B R U S S E L S
ITS six-monthly rotating presidency gives the European Union a curious rhythm that builds to climaxes each June and December. The finale of the current Dutch presidency was disappointing: an Amsterdam treaty that delivered less than had been promised. Next week Luxembourg, with 400,000 inhabitants the EUs tiniest country, takes up the baton. Its programme is full of heart-stopping moments.
Small need not mean ineffective. Several past Luxembourg presidencies have been highly successful, notably the 1985 one run by Jacques Santer, now president of the European Commission, which produced the Single European Act. Luxembourgers, though no happier than anyone else with the inter-governmental conference that ended in Amsterdam, are relieved that it is over: at least it has cleared the way for what could be the biggest day in the life of Mr Santers five-year term, July 16th.
That is when the commission will publish its opinions on applications to join the EU from ten Central and East European countries. At the same time, the commission will unveil proposals for reforming the common agricultural policy; for changes to structural funds (aid for poor regions); and for financing the Union after the current budget arrangements expire in 1999. This Santer package goes under the grand name of Agenda 2000. Its fate will do much to determine the progress of enlargement and, more generally, how the EU functions in the next century.
After Agenda 2000 is unveiled, the Luxembourgers will preside over a brawl. EU members seem no more willing to redirect the flow of money to accommodate new members than they were to tinker with the machinery of government. Judging by this weeks meeting of farm ministers, governments are simply not ready to make the big cuts in support prices to keep down prospective food mountains and to prepare for enlargement. Similarly, the cohesion countriesSpain, Portugal, Ireland and Greecehave made clear that they are not ready to give up any of their share of the structural funds.
Nor is enlargement the only test for the incoming presidency. At Amsterdam, Luxembourg was instructed to hold an employment summit, which will probably be in November. The presidency is meant to inject new urgency into completing the single market, including action on tax. And looming over everything is the single currency, the members of which are due to be chosen next spring.
The man in charge of the Luxembourg presidency will be the prime minister, Jean-Claude Juncker, the youngest of the European summiteers and one of the brightest. He is a Christian democrat of the traditional type, and famously close to Germanys chancellor, Helmut Kohl. On many issues he is well to the left of Britains Tony Blair. He is dismissive, for example, of the new British governments promotion of flexible labour markets. Frantic deregulation without protection for workers cannot, he says, be an answer to unemployment. Luxembourg, he points out, has the EUs lowest jobless rate.
Tax is a touchy issue for Luxembourg, which lures huge amounts of German savings by not charging withholding tax on bank interest. Luxembourg is not the EUs only tax haven, insists Mr Juncker. All European countries, he asserts, have their own favourite tax breaks. He is perfectly willing to eliminate unfair tax competition through harmonisation, but only if it covers all taxes, not just those that happen to be low or non-existent in Luxembourg. Tax reform, in other words, may have to wait.
As for the single currency, Mr Juncker and his officials talk of ensuring that financial markets do not take us by surprise this autumn. They are studiously non-committal about what measures this might involve. But Mr Juncker says that it will become increasingly clear during the autumn which countries are likely to qualify under the Maastricht criteria for the single currency. That could produce turbulence in the markets, especially if it seems that Italy or even France might not make it without scandalous fudging of the criteria. One comfort for Mr Juncker is that Luxembourg, with a budget surplus and little government debt, will pass even the strictest application of the Maastricht tests.
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