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EU: With Money Crisis Over, Summit Eyes Reforms For Expanding East

Amsterdam, 17 June 1997 (RFE/RL) -- On the first of its two days of meetings in Amsterdam, the European Union was finally able to resolve a Franco-German dispute that threatened to wreck the summit.

Meeting Sunday night and yesterday morning, EU finance ministers devised a solution to a week-long public quarrel over a pact to ensure the stability of the European Monetary Union (EMU), due to get underway in 18 months. They did so by guaranteeing to the Germans that the strict economic criteria for EMU members contained in the pact would be maintained, while promising France's two-week-old, Socialist-led Government the new concentration on creating jobs throughout the Union it had demanded.

In fact, the compromise achieved yesterday morning, and ratified by the EU leaders late in the day, differed little from the one offered to the French last Thursday in Paris by EU Executive Commission President Jacques Santer. Notably, it contained no promise for increased EU spending on job creation, a key French demand that both German Chancellor Helmut Kohl and British Prime Minister Tony Blair both said at yesterday morning's summit session was out of the question.

Instead, the accord offered the French a separate summit resolution on jobs which will be published at the meeting's end today. The resolution will call for a special EU summit on employment sometime in the second half of this year. It will also spell out a request to the EU's semi-independent European Investment Bank to finance new job-creation programs throughout the Union.

French Finance Minister Dominique Strauss-Kahn said all that added up to a new impetus in the EU's job policies, and predicted that within a year employment would be the subject of the same sort of stability pact now protecting the euro. Other French officials (anonymous) admitted that Paris had pushed its case as far as it could, short of triggering a full-scale crisis over the euro, and finally had to give in -- while still claiming victory.

This, the officials explained, would at least allow Socialist Prime Minister Lionel Jospin to satisfy those who had elected him that he had done all he could to raise the EU's consciousness about job creation. France's current unemployment rate -- almost 13 percent -- is the highest of any major Western industrial power.

With the threat of a crisis over the stability pact dominating the summit now effectively lifted, the leaders must get on today with the real business of the Amsterdam summit. That is to agree on basic institutional reforms that will permit the EU to expand to Central and Eastern Europe, thereby almost doubling its membership within the next decade.

But it is already clear from a reading of the last draft treaty prepared by the Dutch that the Union's 15 members have agreed to defer the most important reforms for years --until, in fact, it begins its expansion to the East. That's because 16 months of debate at the EU's Inter-Governmental Conference on reforms produced little consensus on key changes.

Thus, there will be no reform of the group's weighted voting system, which today gives small and large members a say in determining policy but would be unworkable in an EU with 25 members. Nor has the question of changing the size of its Executive Commission been dealt with effectively: The EU has simply decided to freeze the present number of commissioners -- 20 -- until expansion begins. And no reform of the EU's cumbersome system of consensual voting on security and foreign-policy matters has been proposed. That, too, will await the beginning of the Union's enlargement.

All this suggests, as many analysts now say, that the EU has invested far more energy in ensuring a healthy birth for EMU in early 1999 than it has in planning for its future expansion. One analyst (Lionel Barber in the "Financial Times") wrote yesterday that "the euro has become the defining issue in European politics," overshadowing by far the still far-off planned EU enlargement.