Pan-European firms plan appears doomed

Date: 20/05/1999

By Simon Coss

EU governments look set to abandon the latest in a long line of attempts to enable companies operating in several Union countries to set up as pan-European firms, if they fail to reach agreement on the proposal next week.

As things stand, agreement on the proposed company statute seems highly unlikely, with Spain still fiercely opposed to several elements of the plan. Madrid is particularly uneasy about the idea that workers representatives would have the right to sit on the boards of any future European companies.

Social affairs ministers will discuss the formula for creating a European Company Statute, drawn up two years ago by former European Commissioner Etienne Davignon, at a meeting next Tuesday (25 May).

When Davignon's plan was unveiled, many observers believed that he had finally found a solution to a problem which has dogged EU policy-makers for almost 30 years.

But diplomats are now warning that if ministers are unable to cut a deal on the plan next week, the German presidency is likely to recommend shelving it more or less permanently. "If things do not work this time, then the presidency is likely to suggest everyone gives up and goes home," said one EU diplomat.

Madrid's opposition to the proposed approach is now the main stumbling block standing in the way of a deal, and Spanish officials have indicated that their minister will not change his stance on the issue at next week's meeting.

EU social affairs experts argue that it would be impossible to make further changes to Davignon's plans to overcome Madrid's objections. They point out that the proposal has already been modified significantly over the past two years and say the version now on the table is the best compromise anyone could realistically hope for.

" If this does not work, then I really do not see what else we could try. We might as well start again from scratch," said one. "If we change things to please the Spanish, we will just end up upsetting somebody else."

The Germans are determined to play their role of presidential compromise- builders to the full and continue to insist that a deal based on the Davignon plan is possible.

" I think that if there is a solution it will come at the last minute during the ministerial meeting," said one German official.

But even Berlin admits that it is hard to see how the remaining problems could be resolved and says it would not be possible to redraft the text currently on the table. "We cannot change the compromise," said the official.

Keyword: European Company Statute.