AFTER a week of bitter Italo-French polemics, all was sweetness and light yesterday in Naples at the end of a morning-long summit between the Italian Prime Minister, Mr Romano Prodi, and President Jacques Chirac of France.
The two leaders expressed their "full agreement" on a wide range of issues including Bosnia, the Middle East, the war on drugs, today's EU summit in Dublin and the heed for the lira to re-enter the European Union's Exchange Rate Mechanism (ERM) "as soon as possible".
For a matter of hours on Tuesday, yesterday's summit seemed likely to be called off by an infuriated Italian government, outraged at two apparently gratuitous attacks on the instability of the lira on successive days by Mr Chirac.
The French leader had argued that Italy might be one of those countries which would not prove ready to join the European single currency at its outset in 1999.
It had always seemed likely that Mr Chirac's comments were intended not so much to veto the lira's entry to the euro as to create conditions ensuring that the lira enters at an exchange rate acceptable to France.
Over the last four years, the lira has effectively devalued by 40 per cent and, although it has recovered nearly half of that ground in the last 12 months, Italian exports to France benefitted greatly when it was at its weakest.
The lira is currently trading at just under the psychological marker of 1.000 (994 yesterday). Mr Prodi would prefer it to remain slightly above the 1,000 rating while Mr Chirac would like to see the lira appreciate even further on its present value.
At a joint news conference yesterday, the Prime Minister said that EU talks about the lira's reentry level to the ERM should be held "as soon as possible", without, however, indicating a specific date for the lira's return to the currency grid.
"This has to be the subject of immediate, rapid, technical negotiations at a multi-lateral level," he said.
Both leaders went on to indulge in a bout of mutual congratulations concerning their respective 1997 budgets, obviously crucial to bringing both economics in line with the strict Maastricht convergency requirements.
Mr Chirac, perhaps keen to atone for this week's "misunderstanding", praised the $41 billion budget unveiled last week by Mr Prodi, saying: "The courageous policy of rigour adopted by the government is in line with the European spirit. The subsequent rise in the value of the lira and fall in interest rates can only be welcomed."
Both leaders also spoke of their "full agreement" on issues as different as Bosnia, the Middle East, the war on drugs and the need to keep the EU's Inter-Governmental Conference (IGC) on schedule. The IGC, of course, is the primary issue on the agenda for today's EU summit in Dublin.
Due to the workings of some mischievous gremlins, reporters were able to listen in to the plenary session of the talks via radio headsets supplied for later translations purposes.
Among the eavesdroppings was a comment from Mr Chirac to the effect that "there are no differences of views between Italy and France on all the major problems".
Immediately after the summit, Mr Prodi and the Italian Foreign Minister, Mr Lamberto Dini, had an hour-long meeting with the Palestinian leader, Mr Yasser Arafat, who was en route from Tunis to Paris for a meeting with Mr Chirac.
Italian Foreign Office officials said that the Palestinian leader had requested the meeting in order to brief the Italian government on the outcome of this week's inconclusive summit in Washington with President Clinton, the Israeli Prime Minister, Mr Benjamin Netanyahu, and King Hussein of Jordan.