Showdown Ahead

A growing sense of crisis surrounds Britain's latest attempt to gain entry into the thriving six-nation European Economic Community. Twice in the past ten years Britain's application has been rejected. This time there is a widespread conviction throughout Europe that a third failure would be the last. No one believes this more firmly than British Prime Minister Edward Heath, who led Britain's first unsuccessful attempt in the 1961-63 Brussels negotiations. "If we miss this opportunity, it will not be there for us to pick up in a year or two," Heath tells audiences.

Heath's worry is partly one of timing. After several preliminary sessions, the crucial negotiations for British entry are now scheduled for mid-May in Brussels. If the six Market members (Belgium, France, Italy, Luxembourg, The Netherlands and West Germany) do not agree in principle to British admission by July, Heath, who must face his party conference in October, is certain to run into a severe backlash in Britain. The Prime Minister and his Conservative Party remain committed to seeking EEC membership, but the British public is less enthusiastic. Food prices would rise 26% after entry, pushing up the cost of living an estimated 4% to 5%. Many Britons also resent the EEC's implied surrender of sovereignty. Public-opinion samplings indicate that 66% of those questioned oppose British entry, and 82% believe that the issue should be submitted to the voters as a referendum.

Common Currency. The consequences of failure would be severe. If Britain does not join the Common Market, the old dreams of a politically and economically united Western Europe, which were so long blocked by Charles de Gaulle, would once again be stymied. Europe would show that it lacks the will and ability to work to achieve the degree of political cohesion that it needs to counterbalance the Soviet Union, the U.S. and China. By contrast, British entry would open the way to the Common Market's growth and development. Since Britain is the major force in the eight-nation European Free Trade Association,-it could lead EFTA members into the EEC, possibly transforming the Common Market into the world's largest free-trading area, whose gross national product would be second only to the U.S.'s. The expanded EEC could then proceed toward the goal of establishing a common currency for all Western Europe by 1980. That development would nudge the bigger community toward substantial political unity, since monetary policy would be decided largely by Common Market headquarters at Brussels and not by individual governments.

European leaders are aware of the enormous size of the stakes--and of the danger that the negotiations will founder on petty details. West German Chancellor Willy Brandt has assured Heath that he will press for a speedy decision. French President Georges Pompidou recently intimated that he will confer directly with Heath if the negotiators are unable to cut their way through the maze of issues. Pompidou has said that he favors British admission, but there is some suspicion that the French once more are seeking to find an issue on which to block British admission, as they have done twice before.

French Fears. This time a key issue is sterling. The French fear that the EEC treasury will be saddled with Britain's financial obligations. Like the U.S. dollar, sterling is a reserve currency and is subject to hot-money "runs" that could undermine its strength. Other countries and investors hold $10.25 billion in British currency and treasury securities, but Britain's own gold and currency reserves are only one-third of that amount. As a result, the French want assurances that their money will not be used to cover British debts if foreign investors should suddenly start to exchange sterling for other currencies.

Another issue is Britain's offer to pay only 3% of the EEC's annual $4 billion budget the first year of membership (1973) and 15% after five years. The figures are so low that Pompidou dismissed them as an example of the British sense of humor. Common consensus, even among Britain's champions, is that London must at least double its initial ante.

Britain is under pressure from Commonwealth countries to help them gain at least a measure of access to the EEC's highly protectionist trading area for agricultural products. Last week New Zealand's Prime Minister, Sir Keith Holyoake, flew to London to begin a tour of three capitals, reminding Europe that Britain's joining the EEC without safeguarding the economic interests of the Commonwealth would mean "disaster" for New Zealand. Though France is opposed to Britain's trade preferences for Commonwealth countries, concessions for New Zealand butter and sugar from former Caribbean and Pacific possessions can probably be successfully negotiated.

The Common Market, of course, thrives on crises. Almost every breakthrough has been preceded by dire warnings of the EEC's impending doom and all-night bargaining sessions that finally produced the necessary compromise. Even now, cautious optimism is detectable on both sides. French Foreign Minister Maurice Schumann said casually: "There are really no serious problems with Britain's joining. We want Britain, and all we ask is that . . . she become a club member within the rules." Geoffrey Rippon, Britain's chief negotiator, struck a still cozier metaphor. "Reasonable men, given enough coffee and cognac," he observed, "can quickly see whether they can reach agreement." But all the signs are that it will take a lot of cognac to float Britain into the select club of Europe.

*The members: Austria, Denmark, Iceland, Norway, Portugal, Sweden, Switzerland, United Kingdom.

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