CNN logo

Infoseek/Big Yellow

Pathfinder/Warner Bros

Barnes and Noble

World banner

European summit comes at crucial time for currency union

The Euro

Jobless rates may impede new treaty

June 15, 1997
Web posted at: 9:46 p.m. EDT (0146 GMT)

AMSTERDAM (CNN) -- Europe's leaders began to arrive in Amsterdam Sunday for a two-day summit. Their task: to sustain the increasingly thorny task of European Monetary Union (EMU).

The leaders hope to complete a new European Union treaty involving 15 governments. The so-called Treaty of Amsterdam has been in the works for two years and would lay the groundwork for a unified currency.

EU leaders try to finalize plans for transforming their bloc into stronger political and economic unit
2 min., 30 sec. VXtreme streaming video


With 18 million jobless within the bloc, the chief impediment is unemployment. In Amsterdam Sunday, 50,000 people marched against a common currency. They complained that the quest for monetary union, slated to take effect in 1999, is causing hardship and destroying jobs. A demonstration Saturday against the treaty turned violent, prompting officials to increase security.

France vs. Germany

Higher-level disagreements also threaten the treaty, with heated disputes between the French and Germans threatening to unravel the effort.

France horrified its partners last week when it stopped routine agreement of the so-called stability pact, a framework approved provisionally in December for keeping budget deficits from ballooning after economic and monetary union. New French premier Lionel Jospin has told his partners he is hostile to the economic austerity required to qualify for EMU.

Helmut Kohl and Lionel Jospin

The French want politicians to run the new currency, which has been dubbed the Euro. Paris is pushing job creation as a top priority. And that would mean spending money on capital projects rather than cutting back to enable the new currency to be launched on schedule.

The Germans, by contrast, insist on a strong country run by central bankers. Germany and others have been against using any surplus funds from the EU budget, arguing that excess money should be returned to national governments to assist their own efforts at budget consolidation.

German Finance Minister Theo Waigel reaffirmed Germany's position in no uncertain terms. Asked about demands from France's new government for the EU to fund a series of job-creating public works programs, mainly in transport and communications, Waigel simply said: "No further spending."

Europe's finance ministers seek to come up with a compromise before the summit gets under way Monday.

Many areas of agreement

European leaders

As for the treaty itself, it waters down powers granted to the European Commission, which traditionally proposed all new legislation.

Governments have agreed to cooperate on issues such as the environment and cultural, regional and industrial topics.

But most are insisting on keeping control of major policy areas such as defense and security, immigration and foreign affairs. Cooperation can only come about if all agree.

The draft treaty is a diluted version of what many advocates of a United Europe would prefer to have seen. But that means it stands more of a chance of success.

Failure will damage many of Europe's leaders politically, particularly German Chancellor Helmut Kohl, who faces an election later this year. It also would disappoint the many Central and Eastern European countries anxious to join the EU because it would likely delay their accession.

More than just jobs, there is an underlying sense that what is at stake is the philosophical foundation of the single currency -- the German model, with a heavy emphasis on monetary stability, versus the new French vision of greater political control in economic policy-making.

Correspondent Patricia Kelly and Reuters contributed to this report.


Related stories:

Related sites:

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.

Search for related CNN stories:
Tip: You can restrict your search to the title of a document. Infoseek grfk

Example: title:New Year's Resolutions

Message Boards

Sound off on our message boards

Tell us what you think!

You said it...

To the top

© 1997 Cable News Network, Inc.
All Rights Reserved.

Terms under which this service is provided to you.