Germany fears for EMU after French result

THE GERMAN government reacted cautiously to the French election result yesterday, insisting that the change of government did not imply a weakening of France's commitment to Economic and Monetary Union (EMU).

The Foreign Minister, Mr Klaus Kinkel, congratulated the new government and predicted that the euro would still he launched on time and in accordance with the Maastricht criteria. "Germany and France remain for me the most important partners. We want to go further in Europe. The euro can be launched under strict adherence to the criteria and the planned timetable," he said.

Few observers in Bonn share Mr Kinkel's sanguine view of the result and the government is clearly nervous that the new government will abandon the austerity programme needed to adhere to the strict Maastricht criteria.

The Chancellor, Dr Kohl, spoke at length to Mr Chirac on the telephone after the result was announced and the new French Prime Minister, Mr Lionel Jospin, is expected to visit Bonn this week. But Bonn fears that the Socialist victory in France, following on the heels of New Labour's win in Britain, could leave Germany isolated in its strict interpretation of the Maastricht criteria.

Dr Kohl will come under pressure to consider modifying Germany's European policy, possibly by strengthening the social component in the form of European employment initiatives which Bonn has hitherto opposed.

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The Italian Prime Minister, Mr Romano Prodi, yesterday welcomed the left's victory, suggesting that the result represented a call for a "different" type of Europe and one which laid a firm emphasis on social rather economic policies.

"This vote expresses a call for something different, for a return to a Europe which refinds the roots of its own great traditions, namely that while you can consider reforming the welfare state you simply cannot just throw it out the window," he said.

The Italian Prime Minister's interpretation was one largely shared by media commentators, many of whom suggested that the French result could well have serious implications for the timing and nature of EMU, while acknowledging that the left's victory was the expression of a Europe wide "leftist wave" as well as a consequence of a series of miscalculations by President Chirac.

"The electorate has condemned an approach based on `monetary obsession' but, without excluding, fiscal rigour, calls for priority to be given to growth and employment. The French election result underlines once more the difficult question of the coordination of social and economic policies re the future monetary union", commented the Rome daily, La Repubblica.

The British Prime Minister, Mr Blair, is expected to meet Mr Jospin in Sweden on Thursday at a meeting of European socialists, amid high hopes for a close political relationship between the two new governments.

The victory showed that France was not prepared to sacrifice social solidarity for the sake of EMU, the National Platform organisation said in Dublin.

The outcome was "the end of EMU as we know it" and should be regarded by a new Irish government as a vote for economic democracy and not as a temporary upsetting of plans for a single currency.