Wednesday, January 03, 2007

The fifth currency in sixty years

The third day into the German presidency of the European Union and it is already boring. Yet again we hear that Angela Merkel is trying to promote, not exactly a free-trade area but some freeing up of trade between the United States and the EU. We heard this last year and, before that, it was an idea promoted by the FAES think-tank, presided over by the former Spanish Prime Minister Aznar. Well, it will give Chancellor Merkel something to think about as she clearly isn’t about to introduce any of those reforms in Germany (except for putting up VAT).

In the meantime, another country has joined the euro, Slovenia, the first of the former Communist states to do so, and probably for a long time. As the New York Times points out, the others are some way off from satisfying the criteria (as are many of those who are members) and have lost interest in the subject, not being able to see the benefits:
Lithuania, one of the first of the newcomers to break with communism, hoped to adopt the euro on Monday, but it failed to meet the European Union’s inflation test by 0.06 of a percentage point this summer. Poland failed to muster the political consensus in favor of joining, and is threatening to hold a referendum on the issue in 2010. Hungary, burdened by political instability, has abandoned its previous target of entering the euro zone in 2010. Even Estonia, a Baltic tiger lauded for its economic prowess, has decided to move back its entry date from 2008 to 2010.
According to the BBC, the Slovenians are overjoyed at the thought of being in the euro and inordinately proud of being the first East European country to have made it into the club.

Others describe certain doubts. There are fears that prices will go up and some worry that the benefits of EMU will not outweigh the difficulties. One market stallholder, who has seen off four currencies in her seventy years, has even expressed the view that, as an independent country, Slovenia, should keep its own currency. Hmmm. I have news for the lady. Slovenia stopped being independent on May 1, 2005.


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