Monetary Union: France presses Britain for a commitment on EMU

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The Independent Online
France is hoping to hurry up a `clear signal' of Britain's intentions on the single currency. It hopes that it might get one on Monday when the Chancellor, Gordon Brown, meets his French counterpart, Dominique Strauss-Kahn, in Paris.

But, as John Lichfield reports, Mr Brown is unlikely to give anything away, at least in public.

Gordon Brown and Dominique Strauss-Kahn have a lot in common and a lot to talk about. They are both handsome, youngish men, with a tendency to arrogance, doing the job that they always wanted. Both the Chancellor of the Exchequer and the French economy minister are attempting to define a new kind of centre-left economic policy, mixing rigour with selective compassion. Both, in different ways, have key roles to play in the making, or the breaking, of the final negotiations on the European single currency in the next seven months.

Their meeting in Paris on Monday - informal talks followed by dinner - will be their first proper tete-a-tete since Britain and France elected left-of-centre governments in the late spring. Paris hopes that the meeting will mark a significant new stage in the readmission of Britain to mainstream European politics. French officials talk of the need for the Blair government to make a "clear statement" sometime soon on its policy towards economic and monetary union (EMU). Will there be a referendum next year? Will the Government opt out of the 1999 starting line-up for EMU but declare its desire - referendum permitting - to sign up soon afterwards?

According to British sources, Mr Brown is unlikely to give anything away on Monday, at least in public.

The French have a good reason for wanting to jog Britain along. They feel that the Blair government, once publicly committed to EMU, would be more likely to support France's position in its dispute with Germany over how the single currency should be managed.

The Socialist-led French administration has scaled down its original ambitions for a "European economic government" which would provide political balance to the monetary power of the new, independent European central bank. But French officials say that they are still pressing for the creation of a "Euro Council", a conclave of finance ministers of the EMU countries to discuss, and sometimes to co-ordinate, broad economic policy. Such a council would not create a new European Union institution, they say. It could be "informal" but it must be "legitimate" (that is, work within the EU treaties) and "visible" (publicly recognised as more than a talking shop).

The French acknowledge that the Blair government is suspicious that such a body might work against the interests of countries which opt out of EMU: in effect, it might become the politburo of a European "hard-core". But once the British government moved towards the single currency, the French believe that Mr Brown would support their campaign for balanced EMU management, over the purely monetarist German approach.

Whether or not Britain makes an early statement on EMU (the chances are "not"), Mr Brown will play a key role in the final single currency negotiations. Britain takes over the rotating, six-monthly presidency of the EU in January and the Chancellor will chair all the detailed talks leading to final decisions next May on the EMU starting line-up and the exchange rates at which countries will merge their currencies into the Euro.

France is playing down earlier reports in its press that it would like to bring forward the starting date of EMU to forestall a wave of currency speculation in the seven months' transition between these final decisions and the launched date ordained by the Maastricht treaty. But French officials say that it is important that the "Euro Council", dear to Mr Strauss-Kahn's heart, should be in place by May to "steady the boat" during the seven months' hiatus.