfortunately in the Caribbean the intense defence of sovereignty promoted
by island nations with small and fragmented economies allied to a regional
institution with no executive authority seem to make the European model
unlikely. Despite this the East Caribbean Central Bank has shown what can be
achieved at a monetary level.

For years two sets of plastic bags have stood on the window of my study. One
group contains the coins and banknotes of Belgium, France, the Netherlands,
Spain, Austria, Italy and Germany: countries that I visit frequently. The
other larger group contains the coins of the Caribbean nations I regularly
travel to. Very soon I will be left with only this second set. The odds are
that I will continue to need this second set for a long time yet.

David Jessop is the Executive Director of the Caribbean Council for Europe
and can be contacted at [log in to unmask]
December 21st, 2001

Note to Editors: the next Week in Europe will be sent on Friday January
11th, 2002


Dr. Amanda Sives
Project Officer - Election Observation
Commonwealth Policy Studies Unit
Institute of Commonwealth Studies
28 Russell Square
London, WC1B 5DS

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