It’s a New United Europe--but France Might Not Make It to Altar : EC: The price of European union may be too high for some countries, they just don’t want to see Germany calling all the shots.

NEW ORLEANS â€”  The European leaders who huddled at Maastricht this month produced either a major milestone in history, or a hollow PR triumph. It will be several years before anybody knows which.

The agreement looks historic. Although British resistance led the Europeans to drop a controversial reference to a “federal� political union in Europe, the 12 members of the European Community are planning, by the end of this decade, to use the same money and to speak with one voice in international affairs.

The Bush Administration gamely welcomed the progress at Maastricht. After all, Europe’s divisions dragged this country into two world wars, and common action by Western Europe may be the best hope to prevent catastrophe in the East. But the Maastricht agreements will create several problems for the United States in the next 10 years.

In the short run, the agreement to move toward a common European currency involves a commitment by all the European countries to bring down inflation, regardless of the economic pain. This means the stagnant U.S. economy cannot look to European markets as a major growth opportunity in the next few years. From now on, the perennial American pleas for growth-oriented economic policy will fall on deaf ears.

In the longer term, the success of the European effort to build a common currency threatens the dollar’s role as the key currency in international commerce. A single European currency is likely to be more attractive to both investors and traders than the volatile and depreciating dollar. One almost certain result: Foreign investors will demand higher interest rates before they buy U.S. Treasury debt. The U.S. national debt, already grotesquely swollen, will be an increasing drag on the living standards and economic opportunities of American families as the single European currency takes hold.

Even farther down the road, it is possible that a European union would rival U.S. power in key parts of the world--especially the Middle East, where many European powers have historic ties. The trade friction between Europe and the United States, already potentially far more destabilizing than the publicized U.S.-Japan squabbles, could become more serious still, leading to the breakup of multilateral trade agencies like the General Agreement on Tariffs and Trade.

But despite all the headlines, Maastricht may be just a flash in the pan. Even as the pressures for European union grow stronger, other forces threaten to derail the continent’s march toward union.

The problem isn’t the isolationism of the British. First Margaret Thatcher and now Prime Minister John Major have earned reputations as the most reluctant Founding Parents of the United States of Europe. But Britain has become too small, too poor and too isolated to count for much in contemporary Europe. The real question marks over Europe’s future arise in France and Germany. At the moment, France and Germany are both backing European union, but there is growing evidence that both countries may have second thoughts before 1999.

Under French President Francois Mitterrand, France has become the most vocal proponent of a rapid march toward European Union. France has lost faith in its ability to play, alone, a respected place in world events. Its economy is too small, its military too weak, its technology too mediocre and its culture too little respected for France to continue to act as even a medium-sized power on the world stage. Mitterrand sees Europe as France’s last chance--only as part of a continental union can France continue to play a global role.

Since Germany will inevitably dwarf France in a united Europe, Mitterrand’s position is an extraordinary confession of defeat and impotence from the proudest country in Europe, perhaps in the world. There are already indications that French public opinion is rebelling against it. France has betrothed herself to Germany at Maastricht, but she has chosen a long engagement and reserves the right to change her mind. Look for a stormy engagement and tough negotiations over the prenuptial agreement and, if France thinks her interests require it, she is perfectly capable of leaving Germany at the altar when the wedding day arrives.

What France wants to do now--right away--is to shop for the ring, and this is where Germany begins to get cold feet. France knows what she wants in a ring: the deutsch mark, Germany’s enviable stable money. A single European currency will let France exchange the perennially weak franc for a new and non-inflationary money. Investors are now so skittish about France’s record of instability and inflation that French borrowers have to pay higher real interest rates than Germans do. This would change under a single European currency.

Germany is far more eager for the marriage than France. But the Germans are just beginning to figure out how much it will cost them to give France this ring. Germany knows that, without a European union, its neighbors will never accept Germany’s return to leadership in Europe. Furthermore, without a united Western Europe, Germany will be on its own in trying to cope with the fallout from the Soviet implosion.

All this makes the marriage attractive to Germany--but to give up the deutsch mark? To trade in the Bundesbank for some unknown European institution in which not just the French but also the Greeks and Italians will be represented? Germans in all parties have promised to look long and hard at German Chancellor Helmut Kohl’s commitments at Maastricht. Kohl’s allies have lost their majority in the upper house of the German Parliament; his political enemies have promised a thorough review of the Maastricht agreements.

Even before the ink dried on the press releases celebrating the Maastricht “breakthrough,� a major diplomatic squabble revealed how differently the leading European countries see the world. Germany, with historic ties to the breakaway Yugoslav republics of Croatia and Slovenia, has long wanted to recognize their independence--and perhaps to sell arms to the Croats as they battle the Serbs. This isn’t what the British and French want. In both World Wars, the Serbs fought with the Western Allies, while the Croats and Slovenes sided with the Germans. Both France and Britain fear that the breakup of Yugoslavia will lead to German domination in the Balkans. They--and the Americans--are also afraid that a precedent on recognition in Yugoslavia will affect future events in whatever the Soviet Union is calling itself these days. And with the British facing separatists in Northern Ireland and Scotland, and the French facing them in Corsica, none of these countries want to make secession easy.

With this in mind, the British and the French were busy drafting U.N. resolutions attacking early diplomatic recognition for the breakaway states, but Germany put its foot down. If necessary, said German government spokesmen, they were prepared to defy the United States, their EC partners and the United Nations.

Faced with this determination, the British and French realized there was nothing they could do. For the first time since World War II, Germany had taken a step away from the Western allies--and the allies were powerless to do anything about it. In Paris, Bonn, London and all other capitals of Europe, governments are pondering this new reality. The French may be more shaken than the British--London has always been suspicious of German intentions--but the French have always told themselves that a stronger EC means a Germany safely tied to a common--meaning, French--foreign policy. But what if a stronger EC means France will be tied to German policy?

As of now, the wedding is on, scheduled for 1996 or, at the latest, 1999. But five years is an eternity in politics, and the European landscape is rapidly changing. Europe’s march to the altar, even if it ends in wedding vows, will be a long and tortuous route. Look for tears and spats before the cake is cut.