The euro, and terrorism


Future historians will look back on the transition from the old to the new millennium as a time of momentous change in the structural composition of global politics. Two events in particular stand out in this respect: the terrorist attacks against America on 11 September last year, and the introduction of the euro on the first day of the new year. The first brought about a qualitative change in international relations and demonstrated that terrorism is no longer an accidental, marginal or regional phenomenon, but an essential component of the global system that has become central in determining the fate of the world. The second event could have an equally great impact on the shape of things to come. But where terrorism introduced an element of chaos in the world, the adoption by 12 European countries of a single currency promises to introduce an element of stability.

Although Europe has still to forge the kind of common identity and political unity that binds Americans, the first day of January 2002 saw the birth of what can be described as the United States of Europe, where, for the first time since the Roman Empire, Europeans can pay for goods and services everywhere in the same currency. With the introduction of a single currency, the Common Market created by the European Union through a succession of measures since the end of the 1970s has become a single market. This is the culmination of a process of European integration first championed half a century ago by French statesman Jean Monnet. While it is true that the single currency does not extend to all the countries of the EU, with Britain, Sweden and Denmark remaining outside the euro zone (at least for now), it is also true that Europe has emerged on the international scene as an entity similar to the United States and capable of challenging its status as the undisputed leader of the unipolar world order that followed the demise of the Soviet Union.

The governor of France’s Central Bank has described the advent of the euro as a structural change in the architecture of the world economy no less important than the Bretton Woods conference that determined how the world economy was to be restructured in the wake of World War II. But sceptics dismiss his appraisal as overly euphoric, warning that E-day (as 1 January 2002, is referred to) comes at a time of global recession and that, moreover, differences in the fiscal systems of the various European countries could be a reason for reactivating friction inherited from the continent’s long history of infighting. In such conditions, the single currency could promote a higher level of tension than of unity.

When the euro was first introduced as a “virtual” currency in 1999, the French Le Monde of 4 January 1999 carried the following banner headline: “The Euro Launches its Challenge Against the Hegemony of the Dollar.” On the same day, the largest mass- circulation Japanese daily, Mainichi, commented on the event under a similar heading. With the euro worth $1.19 at the time, there was a feeling in Europe and Asia that the European entity could stand up to America, the only world pole. But over the last three years, the euro has declined by about 25 per cent in value against the dollar, standing now at 89 cents. This does not augur well for Europe’s prospects of competing with America in the foreseeable future. Still, a single currency is sure to produce a dynamic toward unity in Europe, not only economic, but also political. Three main currencies now compete on the world stage: the dollar, the euro and the yen. The euro is used by only five per cent of the world population, but they represent 16 per cent of GNP worldwide.

Thus, in the short space of four months, the world order has experienced fundamental change. However far Europe lags behind America, the old continent has become an integrated entity comparable to the US. The Deutsche mark, Europe’s strongest currency and the world’s second reserve currency after the dollar, has been replaced by the euro, which represents not one but 12 nations. Today, the most relevant factor in determining the dynamics of world politics is no longer the individual nation- state but large conglomerates of states, whether of the federal variety like the United States of America, or in the form of economically integrated sovereign states, like the European Union. This development has placed new constraints on state sovereignty and impacted adversely on the status of nations which do not belong to or enjoy the backing of this or that large conglomerate. The corrosion of national sovereignty is felt most keenly by the nations of the South. They find today that invoking national sovereignty is regarded as suspicious and lays them open to charges of aiding and abetting terrorism. Indeed, in some cases it is even used as justification to brand them as rogue states.

The average productivity of an individual in Europe is equal to two thirds of the productivity of an individual in America. This disparity is more likely to increase with time than the opposite. That is why the euro is not expected to become a challenge for the dollar anytime soon. But the most important development is that the European Union, even if it is unable to compete with America, has emerged as a pole in its own right. As such, it has acquired a status in the eyes of other great powers, such as Russia and China, that is not determined by how Washington assesses the situation.

The transition from 12 independent currencies to a single one within the span of a few hours, the largest money changeover in history, went off smoothly. From the technical point of view, it was an impressive feat, a constructive endeavour comparable in terms of proficiency and precision to the highly destructive operations conducted against the World Trade Centre and the Pentagon on 11 September. Both Washington and Tokyo welcomed the advent of the euro. Unlike the dollar and the yen, the pan- European currency does not derive its strength or legitimacy from one specific state, nor does it depend on the political will of any specific European state. Moreover, the euro is not expected to help solve some of Europe’s most intractable problems, such as its present high level of unemployment and public spending. The US believes that a single European currency will bring about greater fluidity and flexibility to markets and thus encourage world trade. Ninety per cent of world trade is conducted in dollars and the euro constitutes no challenge in this respect. As to Japan, it is not averse to seeing the emergence of a currency that could eventually become a financial pole capable of competing with America and constraining its crushing superiority. It is also an experiment from which Japan could draw lessons for the establishment of a similar common currency in Asia in future.

In previous writings, I put forward the idea that the present world order is only apparently unipolar while in fact it is a perpetuation of bipolarity in a new form. Instead of communism being the pole which stood in opposition to the Western pole, we now have terrorism. Contrary to communism as the anti-Western pole, terrorism has no legitimacy whatsoever within the global order. Communism could co-exist with Western capitalism; terrorism cannot. It seems, however, that from now on, we will be facing a more complex configuration.

What is new since the appearance of the euro is that America is no longer the unique world pole. A new multipolar world game is in the offing, which is neither the bipolar world game of the Cold War period, nor the apparently unipolar world game that was generally believed to have replaced it following the collapse of the Soviet Union. America is now being accused of opposing multipolarity and of reverting to unilateralism. Actually, we are now being faced with two superimposed maps representing alliances and confrontations in the world. The first includes states attracted by the American pole to avoid being accused of conniving with terrorism. Facing that group of states, another group of states sees itself trapped by terrorism and under attack from America. The second map, which overlaps with the first, includes states which seek the backing of the European pole, in the hope that rivalry between America and Europe will eventually offer them some room for manoeuvre and protect them from the accusation of supporting terrorism.

This means that a wider spectrum of modes of conduct could come to be regarded as terrorist. The very notion of terrorism is itself ambivalent and confused. It will become more so in future.

It seemed for a while that the Bush administration was keen to distinguish between the Arab and Islamic worlds on one hand and terrorism as represented by Bin Laden and Al-Qa’eda on the other. But after the defeat of the Taliban, the creation of a new Afghan coalition government and the West’s belief that the liquidation of Bin Laden is just a question of time, Washington no longer feels the same urge to soothe the sensibilities of Arab and Islamic public opinion. It can thus be said that, if it is true that societies of the South, in general, will suffer much from the momentous changes now underway, this will be particularly true for Arab and Islamic societies.