Without the euro, would Europe have turned to war?

For the fathers of the euro, the end of the Cold War in 1990 was a time for worry as well as celebration. As they looked to the future, they were also obsessed with the continent’s bloody past. Would a new Europe, and especially a reunified Germany, reawaken old nationalist sentiments and lead again to the danger of war?

Germany’s Helmut Kohl and France’s Francois Mitterrand — and just about every European leader since — saw a common currency as essentially a political project, meant to cement European unity and remove that danger. For them, a world without the euro would have been a world increasingly threatened by conflict and perhaps even war.

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Because of these fears, the euro project was rushed through without key agreement on the common political institutions that would have turned Europe into a truly unified economic zone. As a result, each country follows its own economic policy; Greece spends, while Germany saves. And markets have been quick to focus on the weakest links, threatening the entire euro by nearly driving countries such as Greece and Portugal to bankruptcy.

War would not have come to Europe, with or without the euro. A prediction made by Harvard economist Martin Feldstein in 1997 seems closer to reality. He argued that the introduction of the euro would lead to major friction within the European Union, because the problems in maintaining a common currency among so many countries would create confrontations and a rebirth of nationalism.

Feldstein was right. The current euro crisis has frayed nerves so much that Europeans have become more aggressive and even nationalistic again.

The polite tone cultivated for decades by E.U. partners has disintegrated into a tirade of insults. Germans have called the Greeks lazy, corrupt and just plain stupid. The news media in Germany gleefully point out Greek billionaires who pay no taxes, workers who retire at 50and harbors filled with the yachts of the idle rich. German politicians have suggested that Greece sell some islands to repay its debt. In return, Greeks have pulled out the Nazi card, claiming that the Germans owe them billions in wartime reparations.

The other fear in 1990 was that, without the euro, a reunified Germany would again dominate the continent. If Germany gave up its currency, France would support its reunification; the euro would help keep Berlin tied to Europe. German Chancellor Angela Merkel never tires of repeating this mantra — “If the euro fails, the entire European project will be at stake” — when she calls for another bailout of Greece or Portugal or whoever else is on the brink.

But in the past 20 years, the opposite has happened. The Germans reformed their economy. Today, instead of being controlled by the French, they are acting independently as they call the shots in an E.U. of 500 million people.

Without the euro, Germany would still be Europe’s most powerful country, but it would not have the multiplier of a common currency. Using the euro was the equivalent of Americans maxing out their credit cards. Being able to borrow at low German rates helped create real estate bubbles in Spain and Ireland and sent the Greeks and Portuguese on a spending spree.