Coin for Europe's Realm Tarnishes in Paris Streets

FRANCE's public discontent over budget-tightening sends a neon-bright signal to European leaders: The Euro stops here.

For years, European politicians have huddled in their halls of power, working to create a single currency, dubbed the Euro, that would boost trade throughout the continent.

But even though achieving monetary union by the 1999 deadline would require hefty budget cuts in most EU nations, few leaders bothered explaining to their people that the Euro was worth the sacrifice.

When France started to push through the reforms necessary to meet the criteria for a single currency, French public unions quickly raised the barricades against looming cuts in their social benefits.

In America, the fight over balancing the budget in seven years brought one government shutdown and may prompt another. In Europe, the fate of the single currency, if not the union itself, may be at stake.

European leaders are closely monitoring the French strike, especially in London, where disagreement about European Monetary Union (EMU) has opened deep rifts in the ruling Conservative Party.

''France is now a critical laboratory in the quest for EMU,'' says Robin Marshall, chief economist at Chase Manhattan Bank in London. French President Jacques Chirac's government is creating ''a horribly difficult set of tensions'' by attempting to reduce France's budget deficit, he adds.

The future of Europe is ''being fought out in the streets of Paris,'' says Paddy Ashdown, leader of Britain's centrist Liberal Democratic Party. ''This is an historic moment. If the French government is driven off course, monetary union is unlikely to come about.''

The political future of Europe's leaders, including British Prime Minister John Major, may soon be fought out as well.

Sir Edward Heath, the former Conservative premier who took Britain into the EU 22 years ago, recently threatened to vote with the opposition Labour Party if it showed ''more positive'' policies toward the EU than those of the Conservatives.

But Major at the same time faces hard-line opposition to a single currency from other members of the Conservative camp.

John Redwood, who challenged Major for the Conservative Party leadership in the summer, on Dec. 12 published a pamphlet bitterly attacking the concept of a single currency.

''Europe is not ready for it,'' Mr. Redwood says. ''It would cost business dearly for no good reason. It is time to save Europe from itself.''

Major recently told Parliament that the government would soon lay out its policy on monetary union. He said such a document would reflect British doubts about a single currency being possible by 1999.

The British debate is taking place against a backdrop of intense high-level European diplomacy to keep the single currency campaign from losing steam and perhaps collapsing.

As Germany's Chancellor Helmut Kohl and President Chirac met in Baden-Baden on Dec. 7 to affirm their commitment to a single currency, the issue was at the heart of a confrontation between the French government and hundreds of thousands of strikers.

''It is clear that many French people have not been persuaded that EMU is worth personal economic sacrifice,'' says Dominique Moisi, a Paris-based political analyst.

IN Germany, there are indications that support for a single currency is conditional. A poll in November indicated that 2 out of 3 Germans wanted assurances that a Euro-currency would be at least as strong as the Deutsche mark before agreeing to support it.

Italians entertain similar worries, and Prime Minister Lamberto Dini, who favors EMU in the long run, has voiced doubts about the 1999 deadline. Mr. Dini is known to fear that if Italy cut its public deficit sharply in order to meet the criteria for joining a single currency, as the French government is now attempting to do, it too would stir up serious social unrest.

And European Commission President Jacques Santer, while urging the virtues of monetary union, has frequently conceded that large sections of the European public have yet to be ''properly informed'' about the subject.

Indeed, the British government has had trouble selling its European policies even to its friends.

On Dec. 11, David Howell, chairman of the House of Commons foreign-affairs committee, attacked Major's government as ''Europe obsessed'' and announced that he would not be seeking reelection to the Commons.

''Four-fifths of Britain's commercial and financial interests lie outside Western Europe,'' Mr. Howell said. ''Our foreign policy has gone a bit off the rails.''