ERM Realignment: Devalued lira gives EC a breathing space: 'Yes' campaign seizes initiative

THE FRENCH government welcomed the Bundesbank's decision to cut interest rates yesterday and instantly turned it to the advantage of the campaign to ratify the Maastricht treaty by referendum next Sunday.

Michel Sapin, the Finance Minister, reacting to the Bundesbank move and the devaluation of the Italian lira within the Exchange Rate Mechanism, said he believed that a 'yes' vote in the referendum would 'allow France to take part in the opportunities offered and benefit fully from the happy consequences for its economy of the tendency towards a drop in interest rates in Europe.'

The French campaign has been marked by both supporters and opponents of the treaty expressing fears of German domination of Europe, particularly as the EC moves towards a single currency. Mr Sapin said, however, that the Bundesbank decision and the lira devaluation showed the European Monetary System was functioning well. 'The adjustment of parities demonstrates the ability of the Twelve, in a spirit of responsibility and solidarity, to deal with the individual difficulties of a single state.' He talked of 'a real solidarity on Germany's part towards its European partners'.

The news came just after the last opinion poll results for the referendum were published, so it will be impossible to gauge what effect the highly technical EMS moves will have on French public opinion. Polls cannot be published in the last week of campaigning in France. The final polls, however, put the 'yes' vote slightly ahead as the main 'no' campaigners threw huge rallies in Paris to win over the undecided.

At La Courneuve park in the northern Paris suburbs, the Communist Party held its annual Fete de l'Humanite, a popular fair which always attracts tens of thousands of visitors. With slogans such as 'For a Europe of Justice, Democracy, Peace and Friendship. No to Maastricht' or 'No to the Europe of the Bosses', the three-day fair was turned this year into the Communists' only anti- Maastricht campaign rally. Georges Marchais, the party's general secretary, was to make his main speech of the campaign to the fair yesterday evening.

A few miles away, at the Zenith concert hall in La Villette park, better known for its rock concerts, the three main dissidents from the conservative right who are campaigning against the treaty, the Gaullists, Philippe Seguin and Charles Pasqua, and Philippe de Villiers of the centre-right Union for French Democracy, held their only joint meeting of the campaign. With such Gaullist barons as Maurice Couve de Murville, one of Charles de Gaulle's prime ministers, on the stage behind, they addressed an enthusiastic audience of some 6,000 supporters.

Meanwhile, the last opinion polls published before the vote gave 53 and 52 per cent to supporters of ratification. With a margin of error of 3 to 4 per cent, these figures had little real meaning. A poll published in the daily, Liberation, on Saturday put supporters and opponents of ratification at 50:50.

If a statement by Mr de Villiers last week that the majority of undecided voters are believed to favour a 'no' vote is true, the prospects of rejection appear stronger and stronger. The 'yes' campaign, led by the ruling Socialist Party and the main leaders of the established conservative parties, is expected to try and win over waverers by playing on fears of chaos if Maastricht is rejected. Both sides plan a flurry of rallies and broadcasts in the next few days. In any case, the vote looks like being extremely close.

(Photograph omitted)