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On that date, chances are very good at the moment that the new European
Monetary System (EMS) will be put into operation. West Germany's
Chancellor Helmut Schmidt and French President Giscard d'Estaing--two
very close friends who converse with each other in colloquial English-
are determined that the EMS plan will begin on time. A majority of
Community countries is expected to endorse the plan at a summit meeting
in early December.
The details of the EMS were covered in the October-November issue of
The PLAIN TRUTH, but briefly they entail keeping the various national
currencies tied together within close tolerances in a kind of "super
snake" arrangement. Backing up the arrangement will be a pool of gold,
and national currency reserves (including Eurodollars) estimated at
roughly $32 billion.
In another two years time, plans are that a
full-blown and larger European Monetary Fund (EMF) will come into
operation, along the lines of, and probably competitive with the U.S.
dominated IMF (International Monetary Fund).
Settlements between the EMS members will be denominated in a closed
pseudo-currency, the ECU (European Currency Unit). Many believe the
ECU will eventually become a genuine European currency. But that
probably will have to await greater harmonization of monetary and
economic policies among the member states, to say nothing of signifi
cantly greater relinquishing of national sovereignty.
Not all participants in the EMS plans are happy with its progress so
far, most notably the British. In fact it appears unlikely that Britain
will join up at the start. The British government says it won't make
up its mind until the Brussels summit, but it has already "leaked" to
the press its grave reservations about EMS. Specifically it objects
to being forced into what it views as a straightjacket of fiscal
restraints. It fears that by having to bind its currency into a
tight arrangement with the essentially non-inflationary deutchmark,
its economy will cool off ("deflate") too rapidly, threatening indus
trial output and jobs--and, of course, risking loss of power by the
ruling Labor Party. Many laborites are ice-cold toward the Common
Market anyway.
While the British are debating both across and within party lines-
similar to the time wasting national referendum in 1975 on whether to
stay in the Common Market--the Germans and French are rushing ahead
with EMS. Thus, if or when Britain does join, it will have had only
marginal influence on its structure. "If we muff this one," remarked
a columnist in the London Times of November 14, "as we muffed the
inception of the /EEC/ in the late 1950s we could find ourselves
once more standing
on
the platform while the European train moves off."
Meanwhile, the train is at the station, loading up, so to speak. "The
political will is unmistakable" says one German "'Official. "The system
will start January 1." Whether the train stops in London seems im
material at the moment. But it appears that it will pick up an en
thusiatic passenger in Dublin. The Irish government is fully supoortive
� the EMS plan. The Irish pound, presently tied to the Britis � unit,
is already under pressure to rise and will do so whenever the link is
cut. While it won't be easy for small countries to abide with the
stiff EMS rules, the Germans, according to the above London Times
account, "are apparently prepared to underwrite Irish membership."