THE new French Prime Minister, Mr Lionel Jospin, was only half-joking when he told other European Socialist heads of government in Malmo' that he knew some of them may not have been happy to see him elected. The reason is that his left-wing government has thrown EMU into doubt.
Mr Jospin insists that France will participate in the launching of the euro on January 1st, 1999. But it takes a leap of faith to believe that the conditions he has attached to compliance with the Maastricht convergence criteria will not delay EMU. In Sweden, Mr Jospin insisted that his government will not budge on four demands:
. a euro that is not overvalued against the dollar and the yen; he believes the dollar has been deliberately kept weak by Washington for trade advantage;
. an "economic government" (perhaps the Council of Finance Ministers) to counter balance the European Central Bank. Article 104 of the Maastricht Treaty foresees the co-ordination of economic policies in Europe; Mr Jospin wants this to include taxation and wage policies;
. the inclusion of Italy and Spain in EMU from the beginning. Mr Pierre Moscovici, the new Socialist Minister Delegate for European Affairs, says he would oppose EMU without them:
. an emphasis on employment - Mr Jospin wants growth and jobs to determine EU economic policy.
Mr Moscovici was the author of the four conditions. He campaigned for a "yes" vote on Maastricht but later said that had the vote taken place four years later he would have voted "no". He was also behind the May 28th joint statement by French and German Socialist parties, which made employment the chief priority of EU policy.
The new French EU policies risk conflict both with President Chirac and with Germany. Since the left won the election Mr Chirac has been virtually walled up in the Elysee Palace. Having called the early election which destroyed his majority in parliament, he is in a weak position to assert authority over the Jospin government.
Mr Chirac had been an understanding partner for Bonn, and Dr Kohl cannot relish the coming confrontation with Mr Jospin over the Maastricht criteria. All four of the Socialists' demands run counter to German policy on monetary union. Mr Jospin and Dr Kohl are scheduled to meet in Poitiers on June 13th, three days before the Amsterdam summit and the new French demands will be a main subject of conversation.
The first moment of truth will arise on Monday, when EU finance ministers meet in Luxembourg to finalise the budgetary "stability pact" agreed at the December 1996 Dublin summit. The pact will penalise EMU participants who exceed 3 per cent deficit spending. Mr Jospin has said he does not feel bound by the pact, drawn up at German insistence. Mr Dominique Strauss-Kahn, the new Socialist Minister of the Economy and Finance, will make a declaration on the pact in Luxembourg; if he demands additional negotiations, the reaction among France's European partners, particularly Germany, could be an angry one.
Positive statements by the new Foreign Minister, Mr Hubert Vedrine, and the former president of the European Commission Mr Jacques Delors, are a reassuring if not entirely convincing counter-balance to the tension created by the government's demands. Mr Vedrine, in an interview before he became minister, said he was convinced that EMU would create a "positive shock" which would help to unite Europe. "The advent of the euro will bring balance to a world dominated by American monetary authorities since 1971," he said.
Mr Delors' friendship with Dr Kohl and his self-proclaimed role as guarantor of Lionel Jospin's European policy" (his words) may ease Franca-German relations through this difficult time. Mr Delors chose an interview with the newspaper Die Zeit to announce that he will help Mr Jospin in Europe. He insists that if EMU is delayed it will be at German, not French, instigation, and that France will meet the Maastricht deadlines while insisting on a flexible interpretation of the criteria.
