THE European Commission has outlined a deal aimed at defusing the potential crisis in preparations for monetary tin ion created by France's last-minute demand for changes to the rules that will govern how the euro is run, senior officials said yesterday.
The package will be presented by the Commission President, Mr Jacques Santer, to the French President, Mr Jacques Chirac, and the new French Prime Minister, Mr Lionel Jospin, during talks in Paris tomorrow.
Under the compromise, France will be asked to sign up to a stability pact to enforce budget discipline at next week's Amsterdam summit. In return, the summit will issue a formal commitment to translating French demands for the pact to include a greater emphasis on jobs and growth into concrete provisions for enhanced economic co-operation between EU governments after the launch of the euro.
Officials emphasised it would take several months for the detail of such provisions to be worked out and agreed upon by all 15 EU states. They would then be enshrined in some sort of formal declaration at the next EU summit, in Luxembourg in December.
Details of the commission's attempt to broker a deal emerged as France's right-wing President and left-wing government issued mixed signals about their intentions.
Mr Chirac said, after talks with the Dutch Prime Minister, Mr Wim Kok, that he wanted the stability pact agreed at Amsterdam. But Mr Pierre Moscovici, the new Minister for European Affairs, insisted Paris wanted a "real delay" to consider its position. "If we have asked for a reassessment, it is because we think it will take more than a week," he said.
Preparations for Amsterdam were thrown into chaos on Monday when France requested more time to consider the pact and called for development of a European "economic government" to act as a counterweight to the tight fiscal and monetary policies that will be imposed by the pact and a stability-orientated European Central Bank.
The Finance Minister, Mr Dominique Strauss-Kahn, accompanied the request with a strong restatement of France's commitment to going ahead with monetary union on schedule and reaction on foreign exchange markets was muted.
The EU's Finance Commissioner, Mr Yves Thibault de Silguy, said it was "very important" that EU governments delivered on their political commitment to finalising the stability pact at Amsterdam.