Prague, 15 September 1997 (RFE/RL) - The European Union's 15 member states have taken an important step toward ensuring that their planned single currency, the "euro," will be launched on schedule in less than 16 months.
The action was taken after a long period of speculation and debate -- particularly in Germany, the Union's biggest member -- over whether the inauguration of the euro might be delayed for some years.
At a meeting late last week in Luxembourg, the Union's current president, the EU's finance ministers and central bankers decided to advance by about eight months the date on which conversion rates will be set among the currencies of those members joining the first wave of Economic and Monetary Union (EMU). The ministers agreed those rates will now be established in late April or early May at an EU summit already scheduled to make the critical decisions on which members are eligible to join EMU. Once agreed upon, the exchange rates among EMU-member currencies will be permanently locked on January 1, 1999 -- the target date for the euro's launch -- prior to their absorption by the single currency some three years later.
EU officials said the decision was intended to reduce speculation and uncertainty during the eight-month period between the choosing of the first EMU members and the actual birth of the euro. The Union's monetary-affairs commissioner, Yves-Thibault de Silguy of France, said it would strengthen the credibility of the EMU timetable and create what he called "more certainty for operators and businesses."
Complicated as the ministers' decision might seem, it delivered a simple, straightforward message both to skeptical politicians and to currency markets that EU preparations for EMU are on track. German central bank president Hans Tietmeyer told reporters Saturday that the action would send "a clear political signal to markets (because once conversion rates are announced) we will effectively have a piece of monetary union in place." Asked about a possible euro delay, Belgian Finance Minister Philippe Maystadt said "that subject is closed --nobody talks about it any more."
Analysts say that the optimistic talk about the euro's launching represented a significant change in mood within the EU, where doubts about the start-up date have dominated debate since early this year. They point to recent improvements in several EU economies, including those of Germany and France, as one important factor in the change. Another big reason, they note, is the growing belief that as many as 11 EU members may be able this year to meet the strict economic criteria necessary to qualify for EMU membership.
Delay could also wreak havoc economically, as French President Jacques Chirac said in an interview published today (in the German weekly "Focus"). If EMU did not go forward as planned, Chirac predicted, "the reactions of the capital and commercial markets would have disastrous consequences for our economies."
Finally, the analysts say, the conviction has taken hold within the EU that putting off the euro's start could do irreparable harm to any further efforts to integrate the Union politically. During the past several years, the EU's federalist momentum has all but come to a standstill -- except for efforts to achieve monetary union. At the EU summit in Amsterdam three months ago, the 15 failed even to agree on the internal reforms needed to make possible its planned expansion to Central and Eastern Europe. German Chancellor Helmut Kohl, once the EU's most outspoken integrationist, remains a fervent supporter of EMU, but in Amsterdam it was his -- more than any other -- opposition to pressing for internal reforms that made agreement impossible.
That's why EMU's successful launching is also important for the 10 Eastern candidate states. With internal reform efforts stalled, the euro has become the only available glue with which to hold the Union together. Were it to fail, prospects for imminent enlargement would certainly diminish quickly.