gravitating pull will grow, making it increasingly difficult for others to stay out of this new arrangement.

Even the existing eleven euro nations themselves constitute a big power, rivaling the economic might of the United States. Their combined GDP in 1997 was $1.6 trillion short of the United States' $8.1 trillion. But their share of international trade outside the euro area is 19 per cent, that is, 2 per cent higher than that of the United States. When the UK and other countries join the EMU, their combined share of world trade would be much larger than that of the United States.

The EU scores about as well on other economic criteria. While it has a surplus on external account, the US is a net international debtor — its debt exceeding $1 trillion and rising by 15 to 20 per cent every year. Though the US economy is booming today, while that of Germany's, the economic leader of the EU, is sluggish. Most economists believe there is no reason why the EU countries in general and Germany in particular cannot emulate the US in the next few years to come out of the current sluggish phase.

However, there are many who feel that a unified Europe will fail in the long run because of rivalries among its leading members, that is, Germany, France and the UK, as also because of growing regionalism within the EU member countries. Well, a contest for supremacy among these countries is unavoidable. But it may not necessarily lead to the break-up of the EU. This is because the institutional structures that the EU has evolved through the last several decades are, by and large, independent. For instance, the European Central Bank (ECB), which will be responsible for managing the single currency and the overall monetary policy of the EU, has been constituted as a totally independent body. The ECB will be free from all political control, influence or interference from any EU member country. In this respect, it will be the first central bank in the world to be run by totally professional managers who will not be accountable to any political masters. The same is true of other EU institutions, which makes it impossible for any one EU member to come to control or steer its policies and decisions to its sole benefit. What is most important to note is the fact that there is no provision in the EU charter for any member to exit, once it becomes a member. As a commentator has noted, EU membership is like a marriage made in heaven. There is no provision for divorce. .

Through the last three months, I have attended several lectures by EU leaders, senior officials and other authorities in different countries in Europe and read a whole lot of books and articles in numerous journals and popular dailies and magazines on the euro, Europe and its future. One thing is clear: that in the years to come, the euro will emerge as a major currency of the world, bringing about a major diversification of official and private portfolios, bank deposits and bonds. Many countries which today denominate their trade in dollars will shift to the euro, making it a leading global currency. Such a change of fortunes will have far-reaching consequences for Europe, for the US and for other countries as well.

The first and foremost effect will be on the US. As official and private reserves and investment portfolios shift from dollar to the euro and as an increasing volume of global trade comes to be denominated in euros, the role of the dollar will begin to shrink. This will reduce the ability of the US to finance its large external debts affecting a whole gamut of its domestic and international economic policies. Actually, the US is already feeling alerted by the arrival of the euro, which is clear from its attempts to build a dollar zone in Latin America. The first indication has come from Argentina which has been playing with the idea of dollarising its currency.

What all this means is that the next decade will witness a different type of rivalry between two new power blocs — the unified Europe with its own common currency and the US. The contest for global monetary supremacy is bound to eventually spread over to other areas — political, cultural and military. Once the euro emerges as a rival to the dollar, the US and the EU will both scramble for allies around the world, especially among the larger countries such as China, India, Indonesia and South Africa.

Unfortunately, there is not much awareness in India about the far-reaching changes taking place in Europe and their implications in terms of political, economical and social relationships not only within Europe but globally, too. It is hoped that this publication will focus the attention of our policy-makers, political and business leaders and thinking people in general on the emerging European phenomenon and the new challenges and opportunities it offers.