It is a shiny new coin; a one-euro piece.

Quick as flash you retort: "And what is a euro, when it's at home?"

The euro is the new unit of European currency due to be adopted on 1 January 1999 in a number of Western European countries.

Germany, France, Italy and several other countries are c ommitted to it. Initially, it will exist in parallel with the established currencies, but the goal is for the euro to eventually replace national currencies in all of Europe. The British will adopt the euro later, if it is a success. If it isn't a success, the British will not adopt it and then shout across the English Channel: "We told you so!"

A successful European currency replacing the deutschmark, franc, lire and, perhaps, the pound sterling, would have a profound effect on binding European nation states into something more closely resembling a federal union--a European power bloc to rival the U.S.

But a common currency requires a uniform economic policy and a surrendering of national sovereignty for which many people in Europe are not ready. The cultural and economic differences between the participants could produce social tensions that destroy the euro currency and leave individual nations' economies in ruins.

Earnest Reader (E.R.): "Thanks for the current affairs lecture, but does i t mean anything in particular for the electronics industry or electronics technology?"

You remember Esprit and Medea?

E.R: "Uh . . . not really."

These are the two main ways Europe supports microelectronics R&D. They are programs of pre-competitive collaborative research organized within the European Union (EU), in the case of Esprit, and across a wider set of European countries, in the case of Medea.

The connection is that preparations for the euro's adoption are hurting national governments' willingness to pay for Medea projects. Medea is a four-year program of work budgeted at about $2.25 billion, half of which comes from national-government support. The problem is that, in its first two years of existence--1997 and 1998--the level of support is running at about half the budget predictions. Some governments, while supporting Medea and its budget in principle, are, in effect, saying they can't afford to foot the bill.

And this is where the euro comes in: governments that want to introduce the euro have pledged to reduce public spending as a way to help bring their countries' economies in line prior to the euro's adoption.

Next up for discussion is Europe's proposed $18-billion "Fifth Framework".

E.R.: "Fifth Framework?"

That's the grand-sounding name for the next four-year plan for research spending within the EU. It's to last from 1998 to 2002 and provide support to all branches of scientific and industrial research. Information technology is ear-marked to get just under a quarter of the budget, but that would cover software, telecommunications and electronics.

But the Fifth Framework probably won't get $18 billion. At a recent meeting, government ministers from the 15 member states of the EU approved the broad sweep of the plan, but postponed decisions on financial support till later.

E.R: "More scrimping to pay for the introduction of the euro is in the cards, then?"

It's not just that. The bureaucrats who administer the research programs are having a hard time showing the governments who pay for them what benefits result. Somehow, high-quality scientific research in the past has not been seen to have produced winning products or companies, although it is also argued that it has prevented such companies as Siemens, Philips and SGS-Thomson from going under.

E.R.: "So the adoption of the euro means less support and less development of microelectronics in Europe, which will therefore become less relevant?"

Not necessarily, Earnest Reader. The companies of Europe, having learned how to work together under the Fourth Framework, will probably do the collaborative research anyway. But that research, conducted with or without taxpayers help, will be accounted for in . . . yep, euros.

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