Following in the master’s footsteps

Date: 17/12/1998

He may no longer be the leader of the EU's most powerful member state, but former German Chancellor Helmut Kohl was present in spirit throughout last weekend's Vienna summit. Tim Jones reports

WHO needs Helmut Kohl? Not EU leaders, it seems, judging by their first full-scale summit for 16 years without Germany's longest-serving postwar chancellor sitting at the negotiating table.

The most they could offer him, two months after he was thrown out of office by the German voters, was a place at a Viennese dinner table and 'honorary citizenship of Europe'. Yet they paid him a far greater compliment in the way they conducted the summit.

Kohl had no need to launch into one of his 'the European train has to be kept moving or it comes off the tracks' speeches. All on their own, the new generation of Union leaders proved themselves adept at burying profound policy splits beneath a mountain of visionary rhetoric, just as they learned to on Helmut's knee.

For Kohl, summits had to be unifiers. Instead of focusing on the areas where they were divided, summiteers should accentuate the positive and use their formal conclusions to force the pace of negotiations on sticky issues. Later was always better than never.

When they went to Vienna, heads of state and government had two major policy negotiations to drive forward: the Agenda 2000 package of spending reforms to prepare the EU for eastern enlargement, and the coordination of taxes on savings, energy use and company profits.

On the first, all sides read out their prepared positions and did not even pretend to engage in real negotiations. The second was kicked into the long Finnish grass.

Kohl's 'usurper', Gerhard Schröder, who fired up his Social Democratic faithful just before the summit with demands for deep cuts in German contributions to the EU budget, could hardly have been more emollient in Vienna.

Germany's 10-billion-ecu annual net contribution to the Union would have to be reduced, he reminded fellow leaders, but he also acknowledged that he would have to compromise to get a deal.

In the other corner, Spanish Prime Minister José María Aznar told the summit that he would not bore it with his oft-stated position on the future financing of the Union. He simply wanted to state for the record that he would only negotiate on the basis of the European Commission's original Agenda 2000 proposal.

He did not have to specify that he was referring to the German-Dutch proposals for the EU's 85-billion-ecu annual budget to be pegged to inflation until the end of 2006. Everyone knows he hates the idea.

All references to the 'stabilisation' of EU spending in 2000-06, a principle now endorsed by eight governments including the French, were dropped from the conclusions. Its supporters - Germany, France, the Netherlands, the UK, Austria, Denmark, Finland and Sweden - did not complain.

Portuguese Prime Minister António Guterres stepped in to provide Austrian draughtsmen with the finessing they needed for the text by calling for all sides to approve a budget deal based on “solidarity and budgetary discipline”.

They also agreed that Agenda 2000 should be the subject of two special summits: one in Bonn in February and another in Brussels a month later. The net contributors restated their wish for the British government to bring its 3-billion-ecu budget rebate to the negotiating table so they could share it out. UK Prime Minister Tony Blair restated his wish to carry on getting a rebate, but attached no figure to it.

All sides were happy. “The whole intention of the talks was not to come to any final decisions on anything,” said Portuguese State Secretary for Foreign Affairs Francisco Seixas da Costa. “Our interest is to start the German presidency without any predefined decisions on this matter.”

His Dutch counterpart Dick Benschop agreed. “The text includes references to a fair distribution of the costs and benefits of the Union, to solidarity and to rigorous budgetary discipline. It's all in there and it's very important for us that, as final decision-making approaches, everything is still on the table.”

WHEN his presidency began in July, Austrian Chancellor Viktor Klima wanted an overall deal on savings, energy and corporate tax in time for the Vienna summit. In the end, all he got was a three-point chapter in the presidency conclusions and language which the tabloid-stung British government could live with.

“Cooperation in the tax policy area is not aiming at uniform tax rates and is not inconsistent with fair tax competition but is called for to reduce the continuing distortions in the single market, to prevent excessive losses of tax revenue or to get tax structures to develop in a more employment-friendly way,” it read.

Most of Saturday morning was spent toning down the text. Almost nobody noticed that, at the instigation of French Prime Minister Lionel Jospin, the target date for a deal was postponed from the Cologne summit in June 1999 to Helsinki in December.

Instead of concentrating on the key elements of the tax package, the only real dispute at the summit centred on one tiny area of fiscal policy which was agreed seven years ago.

At dinner on Friday night, the big member states launched an ambush. In chorus, Blair, Jospin and Schröder demanded a reprieve for duty-free shopping within the EU in the face of opposition from Denmark's Poul Nyrup Rasmussen, Belgium's Jean-Luc Dehaene and an increasingly angry Wim Kok of the Netherlands.

“It was rather rough,” said one prime minister speaking strictly off the record. “Some of us felt that the big countries were trying to get something through by diktat.”

A COMPROMISE text was agreed to save the big boys' faces. Commission President Jacques Santer accepted their demand for a study into the employment effects of abolition and the transitional regime, but restated that he would not make a proposal to revoke the 1991 decision unless told to do so by all 15 finance ministers.

Reversal of the duty free decision would be a resigning matter for Danish Economic Affairs Minister Marianne Jelved - a fact she made abundantly clear both to Rasmussen and the Commission. The easily-riled Kok gave vent to his anger after the meeting, saying: “This text gives attention to those who thought seven years of preparation were not enough.”

Nevertheless, when attempts to get a reprieve fail in March, Schröder will be able to blame Kohl, Blair to blame Major and Jospin to blame Mitterrand for the 1991 decision. Honour will have been preserved and finance ministers can look forward to lots of lovely duty-full revenues.

Given that all the important topics could not be discussed, leaders spent most of their time talking about yet another 'pact for employment'. Without Kohl and his Finance Minister Theo Waigel at the helm, Bonn is prepared to play the French game of agreeing quantifiable job-creation targets.

Blair, who is determined to remain 'engaged' in EU policy-making even when he fundamentally disagrees with it, gave these plans his blessing. Whether he can keep up this front as the Cologne summit deadline for a pact approaches is another matter, given that its contents are likely to be too prescriptive for London to stomach.

Introducing the Franco-German plan, Jospin trumpeted: “The EU has stuck to its commitments.” Given the trick France, Germany and the UK had just tried to pull over duty-free shopping the night before, the French premier's words rang a bit hollow.

But Vienna was not a place for rancour, accusations of hypocrisy or brinkmanship. Bland it may have been, but it was just what Doctor Kohl would have ordered.