Bonn waters down bid for G7 euro-zone voice

Date: 24/09/1998

By Tim Jones

GERMAN and British arm-twisting has diluted plans to give the euro zone its own distinct voice in international economic policy negotiations.

Smaller EU member states and the European Commission had been pressing for a blueprint to beef up euro-land's representation in the Group of Seven club of leading industrialised countries.

However, when they meet in Vienna on Saturday (26 September), finance ministers look set to agree an informal arrangement under which EU representatives would only join the German, French, Italian and British treasury chiefs at G7 meetings on a 'case-by-case basis'.

This would be a blow to Belgium, Finland, Portugal and Luxembourg as well as Austrian Finance Minister Rudolf Edlinger, who will chair this weekend's meeting.

"The Germans don't want a formal deal because, if there is an informal arrangement, they are bound to end up as the de facto leaders," said a senior monetary official from a small country.

Edlinger has circulated a paper among his fellow ministers which suggests that G7 meetings should, as a rule, be attended by European Central Bank President Wim Duisenberg.

Under the plan, the chairman of the Union's panel of monetary experts the economic and financial committee, whoever is presiding over meetings of EU finance ministers (Ecofin) and the Commissioner for economic and financial affairs would attend the G7 when matters directly concerning their powers were discussed.

The first two political representatives would attend if foreign exchange or fiscal policy was to be discussed, and the Commissioner if macroeconomic aid was on the agenda.

Bonn has toughened its stand against allowing current Economics Commissioner Yves-Thibault de Silguy to become a regular at G7 meetings since he campaigned for a stronger euro-zone reaction to the Russian crisis at the beginning of the month.

De Silguy went on French radio, calling for an emergency gathering of the Euro-11 ministerial coordinating group and early talks with Moscow. His staff even revealed that they were looking into the feasibility of setting up a 'currency board' in Russia, which would only allow the central bank to issue roubles if they were backed by an equivalent amount of earned foreign currency.

When Edlinger put together his team for an EU mission to Moscow this week, he decided to take De Silguy's top official Giovanni Ravasio and monetary committee chairman Nigel Wicks.

Senior officials and diplomats claim that Bonn told Edlinger that De Silguy himself should not go. "The Commission was very pushy in calling for special meetings of the Euro-11, fact-minding missions to Russia and currency boards," said a senior national official. "Retaliation is a strong word for it, but I can't think of another one."