LONDON -- The jitters aroused in Europe by fear the Maastricht treaty might be rejected in France in a referendum Sunday have been playing havoc in currency markets across the continent.
But the pound, because it is one of the most widely traded currencies, has been a special target of money speculators. Prime Minister John Major and his finance minister, Norman Lamont, had pledged to defend it and stave off devaluation at all costs, despite assertions from some financial experts that the currency was overvalued.
Yesterday they pulled out all the stops to do so, and failed.
Now the pound sterling is floating, as it hasn't since the 1980s, and devaluation is thought to be likely. Mr. Major faces political humiliation, possibly ruin.
And Maastricht, the treaty designed to bring Europe closer together politically and economically, is proving to to be the most destabilizing and divisive element to hit the European Community in its 35-year history.
Apprehensions have been accumulating in virtually every European country in the run-up to the French referendum. Many who favor the treaty believe something like a political and economic earthquake will occur if the French vote no. That's the favored metaphor here, that and "Euro-doom."
With yesterday's events, the treaty supporters' anxieties appeared to have turned into self-fulfilling prophecies even before the French vote.
Peter Luff, who heads the European Movement, a pro-treaty lobby embracing all political parties in Britain, described the French referendum as "potentially the most disastrous event in the recent history of the Community."
Should the treaty be defeated, he predicted, stocks would plummet and interest rates soar; the continent would sink even further into stagnation, and the European Monetary System would unravel.
That is to say, Maastricht's major goal of monetary union with a single currency would go a-glimmering. The main purpose of the European Community would remain unfulfilled.
But there are expectations that are darker still than those for economic collapse in Europe. Mr. Luff and others believe destructive forces of nationalism would be encouraged by the treaty's defeat, that somehow the incipient neo-Nazi movement in eastern Germany would benefit from Maastricht's rejection as would the neo-fascists of France and elsewhere on the continent. Some are even emerging in Britain.
In this scenario, the principal champions of European integration -- German Chancellor Helmut Kohl and French President Francois Mitterrand -- would soon be turned out and the policies of 35 years, designed to prevent the kind of nationalistic divisiveness that led to two world wars, would be repudiated.
Jacques Attali, the president of the European Bank for Reconstruction and Development -- the agency set up to funnel development funds to Eastern Europe -- said: "Throughout the land mass of Europe the ingredients are all in place for many Yugoslavias to re-create themselves."
And what about the treaty that was partly the catalyst for yesterday's events? Will it actually be defeated in France? The final polls were taken last week and none can be published in France in the week before an election. The final ones indicated the yes vote would squeak through. But an observer in Paris said: "It will be really close. It could be no. It really could be. If it is, all hell will break loose in France."
Peripheral polls published last week, off the question of whether one supported the treaty, gave reason for more positive expectations. Even as just under half the electorate opposed the treaty itself, large majorities supported its aims -- such as monetary union, and closer cooperation between France and its EC partners.
This does not present a contradiction so much as evidence that many French people are considering voting against the Maastricht treaty as a way of expressing their opposition to other developments and policies -- and the people who favor them.
Many French people want to repudiate President Mitterrand, who is unpopular and favors the treaty. Others will vote no to express their distaste for Arab immigration and for Arabs in general, even those born in France. Still others will vote no to protest rising unemployment, or the German economic dominance of Europe, or whatever social or economic problem grieves them.
Then there are those who are cynically using the widespread uncertainty for their own political advantage. Thus, the Communist Party and the neo-fascist National Front are allied against the treaty.
So fear is what the French referendum is all about. That fear was evident in London yesterday. There is fear on both sides of the question, fear about many things that have nothing to do with the treaty.
That, of course, is not to say that everybody is afraid.