MEPs rush to allay fears on monetary union

MEPs attending the European Parliament have rallied to the cause of economic and monetary union following the decision by the new French government to delay implementing the stability pact agreed at the Dublin summit.

Clearly rattled by the French decision and the growing cloud over the planned introduction of a single currency in 1999, leading parliament figures attempted to allay fears that the EMU project might never get off the ground.

Both the president of the European Monetary Institute, Mr Alexandre Lamfalussy, and the chairman of the parliament's economic affairs committee, Mr Karl von Wogau, told MEPs they were confident the single currency would be introduced on time.

Mr von Wogau said it would be extremely serious" if the member-states could not reach a decision on the stability pact at the Amsterdam summit next week.

"Our fates are all linked together. If we want to have progress and growth it is important that monetary union happens on schedule.

However, many deputies said they were worried about the growing obstacles to the introduction of EMU. The French request for more time to consider the stability pact engineered by the Minister for Finance, Mr Quinn, last December follows disagreement last week between the German government and the Bundesbank over its preparations for a single currency.

The independent Munster MEP, Mr Pat Cox, said the differences between the French and other governments needed to be resolved urgently.

"If it is not, it has the capacity, politically and economically, to destabilise seriously the preparatory work for the launch of EMU," he warned.

Mr Cox said the problems amounted to a "deadly virus which could strike at the heart of the EU if the traditional Franco-German consensus was not restored.

Responding to the concerns of other MEPs about the budgetary rigour required under the stability pact and its possible effect on unemployment, Mr Cox said what was needed to create jobs was more European labour market flexibility.

He warned against "quick, short-term budget fixes". "We tried that. It failed. If we try it again we create an illusion and that illusion will lead to a weak, inflation-prone, high-interest-rate Euro-zone.

A series of reports tabled yesterday repeated calls for the parliament to be given more control over the European Monetary Institute and the future European Central Bank.