Ian Traynor in Berlin
Germany and France this week signalled their determination to merge their currencies in January 1999 as part of an overall European Monetary Union.
Despite misgivings from Britain about a single currency, key finance and banking officials from the two countries moved to dovetail their fiscal policies before this weekend’s meeting of European Union finance ministers and the crucial EU Dublin summit on October 5.
German Finance Minister Theo Waigel said that the two countries had agreed on the outlines of a single-currency stability pact which would impose heavy fines on members whose budget deficits exceeded 3% after 1999.
“We have reached very broad agreement on decisive issues,” Waigel said after the meeting in Kempten, Bavaria. “We are much further than I expected a year ago.”
But the German Bundesbank chief, Hans Tietmeyer, said some details of the stability pact still had to be agreed, suggesting some French resistance.
Pressure on Britain is growing as German Chancellor Helmut Kohl tries to break the stalemate at the EU rolling conference drafting a constitution for a more integrated Europe.
The signs are that Kohl, the driving force behind European integration, has returned from the summer break bent on pushing through his ambitious project.
His Christian Democrats (CDU) have published a paper on EU foreign and security policy, demanding that “common European defence policy and defence be made a reality” and calling for the use of national vetoes as “blockade tactics” to be outlawed.
Both positions are anathema to London, but the CDU paper also contradicts the French position on EU foreign and defence policy.
“A majority of member states must not be prevented from carrying out common EU military actions by a minority,” the paper states.
Waigel’s plan to fine wayward members after the single currency’s launch is not popular with the French since they could be among those punished.
Analysts suspect France will massage its economic data next year to prove its deficit is within the 3% ceiling. But it could not do that over successive years, and so would be vulnerable to fines.