Kohl's wise man calls for Emu to be delayed

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The Independent Online
The German government's continued insistence that European monetary union will begin on schedule was rudely shattered at the weekend by its own top economic adviser, who broke the consensus by calling for the postponement of the project.

Herbert Hax, head of the "five wise men" who provide the government with independent advice, said Germany was on course for busting the two most important Maastricht criteria, and should therefore consider delaying the introduction of the single currency beyond its launch date of January 1999. "The truth is quite simple: stability comes before the timetable," Mr Hax told the Bild am Sonntag newspaper. The government, he explained, would probably exceed the 3 per cent limit set for the budget deficit, and the 60 per cent ceiling for total public debt.

Although the Finance Minister, Theo Waigel, insists that his goal of a 2.9 per cent budget deficit this year is still attainable, no mainstream research institute shares his confidence. The top banks and economic think- tanks estimate that the deficit will stand at between 3.3 and 3.5 per cent.

"The government forecast is 2.9 per cent, but there are others who predict more than 3 per cent," Mr Hax told the newspaper. "If you take the stability criteria seriously, Germany will probably not be able to introduce the euro as planned in 1999."

Bonn's economic woes, aggravated by soaring joblessness, present the EU with a stark choice. "Either you loosen the criteria, and you have to say so now, or Germany will have to get ready for the euro later," Mr Hax said. "Unfortunately, the politicians have turned the possibility of a delay into a taboo."

The latter was again in evidence this weekend, with Chancellor Helmut Kohl pledging in a speech to "stick to both the agreed start date and the convergence criteria". That position, Mr Hax believes, is unwise.

"Germany and a group of other countries will probably not fulfil the convergence criteria before 1998," he said. "Only after that can the euro be introduced in all these countries."

That would mean, the newspaper retorted, that the euro would be launched in 2000. "That would be better than if four or five countries were to march ahead," Mr Hax declared.

His verdict is likely to invigorate the debate about Emu, which until now has barely touched German society.

With government politicians lining up behind Mr Kohl, and the opposition fearful of appearing irresponsible, calls for postponement have been monopolised by a regional Social Democrat leader, Gerhard Schroder. But last week the country's biggest trade union federation hinted that it might turn against the euro, and now cracks are beginning to appear everywhere.

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