BERLIN—For many in Europe, there's a new boogeyman. It steals jobs, grinds down nations and sends prices soaring.
It's called the euro, the currency that 42 months ago replaced local currencies in the 12 countries that make up the so-called eurozone.
In Italy, Labor Minister Roberto Maroni set off a firestorm last week by suggesting that his nation would be better off returning to the lira. His call was endorsed earlier this week by Italy's Northern League political party, which has three ministers in Italy's government. Party leaders promised to offer a plan at their June 19 convention to revert to the lira.
In the Netherlands, dissatisfaction with the currency, fueled by the belief that consumers were cheated when they switched from the guilder to the euro, was a major factor in that country's overwhelming rejection of the proposed European Union constitution last week.
In Britain, France and Germany, major newspapers and magazines published articles this week questioning the currency's future. The cover of the German magazine Stern depicted a German eagle choking on a euro coin.
It's still much too early to know if the euro is in any danger. Eurozone finance ministers defended the currency during a meeting in Luxembourg this week, saying it's good for investment and consumers.
Other experts decry the attacks as based on half-truths and misguided nostalgia.
"It's irresponsible to talk about leaving the euro," said Paola Subacchi, who heads the International Economics Program at Chatham House, an English research center. "Those who talk about dumping the euro have forgotten the histories of their old currencies."
But others say the currency has unavoidable long-term problems. "It's wrong to say the euro already has failed," said Swiss economist Peter Bohley. "It will fail, however. That's been obvious all along."
The euro was introduced in January 2002, amid much optimism. It replaced the Austrian schilling; the French, Luxembourg and Belgian francs, the Dutch guilder; the Finnish markka; the German mark; the Greek drachma; the Irish punt; the Italian lira; the Portuguese escudo; and the Spanish peseta.
Britain, Denmark and Sweden decided not to adopt the euro, and 10 nations that joined the European Union last year—Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic, Slovenia—aren't eligible to adopt it until certain economic criteria are met, a process expected to take years.
Currency traders have bid up the value of the euro against the dollar. At its introduction, one euro was worth 90 U.S. cents, so a 100-euro hotel room cost $90. The euro peaked in value in January, when it was worth $1.36, meaning the cost of a 100-euro hotel room had risen to $136.
The euro has since declined to $1.22, about the same level it was last summer.
Many in Europe believe it isn't just Americans who've seen prices rise with the euro's introduction.
In its cover story, Stern magazine said, "The common currency damages Germany and divides Europe. The euro leads to high prices and destroys jobs."
The magazine said prices have risen 7.7 percent overall since the introduction of the euro. It listed 35 common expenses that have risen, including health care, bread, taxi fare and beer, and 14 that have fallen, including VCRs, computers and air travel. (The magazine said only one item, toilet paper, remained the same.)
Euro supporters discount any claims that the currency has caused higher prices, and even some euro critics agree. Manfred Neumann, who led a movement of German economists in 1998 opposed to the euro, said inflation has been relatively low since the euro was introduced.
But Neumann said he still believes the euro is flawed because a single currency means a single monetary policy, run by the European Central Bank. That means countries have no way to stimulate or slow their own economies.
Neumann explained the problem this way: If the California economy slumps while the Texas economy booms, workers—moving inside a single culture—flow toward the work.
But the euro operates in a world where the Dutch don't move as easily to Spain, or Germans to Ireland. So while the German, French and Italian economies are slumping and could use lower interest rates to prime the pumps, the Spanish and Irish economies are going gangbusters and could use an interest rate increase to tamp down inflation.
It's impossible to do both, so the bank either does something and one camp loses, or it does nothing and both sides feel abandoned.
"It's difficult to address these problems after monetary policy is out of your hands," Neumann said. "The euro came too early, before Europe was ready."
Reverting to national currencies seems to have at least some appeal in European nations worried that they're losing their identities. Stern said a survey it conducted last month showed that 56 percent of Germans favor a return to the mark.
Euro supporters acknowledge some adjustment might be needed.
"The currency could be more responsive to national realities," said Subacchi of Chatham House. "Look, the euro doesn't solve a nation's problems, but it doesn't cause them either."
The following countries use the euro as their currency:
(c) 2005, Knight Ridder/Tribune Information Services.
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