From: yiannis@WAM.UMD.EDU (IOANNIS VELISSARAKOS  ATHINA-HELLAS)
Newsgroups: soc.culture.greek
Subject: The Treaty of Maastricht   (1)
Date: 16 Aug 92 21:48:46 GMT


			ANALYSIS EXTRA		    European (16-19/07/92)
                        (by Victor Smart)


	The Maastricht treaty comes in two dinstict parts. Political 
union is the first and most wide-ranging. Yet it is the second, covering
economic and monetary union, which comes closest to meeting the 
federalist impulse.
	Whereas only hesitant, intergovernmental steps towards a common     
policy on such maters such as foreign affairs and defence were eventually
agreed, creation of a single currency becomes inevitable - as long as
the treaty is finally ratified.
	Scrapping Europe's independent national currencies has long been
a heartfelt aim for big business. To business people the matrix of endles-
sly shifting rates of exchange between 11 currencies remain a headache.
Envious glances are cast at the United States where a massive internal 
market is complemented by transactions in a single stable currency, the   
ever welcome dollar.
 	To those who see commerce and industry as the real motor force
behind European integration, the results of Maastricht would be no
surprise. The Treaty of European Union sets in concrete a date for 
sweeping away independent national currencies to create the European 
Currency Unit, or ECU, as a rival to the dollar. The ECU, it says, will
become a currency in its own right at the latest by 1 January 1999. And,
as the ECU coins begin to jangle in pockets from Lisbon to Leipzig, all
the institutional paraphernalia of full economic and monetary union will
simultaneously come into existence. The move to a single currency is
"irreversible".
	Much of the treaty is taken up with a detailed explanation 
of how Europe would follow the path to a single currency. There are to 
be three stages - the first starting formally when the treaty is ratified,
but in reality already under way.
	At the heart of the strategy is the technical process of conver-
gence. At the moment economic indicators vary widely for each country
inflation, interest rates, exchange fluctuations, bugdet and public 
sector deficits should begin to fall in line with each other and converge
with the record of the best-performing economies.
	If this process can be made to work successfully, in principle
at least, then it will be relatively straight-forward to lock fixed 
exchange rates irrevocably and finally to merge the currencies into one.
It is clear that the whole apparatus is actually modelled on Germany's.
Brave hopes are riding on Europe's shiny new currency. Above all it is
imperative that the ECU is every bit as robust and proof against inflation 
as the Deutschmark has proved.
	At the centre is an independent central bank much like the 
Bundesbank in its role. Called the European Central Bank, this will sit 
in a European System of Central Banks alongside the central banks of each
member state.
	Price stability will be the principal task and strict economic 
disciplines the price the member states pay to enjoy the right to use the
ECU. Member states are sworn solemnly to avoid the curse of excessive
budgetary deficits.
	Despite this, the thoought of sacrificing so revered a currency
as the Deutschmark has still piqued national sensitivities in Germany.
	The government insisted that thousands of copies of the Maastricht
treaty be pulped when it discovered that references to Europe's new 
currency appeared not as the English language acronymn ECU, but as Ecu, 
the ancient French coin.

 				
							    (continues...)

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