So will the European situation have any effect on POG?
Australian Financial Review June 30/97
Opposition mounts to euro entry
By Andrew McCathie, Berlin
The crisis in Germany over its struggle to qualify for
Europe's proposed common currency is deepening.
Chancellor Helmut Kohl, who returned last week from
the US, found his Finance Minister, Mr Theo Waigel,
under attack over the state of the national finances.
Also, a senior member of the Bundesbank has added a
blistering attack on the single currency.
In a speech on Friday, Mr Reimut Jochimsen, a member
of the bank's governing central council, said that the
single currency was "more than ever in doubt" because
decisions on monetary union taken at this month's summit
of European leaders "lacked teeth".
At the same time, economic reform in the country has all
but stalled. The tax reform the Government hoped would
shore up its fragile Budget is under fire from business
groups and facing an uncertain future, with the
Opposition-controlled Upper House of Parliament, the
Bundesrat, likely to block it this week.
Equally damaging for Dr Kohl has been the fierce attack
on his handling of the drive towards the single currency
from one of the Government's most powerful allies, Mr
Edmund Stoiber, the Premier of the key German State of
Bavaria.
The somewhat independently minded Bavarians have
never been noted for their euro-enthusiastic views, with
Mr Stoiber's campaign against any softening of the single
currency culminating in a threat on Friday to vote against
the project in the Bundesrat if it in any way represented a
paler version of the country's beloved deutschemark.
As a member of the Christian Social Union, the
Bavarian-based associate party of Dr Kohl's Christian
Democratic Union, Mr Stoiber's comments have driven a
wedge into the ruling coalition.
After a series of hostile public exchanges with Dr Kohl,
Mr Stoiber declared on Friday: "I am not waging an
anti-euro discussion. I am not waging an anti-Chancellor
discussion, but rather a discussion for a permanently
stable euro that will be and will remain as strong as the
mark."
The growing political tensions over Mr Stoiber's
campaign come only weeks after the coalition emerged
shaken from another bruising battle over the introduction
of the euro, as the single currency is to be called.
That concerned the trenchant opposition of the Free
Democrats, the junior member of Dr Kohl's coalition, to
the possibility of the introduction of tax rises to allow the
Government to balance its books and bring its public
finances more into line with the tough fiscal targets for
signing up to the euro.
Concerned about their image as low-tax party, the Free
Democrats hinted they were prepared to bring the
coalition down if Mr Waigel tried to increase taxes.
All this has occurred just as Dr Kohl and Mr Waigel
were forced into a embarrassing back-down over their
plans to revalue gold and US dollar reserves held by the
Bundesbank to allow Germany to squeeze into the euro's
tough financial criteria after the bank resisted the moves.
Few economists believe that Germany will meet the
criteria for joining the euro as set out in the Maastricht
treaty. |
