MercoPress. South Atlantic News Agency

Euro caught up in EU crisis

The Constitution was meant to make the EU work more smoothly after its enlargement to 25 states from 15 last year and had nothing to do with the euro set up by 12 members in 1999.

But the rejection of the treaty by two EU founding members has raised questions about how committed European countries are to working together to make the single currency a success, and opened the door for Eurosceptics to question its existence.

Italy's Maroni told the Repubblica daily the euro "has proved inadequate in the face of the economic slowdown, the loss of competitiveness and the job crisis."

The euro, which slipped to eight-month lows against the dollar this week, fell further on Maroni's comments but then recovered to trade at $1.2288, little changed on the day.

Though Maroni's comments did not represent the government as a whole, analysts said they expected more such comments in Italy and elsewhere in the days and weeks ahead.

Germany's chief government spokesman, Bela Anda, echoed others in the European leadership when he said that Germany was not worried about the state of monetary union and that "the euro has proven itself".

But many Europeans blame the euro for an economic slowdown and high unemployment, and ? if the referendums in France and the Netherlands are representative ? no longer trust their governments to decide what is good for them.

Both the French and Dutch governments had campaigned for a "Yes" vote.

The treaty on the EU constitution has been on life support all week, as Europe's leaders urged countries to go ahead with ratification despite the French and Dutch "No" votes.

All member states must ratify it for it to come into effect.

But even the commitment to ratification was unravelling yesterday with Ireland, Portugal and Britain hinting they might call off plans to hold their own referendums.

In Denmark, two new polls showed the number of Danes planning to vote "No" in a September referendum had overtaken the "Yes" camp. Luxembourg's Juncker said he would resign if his country rejected the treaty in a vote due in July.

The crisis triggered by the referendums coincides with efforts to agree a long-term EU budget, always a sensitive issue as member states jealously count how much money they are forced to contribute relative to the others. (Bue Herald)