Soft centre to Kohl-Chirac hard core

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The Independent Online

Europe Editor

Prospects for launching a single currency in 1999 will continue to preoccupy European Union leaders next week as they prepare for a summit of heads of state and government in Madrid.

The meeting, which is the climax of Spain's six-month EU presidency, is expected to agree a name for the single currency, and define the steps by which the EU will move to monetary union in the next three years.

The leaders are also due to discuss bringing into the EU the former Communist countries in central and eastern Europe, and the preparations for next year's Inter-Governmental Conference on reforming EU institutions. In what looked like a coded message to Britain, President Jacques Chirac of France and Chancellor Helmut Kohl of Germany proposed in Baden-Baden on Thursday that no country should be free to veto closer EU integration if other member states wish to press ahead.

The proposal was more a restatement of the existing Franco-German position than a bold initiative, and seemed to fall short of calls by Germany's ruling Christian Democrats last year for a "hard core" of EU states committed to deeper integration.

Significantly, the Baden-Baden meeting did not produce an explicit demand for more extensive powers for the European Parliament. Instead, in what looked like a German concession to French doubts about giving the legislature too much authority, Mr Kohl and Mr Chirac referred only to the need to "bind the European Parliament and national parliaments more than hitherto into the process of European integration".

Nevertheless, the two leaders reaffirmed their belief in extending the use of qualified majority voting in EU decision-making, a point on which they have little common ground with John Major's Government.

They also called for a common policy on asylum and immigration, an idea that does not appeal to Britain and may prove difficult to implement in the light of French concerns about the Schengen agreement on abolishing internal EU frontiers.

Far from using the summit to discuss whether 1999 remains a realistic date for launching monetary union, EU leaders intend to settle the irksome question of the single currency's name once and for all. The outcome could reveal a great deal about the relative weight of Germany, France, and the European Commission in the monetary union debate.

France and the Commission have tended to favour the ecu, the name attached to the EU's present notional currency. However, Mr Kohl's government fears that the ecu will prove unsellable to Germans, already sceptical of monetary union, because the existing ecu has weakened against theGerman mark over the years.

Germany would prefer the currency to carry the prefix "Euro"; Eurofrancs in France, Euroschillings in Austria, and so on. But some Commission officials say the name is ugly,and unlikely to win the popular approval needed for monetary union to work.

Several other suggested names - ducat, crown, florin and franken - are considered dark-horse candidates. But Spain's Prime Minister, Felipe Gonzalez, said his countrymen would never accept a currency whose name sounded like Franco, the late dictator.

A failure at the summit to solve the matter would cast yet more doubt over the project starting on time. EU leaders also need to fix a date - the end of 1997 or early 1998 - for announcing which countries have qualified for the single currency.