Maligned Euro Is Now Winning Friends, Influencing Danes

At the Euro's birth back in 1998, doomsaying economists were quick to forecast its demise. They predicted a crisis would test Europe's single currency, and that rifts would emerge as member states fought to regain control over their own economies and escape the European Central Bank's authority.

But as the latest crisis deepens, the euro is looking ever more attractive to EU countries that opted out of the 15-nation euro zone. In Denmark, where interest rates have soared as the central bank seeks to protect the krone, an early referendum on the euro looks likely, and polls indicate rising support in Sweden. Meanwhile, new member states in Eastern Europe are gearing up to meet the strict conditions for adopting the currency. Iceland—outside the EU altogether—is also looking for a chance at admission.

Even among the Brits—those diehard stay-outs—there are hints of slackening euro hostility. Last week, European Commission president José Manuel Barroso told an interviewer that "people who matter in Britain" were rethinking their allegiance to the pound. While most experts agree that an application won't come soon—Prime Minister Gordon Brown is implacably opposed—the currency does have friends in high places. The euro's keenest cheerleader in British politics, Peter Mandelson, is now back in the government.

The continentwide change of heart is no mystery. Smaller nations outside the euro zone have found themselves exposed to speculative attacks on their currencies, and weaker economies like Hungary's have seen their currencies plunge— bad news for the many voters tempted to take out mortgages in euros. For good measure, the ECB has won favor with eurozone members by sidelining the fight against inflation. It's been quick to cut interest rates and pump cash into the money markets to help out the liquidity-starved banks. In happy times, voters tend to see the EU's imperfections, says Hugo Brady of the London-based Centre for European Reform. But in a crisis, "it's welcome if it can promise some kind of stability."

A key test of sentiment in Ireland may follow next year. Fellow EU leaders have been nudging Dublin toward holding a second referendum on the Lisbon Treaty, a modified version of the junked EU constitution that needs Irish approval before taking effect. Its boosters see signs of a new realism that could persuade voters to reverse their "no" vote of earlier this year. "The economic crisis has brought into unusually sharp contrast how fundamental our EU and eurozone membership has been to Ireland's economic success," says Dick Roche, Ireland's minister for European affairs. Bad times for nation-states are good times for the Union.