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European Community transforms itself

By
BILL LAMP

BRUSSELS, Dec. 28, 1993 (UPI) -- The European Community transformed itself during 1993, pulling together to speak with a single, strong voice on the world stage and ratifying a treaty that called for ever-tighter integration on monetary, foreign, defense and judicial policies.

But the year began in gloom for Euro-enthusiasts.

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Danes had rejected the Maastricht Treaty on European Union in 1992, sparking a communitywide wave of skepticism and hostility toward the EC and particularly its executive arm, the Commission.

With their hopes pinned on a second referendum in May 1993, EC commissioners and other community officials laid low, believing that little news from Brussels would translate into good news at Denmark's polls.

Major initiatives were put on hold as Euro-skeptics in the 12 EC member states took up the cry against the move toward centralization and toward accumulating power in the hands of unelected officials.

Europe's economy, however, refused to cooperate. It's slow slide picked up speed in the new year, putting millions out of work.

As EC economies diverged, speculators put its exchange-rate mechanism -- the grid that held currencies within tight bands -- under intense pressure and forced several devaluations. The mechanism eventually buckled and forced monetary authorities to, in effect, float their currencies and put off the prospect of a single currency until the next century.

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Dire economic forecasts predicted the EC would soon be facing 20 million unemployed.

During the spring, EC leaders shot down U.S. plans to lift the arms embargo on outgunned Muslims in Bosnia-Herzegovina and to mount air strikes. But they proposed no solution of their own, further alienating EC citizens who saw the bloodshed nightly on television.

However, fortunes changed on May 18 when Danes on their second try gave a firm ''ja'' to the Maastricht treaty, opening the way for more activist policies.

Politicians responded quickly. At a summit in June, EC leaders commissioned a plan on how to reverse economic fortunes and create jobs, and during the summer France began to throw its weight around at internal EC discussions of world trade talks.

Both efforts bore fruit.

In December, leaders adopted the wide-ranging scheme to reverse a cyclical, structural and technological downturn in the economy with a variety of measures, including re-education and training schemes, and trans-European infrastructure projects.

In the past, economic debates had been marred by drawn-out bitter disputes over cutting welfare and other social security costs. This time, EC leaders concurred on a middle path that trimmed some benefits, but left Europe's generous welfare states intact.

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France pushed EC negotiators at the talks under the General Agreement on Tariffs and Trade to the limit, nearly sinking the negotiations, but in the end extracting a better-than-expected deal from the United States on farm products and films.

Foreign ministers then quickly settled what in the past would have been a divisive debate, voting to provide the losers in the GATT talks -- Portugal's textile industry -- with $451 million (400 million European Currency Units) in aid for modernization. An additional $564 million (500 million ECU) will be made available in low-interest loans for the same purpose.

Leaders were jubilant, hailing the hard-fought GATT victory as the EC's coming-of-age.

All this new-found singleness of purpose had a new platform -- the Maastricht treaty, which went into force Nov. 1 after being ratified by Britain and Germany.

The treaty calls for economic and monetary union, including a single currency, common foreign and defense policies, common citizenship, a cohesion fund to transfer resources from richer to poorer member states, increased cooperation on judicial, immigration and police matters, and a common policy on workers' rights.

The defense identity is unlikely to start taking shape until the next EC constitutional review in 1996, and none of the other goals will be reached easily.

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After a year of tight cooperation on intractable problems, the European Community is approaching the dream of becoming a political powerhouse, but far from solving its economic woes.

EC leaders are speaking with one voice, but if that voice fails to halt the economic slide, they may find fewer are willing to listen.

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