Romano Prodi, the president of the European Commission, has said that the principle by which some areas of policy-making are subject to unanimity (and thus to a national veto) is handicapping the EU. He called for this issue to be addressed at the EU summit which is to be held in Helsinki on 10^th and 11^th December. He said that unanimity was especially harmful in the matter of tax harmonisation, where "progress" was being hindered by Britain. He said that tax harmonisation was not only a very important measure in the fight against unfair tax competition but that it was also an essential instrument in the EU's employment policy. Prodi also said that external economic policy should no longer be subject to unanimity, as well as internal security matters and judicial affairs. In all these areas, he said, the EU was being hindered by the national veto. He said that he also wanted to see initiatives on the new European "foreign and security policy" and said that the Commission would use all the means at its disposal - single market legislation, competition and trade policy - to develop a European defence industry. [Handelsblatt, 2^nd December 1999]

The EU competition commissar, Mario Monti, has said that the Commission will produce its own proposals to fight against "unfair tax competition" in the EU if the summit at Helsinki fails to produce agreement on the matter. Britain and Luxembourg have made it clear that they will not give ground on what Monti regards as "tax exceptions", i.e. on their sovereignty. The Finnish presidency remains determined to force Britain and Luxembourg to give in on the withholding tax, while the German government, supported by a majority of other EU states, are similarly resolved to press ahead with "a minimum level of tax coordination" [Handelsblatt, 29^th November 1999]

The euro has reached a new low against the US dollar, trading at a mere fraction of one cent above parity. It has lost 15% of its value since it was introduced last year. If it falls any further against the dollar, a whole host of options around this rate will kick into play, threatening to accelerate the fall even further. In addition to hovering around the $1 (down from $1.17 when it was launched last January), the euro has also fallen in value by 34% against the Japanese yen. [Süddeutsche Zeitung, 29^th November 1999]

The integration of the Western European Union into the European Union - and with it, the creation of a European army - took a huge leap forward with the recent appointment of Javier Solana, the EU's High Representative for Common Foreign and Security Policy, to be simultaneously General Secretary of the WEU. The plan is for the WEU to be formally integrated into the EU by next year. Now, the intention is for the new European army to take over running Kosovo. This once again underlines how the Kosovo war leads to the European army as night follows day. The German Defence Minister, Rudolf Scharping, said that this would allow the new European corps to cut its teeth on its main task of "crisis management". The whole purpose of the corps, in other words, is to "intervene" in other countries, i.e. to invade them. Funny that a German minister should be so keen on this idea. [Handelsblatt, 23^rd November 1999]

The rescue package dashes any pretence that Germany is embracing Thatcherite capitalism, as some hopeful commentators have claimed. The rescue package is a classic example of media politics at its worst: workers cheering a Chancellor who has in fact shielded one of Germany's biggest banks from the consequences of its own actions and helped a big company in a climate where smaller construction companies are allowed to go to the wall. In the last year, more jobs have been lost in the construction industry than have been "saved" at Holzmann. [Süddeutsche Zeitung, 26^th November 1999] The bail-out comes at the same time as Germany's angry reaction to the hostile take-over bid of Mannesmann by Vodaphone, Mr. Schröder at one point saying that such a bid was against German "culture". Although Mr. Schröder ruled out passing a law to prevent such take-over bids in the future, the EU competition commissioner, Mario Monti, did say that the bid showed the necessity of having a European directive on mergers and acquisitions. [Handelsblatt, 23^rd November 1999]

These decisions by the German Chancellor have sent a chill through Anglo-German relations. Tony Blair and the Foreign Office are said to be realising that they have backed the wrong horse in thinking that the "Third Way/Neue Mitte" paper which the British and German leaders published in June would add up to a row of beans. So, just as John Major had to re-think his pro-German policy within two years of his becoming prime minister, so Tony Blair seems to be re-thinking his. A Franco-British meeting has been held between policy wonks on both sides of the channel from the Blairist and Jospinist inner circles in order to patch up differences between London and Paris. It follows an article in Le Monde by the head of the No. 10 Policy Unit, David Milliband. In tandem, and much more importantly, a common European defence policy is being initiated by London - designed, among other things, to reinforce the Franco-British axis. A quick end is being sought to the spat over beef so that, once again, Britain can attempt to repair the mistake it repeatedly makes of thinking that the Germans are its true allies on the continent. Whether it will succeed in this is doubtful: the 74^th Franco-German summit concluded in Paris on Wednesday. Although reduced in format from previous meetings (it lasted only one day instead of two) the French and Germans may well decide that, after all, they are better off remaining the motor of European integration together, rather than each trying to go his own way with the perfidious British.

Shortly before 5^th November, according to the Tablet, the Vatican Press Office has confirmed, at the end of a synod of European bishops, that canonisation process has begun for the so-called "Founding Fathers" of the European Community, Alcide de Gasperi, Robert Schuman and Konrad Adenauer. A supporter of their canonisation, Chiara Lubich, said that the opening of the cases would show that Europe "was built upon a rock". She added, "I think that the European Union is a design not only of human beings but of God." A bidding prayer at the closing mass of the synod prayed that the political leaders of Europe would "courageously encourage the process of European integration and development" and used phrasing which picked up the words of Romano Prodi, president of the European Commission, in his message to the synod. The text released at the end of the Synod was addressed to Christians and "fellow citizens of Europe" whom it invited "to be committed Europeans . . . treasuring the precious heritage left us by the founding fathers of a united Europe". It was necessary to "pursue, with courage and urgency, the process of European integration, widening the circle of member countries of the Union, while appreciating with wisdom the historical and cultural differences of the nations". [The Tablet, 30^th October 1999]

The former German Chancellor, Helmut Kohl, has been forced to admit the existence of unofficial bank accounts in the Christian Democrat Party which he led for nearly two decades. He has also admitted to the parliamentary committee of enquiry that he occasionally accepted cash donations to the party's coffers. On the other hand, he denied that he had known of the donation of DM 1 million made to the CDU by an arms dealer. This denial has elicited some suspicion in German political circles because Kohl was well known for the intense personal control he wielded over the entire CDU party apparatus. [Die Welt, 29^th November 1999]

As the euro continues to fall against the dollar and other currencies, the danger of inflation cannot, according to one analyst, "be underestimated". The M3 measure of money supply has risen by 6% this year instead of the predicted 4.5% and, as is well known, the ECB targets money supply rather than inflation figures. The commentator says that although there is no immediate danger of inflation - under similar circumstances of rapid monetary expansion in Germany, he says, it took three years before the inflationary effects became visible - it is imperative that the ECB raise rates soon to dampen the expansion. [Professor Joachim Scheide in Handelsblatt, 2^nd December 1999]

2. The New World Order

In a speech to the Canadian Parliament, the Czech president, Václav Havel, praised the Yugoslav war as "an important precedent for the future," saying that "state sovereignty must inevitably dissolve," and nation-states will be transformed into "civil administrative units." [Washington Post, 19^th November 1999]

The United States has built a massive military base in Kosovo known as Camp Bondsteel. It was here that President Clinton celebrated Thanksgiving with the American troops on his recent visit to the province. The 775 acre base is the biggest the US has built since the Vietnam war. Costing $36 million, "The base is a response to the perceived need for a presence in the Balkans for years to come," according to Bryan Hopkinson, Kosova director of the International Crisis Group, a Brussels-based think-tank. "It shows the U.S. means business." The base has a large helipad for nearly 55 transport, reconnaissance, and attack helicopters, including a dozen Apaches. There is no runway for fixed-wing fighter aircraft, but some analysts speculate that the base may be big enough to accommodate a runway in the future. Others say that it will provide the springboard for future interventions in the region and that it brings the US considerable geopolitical advantages. Perhaps with this in mind, Hopkinson says that U.S. planners are shrewdly "taking advantage of favourable circumstances" to build a base spacious enough to accommodate any future needs - those "favourable circumstances" being the expulsion of Serb forces from Kosovo by the US-led Nato war. [Radio Free Europe Newsline, 24^th November 1999]

The US Defence Secretary has also signed, at a meeting in Bucharest of several defence ministers from the region, agreements on establishing a military intelligence network in the Balkans and on infrastructure projects. The Balkan signatories to the agreement are Albania, Bulgaria, Greece, Macedonia, Romania, Slovenia, and Turkey. [Radio Free Europe Newsline, 1^st December 1999]

The Russian prime minister has said that his country's economy has suffered from being opened up to world markets. "The integration of Russia into the world economy has led to heavy losses for the Russian economy," he said. "The Russian state and Russian producers were unprepared for the competitive struggle on the world market. He added that because of the developing world situation, Russia would have to develop her military capacity and her arms industry. In an indirect criticism of his predecessor, he said that the world situation had not developed according to the predictions of "certain Russian politicians in the early 1990s." Although he said that Russian membership of the World Trade Organisation had more advantages than disadvantages, he said that a system of protection of Russian producers had to be developed. [Handelsblatt, 23^rd November 1999]

Mr. Putin is, of course, a senior KGB officer. But his words are curiously prefigured by Adam Smith, who wrote in The Wealth of Nations: " The case in which it may sometimes be a matter of deliberation how far, or in what manner it is proper to restore the free importation of foreign goods, after it has been for some time interrupted is, when particular manufactures, by means of high duties or prohibitions upon all foreign goods which come into competition with them, have been so far extended as to employ a great multitude of hands. Humanity may in this case require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection. Were those high duties and prohibitions taken away at once, cheaper foreign goods of the same kind might be poured so fast into the home market, as to deprive many thousands of our people of their ordinary employment and means of subsistence. This disorder which this would occasion might no doubt be very considerable … The equitable regard, therefore, requires that changes of this kind should never be introduced suddenly, but slowly, gradually, and after long warning." [An Inquiry into the Nature and Causes of the Wealth of Nations, Book 4, Chapter 2, paras 40 and 44]

The destruction of democracy and the rule of law proceeds apace in Slovakia, following the installation of a pro-Western government following the elections in September 1998. President Rudolf Schuster, a lifelong senior nomenklatura Communist and former Central Committee member, has appointed all nine new judges to the Constitutional Court. None of the candidates proposed by the opposition was appointed to the court, nor were any of the outgoing judges re-appointed. [Radio Free Europe Newsline, 29^th November 1999] Now all the levers of state will be in the hands of the governing party and any recourse the opposition may have to the Court will be dealt with by party political placemen.

The Organisation for Security and Cooperation in Europe, which is supposed to ensure the respect of universal democratic values across the Eurasian continent, has once again proved itself to be the instrument of Western policy preferences and a traitor to democratic principles. When the "pro-Western" candidate in the Macedonian presidential elections "won" thanks to massive cheating, mainly by the Albanians who live in the Western part of the country, his supporters fired machine-gun rounds into the sky at the official celebratory meeting in the centre of Skopje. Their exuberance may have been premature, however, for the Supreme Court has ruled that the vote must be held again in no fewer than 221 constituencies. The OSCE, for its part, had declared the vote "satisfactory" the day after the poll was held. [Radio Free Europe, 29^th November 1999; Süddeutsche Zeitung, 16^th November 1999]

On the instructions of the European Union, Bulgaria has confirmed that it will close down two nuclear reactors at the Kozloduy nuclear power plant on the Danube. The remaining two reactors will, the EU said, be closed down by 2006. The EU also said that it had received commitments from Slovakia and Lithuania that they would close down their reactors "as a precondition for launching accession negotiations". [Radio Free Europe Newsline, 1^st December 1999] In this way, French nuclear companies and German electricity companies can gain control of the energy supplies of the EU's new client states.

"The Belarusian economy is in a dead end" according to the German Economic Institute. The talk is of rising inflation, falling growth and a trade deficit. Yet when you look at the graphs you find that economic growth in Belarus was 10% in 1997 - at a time when, as the DIW still claims, the place was in collapse. In the period 1996 - 1997, moreover, inflation was low. If it had low inflation, high growth and falling unemployment (now at 2%) and was still said to be in decline, what faith should we have in the DIW's dire warnings now? [Handelsblatt, 2^nd December 1999]

Readers of the Intelligence Digest are probably not used to taking the drug ecstasy, used at all-night dance parties, often with fatal consequences. They will therefore be unaware that ecstasy tablets carry an "E" on them which is exactly the same as the sign for the euro. No doubt this is intended to give the youth of Europe a sign of hope in the future of European integration. [L'Espresso, 18^th November 1999]