ancient Roman relics – cue to stop digging and call in the archaeologists again. In London developers in the financial district have faced similar problems with buried Roman relics.
Even the idea of unifying Europe goes back a long way. On the eve of the first millennium, the year zero, the Romans were on their way to ruling an empire that would cover much of the territory now in the European Union. A thousand years later, the German-speaking area of Europe was engaged in a long-running attempt to put together a second empire – the would-be Holy Roman Empire. And after Napoleon’s short-lived conquest of Europe in the early 1800s, Hitler made his bid for the Third Reich (Third Empire), which crumbled in 1945.
On a less grand scale, many of the European social and workplace attitudes prevalent for much of this century are steeped in a sense of the past – the dynamics of left-wing/right-wing class politics and the efforts of workers to protect their interests. Workers’ ‘struggles’ are remembered as heroic, and even today, large numbers of Europeans are loath to give up hard-won privileges for the uncertain prospect of global next.
In short, Europeans’ history, their perception of history, and the legacies of history have all too often served to keep them apart and stuck in the past. But now, it seems that the grip of history is loosening across the whole Continent – although people in the Balkans might disagree on that point. New generations of Europeans have grown up amid peace and plenty, eating the same fast food, drinking the same soft drinks, driving the same cars and increasingly sharing the same tastes in music, movies and TV. These New Europeans display a mindset that breaks with the thinking of previous generations – much more focused on the here and now, on themselves and their own futures, much less interested in where they are from and more concerned with where they are going.
To paraphrase Francis Fukuyama, we may well be witnessing something akin to the end of history in Europe – or at least the beginning of the end of Europe’s obsession with history.
The Euro Nightmare
With the approach of the year 2000, computerized countries all over the world are facing the same Y2K ‘millennium bug’ problems. Computers in which dates were programmed as two digits rather than four will be completely thrown when 99 (of 1999) clicks over to 00 (of 2000).
But as Y2K fever heats up, Europe will add its own complication to the computer systems nightmare – a new currency, the euro, which is the flagship of an ambitious project of economic and monetary union. Banks and businesses in Europe currently have to deal with transactions between the fifteen currencies of the European Union, whose exchange rates constantly vary within fairly narrow bands. In order to simplify cross-border business in the future, Europe is going to phase in a single currency. The euro should make things much easier in the long term, but a lot more complicated in the short term. To quote from Peter Pan, the whole undertaking promises to be ‘an awfully big adventure’.
Europeans will be able to start using the euro on 1 January 1999, and for a three-year transition period it will be used in parallel with existing national currencies – the French franc, the German mark, etc. After that, it will be goodbye to the franc, the mark and all the other currencies that will cease to be legal tender in the summer of 2002. During the transition period, the euro will be the cross-rate hub – exchange rates will be calculated on the basis of each currency’s rate versus the euro, rather than directly between the currencies.
It’s not clear whether the European authorities were fully aware of the Y2K problem when they decided on the single European currency schedule. What is sure is that the timing is likely to keep legions of programmers very busy for a long time to come. Phasing in the euro will bring plenty of challenges. Currently, many companies need only deal with their national currencies, but even small, locally focused companies will have to phase in or switch to euro systems sooner or later. And the systems range from cash tills and computer keyboards with euro symbols all the way up to powerful number-crunching programmes handling corporate accounts. IBM calculates that the cost to companies doing business across the Continent will be in the region of US$175 billion. Fortunately, the banking industry is ahead of the pack in its preparations for the euro, which are thought to cost around US$100 million for big banks.
And the euro shift won’t touch only countries in the first wave of euro adopters. The European Union is the main trading partner for Britain, and while the British government is holding to a ‘watch from the wings’ line, British companies doing business with the mainland will probably find it pays to go euro sooner rather than later, since big Continental companies will be going for it. Business Week reports that Anglo-Dutch consumer products giant Unilever and many UK headquartered banks are among the companies that plan to start operating in euros at the birth of the new currency on 1 January. They’re sure to bring legions of suppliers and customers along with them.
Nonetheless, a survey by accounting firm Grant Thornton of London indicated that some 37 per cent of European companies haven’t even started thinking about the euro. It’s a fair bet that a considerably higher proportion of the cash-wielding public is even farther from incorporating the euro into their plans.
The Euro Dream
It shouldn’t take Europeans long to experience the benefits of the euro – which, among other things, will allow one to compare prices in different countries. The variations in price are sometimes big, and with no border controls between many EU countries, we can expect a sharp increase in cross-border shopping trips.
Despite the darkest suspicions of die-hard eurosceptics, the single currency isn’t being introduced to confuse people and make life more difficult. It’s part of a policy designed to remove the obstacles to doing business between European countries, creating a unified trading zone with a GDP to match that of the US. One likely consequence, posits the Economist, is that the euro could become a real alternative to the US dollar on a world scale, which would make it harder for the United States to run unlimited current-account deficits and to exercise unchallenged leadership of the international financial system.
Entry requests were reviewed at a summit meeting in May 1998, and the G-11 were officially named; Britain, Denmark and Sweden have chosen not to join the euro at this time – and Greece didn’t make the cut. At the same meeting Wim Duisenberg, a Dutchman, was named as head of the Central Bank, making him every bit as powerful as America’s Alan Greenspan, head of the Federal Reserve Bank.
In any event, focusing on the EMU entry criteria has spurred countries to greater budgetary sobriety across Europe and in turn helped drive interest rates down – all good news for investors. On the corporate front, the introduction of the euro should cut the cost of transacting cross-border business in Europe. Companies won’t have to give their banks the spread on foreign exchange transactions, and they won’t have to pay for currency hedges to lock in their prices. Moreover, the euro should stimulate cross-border efficiencies, allowing companies to expand, consolidate, restructure or relocate without regard to currency differences. No wonder investors are getting excited.
Banks, insurers and finance houses are expected to be among the first companies to go regional with cross-border product offerings in the single currency, which will make for greater consumer choice and mobility within Europe. Right now it’s theoretically possible to take out a mortgage in one currency to buy a property in another, but the foreign exchange risks are daunting for the average consumer. With the euro, that risk is eliminated. The increasing pace of preparations for Y2K and the euro are making software houses an irresistible investment opportunity, too.
With zero hour approaching, things are suddenly falling into place for the euro. Against expectations, European economies started picking up in 1998, after almost a decade of sluggish performance which threatened to scupper the currency’s introduction. What’s more, the Economist reports that European Commissioner for Monetary Affairs Yves-Thibault de Silguy thinks that the spending on preparations for the euro, coming on top of Y2K spending, will give Europe’s economies a further boost.
Borders, What Borders?
For cross-border travellers in Europe, things are just returning to where they