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Europes determination to stay with the common currency will play

an important role in how the Euro crisis unfolds in 2013.

Europe's common currency has left the continent's southern countries depressed, indebted and

struggling to compete internationally. But even in the tumult of Italy's national election

campaign this month, the question of euro membership isn't being seriously debated. In Italy,

as in Spain, Portugal and other crisis-hit countries, popular support for the euro remains strong.

Across Europe's southern rim, people recoil at the idea of returning to national currencies,

fearing such a step would revive inflation, remove checks on corruption and derail national

ambitions to be part of Europe's inner circle in fact nothing further from the truth. Such fears

outweigh the bleak growth outlook that has prompted many U.S. and U.K. economists to

predict a split of the currency.

Only 43% of Italians say leaving the euro would help the economy, compared with 54% who

believe it would be bad or disastrous, according to a recent survey by Milan-based opinion-

research group Ispo. Strong majorities in Spain, Portugal, Greece and Ireland also reject an exit

from the euro, recent polls show.Europeans' determination to stay in the common currency will play an important role in how

the euro crisis unfolds this year. As Europe's financial-market panic subsides, the euro's survival

relies on countries enduring a painful, lingering economic retrenchment.

Italy's center-left party, which is leading in polls, promise to maintain the austerity measures

required to defend the country's place in Europe. Even conservative ex-premier Silvio

Berlusconi has toned down his anti-euro rhetoric ahead of the Feb. 24-25 national election.

"The euro has forced companies to show what they're made of, to be competitive without the

helping hand of devaluation," said Mr. Belusconi recently "Italy without the euro would be far

worse off."

Popular will to stay with the Euro doesn't guarantee that no country will leave.

Political paralysis or bank runs could, in theory, force a country to print its own currency to

avoid financial collapse. Nor does popular support make the euro a success. Europe's plight has

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resurrected old warnings that a single currency spanning disparate national economies can lead

to crises, as well as make it harder for countries to escape trouble.

Experience suggests recovery from a financial crisis can be easier if a country devalues its

currency, making its goods cheaper abroad. The only option for struggling euro-zone countries,

by contrast, is to push down wages and prices relative to the euro's core economies. The

process will likely add years of hurt to regions of Europe already five years into a downturn.

Many southern Europeans are disappointed with the European Union's institutions and leaders,

and bitter about the effects of austerity medicine. But the euro has escaped the backlash.

"Europeans who now use the euro have no desire to abandon it and return to their former

currency," according to a survey by the Pew Research Center. In Spain and Portugal, 70% or

more of people want to stick with the euro, recent polls found.

Even in Greece, where the economy and employment have shrunk by more than 20%, just one

in five people wants the drachma back. Even supporters of radical anti-austerity party Syriza

mostly oppose leaving the euro.

Antipathy to the euro has risen strongly in European countries that didn't join it. The currency

crisis has strengthened the conviction of Britons, Swedes and Danes that they were right to

keep their own currencies, the EU's regular Euro-barometer surveys show.

The recent history of countries in the euro-zone periphery helps explain their

resilient support for the European project.

Spain, Portugal and Greece all escaped dictatorship in the 1970s. Joining Europe's economy and

institutions helped cement democracy and raise living standards. European ties helped themovercome decades of backwardness and isolation. Ireland's democracy is older, but European

largess is strongly associated there, too, with economic transformation.

The crisis has dealt a blow to Europe's rosy image in such countries as Portugal, but "the

cultural association of Europe with modernization is still there," said Antonio Costa Pinto, a

political scientist at the University of Lisbon.

Spain, with its regional divisions and bitter legacy of the Franco dictatorship, "has constructed

its democratic, contemporary identity on the idea of Europe," leaving the country with "no Plan

B," said a Spanish historian at Madrid's Complutense University during a published interview.

In all of the crisis-hit countries, distrust of domestic politicians and government bureaucracies is

a potent reason why few want to leave the euro. Most people believe their national leaders,

acting without the yoke of the euro, would make an even bigger mess of national economies.

Regular corruption scandals, such as the slush-fund allegations currently shaking Spain's ruling

party, have reinforced popular suspicion.

From the other side of the Atlantic Ocean we have the following statement : "Returning to the

drachma, lira or peseta would mean giving economic power to the most discredited group of

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all," writes Jacob Funk Kirkegaard, a scholar at the Peterson Institute for International

Economics in Washington.

Date: 2/21/2013

Mircea Halaciuga, Esq.

004.072.458.1078

www.SIPG.ro

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