Ministers agree resolution on EMU

DOTTING the i's and crossing the t's on the Stability Pact, EU Finance Ministers at a low key meeting here over the weekend put the finishing touches to a resolution for the Amsterdam summit that will give legal effect to the Dublin monetary union deal.

They also agreed on a schedule for the decision next year on which member states will participate in the launch of the euro. In the expectation that 1997 outturn figures will be available by the end of February, the ministers gave the Commission and European Monetary Institute a month to come up with their recommendation on the runners, and a further month for parliamentary scrutiny both in Strasbourg and at national level.

That will allow a meeting of the European Council (heads of government) to meet, almost certainly on the May Day weekend, to make the final decision. British sources indicated that, although during their presidency, the summit will probably be in Brussels.

A similar procedure will be followed in subsequent years for those who do not make the first group.

The Minister for Finance, Mr Quinn, said it was a good weekend's work which has wrapped up the last of the detailed preparations for the euro.

All but one. Mr Quinn resolutely refused to be drawn on his thoughts on how to fix the rate at which currencies will enter the euro. The issue had not even come up at the meeting, he said.

Mr Quinn acknowledged concerns in the business community that the pound should enter the single currency at sustainable rate but insisted that, while there would continue to be a full debate on the euro, this particular issue was one on which he had to maintain confidentiality. Speculation on the issue by him would be irresponsible, he said.

A variety of approaches to the issue are under examination - they range from a decision by ministers on the eve on the launch of the euro to an averaging of rates over various suggested periods of time.

Journalists, desperate for a story, pored over the detailed texts of ministers' conclusions for evidence that they were tightening up or loosening disciplines, or hinting at a delay, but there was never a glimmer... "Dublin, all of Dublin, and nothing but Dublin," said one diplomat, grinning, determined to spoil the fun.

The British Chancellor, Mr Kenneth Clarke, probably attending his last Ecofin, reaffirmed his view that it would be unlikely for the common currency to be launched on schedule in 1999, but said he had not encountered any serious consideration of a postponement among EU ministers. "I assure you I have not had a conversation (about delay) with any minister," he said.

The ministers accepted a Commission compromise on a disputed interpretation of the Dublin Stability Pact deal. At issue was whether the fine levied against euro member states for exceeding the 3 per cent deficit limit would have an overall ceiling of 0.5 per cent, the maximum level agreed for any one year.

The fine (initially a non interest bearing deposit, turned into a fine if the state does not apply corrective measures) is to be levied on the basis of 0.2 per cent of GDP, plus an additional 0.1 per cent for every one per cent that the deficit limit is exceeded to a maximum of 0.5 per cent of GDP.

Under the Commission compromise, if the fine is to be levied in a second or subsequent year, it will simply add a further 0.1 per cent for every one per cent without repeating the initial 0.2 per cent element. No overall ceiling is set.

The ministers also agreed that the interest on such deposits or the value of the fine, if eventually levied, would be distributed to those other euro participants who were not themselves in excessive deficit.

The Belgian Finance Minister, Mr Philipe Maystadt, described the discussion as "highly hypothetical", reflecting an eventuality that few believe will arise, but a necessary tying up of loose ends.

The Economic Affairs Commissioner, Mr Yves Thibault de Silguy, said the agreement reflected an unwavering commitment by ministers to a strong and stable single currency, supported by tight monetary disciplines.