LETTERS TO THE EDITOR: Belgian chairmanship bodes ill for euro
Financial Times; Nov 8, 2000

From Mr Blair Baker.

Sir, As Peter Norman recently noted ("Broad vision for the future of Europe", October 27), Belgium will take over the rotating six-month European Union presidency in July 2001 and Guy Verhofstadt, the prime minister, will pursue an agenda "to help the European Union develop into a superpower". France, which holds the presidency, will pass the torch to Sweden in January, but Sweden's exclusion from economic and monetary union means that Didier Reynders, the Belgian finance minister, will chair the euro-group during all of 2001.

It is highly probable Belgium will pursue an activist policy not unlike France's current initiative to strengthen the role of the euro-zone finance ministers. Mr Reynders has suggested that one of his priorities will be to improve the euro-zone members' relationship with the European Central Bank. He has been one of the most outspoken critics of Wim Duisenberg, the ECB president, having erupted when Mr Duisenberg was not present at a twice-yearly meeting of euro-zone finance ministers and central bankers in early September.

Mr Reynders has also suggested the ECB adopt a volte-face with regard to its euro public relations battle and "watch the euro's fluctuations in silence". Such a strategy is seemingly at odds with the current practice of verbal intervention from euro-zone finance ministers, national central bank governors, and governing council members. Moreover, Mr Reynders has made clear his intent to attend the Governing Council meetings on a regular basis and could muddy those murky Maastricht waters that differentiate between the roles of the central bank and Ecofin.

Similarly, Guy Quaden, the Belgian central bank governor, has stressed the need to create a more cohesive pan-euro-zone political voice. Mr Quaden has suggested the common currency has suffered due to a lack of a European "image" to complement the intricacies of monetary union. The birth of a supranational euro-state on Belgium's watch would invariably be challenged by the UK and create further divisiveness among Ecofin members. The chief mandate of such a body euro-politic should be the pursuit of structural reforms - a much-discussed topic that falls outside of the purview of the ECB. At first blush, Belgium's assumption of the euro-zone chairmanship does not appear to bode well for the euro.

Blair Baker, Director of Market Research, GCI Financial Ltd

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