For the fathers of the euro, the end of the Cold War in 1990 was a time for worry as well as celebration. As they looked to the future, they were also obsessed with the continent’s bloody past. Would a new Europe, and especially a reunified Germany, reawaken old nationalist sentiments and lead again to the danger of war?
Germany’s Helmut Kohl and France’s Francois Mitterrand — and just about every European leader since — saw a common currency as essentially a political project, meant to cement European unity and remove that danger. For them, a world without the euro would have been a world increasingly threatened by conflict and perhaps even war.
Because of these fears, the euro project was rushed through without key agreement on the common political institutions that would have turned Europe into a truly unified economic zone. As a result, each country follows its own economic policy; Greece spends, while Germany saves. And markets have been quick to focus on the weakest links, threatening the entire euro by nearly driving countries such as Greece and Portugal to bankruptcy.
War would not have come to Europe, with or without the euro. A prediction made by Harvard economist Martin Feldstein in 1997 seems closer to reality. He argued that the introduction of the euro would lead to major friction within the European Union, because the problems in maintaining a common currency among so many countries would create confrontations and a rebirth of nationalism.
Feldstein was right. The current euro crisis has frayed nerves so much that Europeans have become more aggressive and even nationalistic again.
