West Europe Near Accord on One Currency

Western Europe’s leaders all but guaranteed Monday that some of their national currencies will give way to a common one by 1999, and they also made progress toward uniting their policies in areas ranging from foreign relations and defense to working conditions.

In the first day of a scheduled two-day summit meeting, leaders of all 12 European Community nations except Britain tentatively approved a set of procedures to merge the currencies of those with moderate inflation and manageable budget deficits.

British Prime Minister John Major made no effort to block the other 11 EC members from moving toward a common currency as long as the British Parliament retains the right to save the British pound. Other nations predicted that Britain would ultimately realize that its economy would suffer if it clung to the pound.

“Staying out will constitute a great risk for Great Britain,” said French Foreign Minister Roland Dumas.

Many of Europe’s leaders view a single currency as a logical extension of their drive to merge their nations into a giant economy rivaling those of the United States and Japan. The drive is beginning with the elimination of most trade barriers between the 12 EC members by the end of 1992.

Dutch Foreign Minister Hans van den Broek, whose nation holds the EC’s rotating presidency, said he hopes the 12 nations can complete a historic agreement today to unite themselves politically as well as economically.

“I’m confident that we will have results here in Maastricht,” said Danish Prime Minister Poul Schlueter.

Even the British, on most issues the most reluctant of the 12 nations to yield sovereign powers to the EC bureaucracy, seemed to acknowledge that unity has developed unstoppable momentum.

After the first day of meetings, most of them in a modern provincial government headquarters on an island in the Maas River, a senior British official reported “quite a lot of progress” on proposals for a common EC defense policy and, possibly, a common defense force.

“I believe there are converging views” on defense, Van den Broek said, “and we should be able to resolve the remaining differences.”

On foreign policy, France proposed a set of criteria for quickly deciding whether to recognize breakaway republics--such as those in the Soviet Union and Yugoslavia--as independent nations. Among the criteria would be respect of human rights and peaceful definition of borders.

“It would be paradoxical that the (European) Community would not be in a position to demonstrate on the spot a common foreign policy in present conditions,” said Daniel Bernard, a French Foreign Ministry spokesman.

Other areas of political unity could prove more divisive. Britain continued to resist Europe-wide rules mandating maximum workweeks and other working conditions--a British spokesman said they would hurt the competitiveness of European industry and result in a “severe loss of jobs.”

And the EC’s poorer members--Spain, Portugal, Greece and Ireland--demanded that the rich countries of the EC share more of their wealth with them.

If a deadlock develops today over political unity, an agreement on a single currency could be dragged down with it. In Monday’s meetings, Germany continued to insist that it would not sacrifice the mighty deutschemark to a common currency unless the EC nations also set themselves on the path toward common defense and foreign policies.

“Germany has said very clearly that there must be political union with monetary union,” said Henning Christophersen, the senior EC bureaucrat for fiscal matters.

That issue aside, a common currency, with or without the British pound, seemed all but assured. A German spokesman, when asked if he expects a final accord today, said, “I have no doubt that would be the case.”

A senior French official, asking not to be identified, said France is delighted that the formula for moving to a common currency would make the process irreversible.

Under that formula, EC nations could switch to the “ecu”--the acronym for “European currency unit” and also the name of a European silver piece in the Middle Ages--as early as 1997. The switch would occur then only if a majority of EC nations voted for it, and if at least seven EC nations had inflation rates and budget deficits within the parameters.

If those conditions were not met, qualifying countries would automatically make the switch in 1999, with no further vote necessary. As few as two countries could form the initial currency union, with other countries joining as their economies qualified.

A British official noted that at present only France might qualify. Even Germany would not, he said, because its budget deficit is too great.

“We’re talking about a single currency for France, which I think is a good idea,” the British spokesman joked.

But Dutch Finance Minister Wim Kok said the EC would administer the qualification criteria subjectively. Belgium, for example, might qualify because of its low inflation rate even though its budget deficit remains large.

“We’re not going to be governed by computers,” Kok said.