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Why Scepticism Outweighs Acceptance Of Euro In Germany

FRANKFURT (dpa) – The euro is coming – and with it, there has been a flourishing business in Germany involving fraudulent schemes of exploiting many people’s fears and scepticism towards the new currency.

A survey by the Federation of German Banks shows that, with only around three weeks to go before the January 1, 2002 launch of the new coins and notes, one-half of Germans are against having to abandon their pride and joy, the D-mark. In eastern Germany, the opposition figure is 60 per cent.

The survey also found a correlation between educational levels and attitudes towards the euro. The higher the level of education, the greater the acceptance of western Europe’s new single currency.

In this climate of fear and scepticism, shady wheelers and dealers are out to try to make a quick mark. The relatively harmless pitches go like this small advert in a newspaper: “We will change your beloved D-mark into a ‘hard currency kitchen’.”

More dangerous are the ads placed by financial consultants which say “The euro is coming! Stocks in the safe box? We’ll buy up your mutual funds!!”

Consumer protection lobby groups warn that business of this sort to exploit peoples’ fears is booming. In no other country of the European Union is it as easy as in Germany to dupe people with risky investment schemes.

There have also already been cases of the old trick with diamonds. Police in Cologne are warning people about salesmen ringing the doorbell and offering – at exaggeratedly inflated prices – polished diamonds as a “first-class alternative to the euro”.

In contrast to the Italians or French, the Germans are having a hard time parting with their currency.

The D-mark was more than just money. It became, in the post-war economic miracle period, a symbol of German capability. With this entrance ticket into the western business and vacation world, Germans again had something to be proud of.

Luxembourg Premier Jean-Claude Juncker even once went so far as to say that the Germans had “an erotic relationship to their currency”.

The strong rejection of the euro in eastern Germany can be explained by the fact that the people in the erstwhile communist east had to wait decades to finally get their hands on the D-mark.

The date of July 1, 1990, when the inner-German currency union took effect, is therefore more important to them than the formal political reunification a few months later. With the hard D-mark, the eastern Germans were finally able to buy all the consumer goods they had been longing for.

Under the German monetary union, eastern Germans were allowed to exchange 4,000 of their old “Ostmarks” for the D-mark at parity. The rest of their savings they could exchange at two-to-one, meaning a cutting in half.

Now, with the euro, the mark is being cut in half – at 1.95583 marks per 1 euro – again. Political philosopher Peter Sloterdijk believes this is a major factor in scepticism towards the euro. People seem to forget that while wages and assets on paper are being cut by half, at the same time so are their liabilities and costs.

In 1998, there was a high-publicity suit led by a group of professors to stop the introduction of the euro, a campaign which got a lot of public support because people could not differentiate between the internal and external value of a currency.

When in October 2000 the euro dropped to an all-time low of just 83 U.S. cents – it had been launched at the start of 1999 at 1.18 dollars – it seemed to confirm the sceptics’ worst fears about the single currency.

But a calm assessment shows that in purchasing power terms, the euro has been more stable than the D-mark.

Whereas in the first half of the 1990s Germany’s inflation ranged betweeen 5.1 per cent (1992) and 1.7 per cent (1995), the rate since the 1999 introduction of the euro has stayed a steady 1.7 per cent despite the oil price shocks and the mad-cow disease crises in agriculture. And the price trends are pointing further downwards.

The external value of the D-mark also wasn’t always as stable as people seem to fondly recall. There were dramatic fluctuations and considerable problems for the export sector. Between 1985 and 1995, the D-mark traded in a range between 3.5 marks per dollar and only 1.36 marks.

The corresponding euro fluctuation would have been 1.43 dollars and 0.60 dollars, whereas over the past three years the actual fluctuation has been between 1.18 dollars and 0.83 dollars.

Deutsche Bank chairman Rolf Breuer therefore notes that there is a degree of “hypocrisy at play” when people complain about the external weakness of the euro. He said that Germany, the world’s second biggest exporter, had clearly profited from the euro’s value vis-a- vis the dollar.

Without the common currency, the D-mark by itself would likely have gone through a lot of turbulence in the period after the September 11 terror attacks in the United States. In a Europe with many currencies, there probably would have been a lot of liquidation of stocks and money then going into federal bonds.

“The larger currency region is like a net which absorbs the effects of external shocks on the individual countries,” said Ernst Welteke, president of Germany’s Bundesbank, in summing up the first three years of the euro.

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