LONDON — Europe's drive toward a single currency could produce economic decline and destabilize half a century of peace between France and Germany. That assertion in a new book by Bernard Connolly, a senior European Union (EU) official, has sparked an angry debate in Brussels and beyond, and could cost the author his job. The book, ''The Rotten Heart of Europe: The Dirty War for Europe's Money'' (Faber), has been serialized this week in the Times of London. It will be published in Britain Sept. 18, and later in the United States. For the past six years, Mr. Connolly, a Briton of Irish descent, has headed the EU department overseeing the European monetary system - centerpiece of an attempt to gain agreement by member-states to acceptance of a single currency. But instead of remaining a dedicated apostle of monetary union, he took three months unpaid leave earlier this year to write a polemical work. It argues that the exchange rate mechanism (ERM) within which EU members hope to align their currencies as a step toward a single currency, has turned out to be an ''economic monstrosity.'' More controversially, he asserts that the ERM, which Britain was forced to quit three years ago during a period of foreign exchange turmoil, is the product of a ''sweetheart deal'' between Germany's Bundesbank and the French government. Whereas France's aim is to ''tie in and control Germany'' by drawing it into a single European currency system, writes Connolly, Bonn's assumption is that ''what Germans do is right for Germans and must therefore be right for everyone else.'' The contradiction between objectives, he concludes, is ''bound to provoke conflict'' between Bonn and Paris because the German mark will be stronger than the French franc in the long term. Connolly's assault on the European monetary system and the political maneuvering behind it has triggered angry reactions in Brussels. Nikolaus van der Pas, spokesman for European Commission President Jacques Santer, said Connolly was ''removed from reality'' and threatened him with dismissal. Sir Leon Brittan, EU commissioner for external relations, said the book reflected ''a very minority view.'' Private comment was more scathing. One unnamed senior Brussels official called Connolly ''deranged'' and claimed he was ''peddling heresy.'' Such a person was ''unworthy of the European ideal.'' But the Connolly thesis has won applause from prominent British Eurosceptics. John Redwood, who resigned his cabinet post in the summer to challenge Prime Minister John Major for the Conservative Party leadership, said Connolly was ''a brave man who has told us the other side of the story about currency union.'' In a single EU currency, Mr. Redwood said, British interest rates ''would be fixed by a bank in Frankfurt.'' Connolly joined the Brussels bureaucracy in 1979. As late as 1989, he writes, he was still ''quite enthusiastic'' about plans for a single monetary policy for Europe. But experience with how the ERM actually works has changed his mind, he adds. When there was a rush on the British and French currencies in 1992, the book says, Germany's central bank offered to ''provide unlimited support to the franc alone.'' The result, says Connolly, was that Britain had no option but to take the pound sterling out of the ERM. His contention that ''a Europe built on its money'' would be ''sitting atop the fault-line of an earthquake zone'' is stirring controversy in Britain. William Rees-Mogg, former editor of the Times, says Connolly has ''dared to see that the emperor has no clothes.'' But Graham Watson, a British member of the European Parliament, dismisses Connolly's thesis as ''cheap and ludicrous insult-slinging.'' Will Connolly lose his job for speaking out? Not without a struggle, it seems. He says that if Mr. Santer tries to sack him, he is prepared to appeal his case all the way to the European Court of Justice at The Hague. [Book excerpt] A monetary union cannot survive without a political union, as the Bundesbank has said many times without number. But there will not be a political union cohesive enough to put union interests above national interests.... It follows that the single European currency will certainly be weaker than the mark. - From 'The Rotten Heart of Europe'