Reading between the lines

Date: 10/04/1997

WHEN German Chancellor Helmut Kohl unexpectedly announced last week that he was planning to run for an unprecedented fifth term, it had an immediate and dramatic effect.

It achieved what no amount of statement-making by monetary chiefs and other politicians could, bolstering flagging confidence in Europe that the single currency project would start on time despite Germany's current economic difficulties.

Almost overnight, the mood in national capitals changed. EU finance ministers, so often on the defensive when questioned about economic and monetary union, were far more bullish when they gathered in Noordwijk for an informal get-together last weekend than they have been of late about the chances of sticking to the EMU timetable.

Kohl's announcement was heralded as evidence of his very clear commitment to seeing the project through and this, coupled with recent unexpectedly strong economic data from Germany, was music to the finance ministers' ears.

Even the UK's Kenneth Clarke, while insisting that the possibility of delay was “at the back of everyone's mind”, admitted that it had not been mentioned - either at the meeting or in the corridors outside - during the weekend talks. While it is always difficult to glean the truth from ministerial pronouncements about what was or was not discussed behind closed doors, Clarke's remarks were significant given that he has a vested interest in playing up any talk of delay to support his repeated insistence that meeting the deadline is “unlikely but not impossible” - a stance used by the British government to justify sticking to its 'wait and see' policy in the current UK election campaign.

Thus, Clarke's admission that the possibility of delay was not even mentioned is compelling evidence of the mood among finance ministers. It is that - and not Kohl's decision to quash speculation that he may no longer have the stomach for the fight and might be contemplating retirement - which is being seen as the clearest signal yet that the 1 January 1999 deadline is likely to be met.

If delay were seriously being contemplated, officials would have to begin work now on a scenario for coping with the fall-out - and there is little sign that this is happening in any serious way.

Much can happen between now and early next May, when EU governments will make a final decision on whether to stick to the timetable and, if so, which countries will be in the first wave.

But the message from Noordwijk was one which those who have a vital interest in reading the tea-leaves would be foolish to ignore.