The EU Commission president, Mr Romano Prodi, will wish he never spoke to the British Conservative MEP, Mr Daniel Hannan. Not realising that Mr Hannan was taping the "off the record" briefing for use in a magazine article, Mr Prodi appeared to recognise the possibility that a state could withdraw from the euro. It is, of course, regrettable, that Mr Prodi should find himself having to explain remarks which he believed were made in the course of a private conversation. But his comment that a member state might leave the euro in "extreme circumstances" - as "Texas might leave the dollar" is an extraordinary statement for one of Europe's senior officials to make. There is no provision in the Maastricht Treaty for anyone to leave the euro, as Mr Prodi pointed out. Indeed the treaty clearly refers to the "irrevocable" locking of exchange rates. And Mr Prodi's spokesman, engaged in a damage limitation exercise yesterday, said that the president was talking in purely hypothetical terms when he referred to the possibility of a state withdrawing and that he did not believe there were any conceivable circumstance in which this was likely to happen. One one level, Mr Prodi's comments are another example of the difficulties which Europe's policymakers are having in managing their public comments on the euro. This in turn has affected its performance on the markets - although more fundamental economic factors have played a greater role - and damaged its credibility with the public.
Europe's senior politicians and central bankers have responded to the currency's ills with a mixture of disbelief and often ill thought-out comments. They need to show a surer touch in the years ahead. And, of course, they need to work on developing the underlying productivity and performance of their economies, which will be the real foundation of a strong euro.
Are Mr Prodi's comments also a recognition that Europe's policymakers, at the highest level, do not believe that the fixing of exchange rates is necessarily irrevocable? Probably not. Despite its difficult early months, the euro remains a massive project in which the EU member states have invested an immense amount of political capital. The complications which a break-up would cause are almost inconceivable. But his remarks do highlight another central issue. While the 11 euro member states do constitute a single currency area, they are far from integrated economically or politically. This is the conundrum which Europe's policymakers must deal with, if the currency is to be a success.