Kohl seeks to keep French link alive

IMRE KARACS

Bonn

With his image abroad in tatters and the national currency on the slide, President Jacques Chirac of France flew into Bonn last night for a hastily arranged tete-a-tete with the man regarded as the most important politician in Europe: Chancellor Helmut Kohl.

Presented as a routine oil change for the Franco-German axis, the visit none the less had the appearance of a full-blown salvage operation. The German government is visibly irritated with the inauspicious start to the Chirac presidency, particularly with Mr Chirac's failure to deliver on his election promise to cut the budget deficit.

The issue goes to the heart of European integration, Mr Kohl's cherished project. France and Germany will drive next year's European Inter-Governmental Conference (IGC) and a weak and isolated France would reduce Germany's leverage, threatening to bring the entire process to a halt. On most issues that is unlikely, but there are signs of near panic in Germany that the flagship of integration, monetary union by 1999, is in danger of being sunk by France.

So far only two countries, Germany and Luxembourg, have met the economic criteria laid down by the Maastricht treaty. France claims to be in the process of cutting its annual deficit to the required 3 per cent of gross national product, but the Germans frankly do not believe this. All they see is that President Chirac has already lost one promising finance minister, and the French economy has slipped the government leash.

The dawning realisation of the scale of the French problem has splintered the monolith of official German opinion. "Only those who show the will and the ability to hold to long-term stability-oriented policy will pass the tests required by the Maastricht treaty," Mr Kohl thundered earlier this week. "The European currency therefore will be as solid as the mark."

But some of his ministers openly disagree. Apart from Theo Waigel, the Finance Minister who was first to prick this bubble of complacency, the Economics Minister, Gunter Rexrodt is a sceptic. Mr Rexrodt has gone so far as to suggest last week that monetary union might have to be postponed beyond 1999 - a statement he was forced to retract later.

Equally confused is the attitude of the gnomes of Frankfurt. The Bundesbank, custodian of the unshrinking Deutschmark, insists there can be no currency union without strict adherence to the convergence criteria. But the country's six most influential economic institutes said in a joint report on Tuesday that monetary union should go ahead regardless, so that German exporters punch-drunk from a high Deutschmark can start competing on equal terms.

Whoever Mr Kohl listens to, the ultimate fate of monetary union rests with President Chirac, a situation which the imperious German leader must find frustrating. It is rather like the position Bonn has been bounced into by the French nuclear tests. As Mr Chirac discovered yesterday when he was greeted by protesters on arrival, the Muroroa blasts did not enhance Franco-German friendship. Paris's offer to allow EU countries to shelter under the French nuclear umbrella merely added insult to injury.

Beside their revulsion at the French actions, Germans suspect that France is trying to drive a wedge between Europe's fledgling security institutions and the US-led Nato. The offer of a time-share in the force de frappe was politely but firmly rejected. "Germany will do anything to avoid the United States disengaging from the defence of Europe," says a German foreign policy expert.

But despite that disagreement, security is an issue on which the two countries have been able to find common ground. Last week, Bonn tentatively agreed to pay some of the costs of the French spy satellite Helios-2, another device clearly intended by France to sideline the US. And now that German troops are on their way to the former Yugoslavia, military co-operation between Bonn and Paris will at last move beyond the purely symbolic.

The two countries have also made some progress in recent weeks over the vexed question of the reform of Europe's political institutions. A flurry of trips between Paris and Bonn has produced new initiatives, to be presented jointly at next year's IGC. But here, too, disagreements remain. On key questions, such as the eastward enlargement of the European Union, the gap remains wide.

And on the fundamental question of the EU's future, German suspicions are hard to dispel. Germany is yet to be convinced that France is willing to surrender sovereignty to a Europe-wide body which Bonn hopes will one day become the government of a federal Europe.