THE row over Germany's plan to revalue its gold reserves deepened yesterday when one of the Bonn government's senior economic advisers warned that the scheme would endanger the introduction of Economic and Monetary Union (EMU).
Professor Horst Siebert, a member of the government's economic advisory council, known as the "five wise men", said that the government should heed the advice of the Bundesbank and abandon the plan.
"The whole plan is strongly impaired in its credibility and with it the stability of the future currency," he said.
The Bundesbank rejected the plan on Wednesday, claiming that it infringed the central bank's independence. But Bundesbank president Mr Hans Tietmeier denied yesterday that he had ever considered resigning over the matter.
The opposition Social Democrats and Greens will table a parliamentary motion next week demanding the resignation of Finance Minister Mr Theo Waigel.
But Mr Waigel yesterday repeated his determination to remain in office and to push through the gold revaluation plan regardless of the Bundesbank's views.
"There is no reason whatsoever to resign. I will keep fighting for the stability of the mark, for the same stability for the euro and for a 1998 budget that conforms with the constitution.
"I have been confronted with calls to resign from the opposition since my first year in office. That is part of the opposition's ritual. I have the confidence of the coalition and the chancellor," he said.
Describing the revaluation plan as a "well founded measure", Mr Waigel predicted that it would pass easily through the Bundestag, where Chancellor Helmut Kohl's centre right coalition holds a 12 seat majority.
The government points out that Germany currently values its gold reserves at the unusually low rate of DM144 per ounce. The Irish central bank values its reserves at DM595 per ounce, whereas in France the figure is DM630 per ounce.
But one junior member of Dr Kohl's Christian Democrats, Mr Juergen Augustinowitz, yesterday praised the Bundesbank's stand and promised to vote against the measure in parliament.
"I will not take part in any decision in the Bundestag which would impair the stability of the mark or the independence and credibility of the Bundesbank," he said.
The president of the Federation of German Industry (BDI) warned that the row between Mr Waigel and the Bundesbank was damaging Germany's economic interests and called on the two sides to come to an agreement.
Most political observers expect Dr Kohl and Mr Waigel to hold firm to the gold revaluation plan.
. If France returns a Socialist led government tomorrow, the prospect of a soft euro based on a broad membership will become more likely.
Germany is determined that Italy should not be part of the first wave of EMU members but, with its own advisers accusing the government of resorting to accounting tricks, Bonn is no longer in a strong position to deliver economic lectures to its neighbours.
