French Boldness Shakes Fragile European Unity

FRANCE'S threat to veto the compromise agreement on farm trade reached by the United States and Europe earlier this month adds a new strain to an already troubled European Community.

Many analysts believe that France will end up winning the satisfaction it is looking for on farm subsidies, through some kind of EC compensation, to allow it to accept the Nov. 20 agreement. But the virulence with which France brandished its veto threat last week jolted observers across Europe and indicates just how deeply EC unity is suffering in the current climate of economic gloom and growing nationalist defensiveness.

"You'd have to go back 20 years, to the first oil shock, to find an equally confused and divided period" for the EC, says Phillipe Moreau-Defarges, a European affairs analyst at the French Institute of International Relations.

Under the strain of oil-price increases, Community countries forsook unity and ran for political cover in disparate directions, Mr. Moreau-Defarges says, and the same phenomenon is taking place today.

Causes for the deepening divisions among the 12 member states include:

* The languishing Maastricht Treaty on political and economic union, which was to take effect Jan. 1, but has only been ratified by seven members.

* Turmoil within the European Monetary System, which after a new round of devaluations 10 days ago continues to threaten several European currencies.

* And debate over the budget, which is splitting the EC along a rich-poor fault line.

France's veto threat is all the more damaging to unity because it comes from the country that, along with Germany, has led the drive for European union. Until this issue came along French leaders were claiming that the EC's "national interest" veto was superseded by the Maastricht Treaty's spirit of unity.

But that sense of direction has lost out to "political panic" among France's leaders, Moreau-Defarges says, who sense a debacle coming in national elections next March.

The US-EC agreement served at least an initial purpose: The 108-nation talks, under the auspices of the General Agreement on Tariffs and Trade (GATT), resumed Thursday in Geneva.

But even if political agreement in the trade talks is reached by Christmas, as GATT Director-General Arthur Dunkel predicts, no legal text is expected to be ready for presentation to signatory nations for several months. And it is not until then that France would be in a position to veto the key farm trade compromise.

Most EC countries initially greeted the US-EC compromise with applause. But now several members, notably poorer ones, are showing signs of support for France's position. Driving the new sympathy by countries like Spain is a desire to rally France behind proposals for a larger EC budget with new funds to help poorer members.

France appears ready to play the budget issue to its benefit. At a Friday meeting of EC finance ministers on the budget issue, France said it stood somewhere between an EC Commission proposal for a 30 percent increase in Community funding by 1997 and a British proposal to put off any revenue increase until 1997.

The British proposal infuriated poorer EC members but won support from Germany, which is facing heavy reunification costs. France, seeking friends, passed praise all around, citing the need to "remain vigilant in periods of budgetary rigor."

The next clues to future EC unity may come later this week, when French President Francois Mitterrand and German Chancellor Helmut Kohl meet in Bonn Thursday and Friday for the biannual Franco-German summit.

The summit will be closely watched for signs of the kind of leadership that observers say is needed to pull the EC out of crisis. But many observers consider any breakthroughs unlikely, given the difficult domestic situation of each leader and mounting differences between the two key countries.

"Kohl and Mitterrand will make every effort to show they are united and to rally a spirit of unity, but under the circumstances it is fancy to think this couple could pull the Community out of its serious difficulties," says Henri Menudier, an analyst specializing in French-German relations. "About the best that can be expected is that they won't act to worsen the situation."

A growing list of Franco-German differences, although not causing a crisis, is undermining the two countries' ability to act in unison, Mr. Menudier says. He cites the GATT negotiations, the ripple effect of Germany's high interest rates, and Germany's turn against the French-designed Hermes space shuttle, as factors complicating the relationship.

Moreau-Defarges is even less optimistic: The Franco-German meeting offers little hope for a troubled Europe because it is taking place between two leaders who are extremely unpopular at home and who have lost all "margin for maneuver."