Perhaps stung by an article by Valéry Giscard d’Estaing, the former French president and arch-European, the SPD’s candidate for Chancellor in this weekend’s general election, Gerhard Schröder, has professed his faith in European integration in the columns of Le Monde. Having already suggested a new Elysée Treaty (the Elysée Treaty of 1963 is the basis for the Franco-German relationship today), and welcoming everything Giscard says about the paramount importance of Europe and Franco-German cooperation, Schröder sought in his article to reassure Giscard that his election will not compromise the Franco-German relationship. This was evidently Giscard’s main worry. Schröder writes, ‘I do not feel less close to England, as a Hanoverian, than Helmut Schmidt did because he was from Hamburg … and I do not feel any less European than he.’ He writes of the need to launch ‘a federative initiative’ (une démarche fédérative) outlining the distribution of national and European areas of responsibility. In a quaintly frank admission that the new Europe is more German than French, he writes, ‘The federal nature of the European construction is only for us [i.e. the Germans] an upward extension of a form of political organisation with which we are familiar. Only for centralised states is this natural evolution a revolution. It will especially be up to the French to say when it is time to pronounce the fateful word [i.e. ‘federal’] and to accept the new realities.’ This is exactly the language of the infamous CDU policy paper of September 1994, where France was told to make her mind up. ‘I am European because I am German,’ Mr. Schröder concluded. [Le Monde, 16^th September 1998]

The French minister for Europe has said that he wants to re-launch the Franco-German axis after the German elections. He said that Europe needed a new Franco-German project to be implemented by the new Commission which will be appointed in 2000. He has resurrected the old French idea of radical institutional reform, including a reduction in the number of Commissioners and more regular policy-making by ministers at the European level. [Le Monde, 16^th September 1998]

Following the assassination of a leading member of the opposition Democratic Party, an anti-government demonstration in the centre of Tirana was brutally suppressed by the Albanian government on Monday when police and the army fired into the crowd, killing four people and wounding fourteen others. The Albanian government, which came to power last year as the result of an internationally supported armed uprising orchestrated from the Southern Mafia city of Vlora, and which is dominated by the Socialist Party (the successor to Communist dictator Enver Hoxha’s Albanian Party of Labour) was congratulated in its actions by the entire international community. The OSCE denounced the demonstrators as ‘criminal elements’ and various Western governments, including those of Germany, Britain and the US, concurred in the government line that this was an attempted coup. They all insisted that the ‘democratically elected’ Socialist government be supported in power, even though numerous Democratic Party members were murdered during the course of the campaign last year and even though the ‘election’ was conducted in conditions of total banditry in many areas of the country. Now the leader of the opposition, former President Sali Berisha, faces arrest.

The German MEP and likely future leader of the French Green party’s list at next year’s European election, the 1968 veteran Daniel Cohn-Bendit, has shocked many by declaring his support for Hans-Joachim Klein, the accomplice of the convicted terrorist Carlos. Together with a group of intellectuals, Cohn-Bendit signed a petition supporting Klein last week, in which they emphasised that he had given up terrorism and claimed that they had persuaded him to break with his terrorist friends. [Le Monde, 16^th September 1998; Süddeutsche Zeitung, 16^th September 1998]

Germany has now applied to France to extradite Klein. He is accused of having participated in the kidnapping of OPEC ministers, organised by Carlos in December 1975 in Vienna. The attack caused three deaths. Klein was arrested in Normandy, where he was living under an assumed name. He officially renounced terrorism in 1977, denouncing its murderous nature in a book in 1979. However, he refused to give himself up. The government in Germany has used the affair to discredit Cohn-Bendit and the Speaker of the Germans Greens, Joshka Fischer (a possible nominee for Foreign Minister in a future SPD-Green government) who also knew Klein when he frequented the same extreme left-wing circles in the 1970s. Cohn-Bendit is accused of having contributed to the delay in Klein’s arrest. [Le Monde, 17^th September 1998]

Queen Beatrix of the Netherlands has called for a the enlargement of the EU to be slowed down. Speaking on behalf of the government whose programme she was presenting, the Queen laid emphasis on the problems of immigration and internal security. Similar fears have already been expressed in Germany and Austria, politicians in both countries having called for a delay to the free circulation of people until 2015 or 2020 even if three Central European states are admitted as new members in 2002. Queen Beatrix was awarded the Charlemagne prize for her work for European unity in 1996. [Le Monde, 16^th September 1998]

Chancellor Kohl has welcomed President Clinton’s call for an emergency G7 meeting to discuss the world’s financial crisis, but has demanded that Russia formally become a member. He also insisted that the G7 countries continue to ‘stand by Russia’s side’ - i.e. continue to pour Western taxpayers’ money into the Swiss banks accounts of its leaders and to shore up the bad debt incurred by Western banks and governments. In a preliminary statement, the G7 has indeed indicated that it is prepared to accord yet more help to Russia. [Süddeutsche Zeitung, 16^th September 1998]

Russia, meanwhile, is trying to blackmail the IMF into giving more money. The deputy finance minister, Alexander Schochin, has said that if the IMF does not give Russia more money, it will be forced to print money. The suggestion that this would occur was leaked to the Russian press on Monday. [Izvestia, 15^th September 1998]

French politicians have read the Starr report with horror. They regard it as proof that an independent judiciary is dangerous for politicians. (Naturally, they say it is ‘dangerous for democracy.’) François Bayrou, the centrist leader who hopes to become president of the UDF, has attributed the Starr report to a ‘mediatico-judicial campaign’ from which no democracy could be safe. Many French politicians are thus using the Starr report, and invoking the right to privacy, to put a brake on the Socialist government’s promise to make the French judiciary independent of government control. Georges Sarre, a prominent left-wing deputy, has said, ‘If prosecutors became independent in France, then they would all become Starrs!’ [Le Monde, 17^th September 1998]

The European Parliament has expressed support for the European Commission in its attempt to harmonise value added tax. The plan is being presented as a means of simplifying the existing VAT system and making it function better. A German MEP who belongs to the European People’s Party (Christian Democrat) has launched an initiative to upgrade the current committee which oversees VAT law according to the 6^th VAT directive in such a way that in future directives can be passed by majority vote. This initiative comes in the wake of an attempt by the tax Commissar, Mario Monti, to bring the application of VAT into line across the EU. Monti claims that the different ways VAT is applied within the EU are compromising the single market. [Le Monde, 17^th September 1998]

The issue of EU enlargement is dividing the Austrian population. Having profited disproportionately from the fall of the iron curtain, Austrians are now worried about the other side of the coin, namely what will happen to their jobs if Hungary, Poland and the Czech Republic are admitted as members. Exports from Austria to Central and Eastern European countries represented 9% of Austrian exports in 1989; now they are 16%. 30% of Austrian direct investment is in Central and Eastern Europe, and the profitability on these investments (2.9%) is markedly higher than in other regions of the world. On the other hand, small service industries which lie within 50km of Austria’s borders with Hungary and the Czech Republic have suffered significant losses as Austrians prefer to buy their petrol, have their car fixed, have their hair done or visit the dentists across the border where all these things are cheaper. There is, for instance, a high density of Hungarian dentists on the border with Austria.

A poll of 700 companies on the borders of Austria showed 25% positively disposed towards Eastern enlargement; 25% negatively disposed; and 50% neutral. However, 75% expect ‘more disadvantages than advantages. The most hostile group in Austrian society, however, are workers’ associations. Jörg Haider, the leader of the Freedom Party, has not hesitated to exploit these fears and has said that ten thousand ‘low-wage workers’ would be awaiting the fall of the external border of the EU to take up jobs, principally in Austria. This assertion immediately caused a huge rise of support for the FPÖ in border regions.

Economists have also tried to estimate the effect of enlargement. The EU expert at the Austrian Institute for Economic Research, Britz Breuss, has said that there are potentially 700,000 people who might migrate from the new member states to the EU. Of these, 45% would go to Germany and 29%, or 203,000 people, to Austria. The leader of the Institute for Higher Studies estimated the number of immigrants into Austria at 150,000, many of whom could commute. The Institute for Economic Research has thus recommended that free circulation of workers be delayed until 2015, which is just what the government in Vienna has proposed. When the EU was extended to Spain and Portugal, there was a delay of 7 years before free circulation was granted. [Handelsblatt, 15^th September 1998]

On the other hand, the Austrian Chancellor has spoken bullishly about the enlargement process after a meeting with the new Hungarian prime minister, Viktor Orban. He said the EU would commence concrete negotiations with Hungary in November. [Der Standard, Vienna, 15^th September 1998]

The European Commission is pushing something called a ‘Transatlantic Economic Partnership.’ Despite its glossy title, this is a mere shadow of the Commission’s original proposal to create a transatlantic free trade area. including agriculture. That idea was successfully vetoed by the French. The new proposal consists merely of modest steps towards ‘liberalisation’ - things like mutual recognition of professional qualifications and agreement on intellectual property rights. In short, it consists of peanuts. Even Sir Leon Brittan’s proposal of having free trade in services has been dropped.

Conscious of its failure, the Commission is now said to have thrown in the towel and is reported to be placing all its hope in the next round of World Trade Association talks instead. Attentive readers of the Digest will recall Sir Leon Brittan’s speech to the Carlton Club in June when he praised the European Union, and Britain’s membership of it, because of the leading role it was taking in furthering free trade with the USA and of introducing other liberalisation measures. [Frankfurter Allgemeine Zeitung, 17^th September 1998]

The Organisation for Security and Co-operation in Europe, which regularly oversees elections throughout the former Communist bloc, has admitted it bungled the Bosnian elections ten days ago. It admitted that there had been ‘serious problems’ in the poll, for whose organisation it was directly responsible. There were serious problems with the compilation of electoral lists, which has led to allegations that the OSCE was trying to fiddle the vote in order to further the election of politicians which it deems respectable. [Frankfurter Allgemeine Zeitung, 17^th September, 1998]

The European has reported that the Germany secret services have supported and indeed invented the Kosovo Liberation Army. German military intelligence was involved in training and arming the rebels, and KLA guerillas were photographed wearing German uniforms. A French general is quoted saying that the Germans pushed the Kosovars to a military confrontation with the Serbs, which the USA opposed. It also explains the sudden appearance of the KLA as coinciding with the appointment of a new head of German intelligence. [The European, 21^st – 27^th September 1998]

The French Europe minister, Pierre Moscovici, has said that there will be no referendum on the Amsterdam treaty. He denied that this was because the government feared that it would lose. He said instead that it was in order to prevent ‘a false campaign, for which the Amsterdam treaty would be a pretext.’ In fact, it is the president of the Republic, Jacques Chirac, who decides how Amsterdam will be ratified. As his Gaullist RPR party continues to tear itself apart on Europe, it is not impossible (although unlikely) that he will grant a plebiscite on the treaty. [Le Journal du Dimanche, 20^th September 1998]

The Institute for World Economics in Kiel has produced a report on the future of the Euroland economy. It predicts growth of 3% for 1998 and 1999. The institute denies that Europe’s high unemployment is conjunctural and points out that it has risen consistently since 1981, whatever the economic trends. It also criticises the budgetary policy of Euroland: although deficits are expected to fall in 1998, this is only because of economic upturn, and the budgets are due to rise again in 1999. There is also an underlying trend of rising overall debt. Above all, the financial policy of France and Germany is giving the institute cause for concern. ‘All in all,’ concludes the report, ‘the trend of finance policy in Euroland does not correpond to the goals laid down in the treaty.’ [Handelsblatt, 21^st September 1998]

Wim Duisenberg, the president of the European Central Bank, has said that Europe will suffer only very sightly from the world financial crisis. He said that Europe was strong enough to withstrand any downward pressures from outside. He also indicated that he expected the 11 EMU countries to have interest rates similar to those of the ‘core countries,’ namely Germany, France, Belgium, the Netherlands and Austria. Rates are at 3.2% or 3.3% in these countries. In Italy, Ireland, Portugal and Spain, by contrast, they are now at 6%. [Handelsblatt, 23^rd September 1998]

The German agriculture minister, Jochen Borchert, has again rejected the Commission’s plans for the CAP which are laid down in ‘Agenda 2000’. He said that the Commission had not calculated how the reform plans were to be financed in an enlarged EU. [Handelsblatt, 23^rd September 1998]

The German foreign minister has again adopted a bellicose attitude towards Yugoslavia. Speaking at the United Nations, Klaus Kinkel, who has been dying to attack Belgrade for months, has again said that a military operations should be carried out to put a stop to the conflict in Kosovo. Kinkel also called for a global system of crisis management to be put into place. ‘Only when we act together can we survive together,’ he said. [Süddeutsche Zeitung, 23^rd September 1998]

To days after the chief accountant of the Russian central bank said that much of the last IMF loan to Russia had effectively ended up on roulette wheels in Monte Carlo, new abuse of Western money by Moscow has been alleged. It is reported that $1.4bn from the World Bank, which was given for economic restructing, has been used to pay off foreign debts and to meet domestic spending needs. [Handelsblatt, 23 rd September 1998]

Speaking at a European jurists’ conference, the president of the European Court of Justice, Gil Carlos Rodriguez Iglesias, has said, ‘The creation of a European legal order presupposes the living together and the interaction of different; legal orders. The development of Community law has as a consequence an intensive harmonisation of law.’ Of these two contradictory statements, there can be little doubt that the latter is the true one. [Handelsblatt, 29^th September 1998]

Theo Waigel, the German Finance Minister and leader of the Bavarian Christian Democrats (CSU) has warned his colleague and rival, Edmund Stoiber, the prime minister of Bavaria, against putting his name forwards as a candidate for the post of Chancellor. Stoiber is riding a crest of popularity at the moment, having just pulled off a spectacular win for his party in Land elections. Chancellor Kohl said recently that he thought Stoiber was qualified for any job in German politics – meaning the Chancellorship – and other CSU/CDU politicians have been talking about Stoiber as a possible future candidate. [Handelsblatt, 23^rd September 1998]