The most important issues dealt with during the Irish Presidency of the European Union since July have concerned rule making for Economic and Monetary Union. This has become clear as it has emerged from the political and economic debate throughout Europe and the rest of the world that the political momentum for EMU remains solid, in spite of the grave difficulties many governments will face in implementing the convergence criteria.
Yesterday the council of economic and finance ministers, under the chairmanship of the Minister for Finance, Mr Quinn, registered crucial but as yet inconclusive progress towards agreeing a long term stability pact concerning the rules which will govern fiscal policy within a monetary union. It is possible that final agreement will be reached at the European Council in Dublin in 10 days' time. Yesterday's psychological benchmark in the pound's relations with sterling, when it finished up below parity for the first time since March 1995, underlines the salience of the issue. These decisions will affect most Irish citizens and firms, not least because the economy remains interdependent with and vulnerable to whatever course Britain decides to follow so far as the single currency is concerned.
Public opinion and the attitude of the great majority of business leaders have remained convinced that it is in Ireland's best interests to participate in the first wave of a currency union. Economic commentators in this State and throughout the EU have recently become more ready to raise awkward questions about it, however, which is just as well given the momentum building up towards irreversible decisions. The case for a European monetary union remains strong despite these arguments over whether the project is flawed in terms of design, the sluggish economic performances of most of the main economies and the possibility that adhering strictly to the convergence criteria could drive several of them deeper into recession - or into social turmoil.
The internationalisation of economic life has proceeded apace, outstripping the capacity of governments and therefore of electorates to influence it. A European single market, capped with a single currency, will go a long way to rectify these deficits of economic and political policy and capacity. The economic conditions surrounding such a regime, notably lower interest rates and a more coherent and accessible conduct of policy through a European central bank and joint ministerial monitoring, remain highly desirable objects of economic policy.
It now looks as if the politics of the transition towards the single currency will be determined by a trade off between the widest possible inclusion of EU member states and a strict fiscal regime after it is formed. This would enable large states such as Italy and Spain to be included in the first wave, but with longer term political guarantees and operational rules that would commit their governments to tight fiscal policies over a prolonged period, thereby reassuring German opinion.