East European Shift Accelerates West European Union
CAMBRIDGE, MASS. — WHEN Soviet domination of East Europe ended, many observers suspected it would retard the push of the European Community (EC) for full monetary and economic union. Not so, says Henning Christopherson, the vice president for economic and financial affairs of the European Commission. "It accelerated it."
That's shown, he notes, by the timetable for union, favorable public opinion, the fading of neutrality in Austria and Sweden, and the desire of the East European nations to join the 12-nation Community.
A founder of the Community, the late Jean Monet, wrote that Western Europe must be ready for the day when East Europe regains its freedom.
"He was completely right," says Mr. Christopherson. "The integration of Europe has taken place at the right moment." Without a political structure to make decisions, a common market, and a good deal of economic unification in Western Europe, "the situation in Europe could have been dangerous."
"In historical terms, European integration has been very rapid," says the former Danish finance minister, here recently to speak at Harvard University.
Now the EC expects further treaty provisions for greater union to be approved before the end of this year. "We are rather close to a political agreement," he says. "There are enormous political implications."
National legislation implementing these provisions should be passed in 1992 or 1993. The provisions should start coming into effect in 1994 over three or four years. And a single EC currency should emerge in 1997 or 1998, he says. Meanwhile, the convergence of policies and patterns in the national economies of the EC will continue. The member states "can no longer avoid a common discipline," the commissioner says.
That means Italy will have to reduce its huge budget deficit, says Christopherson. The EC will need to help its weaker members, such as Ireland, Spain, and Portugal, to adjust. Britain must lower its inflation rate.
Christopherson expects a "rather dramatic drop" in Britain's inflation rate to 6 percent by the end of 1991. Already, inflation and interest rates have converged in what Christopherson calls the "hard core" of the EC - or what others term the deutsche mark bloc (including Denmark, Belgium, the Netherlands, Luxembourg, and even France).
Austria applied for membership in the EC last summer. Sweden will likely do so in June, says the EC official. The EC will conclude agreements of association with Poland, Hungary, and Czechoslovakia that should lead to membership after a decade.
In the last 20 months, these nations have received some $23 billion in loans, grants, and debt reduction, some two-thirds from the EC and its members. "We have to help them come through a very difficult period," says Christopherson.