Compromise ends bickering between France, Germany: Unemployment problem gains recognition at EU summit

By Madelaine Drohan, The Globe and Mail, Tuesday 17 June 1997

France declared victory yesterday in its battle with Germany over joblessness, securing a promise that European Union leaders would pay more attention to the problem, starting with a special jobs summit later this year.

The promise ended the public bickering between Lionel Jospin, the new Socialist Prime Minister of France, and German Chancellor Helmut Kohl over whether European funds should be used to finance large public-works projects. Their public fight had threatened to derail the summit of European leaders that began yesterday.

This is a great success for France, said Manuel Valls, spokesman for Mr. Jospin. It's a good compromise. It's a good deal.

Dutch Prime Minister Wim Kok, whose country holds the six-month rotating presidency of the 15-member union, helped restore harmony with a package of measures including the jobs summit, a pledge by the European Investment Bank to investigate ways of funding small businesses, and the joint promise by the leaders written into a treaty that they will make employment a priority.

Mr. Jospin was satisfied that France had moved employment high on the EU agenda. And Mr. Kohl went along because no new money would be spent. The European Investment Bank is funded by EU countries but only makes loans on a commercial basis to projects and companies that are commercially viable.

There are only winners in this game. There are no losers, declared Jacques Santer, who as president of the European Commission is the EU's top bureaucrat. We're extremely relieved and very happy that we've managed to get this action.

Mr. Santer was happy because the compromise saved the Amsterdam summit from failure and kept the drive for a single currency on track. If France had stuck to its guns about using public funds to create jobs, it could have delayed the Jan. 1, 1999, launch date for the currency. Yesterday's compromise also meant the leaders could turn today to what was supposed to be the real meat of the meeting: streamlining how Europe operates and preparing the group to accept new members in the 21st century.

Mr. Jospin's demands on jobs had shaken the other European leaders, who did not know what to expect from the Prime Minister whose left-wing coalition took office only two weeks ago. His opening position was that Europe should revive plans shelved three years ago for massive, publicly funded projects such as high-speed train lines criss-crossing Europe.

Just how effective any job-creation measures will be in reducing the number of unemployed in Europe from the current level of 18 million remains in doubt. European leaders have held so-called jobs summits before, and they have done little to fix the problem.

A spokesman for British Prime Minister Tony Blair was dismissive of the employment package, saying there were differences between Britain and France on how to go about tackling unemployment. Britain, whose unemployment rate is among the lowest in the EU, sides with Germany and against France on the question of spending public money to create jobs.

When asked how many jobs might be produced by yesterday's action, the British spokesman replied: Eight. He added that job creation is a matter of national policy, not European policy.

But France's attempts to reform its generous social-security system and make the kind of spending cuts necessary to give its economy a boost have met with widespread labour unrest. Truckers, fishermen, doctors and students have taken their turn marching through the streets of Paris to protest against even the most minor changes.

The former right-wing government lost the June 1 election because its popularity had been so badly dented by strikes and protests.

Mr. Jospin was elected on a platform of promising to create 700,000 jobs, half of them in the public sector, and reducing the working week to 35 hours from 39. No other country in Europe has recently adopted such methods.

The kind of changes that a country such as Britain has made, cutting public spending, allowing freer rein to market forces and removing layers of regulation, have been dismissed by French Socialists, who say they want to have nothing to do with what they call the Anglo-Saxon model.