FRANKFURT Germany AP Even before Europe's single currency is launched politicians are challenging the independence of the central bank that will keep tabs on the new euro. Germany's new leaders have led the campaign demanding that the European Central Bank after it takes over monetary policy Jan. 1 lower interest rates to spur economic growth and create more jobs. The push reflects growing demands across the European Union for a more hands-on approach to monetary policy as the euro launch nears and some fear the tussle between politicians and bankers could damage the historic project. The argument ``goes to the psychological roots of the euro'' its independence from political influence German central banker Ernst Welteke said recently. ``This is a perilous venture in an untested vessel. How can the passengers feel confident if the officers are so visibly squabbling on the quarter deck?'' London's Financial Times asked in a recent editorial. The contest between the usual monetary goal of promoting low inflation and the broader political goal of spurring job creation challenges the new central bank's guiding strategy: price stability modeled on the successful German Bundesbank. The U.S. Federal Reserve is caught in the same tug though Federal Reserve Chairman Alan Greenspan stresses that the goal of low unemployment can't be achieved unless the Fed keeps a vigilant watch and is ready to boost interest rates at the first sign inflation is accelerating. The European debate shows how much the political landscape has changed since the European Central Bank's mission was charted in 1992 when conservative inflation-beating governments were in power. France and Germany the twin engines of the monetary union led the charge for cutting deficits and reducing government spending to create a stable environment for the euro. They were guided by the 1992 Maastricht Treaty which outlined terms for the euro ensuring the independence of the European Central Bank. Since then the conservatives have been replaced by center-left administrations more interested in creating jobs and less in squeezing inflation. With the German election in September nine of the 11 countries adopting the euro now are ruled by the center-left. A consensus is growing. German Finance Minister Oskar Lafontaine has received support from French Finance Minister Dominique Strauss-Kahn in his campaign for interest rate cuts. While Lafontaine boldly demands lower interest rates Strauss-Kahn was more reserved. He said it was ``not inconceivable'' that interest rates would be reduced in France and in Germany in the near future. But that position may be easing. Last week German central banker Hans Tietmeyer said he would not rule out the possibility of lower interest rates in Germany before the end of the year. Such a move could reduce the interest rate that the euro zone itself will adopt Jan. 1. Other European countries while making no demands have signaled they share France and Germany's concerns. A recent EU summit in Austria was devoted to finding ways to boost the continent's economy tackle unemployment stuck at 10.9 percent in the 11 euro nations and prepare for the launch of a single currency. Left-leaning finance ministers went even further in Brussels Belgium recently saying jobs creation should be a key element of monetary policy. ECB President Wim Duisenberg has in the last weeks traveled around the world including stops in Dublin Ireland and New York repeating the message that jobs creation is up to government policy not the central bank. The central bank's job he insists is to keep inflation low and prices stable. With characteristic bluntness Duisenberg has described cutting interest rates to boost economic growth as ``entirely counterproductive.'' It would he says lead to higher unemployment by pushing up long-term interest rates and could undermine the benefits of price stability. Politicians already are hinting that they may take another approach to solve stubborn joblessness if the European central bankers don't pitch in. German Chancellor Gerhard Schroeder said in his first major policy speech after taking office in October that he may be forced to increase government spending if the central bank won't help stimulate economic growth. After Schroeder's speech Duisenberg warned that increased spending would imperil a pact EU governments made promising to slash budget deficits as part of efforts to forge a strong euro. APW19981201.0468.txt.body.html APW19981201.1291.txt.body.html