European Foundation Intelligence Digest, 18th

Rome-Berlin bust-up

The row between Italy and Germany shows no signs of abating. Following Mr. Berlusconi’s suggestion that a German MEP ought to play the role of a concentration camp commandant, Chancellor Schröder has cancelled his holiday to Italy in protest at an article by a junior minister who wrote that German tourists were arrogant. The German Interior Minister, Otto Schily, has now called for the resignation of the minister in question. He said, “If I were the head of the Italian government, this man would no longer have his job. The Italian government would be well advised to deal with this matter (diese Sache in Ordnung zu bringen).” (Perhaps he should audition for the role, instead of poor old Mr. Schulz.) Schily said that decades of work had been invested in creating deep and trusting relations between Germany and Italy, and that “one foolish government official” should not be allowed to jeopardise this. Unlike his boss, Chancellor Schröder, Mr. Schily said he was not thinking of changing his holiday plans. When asked if he thought the media had contributed to the row, Mr. Schily replied pointedly, “In Germany, there is press freedom. The media can publish what they want. Unfortunately, it is different in Italy. Today, many media are controlled by the government.” [Handelsblatt, 9^th July 2003]

Draft constitution starts to unravel

The German Foreign Minister, Joschka Fischer, said on 4^th July that Germany wishes the EU’s immigration policy to be subject to unanimity. This represents a change from the previous German government position on the EU constitution, which was that it did not want to change anything in the draft EU constitution proposed by the European Convention. Gerhard Schröder, the Chancellor, had said at the Thessaloniki summit on 20^th June that he was happy to accept the whole text without any changes. In its current form, the proposed constitution subjects immigration policy to qualified majority voting. Valéry Giscard d’Estaing, the president of the Convention, had hoped to maintain the delicate balance between the European capitals, and his worry will now be that his draft Constitution will go the same way as the Amsterdam Treaty in 1997, which had also proposed QMV for immigration policy until Helmut Kohl, Schröder’s predecessor, also announced a volte-face under pressure from the German Länder, and more specifically from the Bundesrat (the Upper Chamber of the German parliament which represents them) which the Christian-Democrat opposition controls. But if Berlin now obtains a change, then it is likely that other capitals will demand the same. France, for instance, wants a veto on commercial negotiations on cultural matters. [Libération, 7^th July 2003]

In a similar vein, the commissar for EU enlargement, Günter Verheugen, has said that he is unhappy with various things in the draft constitution and has suggested that there be changes. Verheugen said, for instance, of the suggestion that the Commission be reduced in size, “This is an important and critical point. I do not think that it is in the European or even the German interest to have a Commission in which only half of the member states have a representative. This means that even Germany would be represented by a commissar in only every other commission. This will have serious consequences for communication. For commissars are important interlocutors for politics, the economy and society in Germany … I also think that the quality and authority of commission decisions will suffer, if all points of view from all member states are not known when decisions are taken and suggestions made. This is a point which concerns Germany especially. There is not a single decision which does not have special impact on the Federal Republic.” [Handelsblatt, 10^th July 2003]

Italy reopens Stability Pact debate

On the first day of the Italian presidency, Rome has reopened the debate on whether or not the famous stability pact criteria should be relaxed. The suggestion is to be made formally at a meeting of the Council of Ministers on 11^th and 12^th July. But the Italian minister for Europe, Rocco Buttiglione, said that Italy’s finances were in order and so it did not intend to make relaxation of the criteria a priority for its presidency. The monetary commissar, meanwhile, tartly rejected Mr. Buttiglione’s suggestion, saying that the Italian representative on the Council of Finance Ministers, Giulio Tremonti, had not made any similar suggestion himself. Italy has been suggesting for a while that the European Investment Bank make funds available for infrastructure projects and military spending, as a way of kick-starting the economy. Many have expressed fears that this will lead to a weakening of the criteria. The French defence minister, Michèle Alliot-Marie, has also argued that sums “invested” in defence should not be included in the deficit calculations, and Jacques Chirac seems open to the idea of taking this spending out of the equation. The German defence minister, Peter Struck, has also said that the matter should be discussed. The German economics minister, Wolfgang Clement, has similarly called for more active spending on “research”, i.e. on the military, among other things. He said that European industry had to be given better conditions in which to confront world competition and that Germany was already trying to do this with tax and structural reform. Commissar Solbes, meanwhile, repeated his view that Germany must not exceed the 3% limit this year; he drew especial attention to the “dangers” of the German government’s plan to cut taxes. Germany, like France, exceeded the limit last year and will probably do so again this year. [Handelsblatt, 1^st July 2003]

Italy puts Turkish cat among Christian-Democrat pigeons

The Italian foreign minister, Franco Frattini, has said that Italy intends to use its six-month presidency to push forward the integration of the Balkan states and Turkey into the European Union. “The integration of the Balkans is for Italy an indispensable priority,” said Frattini. “As the EU extends towards Russia, it is not in the Union’s interests to have an enclave in the Balkans.” Frattini said that the other main priorities for the Italian presidency would be the rebuilding of Iraq and relations to the USA. Frattini warned against reopening any parts of the European constitution, however, saying that it would be a Pandora’s box. (If he is right, what is the point of having an intergovernmental conference, or for that matter any debate at all?) [Handelsblatt, 1^st July 2003]

Frattini did, however, say that the Italian government would still like a reference to Europe’s Christian heritage to be inserted into the text (something the previous French government had resisted with the threat of veto). Frattini said that he still expects the constitution to be ceremonially signed in Rome at the beginning of next year. “At any rate, for reasons of transparency, the constitution should be presented to citizens before the European elections in June 2004.” [Die Welt, 1^st July 2003]

The integration of Turkey is, however, being strongly opposed by conservative politicians in Europe. At its recent meeting in Copenhagen, the European People’s Party stated unambiguously that, “The majority of the EPP is opposed to Turkish membership of the EU,” said Hans-Gert Pöttering, the head of the EPP in the European Parliament. The influential French MEP, Alain Lamassoure, also said he was against Turkey joining and that French people generally were against it. He has even said that there should be a referendum on this question alone. The Vice-President of the European Parliament, Ingo Friedrich, has warned against enlargement “getting out of control”, the EU having only recently, at Thessaloniki, even accepted the principle of EU membership for the Balkan states. These statements put the EPP at odds with Silvio Berlusconi’s Forza Italia party, which belongs to it: Berlusconi has called not only for the integration of Turkey and the Balkan states, but also of Russia. Ingo Friedrich rejected this latter idea sarcastically when he said, “We do not want to become members of Russia.” He also expressed the view that the new European constitution should fix the borders of the EU. Previous treaties have just said that the EU is open to “all European states” without saying what that means. By the end of 2004, the Commission is supposed to examine whether or not Turkey fulfils the conditions for membership, the country’s candidacy having now been officially accepted. [Andreas Middel, Die Welt, 28^th June 2003]

Germany woos USA

Berlin is evidently still trying to repair the damage caused to its relations with Washington by the Iraq crisis. Although the German government was forced to deny a recent newspaper report that Chancellor Schröder was about to go to Washington, it did imply that negotiations were ongoing on this very matter. But Joschka Fischer is to travel to the American capital next week. [Die Welt, 7^th July 2003]

Perhaps as a result of these overtures, the US Defense Secretary, Donald Rumsfeld, has said that he would support the presence of German and French troops in a stabilisation force for Iraq. No doubt the coalition is grateful for all the help it can get, considering that the number of American fatalities in this Gulf War is fast approaching the number from the last one. The French have responded, however, by saying that it could send troops only as part of a UN force, and this would require a more precise definition of the West’s role in Iraq by the Security Council. A spokesman for the German Ministry of Defence said the same thing. [Handelsblatt, 9^th July 2003]

Sharks circle for top jobs

Behind the scenes, the negotiations over the draft EU constitution include manoeuvering by senior European politicians for the new big jobs outlined in it. In particular, people are angling for the new posts of EU foreign minister and EU president – especially since the reduction in the size of the Commission means that several apparatchiks will be out of a job. So the corridors of Brussels are humming with speculation about who will land which catch. Add to this the fact that George Robertson is to leave Nato at the end of the year to go and work for Cable & Wireless, which means that the post of Secretary-General of the Atlantic Alliance is also up for grabs. Antonio Vitorino, the EU commissar for justice and home affairs, is being mentioned, as is the Norwegian defence minister, Kristin Krohn Devold, who has the support of the Americans and who is, for this reason, not the preferred candidate of the Eurocrats who would like to see one of their number take over Nato. As previously reported in the Digest, Joschka Fischer is one of the main contenders for the post of EU foreign minister, but it is not yet clear whether he would go for that job in 2004, when a new Commission must be chosen, or in 2006 when the constitution is supposed to enter into force. People are also speculating about Günter Verheugen, currently commissar for EU enlargement, who has his eye on the job of commissar for commercial relations (currently Pascal Lamy) and possibly even on the commissar for foreign affairs (“EU foreign minister”), the post currently occupied by Chris Patten. Romano Prodi’s stint as president of the commission comes to an end in autumn 2004 and no one expects him to be appointed for a second term, especially since many left-wing people in Italy think he should replace Silvio Berlusconi as prime minister in Rome. Precisely because Prodi comes from the left, conservatives are saying that the next president of the Commission should come from their ranks: the name of the current Austrian Chancellor, Wolfgang Schüssel, has been mooted for the post. The Social Democrats are talking about Costas Simitis, the prime minister of Greece. The same party divisions exist for the as yet non-existent post of “EU president”: the right’s favourite candidate is Jean-Claude Juncker, prime minister of Luxembourg, with José-Maria Aznar, prime minister of Spain, coming in second place. On the left, Tony Blair and Paava Lipponen of Finland are being talked about. Liberals want the current Belgian premier, Guy Verhofstadt, to get the job. [Andreas Middel, Die Welt, 7^th July 2003]

Growth predictions revised downwards

The EU currency commissar, Pedro Solbes, has revised the commission’s prediction for growth in the euro zone down to 0.7%. Even this depends on what happens in the third and fourth quarters of this year. This is the second downward revision of growth prediction in less than three months, because in April the commission revised its earlier prediction of 1.8% down to 1%. Solbes said that one reason for the cut in growth predictions was the recent strength of the euro against the dollar, which hurts exports from the euro zone. But the euro zone economy stagnated anyway in the first quarter of 2003, with Germany registering negative growth of 0.1%. The Italian presidency is hoping to announce a “new deal” which would stimulate growth through €70 billion of new loans from the European Investment Bank for big public works like infrastructure projects. In the light of this anaemic growth, most experts expect the European Central Bank to cut interest rates in September to 1.75%. [Der Standard, Vienna, 7^th July 2003]

June unemployment in Germany at record high

According to figures prematurely leaked from the German ministry of employment, there were 4.3 million people out of work in June. This is the highest figure for June unemployment since German reunification, although the figure is 40,000 lower than in May. The figure is 350,000 higher than the figure for June 2002, which represents the highest rise for 10 years. The low figure for May 2003 was, in any case, primarily the result of technical statistical phenomenon. Moreover, even the June figures underestimate the unemployment by at least 300,000 since this is the number of people who move into a different category of joblessness: people over the age of 58 can remove themselves from the list of people actively seeking work and still receive the dole, albeit at a slightly reduced rate. This means that they disappear from the official jobless statistics. According to Eurostat, the unemployment rate in the EU rose slightly in May to 8.1%, against 8% in April and against 7.6% in May 2002. Germany has the second highest unemployment rate, at 9.4% The unemployment rate in the euro zone is higher than in the EU generally, and stands at 8.8%. The persistently higher figures for joblessness in the euro zone represent proof of the falsehood of the claim that the single currency is good for jobs. [Die Welt, 2^nd July 2003]

Head of Turkish army says US relations in crisis

Reaction has been furious in Turkey to the arrest by American forces of eleven Turkish soldiers in Iraq, on terrorism charges. On Monday, the chief of the Turkish general staff, Hilmi Özkök, said, “There is now a severe crisis of confidence between the Turkish and American armies.” The Turkish army is often spoken of, especially in Turkey, as being the primary political force in the country. The general said that he did not think that the arrest was a purely local occurrence, even though he said that he also did not think that it reflected US policy. The eleven soldiers were released on Sunday evening and returned to their base in Suleymaniya in the Kurdish autonomous zone of Northern Iraq on Monday, after having been arrested in Kirkuk. According to press reports, the eleven were from an elite unit of the Turkish army. They had been arrested on Friday evening, by over 100 US soldiers who surrounded the building they were in. [Der Standard, Vienna, 7^th July 2003] Those arrested included a colonel who, according to intelligence sources, had been deported twice by the British and Americans for “suspicious activities”. The Turkish Foreign Minister, Abdullah Gül, vigorously denied Turkish newspaper reports that the three officers and eight soldiers had been arrested on suspicion of planning an attack on the governor of Kirkuk. The issue is sensitive because there are plenty of ethnic Turks living in the oil rich town of Kirkuk, and the Kurds and others suspect the Turks of wanting to get their hands on that city. The statement by the army chief of staff confirms suspicions that the event has harmed the position of the Turkish prime minister, Recep Tayip Erdogan, who has been presenting himself as the best interlocutor with the Americans. [Evangelos Antonaros, Die Welt, 7^th July 2003]

Polish bank chief wants euro fast

Leszek Balcerowicz, the president of the Polish central bank, has said that he wants Poland to adopt the euro by 2007. He was contradicting an earlier statement by the economics minister, Jerzy Hausner, who said that he preferred a later adoption of the single currency, and who warned against the negative effects of joining earlier. Unlike Hausner, Balcerowicz called for Poland to respect the EU Stability criteria. He said, “It is important that we keep to the stability pact and that we do not put our membership of the euro zone in question now because of an anticipated fear of an economic diktat from Brussels.” He added that Poland already fulfils the Maastricht criteria and that the country would soon manage to adopt the single currency. Balcerowicz insisted that Poland would not and should not exceed the limits for the budget deficit (3% of GDP). He also said that he was not in favour of fiscal harmonisation. [Handelsblatt, 1^st July 2003]

95% of Commission budget open to fraud

Disquiet is rising in the European Parliament over the slowness with which corruption allegations are dealt with in the European Commission. A German MEP with special responsibility for budgetary questions, Diemut Theato, has said that the latest round of sleaze allegations show that the Commission is incapable of dealing with its own corruption. She said that the latest scandal over the corruption in Eurostat shows that the mechanisms in place are insufficient. The three commissioners with responsibility for Eurostat all say that they knew nothing about that organ’s secret bank accounts, which Mrs Theato says proves the point. Further signs that this Commission is failing in its promise to deal with corruption once and for all came when the Commission’s chief inspector, Jules Muis, announced that he was leaving his job early because he had had constant rows with the Directorate General run by budget commissar Michaele Schreyer. Theato says that nothing has improved since Marta Andreasen, an accountant, was sacked last year for saying that the Commission’s book-keeping does not correspond to modern standards: Andreasen now says that 95% of the EU budget is susceptible to corruption – and Theato says of this: “of course she’s right”. [Andreas Middel, Die Welt, 2^nd July 2003]

National Front members want new EU treaties

The French National Front has conducted a survey of the opinions of its own members and officials on the EU. 93% of them are critical of the EU and the way it functions. 39% expressed the wish that France leave the EU; 53.47% are in favour of co-operation between European states on the basis of renegotiated EU treaties. Only 28% are in favour of enlargement. 81% are opposed to the membership of Cyprus, 76% to Malta, 99.14% to Turkey. 56.9% of those polled said they did not want the United Kingdom to be a member of the EU either. The activists were however in favour of Germany (92.67%), Belgium (85.78%), Italy (85.78%) Luxembourg (85.78%) and Austria (84.05%) being “members of Europe”. Only 36.44% said they wanted the franc back; 55.51% said the euro was necessary for international commerce. This survey was conducted by Bruno Gollnisch, number two in the party, who said that it showed that the party’s official policy was in line with its members’ views. [Elie Barth, Le Monde, 5^th July 2003]