Until a month ago, the picture might have looked different. The French government was pursuing half-hearted economic policies that appeared to suggest it was looking for an excuse not to enter monetary union. In Germany, polls consistently showed public opinion hostile to the idea of sacrificing the strong mark for a potentially wobbly Euro-currency. Elsewhere in Europe, loud complaints were to be heard from countries such as Belgium and Italy whose ability to meet the Maastricht treaty's conditions for joining a single currency were being increasingly questioned in Germany.
Clearly, not all these problems have gone away. But no one should underestimate the significance of President Chirac's policy U-turn in late October. Abandoning his election pledge of last spring to make a priority of reducing unemployment, he vowed instead to wage war on budget deficits so that France can fulfil the Maastricht criteria on time. His government is now committed to a drastic overhaul of the welfare state and other austerity measures strict enough to make Thatcherism look like a charity event. Bankers and economists may well doubt whether Mr Chirac's gambit will succeed, but the important point is that, after six months of wavering, the president has nailed his colours firmly to the mast of the single currency.
So, too, has Chancellor Helmut Kohl. It would be a grave mistake for the Government to think that German demands for even tighter conditions of monetary and fiscal stability than those set out in Maastricht indicate a desire in Bonn to find a pretext to bury monetary union. On the contrary, what they reflect is Germany's justified concern that Maastricht should be sufficiently free of loopholes to guarantee that the single currency will work. Close the loopholes, as they are beginning to be closed now, and Germany will be Europe's foremost advocate of launching monetary union on schedule.
The Tories will therefore not be able to paper over their internal divisions during the next election campaign by arguing that the single currency may never happen. For key member states, monetary union remains the cornerstone of the European Union's future.Reuse content