Cultural dimension 2.1 the euro
On
January
1,
1999,
the
European
Union
adopted
the
euro
as
its
common
currency.
As
the
participating
nations
adopted
the
euro,
there
was
a
transition
cost
in
terms
of
the
temporary
loss
of
output
and
the
pos-
sible
increase
in
unemployment
due
to
the
required
adjustment
to
the
price
stability
and
fiscal
criteria
laid
out
in
the
Maastricht
Treaty.
Banks
in
particular
had
to
bear
the
cost
of
$10
billion
to
$13
billion
(about
2 percent of annual operating costs over a changeover period), with software alterations accounting for half of the cost. By 2002, the substitution of euro notes and coins was complete.
Euro is the official name of the European Union’s currency. Before the name was finally chosen, some European leaders did the last-minute lobbying for their favored names. French President Jacques Chirac wanted to call the currency the Ecu since the name has historical significance for France. Britain’s Prime Minister John Major, on the other hand, preferred names such as the crown, florin, or shilling – all of which have roots in England.
In the end, the European leaders decided against using the name euro as a prefix (e.g., euro-mark, euro- pound). Euro was probably chosen because the name was the least offensive.
Robert Kalina was given a task of designing a set of eurobank notes. According to the rules, the designs could not be related to a specific country. So he used bridges and windows to span seven historical periods: Classical, Renaissance, Baroque, Rococo, the age of iron and glass, and modern twentieth-century architec- ture. One can see through or walk through windows and doors; opening them symbolizes the future. Bridges offer a connecting element: communication. These ele- ments were designed to appeal to 300 million people in twelve countries. However, euro coins have national designs on one side and a universal design on the other.
Sources: “Euro Is Official Name of European Currency,” San José Mercury News, December 16, 1995; “Now the Hard Part: Imposing a Common Currency,” Wall Street Journal, July 28, 1995; “Note Design Aims for Broad Appeal,” Bangkok Post, December 27, 2001.
The EU is unique in the sense that it is the first time that advanced economies have agreed to coop- erate economically at such a grand scale. Naturally, with the fall of the Berlin wall in 1989, countries emerging from communism coveted EU member- ships, while the EU leaders were stalling them. But the Yugoslav wars made the EU aware of the need to enlarge Europe’s security zone. After all, if sta- bility were not exported from the West, instability might be imported instead from the East.20 So the EU is expanding. Ten new members have been admitted for accession in 2004. The ten new members are: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. Turkey, Bulgaria, and Romania have candidate status.While Bulgaria and Romania are on course for accession in 2007, Turkey was told to wait at least two more years before starting talks on joining.21
Political union
A political union is the ultimate type of regional cooperation because it involves the integration of both economic and political policies. With France and Germany leading the way, the EU has been moving toward social, political, and economic inte- gration. The EU’s goal is to form a political union similar to the fifty states of the USA. The EU’s debate over political union involves issues such as having common defense and foreign policies, strengthening the role of the EU Parliament, and adopting an EU-wide social policy. In late 1991, the member countries of the EU have given the EU authority to act in defense, in foreign, and in social policies.
It is doubtful that pure forms of economic inte- gration and political union can ever become reality. Even if they did, they would not last long because different countries eventually have different goals and inflation rates. More important is that no country would be willing to surrender its sover- eignty for economic reasons. The EU, despite great strides, has been plagued by infighting among member states with conflicting national interests.
Although the Treaty of Rome calls for a free internal market and permits market forces to equalize national economic differences, Germany, France, and the Netherlands – which have expen- sive social welfare programs – argue that the social dimension must be taken into account in order to prevent social dumping. In other words, they seek to prevent a movement of business and jobs away from areas with high wages and strong labor organizations to areas with low wages, less organized labor forces, and weak social welfare policies. As a result, the EC Commission adopted the Social Charter in 1989 to establish workers’ basic rights and to equalize EU social regulations (e.g., a minimum wage, labor par- ticipation in management decisions, and paid holi- days for education purposes). Member countries accused of social dumping must subject their prod- ucts to sanctions. European socialists believe that the Social Charter is necessary to prevent countries with the lowest social benefits from gaining a com- parative advantage.
Countries with lower labor costs (e.g., Portugal, Spain, and Greece), however, view the Social Charter as something that forces capital-poor coun- tries to adopt the expensive social welfare policies, in effect increasing the cost of labor and unemploy- ment. To them, the Social Charter is nothing more than protectionism in the guise of harmonization. Such expensive policies are also a major concern to European industry. As may be expected, several initiatives are the subject of heated debate.
The European Union is a good case study of how to form economic and political cooperation at a high level. The EU will be the first group of industrial nations to deal with: (1) how to redefine national sovereignty in light of new economic alliances; (2) how to combine various national priorities with a single decision-making process; and (3) how to deregulate separate economies to induce competi- tion among national monopolies.22