Winter 2000

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Letter from the Publisher

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The first decade of the twenty-first century presents an unprecedented challenge to the relationship between Europe and the United States. The post-World War II era, in which the two continents were bound by feelings of solidarity dating back to a common war-fighting experience, is over. For the new generation of leaders on both sides, it is necessary to reassess the rational grounds on which to base transatlantic cooperation. The Cold War, which froze the parties in preestablished positions, has also passed. More than ever, our leaders' initiatives and mistakes make dramatic differences. The road map to our future is not obvious.

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Prodi on Europe

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President of the European Commission We are entering an era of genuinely exciting change in Europe and, indeed, in the European Commission. It is a new Commission and it is being redesigned for the 21st century. Many challenges lie ahead, not least the imminent enlargement of the European Union. The EU is set to expand from 15 to 25 or even 30 Member States over the next two to three decades. To people outside Europe, the scale and significance of this challenge is not immediately apparent. To many minds, the EU is just another free trade area, like Mercosur, or an intergovernmental organization like the OECD. If a few more countries join it, so what? The answer is that we are NOT just a free trade area or an intergovernmental organization. We are a group of sovereign states molded into a Union which is sui generis, and every time another country accedes, it creates a new "State of the Union," with huge implications on both sides.

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The Revolution in Europe's Stock Markets: A View from Paris

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Seen from the United States, the European marketplace always seemed crowded: So many exchanges in a region which is roughly the size of the United States! But new technology in Europe and the United States is enhancing competition, and should eventually lead to a consolidation of the European stock exchanges. I think that this consolidation will happen, but maybe in unexpected ways.

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The Euro as an International Currency

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One year after its launch in January 1999, the euro has already established itself as the second most widely used currency in the world economy, behind the U.S. dollar and ahead of the Japanese yen.

According to economic theory, a currency fulfills three basic functions: it is a store of value, a medium of exchange and a unit of account. As a store of value, the use of the euro as an investment and financing currency is rapidly increasing, as investors understand the advisability of diversifying their portfolio currencies among those which are more stable and more internationally used. The euro is developing at a slower pace as a medium of exchange or payment currency in the international exchange of goods and services. This can easily be explained by the predominance of the dollar. The use of the euro as a unit of account is linked to its use as a store of value and a medium of exchange.

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US Leadership Is Still Essential - for Europe Too

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We know that the simple, old, East-West divide is gone, and with it the kinds of clear military threats that we spent 40 years deterring. We know that there are new challenges and risks and we can say in general terms what they are - regional instability, often related to ethnic conflict, proliferation of weapons of mass destruction, and terrorism, to name a few. But by their very nature, these new risks are harder to pin down and address than a conventional military threat to an Ally's territory.

Nonetheless, we know that it is NATO's job to deal with these risks and challenges, and so we are working hard to make sure that NATO has the right stuff for the next 50 years, just as it did for the past.

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