GERMAN Chancellor, Mr Helmut Kohl, has come under pressure to counter a vocal campaign by Bavarian Premier. Mr Edmund Stoiber, who is calling for a postponement to monetary union if the entry criteria are weakened.
Mr Stoiber, an influential member of the conservative Christian Social Union (CSU), has threatened to block German membership of monetary union in the upper house unless the criteria are strictly met.
"If the requirements are not fulfilled then, of course, we will have to agree on a thorough, controlled postponement" he said. In an interview with German Radio, he said: "The criteria determine the timetable and not the other way around.
"If you say the euro must come on January 1st, 1999 as agreed and basically no longer say the criteria determine the timetable, then of course you create the impression that the criteria are considered less important than the timetable."
The CSU is sister party to Kohl's larger Christian Democratic Union (CDU).
Together they form the ruling coalition with the liberal Free Democrats (FDP). One senior CSU official threatened to end the alliance with Mr Kohl's CDU over the euro.
Prospective members of economic and monetary union (EMU) must limit budget deficits to 3 per cent of gross domestic product in 1997 to qualify for the single currency in 1999.
With European Union members Germany and France in danger of missing the deficit target, discussion is raging over how to interpret the 3 per cent limit and whether postponing EMU might do more damage than allowing slightly higher deficits.
Meanwhile, Bundesbank President, Dr Hans Tietmeyer, urged the government to complete its comprehensive tax reform plan, adding that a commitment to lasting stability was more important for EMU than meeting the deficit target.
"The 3 per cent is an important reference number - there is no doubt of that," he said.
"But more important than the one off fulfilment, or bare under shooting or overshooting of this number, is the question as to whether countries' public finances are in a condition that can be viewed as sustainable, and lastingly sustainable."
The subtle difference is one of the hottest debates going in the run up to monetary union. Should a country like Germany, which has a long track record of fiscal discipline be kept out of EMU because its budget deficit slightly exceeds the target?
Mr Jean Claude Juncker, the Luxembourg Prime Minister who takes over the European Union presidency this week, said he expected Germany to join BMU even if its deficit were too high.
"If a member temporarily veers from this reference value but then clearly moves in the direction of the value again and it has committed itself lastingly to stability, then even 3.2 per cent conforms to the treaty," he said.
The other side of the question is whether a country such as Italy, which does not have a long record of fiscal prudence, should be allowed into the EMU club if it is able to squeeze into the Maastricht corset this year.
"If we begin with 3.2, then come the next ones with 3.6 and the next country with 3.8 or 3.9. That says everything," he said.
But the Bavarian premier has been accused of launching an anti euro campaign to improve his political profile.
