The Vienna Council


Usefully busy but not innovative: that seems a fair summary of the European Council at Vienna. This is not a negative reflection on the summit's Austrian hosts, but rather an expression of the current state of play in the European Union's affairs. It is more a process than an event, clarifying and anticipating rather than deciding, whether on employment, budget negotiations, enlargement, taxation, economic policy in relation to the euro, duty free sales or foreign and security policy, the main agenda items. In this respect it recalls the celebrated remark made during the Congress of Vienna in 1815: "Le congres danse, mait il ne marche pas".

That this is useful can be seen from several important clarifications of policy emerging from the meeting. On corporate taxation, for example, two important matters of vital concern to this State were identified. Gone is any reference to general harmonisation of rates and the principle of fair tax competition is accepted. What remains problematic and a continuing concern is rather taxation distortions of the single market and unfair tax competition, which are to be investigated further. This is a relief for the Irish and British governments, which had looked set for a battle with the new German government on the matter. It is unlikely to go away altogether however, because of unanticipated issues of economic policy arising from the single currency.

Likewise, on Agenda 2000, the complex and equally vital set of negotiations on a new EU budget for the period 1999-2006, it was agreed to set a deadline for agreement at a special summit next March under the chair of the incoming German presidency. This will be a confrontational affair, it is now clear, pitting northern and southern EU states against one another on the issue of whether to expand or stabilise the budget. Ireland is especially vulnerable to a hard landing because of the extent of our reliance on the Common Agricultural Policy and rapid economic growth. All that can be said from the Vienna Council is that the effort to increase the budget is difficult indeed.

It may well be, therefore, that the most realistic leeway for spreading limited resources around without unacceptably disadvantaging existing member-states will be to delay enlarging the EU by several years. This option is not talked about explicitly, but it is inherent in the refusal to contemplate increasing the budget which is such an increasing part of the political rhetoric in Germany and other net contributor countries.

It is an opportunist course, which could rebound on those who push it, as opinion in the accession states could harden against prolonged delays. The Vienna Council issued positive messages to the states lined up to join and their leaders had a lunchtime meeting. It will be up to those who genuinely want to see a timely enlargement to keep up the political pressure now that the negotiations are under way. Another piece of opportunism was seen in the decision to explore the possibility of delaying the abolition of duty free sales, as agreed in 1991, because of distortions to the single market. Ireland has supported the campaign, which has now gathered wider support as politicians foresee unpopularity and yield to lobbyists' pressures.