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Germany: Kohl Faces Protest In London Over EMU

  • Stuart Parrott

London, 18 February 1998 (RFE/RL) -- German Chancellor Helmut Kohl will face demonstrations against the single European currency tonight on a visit to Britain to be honored by the City of London for his contribution to the development of Europe.

A coalition of nationalist groups that is campaigning to save the pound sterling and to end British membership of the European Union is organizing the demonstrations.

Kohl is one of the principal architects of the single currency, due to be introduced on January 1, 1999, in what's regarded as the most far-reaching change to the international monetary order in decades. Kohl is expected to repeat his view in talks with Prime Minister Tony Blair today that monetary union is essential to the political union of Europe -- one of his main goals as Chancellor. He argues that the momentum behind the single currency is now unstoppable.

A decision on which countries qualify under the Maastricht Treaty criteria for joining the single currency will be made at an EU summit in May. Britain, Sweden and Denmark don't intend to join up, at least for now, while Greece is disqualified by the weakness of its economy. Analysts predict that the other 11 countries in the 15-nation will participate in the launch.

Kohl has said repeatedly that his hosts tonight -- the financial community of the City of London -- eventually will force Britain to participate in the single currency, because it is in their interests to join a scheme that will shape the economic future of Europe. As he put it: "The City is heading for Europe, and others will follow."

Kohl is to be granted honorary citizenship by the City of London for his statesmanship and achievement in pushing through German unification and European integration. (He shares the honor with, among others, Ronald Reagan and Nelson Mandela.)

Although they are feting Kohl, many London financiers are skeptical about the single currency, the euro, warning that it may be a soft currency particularly if, as some predict, the Maastricht rules are bent to allow weaker European economies to participate.

Market analysts say the euro could be dragged down in value by the inclusion of indebted, high-spending countries such as Italy, one of several countries said to have accumulated national debts well over the strict percentage limits set by the Maastricht Treaty.

This concern is shared increasingly at home in Germany where latest polls show a 2-1 majority against the euro, reflecting fears that the hard deutschemark will be replaced by a soft euro.

Over half of Germans polled believed there will be a political fudge when EU leaders meet for a Euro-summit in May.

A statement signed by 155 German university professors earlier this month called for European monetary union to be postponed on the grounds that economic conditions are unsuitable. Other economists warn of an increase in unemployment, highly sensitive in a country with 5 million unemployed, the highest rate since the 1930s.

Four German academics are trying to block the new currency by launching a challenge in the Constitutional Court. The 11th hour campaign to derail the euro poses a political headache for Kohl, due to seek a record fifth term as chancellor in September's general elections. He knows his own electorate increasingly shares the mistrust of the euro likely to be expressed by British demonstrators outside a London banqueting hall tonight.

The Daily Telegraph makes a somber point: it says if the single currency ends in failure, Germans' anger will difficult to contain if their savings -- equivalent to $2.754 billion -- are devalued.