Commentary: Solving the EC's Danish dilemma

One of the problems for European financial markets - particularly those in government bonds - is imagining how the community might extract itself from the hook on which the Danish voters have impaled it. Without Maastricht, monetary union is in doubt. Without a single currency, can the markets really justify the small gap between German and other EC interest rates?

The Maastricht puzzle perplexes politicians too, not least the British ones now responsible for chairing the EC meetings that have to put the treaty together again. The UK Government will be reluctant to go along with any of the more militant proposals to drum the Danes out of the community by repudiating the Treaty of Rome and having 11 member states readopt its Maastricht-amended version. The real question is how to haul the Danes back on board the Eurotrain.

Thankfully, the Danish government is beginning to think hard about how it might happen. On the face of it there are two apparently irreconcilable considerations. The first is that the French, Germans and John Major appear to be determined not to reopen an iota of what was negotiated for fear that the whole package would then unravel. The second and contradictory consideration is that the Danish government will find it politically difficult to hold another referendum unless something in the package has clearly changed. An attempt to bludgeon the Danes into acceptance would merely court another resounding rejection.

The answer, as the Danes may well propose in the white paper that they are to publish in September, is likely to lie in annexes to the treaty. There might be some clarification of exactly what powers should be reserved to member states. At the same time there might be new commitment to openness in EC law-making, presently conducted behind the closed doors of the council of ministers.

The good news from Copenhagen is that solutions are not out of sight.