A European Germany Or A German Europe?

The last big event held in the small Dutch town of Maastricht was a horse-jumping Grand Prix a month ago. When the 12 European Community heads of government meet there on Dec. 9-10, they'll be facing higher hurdles than their equine forerunners--and greater hazards.

What's at stake is nothing less than the political and economic shape of Europe. For the aim at Maastricht is to draw up the rules and timetables for close EC monetary and political union. If the leaders can strike a deal, Europe would be on the road toward a single currency under a Eurofed by the end of the decade. And such institutions as the EC Commission in Brussels and the European Parliament would gradually gain power over defense and foreign policy.

Such a shift would amount to the first complete overhaul of the EC's founding Treaty of Rome since it was ratified in 1957. At that time, the goal was to anchor West Germany to the former Allied powers, bringing it under political control. Now the Euros, led by the French, are trying to harness German economic power. They want, as German Foreign Minister Hans-Dietrich Genscher put it, "a European Germany, not a German Europe."

GERMAN LOOK. Achieving this goal won't be easy. German Chancellor Helmut Kohl and French President Francois Mitterrand collaborated on a blueprint for a post-cold war Europe in 1990. But since then, the emerging structure has taken on a decidedly German look. Proposed new institutions such as the Eurofed appear suspiciously like their German equivalents, in this case the tightfisted Bundesbank.

As the summit approaches, skeptics point out that the Europeans are still squabbling over the basic EC '92 program and that past meetings have mainly produced empty talk. At the same time, the Europeans are becoming anxious: They remember what an uncomfortable bedfellow Germany can be. High German interest rates have helped send the German mark soaring, forcing a hike in French rates on Nov. 18 and pushing the British pound near the floor allowed in the European Monetary System. A single currency would put the screws to weak EC economies such as Britain and Italy by taking away the escape hatch of devaluing their currencies. But for now, France, the key player on the Continent after Germany, is willing to take that risk. The French are marching in monetary lockstep with Germany through the EMS, and they know that discipline has won them big gains against inflation. They think a Eurofed that replaced the Bundesbank as Europe's monetary drummer would give them policy clout.

BIG FEARS. Unification talk unnerves the British. Prime Minister John Major and his cabinet are painting scary pictures of a meddling EC. But most observers think that's an exaggerated fear. Moreover, European executives are pushing hard for a success at Maastricht to follow up the EC '92 process of sweeping away barriers to trade. Otherwise, they argue, they will still face 12 monetary, fiscal, and legal regimes and won't be able to compete against Japan and the U. S.

But if Maastricht produces an agreement, as many analysts think likely, it will be mainly because of the combined weight of France and Germany. When they team up, the rest of the EC, including Britain, has little choice but to follow.

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