Panic sparked by euro’s fall boosts French hopes of strengthening coordination

Date: 29/06/2000

By Tim Jones

Had the French presidency of the EU begun a year ago, Paris would have a fight on its hands in driving through a long-cherished policy goal.

For three years, France's obsession with bolstering the economic arm of economic and monetary union has been the aim that dare not speak its name.

But the political panic induced by the sustained weakness of the euro on the global currency markets over the past 12 months has done much of Finance Minister Laurent Fabius' talking for him.

As a result, when he presents his first thoughts on how to reform the Euro-12 ministerial coordinating group next month, Fabius will find that the ground has never been so fertile. Indeed, his only danger will be shooting too high and missing.

The bones of his plans, which are being drawn up hand-in-hand with Belgium's Didier Reynders, are already known.

They want to postpone full-scale meetings of all the EU's 15 finance ministers (Ecofin) by a day and put intense moral pressure on 'out'

ministers to forgo their observer status at fortnightly gatherings of the European Central Bank governing council. Euro-12 meetings would be extended from their current two-hour time slot just before Monday Ecofins to fill a half or whole day.

EU rules would allow such a change under the Belgian presidency in the first half of next year. Before rescheduling meetings, Reynders would have to consult European Commission Secretary-General David O'Sullivan, Council of Ministers Secretary-General Javier Solana, and the Portuguese and Swedish governments but a decision could not be blocked.

By making full use of Article 113 of the EU's new consolidated treaties, the Euro-12 chairman would attend all ECB meetings and use the power to "submit a motion" for the bank's "deliberation".

While its formal powers may be intact, the real-life influence of Ecofin - generally regarded as the most authoritative Council of Ministers grouping - is being drained. Compared with the struggle against British and German opposition to the original Euro-x back in May-December 1997, what is most striking about these Franco-Belgian plans is how resigned to change the former opposition seems to be.

Swedish Finance Minister Bosse Ringholm, who will chair Ecofin meetings in the first half of next year, has already signalled his willingness to surrender his seat at the ECB council to Reynders.

If the Danish government loses the September referendum on euro-zone membership, its Finance Minister Marianne Jelved can be expected to do likewise during her country's EU presidency in 2002.

So far, so easy. The same cannot be said for France's longer-term aims exemplified in a little-noticed but extraordinarily hard-hitting speech to a conference in Stresa last month by Fabius' predecessor-but-one, Dominique Strauss-Kahn.

Strauss-Kahn, whose charm offensive in 1997 against Germany's Theo Waigel led to the creation of the Euro-x, wants to go a step further and remove EMU's 'economic government' from the clutches of Union institutional structures altogether.

In words that will send shivers down the spines of senior European Commission officials and politicians in some of the EU's smaller member states, Strauss-Kahn said: "I am not convinced that the current position of including the euro in the acquis communautaire is tenable for much longer."

In the long term, the Commission is staring into the abyss. Strauss-Kahn is not just a former minister. He is still a power in the land, close to Premier Lionel Jospin and a leading thinker in the Socialist Party.

And it is not just the French who are now talking about modelling EMU on the Union's common foreign and security policy, and giving the common policy a secretary-general to play a similar role to that now performed by Solana in the foreign policy arena.

At the moment, Euro-12 agendas are arranged during a regular lunchtime discussion between all 15 national treasury chiefs attending meetings of the EU's Economic and Financial Committee. Attempts under last year's Finnish presidency to put this work on a more formal footing foundered, but Paris and Brussels are keen to revive the idea.The notion of assigning the EFC chairman a dual role as EMU's secretary-general and the euro zone's 'high representative' on the world stage is already being actively canvassed.

Article forms part of a survey on the French EU Presidency, July-December 2000.