Schröder calls for Europe to set tax
Schroeder Plan Seeks More Unified Europe
Gerhard Schröder inflamed the fierce British debate over the euro last night by suggesting that the European Union should determine taxation policies in member countries.
In an interview with The Times that will be used as ammunition by the anti-euro campaign the German Chancellor called for the Europeanisation of everything to do with economic and financial policy.
At the same time Jack Straw refuelled the domestic argument by suggesting that the ultimate decision on the euro would be for the Cabinet and not the Treasury.
The Foreign Secretary said that even if the Treasury failed to deliver a clear and unambiguous verdict on the five tests, the Cabinet could still take a political decision to call a referendum.
Speaking to BBC News 24s One to One programme, Mr Straw said that the extent of the Cabinet debate would depend on the complexity and ambiguity of the issues.
He added: If the choice is a very tricky one and theres ambiguity in it, then you will spend time and there is a point where there has to be a political decision. Its a decision informed by an economic assessment . . . but everyone knows that economics is a branch of political science.
In his interview with The Times, Herr Schröder, knowing that his words were controversial, suggested that there was a need for more co- ordination and co-operation, in economic affairs, words which he said should be used in order to soothe British feelings.
He was clearly referring to harmonisation of financial areas, presumably including taxation and social security.
Tony Blair successfully fought at the Nice summit in December 2000 against a prolonged campaign to end the British veto on tax and social security.
Herr Schröders remarks will bolster the claim of the sceptics at that time that Germany and France would in future try to reopen the issue.
Herr Schröder injected further contention by suggesting that euro membership meant signing up for political union, which ministers have always denied and the sceptics have always claimed. He added fuel by suggesting that Mr Blair was the man best equipped to lead the country into the euro.
Herr Schröder declared in his interview: I am absolutely sure that there is nobody who can deal with the process of entry which I would welcome better than Tony Blair.
But the Chancellor stressed that euro membership meant signing up for political union. European monetary union has to be complemented by a political union that was always the presumption of Europeans including those who made active politics before us.
For the past four years the Chancellor has taken a rather pragmatic view, avoiding any hint of a European vision. This was left to his Foreign Minister, Joschka Fischer. Now the Chancellor has abandoned his cautious tack and is declaring Europe to be one of the main pillars of his next term of government if he wins the general election in September.
The reason, he said, is that the constitutional convention in 2004 determining the continents power lines after Europe has expanded eastwards and many new entrants will change Europe as surely as the introduction of the euro has done.
These are the big tasks in the coming decade, he said, making plain they were tasks in which Germany should play a leadership role. Germany was historically close to Eastern Europe and is chairing the constitution conference.
His most controversial words were on the economy. What we need to Europeanise is everything to do with economic and financial policy. In this area we need much more, lets call it co-ordination and co- operation to soothe British feelings, than we had before. That hangs together with the success of the euro.
Before his remarks on the euro Mr Straw yesterday accepted for the first time the idea of a European constitution, at which British politicians have previously balked, He said: There is a case for a statement of principles, which sets out in plain language what the EU is for and how it can add value, and establishes clear lines between what the EU does and where the member states responsibilities should lie.
His words on the euro echo those of other leading ministers who are known to be concerned that Gordon Brown's caution could rule out entry into the euro until after the next election.
Chancellor Gerhard Schroeder will push for a radical restructuring of the European Unions governing institutions to create a centralized EU government with a two-chamber Parliament and expanded powers, a spokeswoman for his party said Sunday.
Mr. Schroeders plan, if accepted in an EU constitutional convention in 2004, would lay the foundations for what the most ardent integrationists see as an eventual United States of Europe.
The proposal is meant to advance a postwar dream of European political unification and reflects Berlins efforts to carve a greater German leadership role in Europe, EU analysts said.
But the notion of a unified Europe, which inevitably would dilute the authority of national governments and Parliaments, remains a flash point of deep division within the 15-nation bloc and would take years to implement.
The leadership of the governing Social Democratic Party, which Mr. Schroeder heads, outlined its blueprint for Europes future in an internal party document, the newsmagazine Der Spiegel reported in its Monday editions.
Grit Auerswald, spokeswoman for the party, confirmed the report Sunday and said that the partys national board would review the paper on May 7 and present it at the partys annual convention in November. .The document has not been discussed by the partys committee, and it is not yet public material, she said.
Under the Schroeder plan, the EUs current executive body, the European Commission, would become a European government. Miss Auerswald declined to provide further details on this point, which alone would invite a clash within Europe, where heads of state oversee and often override the commission.
EU heads of state currently meet at least twice a year to approval all EU treaties and initiatives. Heads of state also appoint the 20 commission members.
The existing European Parliament, which has only limited authority to initiate legislation, would gain critical new powers. It would command complete budget authority in a move that could infuriate French champions of the unions common agricultural policy. The French have fought to retain influence over farm policy and its massive subsidies, which accounts for almost half of the total EU spending.
A second chamber of Parliament would emerge at the European level as well. The EUs Council of Ministers, a diffuse collection of committees from national ministries, would merge into a pan-European chamber modeled on Germanys Bundesrat.
In Germanys federal system, each state sends a delegation to the Bundesrat, or upper house, which in turn gives the 16 states a major role in the legislative process. Bundesrat members are appointed but not directly elected.
The EUs existing, secretive Council of Ministers has prompted much of the criticism that the EU is undemocratic. Ministers routinely meet behind closed doors.
By having the council evolve into an open legislative chamber, the Schroeder plan is meant to help address what EU critics call a democratic deficit.
Other issues with more regional importance would be delegated back to a national level. That move, long favored by local European leaders, would expand the room to maneuver for an independent regional and structural policy, according to Der Spiegels account.
The German vision is likely to receive a hostile reaction from Britain, which has not yet joined the 12-nation common currency and exhibits a popular distrust of a European superstate.
Analysts said that Mr. Schroeders plan was likely to go beyond the aims of the French political elite, who want to retain a greater degree of national influence but who also support a future EU constitution in some form.
The Danish, Swedish and Finnish governments also are likely to give it a cool reception, EU analysts said.
Germany has given itself a leading role in the EUs enlargement into the former Soviet-bloc nations in Central and Eastern Europe, which ranks as Europes next biggest undertaking after the 1999 adoption of a single currency.
At Decembers EU summit in Nice, Mr. Schroeder gained stature in Europe after he successfully pushed for the 2004 constitutional convention, which the French resisted, as a vehicle to overhaul the EUs structures.
At the same time, Mr. Schroeder has signaled that Germany has less enthusiasm for its traditional role as the most generous net contributor to the EU budget. After consolidating his political position in Europes most populous and economically most powerful nation, and bolstered by recent state elections, Mr. Schroeder is in a position to advance German foreign policy interests more confidently in Europe and abroad.
With the inauguration of the European Central Bank and the common currency, 12 nations have forfeited a significant share of economic policy control. Steps toward a common European defense and foreign policy are in their infancy.
Previous German proposals for a united European government began almost a year ago. They were issued by the German foreign minister, Joschka Fischer, in what Germans routinely call the vision speech.
Given the sensitive nature of his vision, Mr. Fischer took pains to call them personal views and not government policy. This time, the proposals were drafted under the guidance of the chancellor himself.
The EU currently runs its affairs as a consortium of individual nations under a structure largely fashioned with the 1951 signing of the six-nation European Coal and Steel Community Treaty. Now 15 nations, comprising 370 million people, basically rely on the same unwieldy system of compromise and political horse-trading to form decisions. Vetoes by single national governments continue to stalemate the system.
With 13 more East European states lined up to join the EU, the need to overhaul the entire system has become more compelling than ever, the Germans believe.
Germanys conservative opposition, which shares Mr. Schroeders pro-European stance, welcomed the initiative.
We certainly have a democratic deficit in the EU, and that must change, said Angela Merkel, who heads the Christian Democratic Party.