EMU: postponed by common agreement?

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EMU: postponed by common agreement?

I've said it before in this column: the 1999 date for European monetary union will be postponed. I'm saying it again because the chorus of Europe's politicians proclaiming that EMU will happen on time is deafening. But I think postponement will happen, by common agreement of the 15 member states, probably before the end of this year.

EMU was always a political rather than a purely economic project. Although it carries clear economic advantages for companies trading across frontiers, EMU's main aim was to prevent a greater Germany from transforming its economic might into political influence throughout Europe, by removing the Deutschmark as an instrument of Bonn's national policy. Chancellor Kohl has gone along with the project because he belongs to that generation of Germans who instinctively believe that, without a united Europe, their own country will become aggressive again. In turn, the French accepted the strict criteria for EMU in the full expectation that, ultimately, the Germans would not insist on them being applied.


Both sides are now deeply disappointed. For the Germans, the abolition of the Deutschmark was to be just a step on the way towards a United States of Europe, complete with a federal parliament and government in Brussels. The French are now determined to avoid this .At the same time, the French have discovered to their horror that the Germans are deadly serious about the convergence criteria for EMU, something that no country, apart from tiny Luxembourg - which has no real currency of its own - currently meets.


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