1996 ambitions focus on EMU

Date: 04/01/1996

By Rory Watson

ATTENTION will invariably be turned inwards in the coming 12 months as the EU starts to lay the foundations of a modernised home suitable for more occupants and for the next century.

Uppermost in every government's mind is the urgent need to create the conditions for a single currency in just three years time. Apart from the regular six-monthly health checks of national economies, agonising over the route to the Euro is unlikely to loom large on formal EU agendas in 1996.

But behind the scenes, the effort each country, including hesitant Denmark and the UK, is making to meet the convergence criteria will influence almost every decision, particularly those with any economic consequence.

They will be trying to reach that target at the very time the European economy is slowing down. Some countries, like Belgium, are determined to meet the 3&percent; budget deficit threshold this year, rather than by the early 1998 deadline.

Others, like France, will be carefully testing to see how far they can go in imposing economic rigour without creating social and industrial unrest. A rash of strikes would not only threaten the government's stability but, coupled with lower than expected tax revenues, could make it even harder to meet the budget deficit target.

The challenge of finding a way through the economic minefield will be a crucial test of the EU's credibility with the public at large. If the electorate believes that its sacrifices - either through lower living standards or fewer job opportunities - are unnecessarily caused by the EU, it will be even more critical of the new-style Union on offer from its leaders.

Concern over public opinion is likely to be a recurring theme throughout 1996. Periodic efforts to sharpen up the Union's presentation of its policies are not new. But this year will see the first concentrated attempt to coordinate the disparate and sometimes confusing messages the various EU institutions and national governments have traditionally put out to the public.

All are now being urged to speak with one voice on three themes at the heart of EU activity. With the help of a 50-million-ecu budget, a trio of information campaigns is set to run through 1996. Starting later this month with the first step of a publicity drive for a single currency, it will gradually expand to explain citizens' rights within the Union and promote the changes to the Maastricht Treaty being contemplated.

Negotiations on those changes will run throughout much of 1996 and into 1997. They open in Turin on 29 March and thereafter foreign ministers will meet virtually every month as they strive to modernise the Union in preparation for its enlargement to take in new members.

The Intergovernmental Conference (IGC) talks will focus largely on institutional changes and will highlight the frequently conflicting claims of national sovereignty, with its emphasis on unanimous decisions and intergovernmental cooperation, against efficiency, based on majority votes and clear EU solutions.

Although Italy will enjoy the splendour of launching the IGC process, the bulk of the hard work is expected to take place in the last six months of the year when Ireland holds the EU presidency. Optimists hope that enough will have been achieved to leave just a small handful of political decisions to be taken after the UK general election, which must be held by May 1997 at the latest.

The coming year will also see the EU indulge in some internal spring-cleaning. Plans are being laid to reform the Common Agricultural Policy's highly-criticised olive oil and tobacco sectors, and the prospect of a new beef mountain has prompted thought of further reforms in that area as well.

Increasingly, existing policies are coming under careful scrutiny. An assessment is expected by the summer of the impact of the EU's regional and social policies in developing the economic strength of the Union's four poorest members: Portugal, Spain, Greece and Ireland. Its conclusions are likely to provide an indication of the sort of structural policies the Union may have to consider when it takes on board the less wealthy countries of Central and Eastern Europe.

Pressure will continue to complete the single market, particularly by tackling non-tariff barriers, and to pursue the drive for the liberalisation of the electricity and telecommunications sectors.

1995 proved a hectic year for EU foreign policy. The coming 12 months are likely to see fewer new initiatives, but the Union will still have its hands full. In particular, it must devise a comprehensive strategy for its dealings with Russia and explore the largely untapped potential of Asia.

But 1996 will also demonstrate how the line between EU internal and external policies is becoming blurred. One of the main tasks facing the European Commission's foreign policy analysts will be to start preparation of the individual reports assessing the ability of would-be members to fit into the Union.

Apart from Turkey, ten applications are already on the table and formal Czech and Slovene bids are imminent. The reports must be completed next year and will give the first clear indication of the next group of countries to enter the Union.