The European Community's complex system of managed exchange rates celebrates its fourth anniversary this month - but the candles are flickering. Over the weekend, after long and difficult negotiations, EC finance ministers meeting here agreed to patch up the shaky system once again by realigning the parities between their currencies for the seventh time in the system's very short life.
Some financial wizards here argue that this new realignment - perhaps the most contentious so far - could be the beginning of the end of the so-called European Monetary System (EMS). But others say the system has served its purpose well.
The latest realignment means the devaluation of the French franc for the third time since Francois Mitterrand's Socialist government took power nearly two years ago, this time by 2.5 percent. The West German mark was revalued upward by 5.5 percent. A bitter row broke out between the West German and French finance ministers, with the former arguing that a revaluation of the mark would make his country's economic recovery more difficult, and the latter saying a devaluation of the franc would seriously hurt his country's ability to buy products from abroad.
The EMS, set up in March 1979, was supposed to stabilize the exchange rates of eight key West European currencies (not including the British pound) by linking them to preset limits that governments pledged to defend.
This followed a long period of ''floating'' rates, which EMS advocates - notably former French President Valery Giscard d'Estaing and retired West German Chancellor Helmut Schmidt - claimed had made it difficult, if not impossible, for industry to operate. They say the uncertainty caused by fluctuating exchange rates within short time periods had had a paralyzing effect on decisionmaking in business, whether it related to investment, trade, or production.
But since it was created, the EMS has not been the cure-all its supporters had hoped it would be.
Economic performance among EMS member countries has continued to diverge. Because of that, the system has had to undergo several modifications as pressure has built up for currencies to ''break out'' of their preset limits by becoming too weak or too strong.
More often than not it has been the West German mark, reflecting the strength of Western Europe's ''locomotive'' economy, that speculators have rushed to buy, leaving the other EMS currencies - especially the French and Belgian francs - in the lurch.
That was true once more in recent weeks as the French economy has been seen by the business community to falter under Socialist rule while the West German economy appeared to show renewed strength. This strength has been particularly evident since the defeat in West German elections earlier this month of the Social Democrats and the elevation to power of the center-right Christian Democrats and the right-wing Liberals.
Underlying the perceptions have been what economists call the ''economic fundamentals.''
West Germany's inflation rate (now 3.5 percent) has slowed more quickly than the French (9 percent). West Germany has also enjoyed a healthy trade surplus. France's trade deficit, on the other hand, hit $1.4 billion in January, its foreign debt has been estimated at $20 billion, and France's industrial output has not improved even as the world recession has begun to ease.
France has certainly begun to get unemployment under control. But even that has worked against the French franc, with the business community saying it will mean higher costs for industry than in countries with growing unemployment - like West Germany.
And then there is the question of faith.
''Does anyone really think the Socialist government in France can turn the economy around?'' a Brussels-based US executive asked rhetorically. ''I doubt it.''
What the latest - and certainly not the last - realignment in the EMS will mean is that French exports will be less expensive to buy for those countries whose currencies have not been devalued. Just the reverse will be true, of course, regarding imports.
What will happen to the United States dollar and the British pound is uncertain. After most realignments the dollar has fallen because of heavy upward pressure on the mark. But after the EMS shuffle last June the dollar rose. Most economists, however, believe that the dollar is due for a fall this year (to help correct the huge US trade deficit), whatever happens to the EMS.
As for the pound, its fate appears to be tied more closely to the now uncertain price of oil (Britain is the world's fifth-largest oil producer) than to the movements of the EMS, experts agree.
Analysts also agree that the EMS will survive - at least until the next need to realign currencies comes along, as well it might within months unless France acts to correct its ''economic fundamentals.'' Other analysts, however, see the current tension in the EMS as further testimony to the hopelessness of imposing fixed exchange rates on currencies of countries with such divergent economic policies and power.
''The system is bound to break up someday,'' a Brussels banker said.
For now, the EMS seems to most prime movers to be better than its alternative , which is ''chaos,'' in the words of a West German economist. Even the French, who many believe would be the first to withdraw from the EMS, remain committed.
Said French Finance Minister Jacques Delors: ''We must do what's necessary to ensure the cohesion of the EMS.''