Euro-chase begins

From Spain to Sweden, the Euro-chase is on, and governments as well as opposition parties have embarked on a high-stakes, high-risk trajectory by hanging their reputations on the EMU and its most visible manifestation, the single currency called Euro.

Nowehere is this more evident than in the United Kingdom where John Major has to pacify not just Euro-lovers and haters within his own party but also explain to a disgruntled electorate why EMU is important considering it has split his own party. And Tony Blair who is set to replace him at 10, Downing Street, has seized on the split to say he will lead Britain into the EMU as a major player and not as chief sulker.

French President Jacques Chirac has gone a step further and dissolved Parliament and sought a fresh mandate on the Euro. He wants the freedom to make the necessary budgetary steps to meet the EMU8217;s strict deficit rules.

Chirac will most likely retain his job whether or not the French voters believe in the Euro, but the Opposition Socialists have started questioning the EMU, thus making it clear that Euro is central to the electoral battle.

Even Germany8217;s powerful Helmut Kohl is readying himself for another re-election campaign because he wants to shepherd the EMU past a public that is increasingly sceptical. In a new twist, Germany8217;s publicly-owned banks have threatened to drop their support for the EMU if the European Commission pulls them up on any systematic manner. Danish Prime Minister Poul Nyrup Rasmussen wants the EMU but the Danes rejected it in a referendum. So far, just Sweden8217;s Goran Person is sitting pretty he has the economy and what appears to be a cooperative electorate, to qualify.

If you live in Europe, you cannot avoid talking about economic and monetary union which according to politicians and bankers will change the face of international monetary relations. How this will affect the rest of the world will depend on the measure of stability EMU introduces into the global monetary system, as well as what it does to the dollar as the world8217;s main reserve currency. There8217;s little doubt that EMU will happen. When, is the question for the voters. At what price ask Euro-leaders.

Next spring, European leaders will decide at a summit where EMU the Maastricht treaty on European political and monetary union has set strict rules for this is heading.

Europe8217;s pundits say the Euro, the new money, if backed by credible monetary policy will eventually play a more important global role than its constituent European currencies today. But, increasingly leaders are finding that selling the Euro to the electorate is turning into a veritable nightmare.

In a bid to flag the race, the European Commission has forecast that 13 countries are on track to meet Maastricht8217;s key public deficit target of 3 per cent of Gross Domestic Product. The ten commandments that decide whether or not a country is swept up in the first wave include price stability average inflation below 2 per cent, exchange rate stability, sound public finances 3 per cent of GDP deficit target this year, labour market flexibility, wage flexibility and a string of requirements relating to infrastructure and regulatory policies. The race promises to be ruthless, one that will pit governments against a restive electorate asking some very tough questions on Europe8217;s 12 per cent unemployment.

Looks like Euro8217;s implications are hard to predict, but even harder to ignore.