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EEC Leaders Agree on Compromise Plan for Economic Unity

June 27, 1989|From Associated Press

MADRID — European Economic Community leaders today agreed on a compromise plan for gradually unifying their economies after Britain succeeded in blocking attempts to create a single currency and a central bank.

"We have conceded nothing at all," British Prime Minister Margaret Thatcher said at the end of a two-day summit.

However, France and West Germany, which were aligned against Britain in the dispute over broad plans to unify the economies, also declared themselves pleased with the compromise pact.

Closer monetary union is part of the EEC's drive toward December, 1992, when the member nations will drop trade barriers to form a single market.

West German Chancellor Helmut Kohl said the agreement at the end of a two-day EEC summit was a "superb result."

"The foundation has been laid for a development that brings the EEC further together and brings political union one step nearer," Kohl told reporters.

How Far and How Fast

The 12 EEC leaders have been divided over how far and how fast to go toward closer economic and monetary union as part of the establishment of a single Europe-wide market in 1992.

In a final communique, the leaders endorsed only part of a sweeping plan for monetary union drawn up by Jacques Delors, head of the EEC's executive body, the European Commission.

The communique avoided setting any deadline on the more controversial aspects of the plan: creating a single currency and a central bank. But it did provide for the calling of an intergovernmental conference on those proposals, something Thatcher had sought to avoid.

French President Francois Mitterrand said he will call the intergovernmental conference after next year. The conference can be called by a simple majority, but once there any member nation could veto the changes.

Britain also agreed in principle to link the pound to the exchange rate mechanism that aligns the value of the EEC's major currencies.

But Thatcher hedged the move, which she has long resisted, with strict conditions. These included that Britain's 8.3% inflation must drop to near the 4.5% average in the EEC and that arrangements for the single market must be complete.

Repeated Clashes

Besides Britain, some smaller EEC nations, including the Netherlands, Luxembourg and Portugal, have also expressed reservations about the Delors plan.

Mitterrand and Thatcher clashed repeatedly during the summit behind closed doors, officials reported, and gibed publicly at each other afterward.

Each claimed that it was the other who had been most isolated at the conference.

"It was not me who was isolated," said Thatcher. "It was President Mitterrand."

Mitterrand agreed with a French radio interviewer that Thatcher was the "brake" on Europe.

She retorted at a news conference: "It's a bit rich, isn't it--someone who has not got freedom of capital movement . . . calling me a brake on Europe. He has scarcely got into the car."

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