Major and Dini warn of EU monetary chaos

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The Independent Online
John Major and the Italian Prime Minister, Lamberto Dini, made a joint appeal to their European Union partners yesterday for an in-depth analysis of the effects of monetary union, saying that the consequences of getting it wrong could be chaos across the continent.

The two leaders, meeting in Florence, appeared to find common cause in discussing the two biggest economies likely to be sidelined in the moves towards a single European currency - Britain because it is reluctant to join, Italy because its economy is unlikely to be strong enough.

Political sources at the summit said that the two countries, along with France, would press for a detailed analysis of EMU at next week's summit in Madrid.

Both leaders noted that only a minority of member-states is likely to meet the criteria for monetary union laid down by the Maastricht treaty, and that plans must therefore be made for the countries left out.

"Monetary union will affect everybody whether they take part in it or not," Mr Major said. "If it proceeds, or when it proceeds, it has got to be right, otherwise it will cause chaos and difficulty across Europe."

With France hit by a growing wave of strikes as a direct result of its efforts to meet the Maastricht criteria, countries across the EU are becoming painfully aware of the dangers of imposing excessively austere strictures on their economies at a time of recessionary hangover and generally slow growth.

Commissioning a detailed analysis of monetary union - covering import and export markets, foreign exchange trading, agricultural policy and possible social problems - would force the EU to address the mounting difficulties facing its single currency project and perhaps create mechanisms for non-qualifying countries to join after the present 1999 deadline.

Mr Dini denied that the joint platform was an attempt to delay monetary union, saying there were still two years to go before the third and final phase of the process got under way. But Mr Dini knows, despite his protestations to the contrary, that Italy could never meet the criteria as they stand and that his country's best hope is to find a back door by which to enter after 1999.