2916 Wednesday 23 September 1992


Geneva Sep 22 (Chakravarthi Raghavan) -- European Community leaders in the aftermath of the narrow French yes in the referendum on Maastricht appear to be engaged in a series of moves to make the public believe that their concerns were being addressed.

The EC Commission leaders, as well as the member-states were attempting this even as they are trying to preserve the very power structures against which nearly 49 percent of the French public said no, and perhaps equally sizeable sections in Britain and even Germany would say no - if there be referendum in these two countries where the governments don't want it.

Britain's John Major, in the EC presidency has called for an emergency summit meeting in October, while Chancellor Kohl was travelling to Paris to meet with President Mitterand. The intention behind the Kohl-Mitterand meeting, officials in Paris and Bonn have been reported in the media as saying, is to ease the ratification debates in Britain and Germany and further the ratification process.

The EC Foreign Ministers, after a meeting in New York, issued a statement that there would be no renegotiation of Maastricht at the October EC Summit, convened by Major.

But given Denmark's 'no' in the referendum, and the fact that for Maastricht to come into force, all 12 members have to ratify the treaty, the average European's or outside observers' confusion on how the EC leaders would square the circle could be forgiven.

The EC leaders actions, one European observer said Tuesday, seemed more like the anecdotal story of the Dutch boy putting his fingers to save the dikes. "Whether he actually managed to save the dikes or not, the flood-gates have already been opened and can't be arrested by putting fingers in holes," he said. Various EC leaders also tried to soothe public opinion by talking of steps to make EC institutions more responsible, through greater use of socalled 'subsidiarity' or devolution of power and decision-making to local and national authorities.

But the EC institutional structures - the EC Commission and its powers and role subject to decision-making by the EC Council of Ministers, and the powerless European Parliament (to which unwanted and troublesome politicians on national scene are shunted off and which can only debate and give 'advice' where it is sought), and the space for national Parliaments in areas where the EC claims jurisdiction - have all been spelt out in some fine print in tomes of treaties and agreements, including the Rome Treaty and the Maastricht one.

Given this, the reassuring statements seem to lack credibility and unlikely to quieten the opposition.

The views on the Exchange Rate Mechanism (ERM) and its functioning, including suggestions for regular currency devaluations by countries within the ERM, advocated by the German Bundesbank Chairman, Helmut Schlesinger, far from helping bring some order to the European Exchange Rate markets and currencies, would merely encourage speculators to test the will and capacities of central banks - and further accentuate the moves of US and other institutional investors to move out of currencies they see as weak.

Any such moves, when the principal countries are set against capital controls and fiscal policies of raising taxes to meet needed expenditures, while probably easing the turbulence on exchange rate markets, would increase risks of imported inflation.

Above all, given the strength and size of the German economy and the German mark and the Bundesbank role, would in effect force the other countries to grit their teeth and follow German policies, accentuating further the visceral anti-German feelings not too far below the surface among the ordinary public of the neighboring countries.

While the public disquiet within the EC over decisions by bureaucracies twice or thrice removed from national capitals have been expressed in relation to the Maastricht treaty, such disquiet has arisen over the way the Rome treaty and the Commission's powers over trade and other elements have been exercised.

The various moves and talks about 'subsidiarity' and undertaking a public education campaign seem unlikely to meet these problems.

The European leaders seem to face two difficult problems.

On the one hand, nationally and within the EC they are trying to further the interests of the large corporations and their need for 'level playing grounds'. This the EC Commission is trying to do by using the provisions of the Rome treaty to break down national barriers to EC wide competition, including by foreign corporations established within the EC, as also by negotiating in the Uruguay Round and GATT rules to further this.

Though all of these have to be approved by the political masters of the Commission, the EC Council of Ministers, this is done in non-transparent ways and without the Ministers of countries in face being accountable or responsible, in strict Parliamentary terms, to their legislatures.

Behind the many statements intended to be 'reassuring' there is no indication that the European power structures are ready to undertake fundamental change of policy or direction on these matters.

At the same time, European leaders are trying to make it appear to their domestic audiences - farmers, workers and even the small and medium entrepreneurs - that the government is strongly defending their national interests and is capable of doing so in future.

In this whole exercise, an immediate casualty on the multilateral front appears to be the Uruguay Round and the GATT. In so far as their demands on the South is concerned, both the US and EC are achieving it bilaterally. The NAFTA incorporates practically the Dunkel draft on intellectual property, services etc, and the US is trying to secure similar gains with others. The EFTA countries in their association agreements with Poland and Israel have also doing the same, and the EC-EFTA agreements will ensure its wider benefits to the two.

Neither the US nor the EC are in a position to use the Round now to gain advantages visavis each other.

And the developing countries, by their reactive attitude throughout the Round, and after the Dunkel text, and by yielding bilaterally in dealings with the major trading partners are unable to gain any thing.

Only a substantial re-thinking and unity within the South can make a difference, but this is some time in the future, if at all, and might come only in the wake of domestic upheavals.