Grand Duchy’s tightrope act

Date: 06/11/1997

Rory Watson assesses Luxembourg's chances of beating the odds and preserving its reputation for running successful, if unglamorous, presidencies

THE last thing the Luxembourg government wanted as it prepared for its six-month EU presidency in the second half of this year was the burden of organising an additional European summit at short notice.

But that is precisely what landed in its lap when EU leaders last met in Amsterdam in June. What made the challenge even worse was that the solitary theme for the top-level gathering was to be the fight against unemployment.

No wonder Luxembourg Prime Minister Jean-Claude Juncker initially counselled against the idea. He knew the preparations would be extremely time-consuming, especially for a small administration, and that his country's EU presidency would be judged almost entirely on the outcome of the summit. Since no magic wands exist, that prospect looked distinctly unappetising.

Now, more than half way through its presidency, the outlook is hardly any brighter. But it is not for want of trying.

Juncker has thrown himself into the project with a vengeance. He has contacted anyone and everyone who could have a bearing on the summit. He has written to fellow EU leaders, met the social partners almost a dozen times and persuaded MEPs to come up with a financial package for the summit.

The jury is still out on the fruits of those labours and will only give its verdict later this month.

But if Juncker cannot fashion something worthwhile, then it is unlikely anyone else could. Not only is he Luxembourg prime minister, he is also uniquely responsible for social affairs and the economy. "That should help to provide a certain degree of coordination, certainly between finance and social affairs ministers who do not always see eye to eye," suggests one EU official.

It is not just this month's special summit which is placing a heavy responsibility on Luxembourg's shoulders. An equally onerous burden is imminent in the run-up to the green light for enlargement negotiations.

In a highly methodical fashion, the Grand Duchy has kept a tight centralised hold on member states' reactions to the European Commission's Agenda 2000 programme for policy reform and an increase in Union membership. It has insisted the work be handled by special meetings of EU ambassadors instead of being handed out to separate working groups.

"There has been some criticism that the work has been over-organised, but the presidency does have a mandate and a timetable to keep," explains one defender of Luxembourg's EU Ambassador Jean-Jacques Kasel's working methods.

The constant round of Agenda 2000 meetings has managed to fashion general support among governments for the Commission's approach of limiting the initial negotiations to Cyprus and five central and east European applicants.

But if there is to be total harmony on this at December's European summit, then the Luxembourg presidency will have to find some way of meeting the concerns of member states such as Sweden, Denmark and Finland that countries excluded from that first wave may suffer unduly.

One possibility being explored is to rebalance the pre-accession budget so that a greater share than is now on the table will be specifically earmarked to speed up the second group's ability to open their own negotiations later on.

In one area at least, the Luxembourg government has noticably failed to keep the lid on the enlargement debate and its financial consequences. Despite repeated pleas from Juncker and others such as his predecessor Luxembourg Premier Jacques Santer, some member states have pointedly raised their own personal budgetary worries at the very outset of the negotiations.

Luxembourg now finds itself caught in the middle between Germany, the Netherlands and Sweden who are vociferously demanding a cut in their gross budgetary payments, and Spain, Greece and Portugal which are insisting that there should be no undermining of the concept of Union solidarity and economic and social cohesion.

In addition, in at least two areas which were prominently flagged by Luxembourg Foreign Minister Jacques Poos in early July as Grand Duchy priorities, there has so far been a total absence of progress.

Despite strictures to fellow ministers and guidelines for increasing the efficiency of their monthly meetings, Poos has, not surprisingly, been unable to change deeply ingrained habits.

Similarly, there have been few takers for his idea of conducting an in-depth analysis of the Union's policy on human rights to ensure a more coherent line which will prevent any repetition of the embarrassing diplomatic hiccup which has soured EU/Australian relations.

"We would have liked to have had this discussion before the end of the year, but I am not sure that we will now be able to do so," admits one senior Luxembourg source.

Similar doubts hang over moves to bring a greater degree of tax harmonisation into the Union - an area where Luxembourg has been regularly accused of feathering its own nest by opposing EU-wide measures.

To counter the allegations, Juncker deliberately placed tax harmonisation high on his country's presidency agenda, but senior officials now rate the chances of a mini-fiscal package by the end of the year as no more than fifty-fifty.

In what has generally been a low-key presidency - "Overall, you cannot say there have been any dramatic successes or dramatic failures," says one EU diplomat - the Luxembourgers have notched up one quiet success.

They have improved the relationship between the Council of Ministers and the European Parliament, which had deteriorated dramatically under their Dutch predecessors largely because of the failure of Dutch ministers to appear regularly before MEPs during their Strasbourg plenary sessions.

"Whether it is because they are a small country or are conscious that they house the Parliament's secretariat, Luxembourg ministers have always been ready to come to talk and listen to MEPs," explains one official.

The new atmosphere has already successfully defused four arguments between the Parliament and the Council of Ministers over EU legislation on issues ranging from data protection to public procurement. A further ten 'conciliation procedures' are now in the pipeline and such is the Grand Duchy's reputation among MEPs that many in the Parliament want these completed before Christmas rather than allowing them to spill over into next year's UK presidency.

As the Luxembourg government approaches the critical stages of its presidency, there are fears in some EU quarters that the quiet efficiency with which it took to the task in July is no longer quite so visible.

"They started well and they are doing their best, but they are running into the rocks and certainly organising two summits is tough," says one EU diplomat.

The criticism has been partly prompted by the failure last month to clinch an elusive deal on gas liberalisation - one of the last pieces of the energy jigsaw - despite earlier hopes that an agreement might be in sight.

Any definitive judgement at this stage, with almost two months of the presidency still to run, would be premature. But the Luxembourg government is acutely aware that if it is to succeed in holding on to its reputation for running successful - if unglamorous - presidencies, it still has some major hurdles to leap.

It must ensure that this month's employment summit is not an entirely hollow gesture and maintain Union unity as enlargement and policy reform beckon. Neither task will be easy.

But if it succeeds - and pulls off a gas liberalisation deal at the 11th hour - it will turn the tables on those who have questioned the wisdom of letting such a small country take its turn at the Union's helm.

Major review of the Luxembourg EU Presidency.