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Euro-Marriage & Divorce

Question for French Premier Lionel Jospin and German Chancellor Helmut Kohl: Will divorce precede marriage?

The next stage in uniting Europe, monetary union, was moving toward its Jan. 1, 1999, nuptial date reasonably well until this month. Now that union (nickname: EMU) faces the risk of divorce. That's a policy split between its heretofore staunchest core members - France and Germany.

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In short order, the following have happened:

* Mr. Kohl was rebuked by his central bank when his government tried creative bookkeeping to get its deficit in order for EMU.

* Kohl's think-alike partner in building Europe, French President Chirac, was rebuked by French voters.

* Kohl then announced that monetary union would go ahead as scheduled no matter what.

* France's new prime minister, Jospin, countered by asking for a delay to reconsider the strict budgetary vows required from partners in the prospective marriage. Jospin also wants to create a new political institution to oversee the planned independent central bank for Europe.

Historically, this French-German split is of utmost importance. After all, one of the great accomplishments of the European Union has been to subdue the quarrels (and wars) between France and Britain, Germany and France, and Britain and Germany that have for centuries hampered continent-wide peace, commerce, and easy movement of labor and business.

The core problem is: how to create a solid new euro currency without causing further job loss in states already facing near 13 percent unemployment.

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That dilemma exists in most major democratic nations. In the US it caused the "Humphrey-Hawkins requirement" that the central bank report to Congress not only on the dollar and inflation but also on progress toward full employment.

France's new government rightly suspects that the proposed EMU budget disciplines would further worsen its job picture. Most Germans rightly suspect that M. Jospin's plan to loosen financial discipline would mean trading solid deutsch marks for weaker euros and more inflation. Britain's Tony Blair is confirmed in his wait-and-see attitude toward joining EMU.

How to break the impasse? A year's delay might be better than the dilution of discipline proposed by Paris. Such dilution would likely result in more long-run instability, inflation, and loss of businesses and jobs in Europe.

Kohl wants to be the historic figure who (1) reunited Germany and (2) united Europe. The first act was harder to digest than expected. The second may take longer than planned.

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