More on British reaction..
Euro launch descends into farce
By George Jones, Political Editor, and Toby Helm, EU Correspondent, in
Brussels
THE credibility of the European single currency was undermined last
night by a welter of recriminations over Tony Blair's handling of the
chaotic Brussels summit which ended in a fudged deal over who should
head the new central bank.
Money markets across Europe are braced for a volatile session today amid
fears that the euro's standing has been compromised by political
interference. Downing Street dismissed accusations from other European
leaders that the Prime Minister - who chaired the summit as the current
EU president - had not done his homework for the crucial meeting to
launch the euro.
But the sour mood around Europe over the traumatic birth of the new
currency was in marked contrast to the recent acclaim Mr Blair has
received for his success in brokering the Good Friday agreement in
Northern Ireland and helping to set up today's Middle East peace summit
in London.
London's stock market will be closed for the May Bank Holiday, but
thousands of currency dealers have been drafted into the City to trade
on international markets in the wake of the decision to allow 11 EU
currencies - but not sterling - to join the euro on Jan 1. Dealers,
business leaders and politicians across Europe are worried that the
unseemly wrangling in Brussels, which lasted until the early hours
yesterday, will have damaged confidence in the independent management of
economic and monetary union.
After 13 hours of argument, a weary Mr Blair announced a compromise
between the rival French and Dutch candidates for the post of president
of the Frankfurt-based European Central Bank, which will set interest
rates across "Euroland" - the 11 countries participating in the single
currency.
Wim Duisenberg, 62, the Dutch candidate, was appointed to head the bank
for the first eight-year term. But there are fears that he will be seen
as a "lame duck" president because of a promise that he will step down
half-way through his term.
President Chirac of France pressed for a written assurance that Mr
Duisenberg would quit after four years to be replaced by Jean-Claude
Trichet, 55, head of the French central bank. This was resisted by
Chancellor Kohl of Germany on the grounds that it would contravene the
Maastricht Treaty, which stipulates that the bank president must be
appointed for an eight-year term.
Eventually, Mr Blair persuaded Mr Duisenberg to appear before all 15 EU
leaders and their finance ministers to assure them that he intended to
stand down of his own accord in the middle of 2002 - after euro notes
and coins are introduced - to make way for the Frenchman. But Mr Blair
faced seething resentment among other EU leaders for allowing what had
been intended as a high-profile launch of the new currency to be
overshadowed by horse trading.
Jose-Maria Gil Robles, president of the European Parliament, who stormed
out of the summit in protest on Saturday, likened the Bank to a
malformed baby and said he had "no doubt" that the agreement breached
the spirit of the Maastricht Treaty. Romano Prodi, the Italian Prime
Minister, said Mr Blair had been "ill-prepared" while Jean-Claude
Juncker, the Luxembourg premier, said he had not sufficiently briefed
some fellow leaders on the proposed deal.
Downing Street officials dismissed the criticism, claiming that Mr Blair
had spent hours with the summit's leading players averting a full-scale
clash, which could have resulted in both Mr Duisenberg and M Trichet
being vetoed, wrecking the currency's launch. Mr Blair's spokesman
admitted that it had been "very difficult" but denied that there had
been a "fix", saying he had achieved his objective. The blame lay with
other delegations who had not made up their minds before arriving in
Brussels.
But Euro-MPs were warning within minutes of the deal being done that it
could be illegal, and the European Parliament might seek to oppose the
appointments to the bank's board next week. The first real test comes on
Thursday when Mr Duisenberg is questioned by Euro-MPs. The Parliament
has consistently said it wants a president for eight years.
Although it cannot block the deal, a vote against would embarrass EU
leaders and provoke a further crisis of confidence in the euro. The deal
could also face a constitutional challenge in Germany, where there is
concern that it is against the spirit of Maastricht.
William Hague said the "near farcical wrangling" did not augur well for
the future of the single currency. "There has been a fistful of fudges.
Economic fundamentals have been blithely ignored." Kenneth Clarke, the
former Chancellor, hailed the agreement as "the most important political
movement in Western Europe since the end of the Cold War". But he
accused the French of behaving badly and said Mr Blair had given in to
them.
Gordon Brown, the Chancellor, defended Mr Blair's handling. "I'm
satisfied that we got, eventually, the decisions that were right both
for the project and for Britain in Europe as well," he told Radio 4's
The World this Weekend. |
