A Single Currency but Little Solidarity

On the streets of this town, as a clarinet player strolls through falling leaves, an au revoir is as likely to be heard as an auf Wiedersehen. Beer and cognac flow in harmony, and the bratwurst doesn’t bow to the foie gras.

Saarlouis -- rising from the coal fields on the German-French border -- is a miniature of the European Union’s plan for the continent. In fits and starts, and often amid clamorous protest, the union is attempting to integrate the countries of Europe and create an economic market to rival the U.S. while diminishing the nationalism that for centuries erupted in war and strife.

The euro, Europe’s single currency, is a central piece in this grand scheme. Shared by 12 countries since the notes and coins were introduced in January 2002, the euro has powered some European stocks and spurred cross-border corporate deals.

For all that, the euro is hardly popular. It’s little more than a convenience, some say, a symbol of unity at a time when the continent is unwilling to rally around other banners.

The atmosphere of European togetherness is a sort of big family wrestling match bristling with politics, egos and mixed results.

Britain, Denmark and Sweden, which belong to the 15-member EU, are refusing to join the European Monetary Union.

The troubled economies of France and Germany -- keys to the union’s success -- are worrying industries across the continent.

Many capitals are slow to make the political and social changes necessary to connect the shopkeeper in Lisbon to the pretzel maker in Munich.

Recent acrimony in Brussels threatened the draft of a European constitution when large and small nations bickered over power sharing. Europe remains split over foreign policy, immigration, military pacts and globalization.

Underlying the persistent questions of unity are the more profound questions of identity. What exactly is a European? “Europeans are missing a common language,” said Carl Jakob, manager of Pieper’s department store in Saarlouis. “Our old cultures will not grow easily together. If you look to America, you see Russian, Chinese and Italian neighborhoods. But everyone identifies themselves as Americans. This was a new thing for the world. We don’t have that new thing in Europe.”

To gauge Europe’s angst over its identity, one need only inquire about the euro.

‘It’s Only Irritated Us’

“The worst idea of all time,” said Susanne Jacobi, who runs a wine shop in Saarlouis, a town name that begins with a German accent and ends with a giddy nasal French twist. “It was supposed to unify us, but it’s only irritated us.”

The euro has removed the burdens of foreign exchange rates for most Europeans, but it has not ignited widespread economic growth, and its high value against the dollar (one euro is worth $1.18) may hurt exports while pushing up European prices.

“We know it’s nonsense to maintain such a high euro,” said Marc Touati, an analyst at Natexis Banques Populaires in France. “It’s a lack of economic realism. We are unable to control the euro value and we have a high euro when we need a low one.”

Europeans concede that they do enjoy the convenience of a single currency.

There is also a sense that the euro bridges lingering World War II divides and counterbalances what many view as the dangerous policies of the U.S. Yet this new money, still crisp and shiny, has failed to ignite European solidarity.

“Now we don’t have to exchange money when traveling in Europe,” said Beatriz Diez Muino, an art teacher in Madrid. “But I don’t feel more European or less Spanish because of the euro. The identity of the human being is deeper than that.”

The convenience notwithstanding, consumers complain that -- despite low overall inflation -- the shift to the euro encouraged merchants to play tricks with the math and increase prices for Europe’s 375 million people. In interviews across the continent, there is a feeling that somehow the worker and the pensioner have been cheated in a sleight of hand concocted by politicians and corporations.

“If you go to the grocery or vegetable shop, it’s like going to the jewelers,” said Gloria Molinaro, owner of a dry cleaner in Rome, where consumer groups have staged shopping strikes to protest the euro and an inflation rate that climbed to 2.8% for August. “The price increases have been ridiculous.... We should go back to the Italian lira because with the euro everyone is trying to rip us off.”

Italian consumer organization Intesa claims the euro has brought “a wild and unchecked increase in prices which has drastically dented” purchasing power.

Tobacco and alcohol prices, for example, are up 7.3%. A glance at an Italian restaurant guide shows that a dinner in Villa Valentina outside Rome in 2001 cost 45,000 lire, or the equivalent of 23 euros. When the currency officially changed to the euro a year later, the price of that dinner nearly doubled to 40 euros.

Little Faith in the Euro

A recent survey published in the weekly Panorama found that 57% of Italians had no or little faith in the euro. Forty-six percent of the French believe the euro has hurt the economy, according to the nation’s Ipsos polling agency.

The same organization found that the new currency has not vanquished old habits: 57% of French still calculate prices in francs before converting to euros; 64% of Germans tabulate in marks.

“A 100 German mark bill used to last three nights of dinners out,” said Jacobi standing amid bottles of Merlots and Rieslings in her Saarlouis wine shop. “The equivalent in euros lasts one night. My business is down 50%. People are worried. My customers used to come in here and sip wine and tell jokes. These days they talk politics and gripe about the euro.”

The euro, discussed for decades, gathered momentum following the Cold War. European leaders, notably former German Chancellor Helmut Kohl, re-invigorated the 1950s vision of a unified continent anchored by Germany and France and stitched together with a single currency.

But not every country is buying into the vision.

The British are loath to give up the pound sterling and the Danes turn a chilly Nordic shoulder to the idea of letting go of the krone.

Last month, Swedes voted against the euro by 56% to 42%. The defeat highlighted Swedish suspicions that the euro would undermine national sovereignty and endanger deeply rooted social programs. The Swedes were even less convinced of the value of membership in the euro club when they looked to the troubled economies of Germany and France.

Both nations violate the European Union’s 3% limit on annual budget deficits because they have not been willing to sacrifice domestic agendas for euro compliance. France and Germany -- each with annual economic growths of less than 1% -- are only beginning to change their social, political and tax structures. Reform pressure will build, according to economists, when the poorer nations of Eastern Europe join the club later this decade.

“That’s the problem with the euro,” said Joachim Starbatty, an economics professor at Tuebingen University in Germany. “There is no single power to force members to follow the rules. Nations are not postponing their national interests for the collective good of the euro.... This will be a big problem for the future.”

For some, though, the euro is conjuring at least a veneer of oneness.

“The single currency is actually doing the grunt work in forging a sense of European identity that still can’t be achieved through a common language, or through a shared military and common foreign policy,” said Paul Isbell, a senior international economic analyst for the Elcano Royal Institute in Spain.

He added that the euro’s strict economic requirements have lifted the statures of once financially dubious nations, especially those along the Mediterranean. The single currency, he said, has helped Spain in “clearing its reputation as a spendthrift, inflation-ridden, weak-currency [nation]. The influence that Spain has gained would have been unthinkable without its entrance” into the euro.

‘Flags and Money’

“When you flip a [euro] coin over to see the seal from Germany, Italy or France, you realize that you’re looking at symbols of a shared culture,” said Carmen Brana, a sociologist in Madrid. “Flags and money are key elements to our identity. None of us feel less Spanish, but with the euro stronger than the dollar, we are proud of being European.... The world needs a counterbalance [to America] and a unified Europe can step up to the table.”

Back in Saarlouis, Christine Hein doubts the unifying force of the euro. “You can’t unify people with a currency,” she said, sitting in the shade of maple trees downtown. “There are cultures and histories that can’t be ignored. You can’t make everything in Europe look the same.”

Saarlouis is accustomed to changing tides of language and culture. This region of dumplings and coal seams has long been battled over. French King Louis XIV -- the town’s namesake -- built a fortress here in the 17th century and flooded the Saar River to keep his enemies away. Germany lost and regained the Saar territory through both world wars, and was finally granted full control of the region in 1957.

Since then, the French and the Germans have co-mingled in Saarlouis, which sits about six miles from the French border and 16 miles from Luxembourg. Before the introduction of the euro, the pockets of people here jangled with coins from three countries. Crossing borders was a hassle; customs could be arduous.

The euro and the European Union’s loosening of border restrictions spurred a kind of internationalization -- 25% of the workers in the city’s steel mill, chocolate plant and Ford factory are French.

Germans buy their gas in France because it’s cheaper. The French buy clothes in Saarlouis. Nationalities don’t seem to matter, but, despite the mix of languages and cobbled phrases, they do.

“You need a large vision for a unified Europe,” said Saarlouis Mayor Hans-Joachim Fontaine. “And you need people who must fit that vision to their lives. Maybe one day our younger generations will not know borders.”

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Contributing to this report were Times staff writers Sonya Yee in Vienna, Maria de Cristofaro in Rome and Achrene Sicakyuz in Paris and special correspondents William Wallace in London and Cristina Mateo-Yanguas in Madrid.