America and the euro gamble.

• Author: Harries, Owen
• Position: Implications of single European currency for the US

As the American foreign policy establishment has been preoccupied in recent months with such things as the fall of Suharto, the Indian bomb, and Kosovo - all serious issues - an event of much greater long-term significance has received scant attention.

This is the adoption of a common currency - the euro - by the members of the European Union. This has the potential of changing the basic structure of world politics by bringing the brief era of the single superpower world to an abrupt end. For a common currency implies political unity. While Americans worry about the emergence of China as a rival that will challenge the supremacy of the United States, a United Europe will be a much better equipped and more convincing candidate for that role.

That is the geopolitical significance of the creation of European Monetary Union (EMU). Despite that significance, however, the event has received very modest attention in the American media. In so far as they have paid attention to EMU, the main theme has been that of uncertainty. Until a few months ago, there were serious doubts as to whether the thing would get off the ground at all; then, once it became clear that it would, uncertainty shifted to prospects of its success. In the first half of May, for example, the New York Times published two articles on the subject under the fides "Europe's Colossal Coin Toss" and "Rolling Some Big Dice in the Euro Casino"; and when the Washington-based magazine International Economy ran a symposium on the subject, it put on its cover two huge dice. Newt Gingrich characterizes the common currency as "an extraordinary experiment - and an extraordinary gamble." James Glassman, in a generally favorable analysis of the move toward the euro in U.S. News and World Report, acknowledges that it is "the greatest financial experiment in the past quarter century, and no one can foresee its consequences." The emphasis on the element of risk and uncertainty, then, is pronounced.

There are exceptions, of course, and some influential figures come down unambiguously on one side or the other. The distinguished Harvard economist, Martin Feldstein, writing in Foreign Affairs and the New York Times, insists that the EMU venture is a serious mistake, pregnant with political and economic trouble. So does the New York Times columnist William Satire. On the other hand, Jeffrey Garten, dean of the Yale School of Management, writing in Business Week, asserts firmly that EMU will succeed, and that the United States should be bracing itself to meet the challenge it will pose.

Garten at least acknowledges that EMU will represent a serious problem for the United States. The Clinton administration's position is that it will do nothing of the kind. If uncertainty has characterized the media, serene confidence apparently prevails in official circles. The assumptions there are that, as a major step toward European integration, EMU is, without qualification, a good thing, and that there will be a complete harmony of interests between the anticipated United Europe and the United States of America. Thus President Clinton: "I...