European finance ministers formally approved Friday the Jan. 1 launch of Europe’s single currency by 11 nations and called on all states to begin the economic reforms needed to stimulate growth and reduce Europe’s pool of 18 million unemployed.
European heads of state and government will convene Saturday to complete the preparatory stage for the single currency and to try to resolve a simmering feud between France and Germany over the choice of a governor for the European Central Bank that will begin functioning in July.
British Chancellor of the Exchequer Gordon Brown, president of the Council of Finance Ministers, hailed the decisions by the ministers as “historic” and said it was “the most important meeting of finance ministers there has been.”
“This is . . . the beginning of a new era for Europe,” he said, noting that the euro area will encompass 20 percent of the world’s economy.
The finance ministers called on all 15 members of the European Union to maintain the rigid budget discipline that has enabled 11 of them to qualify for the single currency, to be known as the euro. The ministers also urged structural economic reforms to make labor and capital markets more effective.
“Economic reform is the next big challenge for Europe,” Brown said.
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The ministers promised to monitor budgetary objectives throughout the EU and submit by the end of this year programs on national stability and economic convergence. The 11 countries that will participate in the single currency from Jan. 1 are Germany, France, Belgium, Finland, the Netherlands, Luxembourg, Italy, Spain, Portugal, Austria and Ireland.
Britain, Sweden and Denmark have opted not to participate for the time being, and Greece does not qualify.
While finance ministers were meeting, British Prime Minister Tony Blair, as president of the EU, was in The Hague meeting with Dutch Prime Minister Wim Kok to try to resolve the dispute between France and Germany over the choice of the central bank governor.
Finance ministers of 14 EU countries support Dutchman Wim Duisenberg for the job, but French President Jacques Chirac is holding out for Jean-Claude Trichet, governor of the Bank of France. What was supposed to be a technical decision has become highly political.
Blair’s spokesman, Alistair Campbell, said Blair had talked by telephone Friday with German Chancellor Helmut Kohl and Chirac about the dispute, but he declined to give details. “We think an agreement can be brokered, although the situation does remain difficult,” he said.
There had been speculation that Duisenberg would serve the first half of an eight-year term, then step down to make way for Trichet. But that seems to have been ruled out, with European Commission President Jacques Santer and others noting that it would be a violation of the Maastricht Treaty, which calls for the governor to serve a non-renewable term of eight years.
Some Europeans have suggested that the summit will have to turn to a third candidate if no agreement can be reached on Duisenberg or Trichet. Campbell said no third name has come forward, as either man would be an excellent choice.
Brown said he was confident “progress will be established tomorrow” on this issue but declined to say whether he expected the dispute to be resolved Saturday.
Brown said that next year Britain will publish the outline of a national plan to convert from the pound to the euro.
The British government has put off until after the next election, in 2001 or 2002, a decision on whether Britain should adopt the euro, but Brown has made clear he is a strong advocate of the change.
He said he regretted that in the last five years other European nations made preparations for the euro but Britain did not. “Our task now is to make sure Britain is ready for the euro,” he said.
Brown noted that EU members as a whole have reduced their budget deficits to 3 percent from 6 percent in the last two years and reduced inflation to 2 percent from 5 percent.