Germany’s hidden discord

Date: 20/06/1996

IF the Intergovernmental Conference on EU reform does not gather speed soon, EU leaders fear the cumbersome exercise might well drag on beyond the June 1997 deadline envisaged when the negotiations opened in March this year.

Recognition of this fact just two months after the beginning of the IGC prompted French President Jacques Chirac and German Chancellor Helmut Kohl to call for fresh political impetus to be given to the talks.

The European summit in Florence, the two leaders declared at their meeting in the French town of Dijon earlier this month, should come up with more than just another comprehensive catalogue of the 15 EU countries' differing stances.

After 12 weeks of discussions during which the IGC negotiators have largely restated their governments' known positions - without, in some cases, making even those absolutely clear - many EU leaders believe that the time has come to get down to brass tacks, establish a clear list of priorities and start negotiating in earnest.

However, while leaders push for speed, their negotiators have to grapple with the sometimes conflicting demands and positions emanating from the different ministries taking an active interest in the talks, as the German example makes clear.

While Chancellor Kohl's pro-European attitude might lead observers to suppose that his government joins battle at the IGC with a single stance, a closer look behind the federalist posturing which has become Germany's new political correctness reveals a far more varied political landscape than one might expect.

Deep cracks show up within the government itself, with some important ministers lobbying for a substantial cut-back in the European Commission's powers while others refuse to even contemplate majority voting for policy areas considered to lie at the heart of national sovereignty.

The most outspoken and forceful advocate of a strengthening of the relative power of the Council of Ministers is Agriculture Minister Jochen Borchert. Three years of dealing with the complexities of the Common Agricultural Policy have reportedly left him with a deep sense of frustration about his comparative lack of room for manoeuvre.

The Commission's extraordinarily strong position in agricultural policy matters, best exemplified by its recent decision to overrule scientific advice and ministerial opposition and engineer a partial lifting of the export ban on British beef products, has prompted Borchert to push for a redesigning of the 1987 “comitology” agreement.

This highly-technical set of rules, unknown to the public and understood only by a tiny minority of experts in Brussels (and an even smaller group of officials in the EU's national capitals) spells out the bewildering array of committee-based decision-making procedures used for the single market and Common Agricultural Policy (CAP) issues, with the Commission enjoying varying degrees of power to ignore the opinion of a minority or even a majority of member states.

While Borchert is happy to leave the procedure for regulatory and advisory committees unchanged, he is pushing strongly for the rules governing management committees to be redesigned.

These rules, which require a qualified majority of member states to oppose a Commission proposal in order to block it, apply to 75&percent; of CAP decisions and changing them would amount to a small revolution in the way the EU deals with agricultural policies.

However, Borchert - a dour-faced Guestfalian farmer-turned-politician with a dry sense of humour and a clear grasp of the technical complexities of the CAP - has decided to carry his attack on the Commission's prerogatives into even more dangerous territory by pushing for an end to the Commission's sacrosanct monopoly on proposing new legislation (the so-called 'right of initiative').

In this, Borchert enjoys the support of the German ministry of economics, another Bonn ministry with day-to-day experience of the extent to which European integration has already led to a transfer of decision-making competence from the national to the European level. With majority voting in the Council of Ministers already the rule for most internal market business, the ministry of economics supports Borchert's drive to extend the right of initiative to the Council, should the Commission fail to respond to a request from a group of member states for it to come up with a new legislative proposal.

“In the present situation, we are paralysed unless we can persuade the Commission that there is need for action,” says one official. “In theory, we could take it to court if we thought that it had failed in its role as guardian of the treaty. But this would always be a very difficult thing to prove, and is hardly a practicable way.”

The eagerness of the agriculture and economics ministries to reclaim some of the powers lost to the Commission is mirrored by the adamant refusal of the ministry of finance and its chief Theo Waigel to even consider an end to the unanimity requirement for Council votes on fiscal matters, which gives each member state an effective right of veto over every piece of proposed EU fiscal legislation.

Although Waigel and his officials readily concur that the unanimity principle is the reason why countless hours of Council meetings and preliminary negotiations have been devoted to the fruitless pursuit of an EU-wide energy tax, a capital gains tax or a common Value Added Tax rate, the idea of introducing a measure of majority voting in this area remains completely taboo.

So while nearly all Bonn officials agree with Tax Commissioner Mario Monti's analysis that the coexistence of 15 different - and sometimes competing - tax systems in the single market distorts and hampers internal trade, leads to enormous bureaucratic costs and, more worryingly, fuels a gradual erosion of the taxable income base in each member state, there is an equal consensus on the need to reject any change to the existing system.

The reason unashamedly given throughout Europe's finance ministries for this has nothing to do with some economic or democratic rationale, and everything to do with the preservation of power.

“This would really strike at the heart of things,” says one official. “We have given everything else away to Brussels. This is about the last space we have left to breathe in.”

As German officials stress, even the most ardent of federalists in the corridors of powers across the EU have so far refrained from attacking the power of the Union's finance ministers.

Privately, senior sources in Bonn and Frankfurt acknowledge that the single market and monetary union will eventually make some Communitarisation of the Union's fiscal policies unavoidable, including an end to the strict unanimity requirement.

But this, they insist, will be left to the next Intergovernmental Conference - which will not be held before the beginning of the 21st century - at the earliest.

Meanwhile, Germany's IGC negotiators at the foreign ministry in Bonn are confronted with the difficult task of reconciling their Chancellor's federalist imperative with the less-than-federalist pressure emanating from powerful ministries.

The chorus of conflicting voices, made even louder by the constitutional requirement to involve Germany's 16 Länder in the negotiations, leads to frequent and drawn-out inter-ministerial consultation on the issues facing the IGC, with the German delegation regularly the biggest group at the negotiating table.

Typically, a lid is being kept on the conflict over Germany's negotiating stance through the use of delaying tactics favoured by the German chancellor.

So, for example, on the crucial IGC question of whether to end the Commission's monopoly of the right of initiative, diplomats say “the German government's official position is still undetermined”.

Precisely when Chancellor Kohl will be forced to pin his colours firmly to the mast depends in part on whether he and Chirac succeed in persuading other EU leaders at their meeting in Florence that the time has come for the IGC negotiations to begin in earnest.

If Kohl gets the timing wrong, the long-term consensus which has long been the hallmark of Germany's approach to Europe could be seriously undermined - threatening the Chancellor's hopes of using this round of EU reform to begin turning his federalist ambitions for Europe in the 21st century into a reality.