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Chapter III.
Regional Developments

D. Europe

a) Strides ahead for Europe

Europe focused its energy in 1998 on moving forward preparations toward introduction of the euro (January 1999 commencement of the third stage of Economic and Monetary Union), including the establishment of the European Central Bank (ECB). The negotiations with accession candidates were held in March, and the United Kingdom and France took initiatives at the end of the year toward strengthening European defense cooperation. Those are examples of strong moves toward creating a new order in regard to politics, the economy and security. The German general elections at the end of September produced the Schröer Administration, a coalition between the Socialist Democrats and the Green Party, with the result that 13 out of the 15 EU member states now have center-left governments. This has led the EU to place employment at the top of its list of priorities, scheduling EU-level consultations toward conclusion of an "Employment Pact."

b) European Union evolution

  • Moves toward introduction of the euro

    At a special meeting of the European Council held in Brussels in May, it was decided that 11 of the 15 EU member states-Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain-had fulfilled the convergence criteria and would introduce the euro from the outset. Introduction of the euro in January 1999 will mean the implementation of single monetary policies by the ECB. (However, actual euro notes and coins will not be circulated until January 2002.) This will accelerate intra-regional market integration and also create a euro zone on an economic scale second only to the United States, and will also affect the world economy significantly. However, because countries introducing the euro are obligated to curb their fiscal deficits, fears of a deflationary tendency in the European economy have yet to be assuaged, and it will be vital to address structural problems such as improvement of rigid labor markets and coordination of tax and social security systems.

  • Enlargement of the EU

    The EU initiated accession negotiations at ministerial level with Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia. The EU negotiation process entails screening work to identify any points of difference with EU legislation and systems (aqui communautaire) in 37 areas covered in 31 chapters, after which the actual negotiations begin, and as at the end of 1998, the six countries listed above had completed negotiations in three areas (science and research, small and medium-sized companies, and education and vocational training). Annual decisions will also be made on whether to launch accession negotiations with Bulgaria, Latvia, Lithuania, Romania and Slovenia, based on progress with preparation in these countries. The prospect of EU enlargement has made EU financial reform a must, and an ad hoc meeting of the European Council in March 1999 in Berlin is expected to aim for a political consensus on this based on "Agenda 2000," reform proposals put together by the European Council.

  • Amsterdam Treaty

    To further strengthen cooperation in the various areas covered under the Maastricht Treaty (the Treaty on European Union), the Amsterdam Treaty, which amends this earlier treaty, was signed in October 1997 in preparation for EU enlargement and is expected to be ratified by all member countries in 1999. When the Amsterdam Treaty goes into effect, a constructive abstention system will be introduced in regard to the EU's Common Foreign and Security Policy (CFSP) (whereby countries can abstain without obstructing the formation of consensus but are not bound by that consensus), and a Secretary-General will be appointed to take charge of the CFSP, which should allow more flexible and effective implementation of common foreign policy.

  • Signs of progress with defense cooperation

    Based on factors such as lessons learned from the EU's response to the Kosovo issue, an informal European Council meeting was held in October in Poertschach, Austria, where members recognized the importance of strengthening European defense cooperation, and this was followed by the first EU Defense Ministers' Meeting. A summit was also held between the United Kingdom and France in December in St. Malo, issuing a joint statement on boosting the defense capacity of Europe, with discussion to be furthered within the EU with an eye to relations with the NATO and Western European Union (WEU) frameworks.

c) NATO trends

  • NATO enlargement

    In 1998, the 16 NATO member countries ratified accession protocols for the Czech Republic, Hungary and Poland. These countries will next receive formal accession invitations from NATO, and will sign the accession documents and deposit these with the United States, realizing their official accession to NATO.

  • Consideration of a New Strategic Concept

    The Strategic Concept adopted by NATO in 1991 is being reviewed to allow NATO to respond to changes in the European security environment. The December Ministerial Meeting of NATO saw a basic understanding formed among member countries as to a New Strategic Concept, agreeing that collective defense was the foundation of NATO, and that it was also vital to respond appropriately to the new security environment, including efforts in regard to crisis management, peacekeeping operations and other duties outside collective defense. At the same time, clear differences emerged over the priority to be placed on crisis management and peacekeeping operations, the scope of extra-regional activities and the legal grounds for the use of force, with the United States taking a more positive stance where Europe tended to be more cautious. Discussion will be taken forward toward adoption of a new strategy concept at the April 1999 Summit commemorating NATO's 50th anniversary.

d) Economic situation in Europe

Comprising roughly a third of the world economy, the EU economy has a major impact on world economic trends. The 2.8% GDP growth rate for the region in 1998 was comparatively sound, but may decelerate slightly in 1999 due to the deterioration of economic conditions worldwide. However, the various fiscal robustness policies being advanced within the region toward the introduction of the euro are achieving results, and EU fundamentals remain basically in good shape. At the same time, with the unemployment rate still at a high of about 10 percent, unemployment continues to be one of the major challenges that Europe is facing. The European countries are therefore beginning to prioritize economic policies which combat unemployment and stimulate the economy, creating a dilemma between the employment policies taken by respective countries and the policies being taken by the EU toward fiscal robustness based on the Stability and Growth Pact. The December European Council meeting in Vienna is scheduled to pursue conclusion of a "European Employment Pact." While the overall economies of the Central and Eastern European countries are growing relatively soundly, disparities are emerging between those countries which are succeeding in privatization and other economic reforms and those which are not.

e) Japan-Europe relations

United Kingdom Prime Minister Tony Blair visited Japan in January, timing his trip to coincide with the opening of UK Festival '98. A Japan-UK Summit meeting with Prime Minister Hashimoto at the time produced the Japan-United Kingdom Common Vision toward the 21st Century. Prime Minister Hashimoto visited the United Kingdom twice, and Japan-UK and Japan-Spain Summits were held at the Second Asia-Europe Leaders' Meeting in April, Japan-UK and Japan-Germany Summits held at the time of the May Birmingham Summit of the Eight, and a Japan-UK Summit held between Prime Minister Blair and Prime Minister Obuchi at the time of the September UN General Assembly. 1998 was therefore a year of extensive high-level exchange between Japan and the United Kingdom, while on the policy front too, the two countries coordinated closely, jointly tabling and passing a Security Council resolution, for example, at the time of the Iraq crisis in February. In particular, Their Majesties the Emperor and Empress of Japan made an official visit to the United Kingdom for the first time in 27 years in May, marking 1998 as a special year in Japan-UK relations.

1998 was also designated the Year of France in Japan, and witnessed a number of cultural events, including the visit to Japan by French President Chirac in April to light the Statue of Liberty transferred from the banks of the Seine in Paris to Odaiba.

As for Japan-EU relations, in addition to the annual Japan-EU Summit held in January, a Japan-EU Ministerial Meeting was held in Tokyo in October with the participation of Foreign Minister Koumura and six other Ministers from Japan and Vice President of the European Commission Sir Leon Brittan and two other members of the Commission (minister-level), engaging in an exchange of views on a wide range of issues including Japan-Europe economic relations and Japan-EU cooperation.

High-level exchange also took place with other European regional institutions. Secretary-General of the Organization for Security and Co-operation in Europe Giancarlo Aragona visited Japan in January, while Council of Europe Secretary-General Daniel Tarschys visited in July. Japan also attended the OSCE Ministerial Meeting in Oslo in December as a "Partner for Cooperation" (the OSCE equivalent of an observer).

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