EU Reaffirms Goal of Single Currency by ’99 : Europe: Only Germany and Luxembourg meet strict qualifying conditions for membership in monetary union.

After days of verbal sniping that unsettled currency markets and pushed the dream of monetary union to the brink of destruction, European Union finance ministers and central bankers appear to agree, after all, on how to reach the noble goal.

At least for the moment.

The latest twist in the on-again-off-again push for a single European currency unfolded in the Spanish city of Valencia, where the financial leaders emerged from a marathon weekend meeting to reaffirm their commitment to usher in the new currency by January, 1999.

Although they wouldn’t say so publicly, they even agreed on a name for the new money: the “Euro.”

Despite this show of unity, serious doubts remain about whether Europeans can meet the terms of the 1991 Maastricht Treaty, which commits them to introducing a single currency by 1999.

“After the weekend, I’d say monetary union has moved from the impossible to the implausible,” said James Lister-Cheese, a currency specialist at the London-based consultanting house Independent Strategy. “There is a lot to do.”

Achieving a currency union, at least among a core of the economically strongest EU-members, has long been viewed as a goal whose potential rewards extend far beyond the logic of a common coinage.

Many have come to see monetary union as a make-or-break issue for the entire EU.

“A single currency is a political necessity for Europe,” concluded Yves-Thibault de Silguy, member of the EU’s executive commission responsible for monetary affairs.

Much of the debate focused on the strict qualifying conditions, which include each member keeping the national budget deficit below 3% and national debt below 60% of gross national product. Italy cannot meet such terms by the 1999 deadline for monetary union, and France is also doubtful.

But after 2 1/2 days of deliberation in Valencia, the ministers announced there would be no delay in the 1999 timetable, Italy was deemed initially ineligible, the strict conditions would not be relaxed and leaders had committed themselves to “a gentleman’s agreement” to go beyond these criteria.

The plan reflected Germany’s dominance of the proceedings, observers said. “If monetary union goes ahead in Europe, it will be on German terms,” declared London’s Financial Times.

Germany’s power to shape a currency union is not based only on the dominance of its economy and the mark, but also the weakness of the other major nations. With France an uncertain qualifier, Italy effectively ruled ineligible, and Britain deciding it will not take part in the first stage, there is no one to counterbalance Bonn’s proposals.