Majority of EC nations now committed to monetary union

December 10, 1991|By Richard O'Mara | Richard O'Mara,Sun Staff Correspondent

MAASTRICHT,NETHERLANDS — MAASTRICHT, Netherlands -- The word "irreversible" has come to dominate the European Community summit here as a majority of the 12 member-states appear determined to launch the EC into a new phase of its life, one from which there can be no turning back.

Last night the 12 tentatively agreed to a formula that would fix the currency rates of the community members possibly by 1996, if the economies of at least seven countries meet stiff criteria by then.

If not, a decision would be made automatically in 1999 to go to monetary union. Those countries not ready would be brought in later. The adoption of a single currency would follow shortly afterward.

Not everybody is eager to greet the brave new world of homogenized money. Britain and Denmark have been resisting the drive toward monetary union, a drive which seemed to have gained notable force the first day of the conference.

All except these two are prepared to commit to it now.

Monetary union, the adoption of a single currency around the end of the decade and deeper political cohesion are the goals of this summit. The Dutch government, which occupies the EC presidency this year, is host.

Events in the East distracted the EC leaders during their first day of deliberations. Britain and France took time out to discuss the decision by Russia, Ukraine and Byelarus to form a commonwealth outside the Soviet Union. Further discussions were expected last night at the leaders' dinner.

British Foreign Minister Douglas Hurd told the BBC about his concern about how nuclear weapons in Russia and Ukraine will be controlled. He said he had been in touch with U.S. Secretary of State James A. Baker III. To have a safe world, he said, "We do need certain undertakings as to how the people holding those weapons behave."

Describing the early talks on monetary union, Dutch Finance Minister Wim Kok said there was "a general acceptance of the irreversibility" of the process. Agreement at Maastricht, he said, "means acceptance of a single currency.'

An Italian delegate also reported the frequent use of the word "irreversibility" in the talks by the EC ministers. And a Spanish delegate said the move toward a single currency had an "ineluctable" quality to it.

Britain remains averse to much that threatens to unfold at this little riverine town the Dutch have chosen as the point of departure for the march into the future, but seemed to be softening. Last night a senior British official relayed a comment by Prime Minister John Major to the effect that "agreement [in Maastricht] is desirable."

The word "federal" was still in the draft treaty when talks began yesterday, but Mr. Major managed to get it expunged in the afternoon. He had threatened not to sign if the word remained. As one British analyst explained, "federal" is the opposite of sovereign, a concept of psychological importance to the English.

Dutch Foreign Minister Hans van den Broek reiterated that Britain would pay a price in terms of concessions in other areas for the deletion of the word.

Mr. Major also dislikes the term "opt-out clause," which is what everybody uses to describe a protocol being drawn up to allow Britain and possibly Denmark to make their final decision to move to a single currency later on, not now with the rest.

Britain wants Parliament to make the decision when the time comes to give up the beloved pound sterling and embrace the dreaded ECU (European Currency Unit). Denmark will hold a referendum.

As for "irreversibility," the British call it "coercion." However, the British, fairly sure they will get their "opt out," went along with the schedule for arriving to a single currency for the others, but "with reservations."

Though continental Europeans are more keen on monetary union than Britain, they are not the only ones with apprehensions. The Germans have begun developing second thoughts themselves. The Germans are convinced that they have more to lose than anybody else if it goes wrong. They have, in the deutsche mark, the strongest currency in the EC, and are only now becoming aware they may be putting it at risk.

But their response to these jitters is not to back away from the single-currency goal but to demand of all the others more rigorous monetary policies and unflagging anti-inflationary measures so that when the time comes to go to the ECU, their economies will be ready.

"The German economy," said a member of the Federal Republic's delegation, "is the fruit of a stable currency and little inflation. We would not like to have our hard currency replaced by a weak one."

He said a lot of Germans these days "ask themselves why, having lived for 40 years with the deutsche mark, they have to give it up for something that might not be as good."

Chancellor Helmut Kohl has said that he would not sign a monetary union treaty that did not guarantee a single currency that is, before it is anything else, as hard as the deutsche mark. The German message is clear: The ECU will be hard, or there will be no ECU.

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