The heads of state gathered at the summit failed to reach an agreement on EU voting procedures that was supposed to pave the way for the enlargement of the EU into Eastern and Central Europe. Paris, Bonn, and other large powers want greater voting power in the EU, especially as more states join. German chancellor Helmut Kohl blocked an expected change in the treaty to have more majority votes, arguing that the state governments in Germany could not accept it. The summit put off any restructuring of the EU voting until after a decision is made to admit several new members.

At least ten governments have applied for membership in the Union, ranging from Estonia in the north to Cyprus in the south. For London, Stockholm, Helsinki, and Washington, this enlargement of the Union is a high-priority question that intersects with the expansion of NATO toward the borders of the Russian workers state. As it became obvious that none of the Baltic states will become members of NATO in the first round, the governments of Sweden and Finland began pushing the EU to take in at least Estonia, the Baltic state they say has come the furthest on the road to meet European Union standards.

Both Stockholm and Helsinki advocate taking a further step by having the European Union guarantee the military defense of Baltic states that are members of the EU if threatened by Moscow. They propose that the military decisions be made by the EU and carried out by the Western European Union (WEU), the military organization composed of the NATO members in Europe. Swedish and Finnish troops could participate under the WEU's command, they say, although Stockholm and Helsinki remain outside NATO. This course has been backed by Washington and by the new British prime minister, Anthony Blair.

A different proposal by Paris to merge the WEU with the EU was blocked by London, Stockholm, Helsinki, and Vienna at the Amsterdam summit. The Swedish paper Svenska Dagbladet reported that the final pact referred to the "possible integration of the WEU, if the European Council so decides." The European Council makes its decisions by unanimous vote.

Debate over EMU criteria
Another point of debate was the "stability pact" negotiated last year in Dublin, which sets limits on inflation and budget deficits that EU members are supposed to meet in order to enter the monetary union. When the newly elected French government asked on June 10 for a "time-out" to think over the pact, which was to be signed in Amsterdam, the focus of the summit changed from the reform of the treaty to how to negotiate the monetary union back on track.

French prime minister Lionel Jospin said he needed promises of jobs from the European Union before signing the stability pact. During his election campaign, the Socialist Party leader had pledged to renegotiate the stability pact.

This didn't go over well with Bonn. In Dublin, the German government already had to back off some of its conditions for the shaping of a strong euro - as the EMU currency is called - such as demanding heavy fines on the governments that do not meet the EMU fiscal criteria. The French proposal would lead to a further weakening of the euro, relative to the dollar and yen.

In the end, Jospin accepted what the Financial Times of London described as a "fig leaf" - a toothless pledge to promote employment and economic growth - in exchange for the stability pact.

But French government officials have made it plain they don't consider themselves bound by its criteria, which include having a budget deficit of no more than 3 percent this year. Speaking in a radio interview Francés European affairs minister Pierre Moscovici declared, "We need to see what the situation of our public finances is and it's in regards to that public-finances situation that we will decide, or not, to participate in the euro."

French officials quickly disavowed Moscovici, saying his statement reflects "neither a political will nor a strategy" by the French government. At a press conference with President Jacques Chirac, Jospin reaffirmed Paris's "profound attachment to achieving the common currency on the agreed date" - though he didn't mention meeting the required criteria. Returning to Paris, Jospin decided to delay any major budgetary decisions until autumn.

Bonn is not in a strong position to insist that the EMU criteria be strictly met, especially after Kohl and Finance Minister Theodor Waigel recently attempted to juggle their books by revaluing Germany's gold reserves to meet the 3 percent deficit target. A recent report by the Organization for Economic Cooperation and Development stated that Bonn, Paris, and Rome may all fail to meet the criteria for 1997.

While press coverage in Britain, Scandinavia, and the United States centered largely on the failure to reform the EU treaty on power-sharing, the German media mostly worried over a soft euro. With elections coming up next year in Germany, the question of the strength of the currency has already become a central issue. Gerhard Schroder, the most likely social democratic candidate for chancellor, said the EMU has to wait until the convergence criteria is fulfilled, according to Svenska Dagbladet.

The social democratic government in Sweden decided June 3 that Stockholm will not participate in EMU in the first round, set for Jan. 1, 1999, although Stockholm will meet the main criteria in 1997. Copenhagen also meets the criteria but has negotiated an exemption from EMU. London will not join EMU in the first round either, and Blair has stated that the convergence criteria should be strictly met by those who join EMU. He is trying to take the lead in Europe to demand "labor flexibility" as a road toward capitalist prosperity.

London and Stockholm are trying to make a strong showing in relation to their rivals who are not able to meet the criteria for the monetary union. A June 4 article in Svenska Dagbladet described Britain, Norway, Sweden, and Switzerland as a dollar-pound area. These countries earlier constituted the European Free Trade Association (EFTA), a trade bloc that in the 1960s was led by London with a special relationship to Washington. EFTA has since disintegrated and regrouped in and around the European Union.

The article in Svenska Dagbladet stressed that the pound, the Swiss franc, and the Norwegian krona all have surged on a higher dollar, and raised the hope that the Swedish krona will follow suit. Much of the trade from these countries is in dollars or pounds.  
 
 
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