European Foundation
Intelligence Digest
Issue No. 178
16th October
2003
I. Stability Pact abandoned, constitution in trouble
The French and
German leaders have united around support for a “flexible” interpretation of
the Stability and Growth Pact - in other words that they intend to ignore its
provisions. Moreover, they have
obtained the green light to do this from the monetary commissar, Pedro Solbes,
who gave the countries a further year to bring their finances under
control. Solbes is himself under
pressure at the moment because Eurostat comes under his remit, and he stands
accused of tolerating corruption in his department. This means that the Pact will not be respected this year, as it
has not been for the last three years running.
This breach of the rules has been sugared over with promises by the
errant pupils to do better in future.
But it underlines that there is no point having the rules in the first
place, since it is now admitted that they are incompatible with the primary
obligation of any government to be able to adjust economic policies to
circumstances. [Martin Wiegers, Die Welt, 14th
October 2003; Solbes interview in Le
Monde, 12th October 2003]
The French President and the German Chancellor, together with their foreign ministers, held a meeting in the Elysée Palace on 12th October in order to harmonise their positions before the European council on 16th and 17th October. Jacques Chirac said after the working dinner that both countries were determined to reduce their budget deficits but that they would not put economic growth at risk to do so. The German Chancellor agreed, saying that he thought that the other EU member states and the European Commission had an interest in seeing the French and German economies grow. Mr. Schröder also said that the latest discussions between Paris, Berlin and Brussels had led to the Commission adopting a more realistic position on the matter of the French and German budget deficits, which are expected to be 4% and 3.8% of GDP in 2003.
The two sides also discussed the European Constitution and the Common Defence Policy. According to reports in the German press, Berlin and Paris are working with London on a project to create an EU military force which would be independent of NATO. [Le Monde, Handelsblatt, 13th October 2003]
French and German friendship has
reached such a pitch, indeed, that the German Chancellor has asked the French
President to represent him at the EU summit on Friday. German officials will be waiting outside the
door just in case there are any difficult decisions which would need a phone
call to the Chancellor to resolve. The
reason for this strange arrangement is that both the Chancellor and the Foreign
Minister, Joschka Fischer, need to leave Brussels late on Thursday evening in
order to vote in the Bundestag. We have
come a long way from the Nice summit three years ago when, during an argument
between France and Germany over the votes each country should have, Chirac
asked out loud what French soldiers had shed their blood in two world wars
for. [Ralf Beste, Der Spiegel, 14th October 2003]
The prominent
Social Democrat MEP, Klaus Hänsch, has said that he found the opening
discussions of the Intergovernmental Conference to be “completely eerie”. Hänsch had been a member of the Convention;
now he is one of the European Parliament’s two representatives at the IGC. Hänsch said that the opening discussions
have little ground for optimism because old arguments were being re-hashed,
even though they had already been dealt with in the Convention. The biggest sticking point is the size of
the Commission, many countries refusing to be deprived of at least one
commissar. Hänsch says that he fears
that everything will be thrown open for discussion in the IGC, and that the
governments will unite around the lowest common denominator at the last minute of
the negotiations. Asked about his “baby”,
the draft text, Hänsch replies that he is concerned about it. “Too many people are trying to prevent the
child from growing up. They want to
dress it in their own imaginations.
Such creatures are never good because they never get to be themselves.” [Interview in Die Welt, with Katja Riddersbusch, 15th
October 2003]
Reduction in
commission ‘will not happen’
According to the
Austrian foreign minister, Benita Ferrero-Waldner, the number of states opposed
to the reduction in the number of commissars to 15 is too great for this key
proposal of the draft Constitution to be adopted. 18 out of 25 countries are demanding that each country have at
least one commissar. Supporters of the
change point out that the principle has already been accepted at Nice, where it
was agreed to have 20 commissars for 27 countries. They say that if the principle agreed at Nice is now dropped,
then those countries which then agreed to drop their 2 commissars (Germany,
France, Britain and Italy) will demand something in return. The German foreign minister, Joschka
Fischer, has said that it does not want to change the draft. Fischer said that the number of commissars
was one of the most difficult questions, which would not be solved until the
end of the IGC, which is expected to be in December. Poland and Spain remain determined to keep the voting rights
agreed at Nice. German sources say that
the German Chancellor has privately been very critical of Warsaw’s intransigent
attitude: it is said that large
financial subsidies were agreed for Poland, and that Poland is now expected to
react favourably to the new constitutional proposals – in other words, that she
is expected to sell her birthright.
“The way the Poles are behaving is not the way we work here,” said a
senior EU diplomat. [Handelsblatt, 15th
October 2003] One
of the reasons why the draft proposes to reduce the number of commissars is
that there is not enough work to go round for 25 of them. [Jean Quatremer, Libération, 15th October 2003]
At the first
session of the intergovernmental conference which started in Rome on 4th
October, some 15 states expressed a desire to see the insertion of a reference
to the “Christian heritage” of Europe inserted into the new European
Constitution. Now a group of MEPs has
launched a campaign for this. Led by
Elizabeth Montfort, the MEPs are calling for the reference to the religious
heritage of Europe to include the phrase “especially Christian”. This request was rejected by the European
Parliament on 24th September, by 283 votes to 211 and 15
abstentions. But the pro-Christian MEPs
are now launching a public petition, which has already collected some 300,000
signatures. Madame Montfort is hoping
to get a million names by the end of the year.
Two French organisations, the Convention of Christians for Europe and
the Foundation for political service, are campaigning for the insertion of the
reference, saying that Christianity is both a simple historical fact about
Europe, and that it is the source of human rights and indeed of the idea of
European unity. [Thomas Ferenczi, Le M onde, 12th
October 2003]
II.
Other European News
Speaking at the
Russian-German summit in Yekaterinburg, the Russian president accused
“bureaucrats in the European Union who would like to put down conditions for
Russian entry to the WTO which are deliberately unacceptable.” Putin described the EU’s position as
“dishonest” and said that Russia was not prepared to allow itself to have its
hands tied. Russia is the largest economy
still outside the WTO and the deadline for its acceptance keeps slipping. The original aim was 2003 but now people are
expecting it to take until 2008, as negotiations have reached an impasse. The main stumbling block is internal energy
prices. The EU wants them to be aligned
with international process, arguing that the present arrangements represent a
huge subsidy to Russian industry.
Currently, prices for energy are about one sixth inside Russia of what
they are on the European market. Russia
argues that these arrangements should be allowed to continue, given that they reflect
geographical fact and that the Russian winter is so cold. Russia is also under pressure to liberalise
the energy sector, in particular by dismantling the state energy monopoly,
Gazprom. But it seems unlikely to do
this, as Gazprom provides much of the state budget and also supports President
Putin. Arguments have now broken out
within the Russian elite about the degree to which the country should integrate
economically with Western economic structures like the WTO: it is argued by the pro-integration camp
that foreign investment is necessary and that only full WTO membership will
produce it. [Natalie Nougayrède, Le Monde, 12th
October 2003]
President Putin
has said that he does not rule out the possibility of denominating Russian oil
sales in euros. He was speaking at the
same Russian-German press conference on 9th October. Almost half of Russia’s oil exports go to
Europe. Putin originally suggested
selling oil for euros in 1999, when relations with the US were also tense. [Le Monde, 12th October 2003]