Bonn counts cost of wasted opportunities

Date: 24/06/1999

EU presidencies always deliver less than they promise but, as Tim Jones reports, Germany's inexperience meant it fared worse than most

IT HAS been an unhappy six months for Gerhard Schröder at the helm of the EU.

The embattled German chancellor might be forgiven for thinking that criticism of his presidency of the EU since January is the least of his worries. After all, he has had to fight internal battles with his finance and environment ministers, his pension reform plans have been greeted with widespread hostility and support for his Social Democrat Party slumped by ten percentage points in last week's Euro-elections.

But inexperience in government and troubles at home have produced the least effective Union presidency since a rudderless Italian administration ran the show in the first half of 1996.

Schröder's defenders point to the obvious successes of the past six months. The collapse of the European Commission was answered with the swift and bloodless appointment of Romano Prodi at the March special summit in Berlin, where a tight €645-billion seven-year budgetary framework for the Union was also wrapped up.

What was effectively the EU's first war - in Kosovo - was prosecuted successfully, wobbly coalitions held together in Bonn and Rome, and Javier Solana was chosen as the first EU high representative for foreign policy with little fuss.

This is all very true but also largely events-driven; some decisions are made simply because they are ripe to be taken.

The 1993 Belgian presidency secured EU acceptance of the agreement which emerged from the Uruguay Round of multilateral trade talks, but that was 10% due to the undoubted deal-making skills of outgoing Premier Jean-Luc Dehaene and his then Foreign Minister Willy Claes and 90% due to the willingness of the French and the Americans to reach an accord.

The performance of Greek Foreign Minister Theodoros Pangalos when he led the EU's enlargement negotiations with Austria, Finland, Sweden and Norway in 1994 was so erratic that it was almost designed to keep them out. Yet he still managed to close the deal, because German Chancellor Helmut Kohl wanted it done.

Although agreements have been struck under Schröder's presidency, his naïvety when it came to playing the Union game meant that he failed to deliver the trade-offs vital to the running of the 15-member club.

Day-to-day business under Germany's veteran ambassador Dietrich von Kyaw was predictably efficient, but a lack of ministerial leadership often left Brussels-based diplomats confused and rudderless. In many policy areas, envoys felt they were in no position to negotiate.

The prime example was the European Employment Pact, a job-creation package trumpeted at last December's Vienna summit as the centrepiece of the German presidency. Two months in to Bonn's stint at the helm, employment policy experts still had no texts to negotiate and, when they did arrive, they were a duplication of the work which had been going on since the November 1997 'jobs summit' in Luxembourg.

Bonn's big idea, when it finally came in May, was for yet another forum to discuss how to avoid destroying jobs: this time a 'mega-jumbo' including finance and employment ministers, labour unions, employers and the European Central Bank.

The frustration and anger of long-suffering employment policy civil servants was reflected, albeit diplomatically, in the promise by the incoming Finnish presidency to introduce a moratorium on new jobs initiatives.

The Germans argue that the first half of their presidency was tied up with securing agreement on the European Commission's Agenda 2000 package of reforms to ready the Union for enlargement to the east. Even here, however, signals were confused and Schröder misread French President Jacques Chirac and Spanish Premier José María Aznar; a mistake that proved fatal for the rest of his agenda.

The Austrian presidency had made considerable progress in narrowing down the terms of the Agenda 2000 debate in a way that was acceptable to 14 out of 15 EU member states. Spain opposed every compromise. Eight countries favoured a real-terms freeze in the EU's budget over seven years - although in hindsight the French were only going along for the ride - but a Spanish veto would sink the entire deal.

Lacking clear signals from Bonn, Von Kyaw and his team conducted intensive negotiations on the technical aspects of the agreement and established a schedule which was designed to deliver political guidance on key issues at set times.

Unfortunately, this timetable depended crucially on Finance Minister Oskar Lafontaine, who found the subject a bore, and Agriculture Minister Karl-Heinz Funke, who was unsure what he wanted and to what extent he should pacify his French counterpart Jean Glavany.

It was Bonn's handling of the last weeks of the negotiations on reform of the Common Agricultural Policy which landed Schröder in trouble. Glavany, the latest in a long line of troublesome French agriculture ministers, realised early on that Funke - for all his superficial reforming zeal - was increasingly worried that German farmers would lose heavily under the European Commission's proposals.

The Elysée Palace spied the main chance. French President Jacques Chirac felt slighted because Schröder had not even attempted to stitch up a Franco-German deal on Agenda 2000 in grand Kohl-Mitterrand style before the Berlin summit. Even worse, right up until the pre-Berlin Agenda 2000 get-together in Bonn, Schröder continued to talk about CAP 'co-financing' - an idea which Chirac considered non-communautaire and offensive.

German diplomats reported back to their masters that the timetable they had devised lacked the political urgency needed to secure a deal. They feared that without a sense of crisis, the Agenda 2000 talks could not be cracked under the German presidency and, with 'Red Oskar' still fresh in his political grave, Schröder desperately wanted a high-profile EU policy victory.

A series of brain-storming sessions came up with the bizarre idea that failure to secure an agreement would undermine Europe's new currency. "If the EU were to create no reasonable financial planning for the years 2000 to 2006, then that could, and I deliberately choose my words with care, have repercussions on the international financial markets on the quality of the euro," said the German chancellor. Even ECB President Wim Duisenberg professed himself puzzled at the link.

It certainly did not worry Chirac. By the time he got to Berlin, the French president had hardened his position against CAP reform. Determined to avoid a repeat of UK Prime Minister Tony Blair's mistake at the May 1998 euro summit when he allowed Chirac to bargain away in endless bilateral meetings, Schröder kept the French president at the summit table. Much good it did. After a macho all-night session, ambitious CAP reform had evaporated with the morning dew.

Meanwhile, so keen was he to secure a budget deal that Schröder gave Aznar an very generous deal with no trade-offs.

Given that Madrid was blocking progress on the 29-year-old plan for a European Company Statute and a seven-year-old proposal for EU-wide taxes on energy consumption - both ideas championed by Germany - diplomats and Commission officials were amazed.

The Berlin deals on the budget and Prodi's appointment generated positive headlines for the Germans, but Schröder paid the price in the second half of his presidency.

Sure enough, the company statute and the energy tax proposals ground to a halt in official-level negotiations and Aznar actually toughened his position during a harangue at this month's Cologne summit.

Kohl was in power long enough to have a second bite at the presidency. If Schröder is equally lucky, he will have to use it to better effect than he did this time around.

Features on the German EU Presidency, January-June 1999.