Germany and Italy bridle at British assaults

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Pent-up bitterness between Europe's governments over the monetary crisis burst into the open yesterday. Attacks on Germany by Norman Lamont, the Chancellor, and Michael Heseltine, President of the Board of Trade, were met by retorts from the German Chancellor, Helmut Kohl, and Giuliano Amato, the Italian Prime Minister.

Mr Lamont, evidently deeply bruised by having had to take the pound out of the ERM, blamed Germany for Britain's humiliation and said that the country would not rejoin until German policies had changed. 'We want to be satisfied that German policy, which has produced many of the tensions within the exchange rate mechanism, is actually going to have some changes and be able to operate within a more stable environment', he said.

In Florence, where he was meeting his Italian counterpart, Chancellor Kohl dismissed Mr Lamont's outburst as 'inappropriate for a minister'. The devaluation of the pound and the lira were 'exceptional but necessary reactions to counter the turbulence of the markets'.

Mr Amato, as battered as his British colleagues by the maelstrom, added: 'Believing there is always a bad guy with a big stick who hits the little guy belongs to the world of three-to-five-year-old children.' But one of Mr Amato's ministers also puts the boot in. 'Nationalistic interests are prevailing . . . this in part is determined by certain rigidities from Germany which nobody can deny,' said Franco Reviglio, the Budget Minister. 'If we want a united Europe . . . it is not possible that the stronger countries pursue their own objectives without worrying about the consequences for the other countries.'

Mr Heseltine also weighed in: 'I don't think there is any serious doubt that the remarks attributed to the president of the Bundesbank triggered the turbulence which led to us suspending our membership of the ERM.'

Theo Waigel, the German Finance Minister, shot back that 'instead of blaming Germany, other European countries should concentrate on home-made problems' as the cause of the currency upheaval. 'All our European partners benefited from German unification. They should think about that before criticising us.'

Disagreements among the Twelve are adding to the danger of an explosive crisis after tomorrow's French referendum on the Maastricht treaty. Behind the scenes the sniping is ferocious. Many officials believe Britain has been dangerously complacent over the risks of a break-up of the Community if France votes 'no'. They dismiss the Foreign Office view that everything can proceed as if nothing had happened.

However the French vote, confidence in the union is so shaken that it may be harder than previously imagined to bring Denmark back on board. A senior European diplomat even went so far as to suggest yesterday that it was the British attitude to Maastricht that had perhaps paved the way for the Danish 'no'.

Another senior diplomat said a 'no' vote would leave the Community 'like a chair with three legs'. He predicted a period of chaos followed by an EC summit at which a programme 'to stop the disintegration of Europe' would be decided. 'The success or failure of this new attempt will depend on the Franco-German axis. Britain will be able to influence this process but in its traditional role as an outsider,' he said.