The vice-president of the European Investment Bank, Mr Massimo Ponzellini, said at the weekend the European Union's planned enlargement towards central and eastern Europe could further damage the struggling euro.

"The euro will weaken further when these countries join [the EU]," Mr Ponzellini said at a conference on eastern Europe in Bologna.

"In the best of the hypotheses, the [euro] will remain as it is," after the EU takes on board the new members, he said.

EU leaders are due to meet in Nice in December to agree on reforms to ready the Union for expansion by 2003.

The Czech Republic, Estonia, Hungary, Slovenia, Cyprus and Poland are front-runners for membership. Latvia, Lithuania, Slovakia, Malta, Bulgaria and Romania joined membership talks later.

Some of these countries are also looking at joining the 11nation euro zone as soon as possible after entering the EU.

"As an economic bloc, they are not big enough to generate a request for euros on the market and thereby strengthen the currency. And the inflationary impact of these countries when they will enter Europe will not help the euro," Mr Ponzellini said.

Among other factors, he blamed the euro's weakness - the single currency has lost 30 per cent of its value against the dollar since its launch 22 months ago - on an economic growth gap between the United States and Europe and political disunity within the Union.

"For one of these elements, the growth gap [with the United States], things have improved a bit and the euro has risen, but it is only a marginal improvement," he said.

Meanwhile, two senior academics who once tried to stop Germany joining Europe's single currency are preparing a fresh constitutional challenge to block the launch of euro cash.

Mr Wilhelm Hankel, the Frankfurt university economics professor who co-sponsored the unsuccessful challenge in 1998 to delay the monetary union, told Bild am Sonntag newspaper the renewed challenge would argue the euro was not a stable currency.

"I am preparing a constitutional complaint that should stop the euro," he said. Mr Hankel, who is preparing the challenge with another prominent Euro-sceptic, law professor Mr Karl Albrecht Schachtschneider, said a 1993 German constitutional court ruling provided a legal basis for the complaint.

"The constitutional court made it then quite clear: the euro must be stable," Mr Hankel said.

The court ruled in 1993 that the 1991 Maastricht treaty on European monetary union did conform to the German constitution but it also said the union had to be based on a strict interpretation of the treaty.

Mr Hankel said the euro was failing to meet the ECB's own criterion for stability defined as annual consumer price inflation of no more than 2 per cent.

"Now we have [euro zone] inflation already at 2.8 per cent, so there cannot be any talk about stability," Mr Hankel said.

The ECB, however, has always stressed that its mandate was to keep prices stable over the medium term and temporary rises such as the recent oil-induced jump could not be ruled out.

The 1998 complaint lodged by Mr Hankel, Mr Schachtschneider and two other academics sought to delay the euro launch on the grounds that European countries would endanger the currency by fudging the economic criteria for monetary union membership.

Few economists believe the monetary union could be undone at a time when preparations for the introduction of euro notes and coins in January 2002 have already entered a decisive stage.

But the Danish No to the euro in last month's referendum and public opinion polls in several euro area countries show that the euro's 30 per cent decline since its January 1999 launch has soured sentiment towards the single currency.

Iraq will switch to the euro for its UN-authorised oil exports from November 1st, its Oil Minister, Mr Amer al-Rashid, said yesterday.