The British government's latest statement that it is unlikely to join the European Union's economic and monetary union in the first wave is politically driven, just as is the EMU project as a whole. There is, however, more uncertainty about Britain's position than about EMU, given the political determination with which the project is being pursued - and despite the great difficulties many EU governments are having delivering on the convergence terms.
Yesterday's announcement from a divided cabinet makes it more unlikely that Britain will join soon, even if the Conservatives are defeated. There will be much pressure now on the Labour Party to clarify its position beyond the commitment to hold a referendum on the subject. A Labour government is not likely to join early, given the many other pressing matters on its agenda. It would be difficult to turn British public opinion around in the few months that would be available to make a decision by early 1998, assuming the Labour leadership decided firmly in favour. A Labour government would be more likely to track the first wave currencies closely. If the Conservatives were to win the election it is most unlikely because of their internal divisions, that they would seek to join, or even to track the first wave members.
These decisions will have major implications for Ireland because of the interdependence of our economies and the political facts of life and death in Northern Ireland. The Government has stated very clearly its determination to join the first wave, despite the vulnerability of important economic sectors to sterling volatility outside it. Public opinion decisively supports this position, as does the major Opposition party, Fianna Fail. It is in Ireland's interests to join in order to avail of the benefits, including consolidation of the single market, stable interest rates, lower transaction costs and a position in the core group of EU states.
There can be no denying the risks associated in proceeding independently of Britain. They have been pointed out by several prominent business figures, by a number of economists and increasingly by leaders of the Progressive Democrats. It is good that they are aired and thoroughly discussed as these decisions about who will participate come more clearly into view.
But it is also important to understand the political as well as the economic basis on which they must be taken. Britain's convulsive debate about Europe is driven largely by domestic concerns about its constitutional structure and its place in the world. These can obscure and delay recognition of the basic interests and the considerable political consensus that exists there in remaining at the heart of the EU, however the Union is designed and shaped by the current Inter Governmental Conference. It is going to take some considerable time for these issues to be worked out, irrespective of who wins the forthcoming election. Certain assumptions must therefore be made about the direction Britain will take. The most prudent one is that it is most likely to join a common currency, but belatedly. Would the critics dispute that scenario? And would they not agree that were Ireland to await such a British decision we would have damaged unnecessarily our interests by being classified once again as a dependent economy?