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Europe: EU On Course For Monetary Union, But Not For Jobs

  • Joel Blocker



Prague, 19 November 1997 (RFE/RL) - At meetings at the European Union's headquarters in Brussels earlier this week, finance ministers of its 15 member states finally set a definitive date -- January 1, 2002 -- for the introduction of the notes and coins of the bloc's coming single currency.

Six months later (June 2002), the ministers decreed, the complete conversion and exchange of national currencies for the common money, the euro, will be completed. As the centerpiece of the EU's Economic and Monetary Union (EMU), the euro was already due to be launched as its only accounting currency three years earlier (Jan. 1, 1999).

The EU is due to decide at a special summit early next Spring, probably May 1 and 2, which members will be included in the formal launching of EMU in less than 14 months' time. The decision will be based on member states' economic performances t-h-i-s year, particularly in meeting the strict so-called convergence criteria for EMU --notably, a limit on budget deficits of three percent of domestic product. The criteria were set in the 1992 Maastricht Treaty that transformed the former European Community into a Union.

With some glaring recent instances of what is ironically called "creative" accounting in national governments' book-keeping systems, 11 members are now expected to be in the first wave of EMU members. Britain, Denmark and Sweden all say they do not want to join EMU immediately. Greece, the most economically backward of the 15, is considered unlikely to meet Maastricht standards soon.

But the final decision on EMU dates was just about the only important agreement reached by either the finance ministers or their agricultural and social-affairs counterparts in a series of get-togethers Monday and Tuesday. One failure came over a Franco-German idea for a so-called Euro-Council, an informal body of EMU members that would work to coordinate economic and exchange-rate policies.

France originally proposed the council as a counterweight to the future European Central Bank (ECB), scheduled to begin operating at the start of 1999. Germany agreed to it after gaining assurances that the ECB's independence would not be impaired. That's one major reason why the Euro-Council -- also known in Brussels jargon as Euro-X, because its powers have yet to be defined- - will be an informal grouping.

At the Brussels meetings this week, however, the four members not expected to be in the first euro wave opposed the Franco-German idea on the grounds that it could split the EU into two camps, leaving Britain, Denmark, Greece and Sweden in a weak minority. So, typically, the decision was deferred until the EU's biannual summit in just over three weeks in Luxembourg, its current president. The same meeting (Dec. 12-13) is due to decide on which of the 10 Central and East European candidates will begin accession talks early next year.

But more and more it seems as if EMU questions -- including the very delicate one of who's to be the ECB's first president -- will dominate the mid-December summit, just as they did the Union's last regular such meeting in Amsterdam five months ago. The Amsterdam summit's chief achievement was to resolve Franco-German differences over EMU, which were not even on its agenda. But it was flagrantly unable to agree on the basic institutional reforms needed for the EU's promised expansion to the East, which was the chief item on its agenda.

A second notable failure at the Brussels ministerial meetings concerned expectations for still another summit. This one, to be held tomorrow and Friday in Luxembourg, is a special meeting on creating jobs in an unemployment-plagued Union. France's Left Government, then newly elected, demanded it at Amsterdam before agreeing to Germany's strict economic criteria for EMU members. But in Brussels the assembled ministers could only demonstrate that expectations for concrete results from the jobs summit were lower than previously estimated.

Even before this week it was clear that, because Germany -- the EU's biggest net contributor -- wouldn't accept the idea, the 15 would not agree on collective jobs policies that involve new outlays of Union funds. Such actions involve, among other things, retraining, attacking long-term unemployment, reducing benefits for the jobless and social-security charges for employers. They are the only ones likely to have an effect on the current Union-wide 11 percent unemployment rate.

In Brussels, the ministers compounded the problem by borrowing from the Amsterdam accord on EMU, which added a "stability pact" to impose strict economic discipline on euro joiners and sanctions for offenders. They set up a loose system to monitor each other's economies once a year, just as the stability pact does, in order to see if enough was being done to create jobs. The part of the pact they did not take was the sanctions imposed on offenders, which gives teeth to EMU regulations. Instead, they left it to what officials called "peer pressure" to keep member states in line on jobs creation --in the view of many analysts, a sure way to insure noncompliance with EU goals.

After the talks, Luxembourg Prime Minister Jean-Claude Juncker told reporters that the toothless job monitoring agreed upon would mean that "any member not doing its homework will be obliged to provide an explanation." The problem is, the 15 members are not school-children learning lessons but nations with increasingly varying interests. That unalterable fact is likely to be demonstrated again in Luxembourg on Thursday and Friday.
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