All in all, the Feira Summit turned out to be a bit of a disappointment. The results that may perhaps have set their seal on the European integration process failed to spring any surprises: they were taken as read well before EU leaders gave their approval, and this applies equally to the headway made with the European Security and Defence Policy or the question of extending institutional reforms. The "in situ" outcome, that is; the compromise on the savings taxation issue, was beset by the doubts and bafflement of the very ones who struggled to put it together: the Finance Ministers.
The dismay is attributable in part to the inefficient way EU Summits are organised at present. EU leaders are supposed to reach decisions on a long list of key political and economic questions within the space of a few hours. Most of the time, all they do is wave through items that have been prepared beforehand. The general public then fails to notice any successes. They are not noticed when they are actually achieved (before the Summit), because they cannot be announced until the EU leaders have given their blessing, nor when they are approved, because there is no debate. Take for example the impressive progress made on the defence front: an item of key importance for European integration is taking shape before our eyes, but no-one outside the fora directly concerned has noticed anything very much going on. It is to be wondered whether the EU leaders themselves have actually scrutinised the texts they have endorsed. Also unheeded was the common strategy for the Mediterranean region and a myriad of «economic » guidelines, arbitrarily bunched together under the heading of "the follow-up to the European Council in Lisbon ». The various Summits may be considered resounding successes if the idea is to ensure they make hardly any impression on public opinion. This time round, the media quite rightly focused on just two of the topics that cropped up for discussion in Feira: the troubles with Austria (not even on the agenda) and savings taxation. This is a good opportunity to cite one or two remarks that went completely or nearly unnoticed.
« Closer cooperation in the singular. In order to announce the extension of the IGC agenda on institutional reform, the Summit conclusions state: " The European Council considers in particular that the provisions on closer cooperation introduced into the Treaty of Amsterdam should form part of the Conference's future work ». This is the first time EU leaders have used the singular instead of the plural when opining on this « closer cooperation ». This is purely a cosmetic precaution, but it does have some significance. It seems to suggest going beyond a series of potential forms of cooperation paving the way to a « free-choice » Europe, that would be unsystematic and impossible to govern, and moving towards the "closer integration" recommended by Lamberto Dini, with a nod in the direction of Jacques Delor's vanguard. This detail is a reflection at the highest official level of the obvious and often spectacular progress being made by a European vanguard hell-bent on retaining and achieving the integration goals. Jacques Delors recently spelled out and fine-tuned his concept, and for the first time perhaps, he seemed quite upbeat about the prospect of this taking tangible shape by 2005 (1).
Enlargement: the main thing is not concluding the talks. EU leaders were particularly forthcoming about the prospective EU members and their impatience: "The European Council recalls that, in addition to finding solutions to the negotiating issues, progress in the negotiations depends on the incorporation by the candidate States of the acquis in their national legislation and especially on their capacity to effectively implement and enforce it ". In other words, the main thing is not to make commitments but to be in position to honour them.
Meanwhile, Commissioner Wallström (who certainly knows how to speak her mind), warns about the danger that the slow pace at which the would-be members are getting into line with Community legislation is holding up the accession process (whilst admitting that the biodiversity in Central and Eastern European countries could be a boon to the rest of Europe, whose resources in this respect are sorely lacking and this could prompt them to be inflexible in defending their farm sectors and natural resources).
The Feira conclusions add that at the Nice Summit in December, the Council « will review progress on enlargement and consider how to take forward the accession process". This suggests that nothing can be taken as read. A number of candidate countries would be well advised to be wary of false friends offering safe deadlines and to seriously consider the suggestions Jacques Delors made about the advisability of offering all Eastern European countries an immediate place in the European home » (a place which does not necessarily mean participation for all in the future vanguard, but maybe for one or two).
In the light of a cautious, but crystal clear report from Mr Verheugen, the Commission sought last week to open a debate on this key issue. It did not seem to score much of a success though, for the debate grinded to an abrupt halt: one or two Commissioners came out with banal statements, whilst others left the room. And yet, the Commission will be compelled to spell out its intentions between now and November otherwise, in the words of Jacques Delors once more: "it will be disappointment for some and a process of watering down for all".
The end, at last, for banking secrecy. We have all seen how anxious the financial sectors and Finance Ministers themselves are to warn against the temptation to read too much into the compromise reached at Feira on the savings taxation issue. Our readers have all the facts they need to make up their own minds(2) But apart from the remaining ambiguities, heed should be paid to the following remarks in the Feira conclusions: the European Council « endorses the timetable set out, which foresees a step-by-step development towards realisation of the exchange of information as the basis for the taxation of savings income of non-residents". It is a clear political decision, with an invitation to Finance Ministers to "pursue with determination work on all parts of the tax package so as to achieve full agreement
on the adoption of the directives and the implementation of the tax package as a whole as soon as possible and no later than by the end of 2002 ». Before playing this down it has to be remembered that only a few weeks ago, Europe had made no progress at all in the bid to strike a better balance between the taxation of capital and the taxation of labour: this effort is basically focused on three fronts: employment (easing taxation), combating tax havens, combating capital flights and relocations..
And how (whilst waiting for the « exchange of information-« system to become widespread) can the favourable development already represented by the withholding tax on the savings income of non-residents pass unnoticed ? The current system means that each Member State is a tax haven for the citizens of all the others, which causes, according to one commentator, a "hotchpotch of hypocrisy and organised crime paving the way to privileges, unfair competition and recycling". All of this basically has to disappear before the final solution. A fair amount has already been achieved. It is progress in an extremely controversial and complicated area where the idea is to proceed by stages.
The doubting Thomas's point out that implementing the Feira guidelines is conditional on the talks/negotiations with third countries, which have a key role to play in respect of tax havens and they should be encouraged to adopt measures with an « equivalent effect » to the EU's. Certain ironic smiles (real or virtual) seem to suggest that nothing serious can be achieved. EU countries themselves that retain or encourage tax havens are politically compelled to act. As for the main third country singled out by the Feira texts, Switzerland, the reaction of the newspapers are telling. According to one newspaper, the Swiss need to reach an agreement with the EU on savings taxation if they wish to continue following the "bilateral option" in the agreements with the Community. Another newspaper says "it is not enough to wait, Berne now has to come up with some ideas and tone down its stance on banking secrecy'. A third newspaper urges the banks to « learn to live without banking secrecy » and to focus their efforts on supply effective, affordable services, rather than « wasting their energy in a battle already lost beforehand ». A fourth newspaper says the affairs involving Nazi gold and Jewish assets have made Switzerland realise what pressure is all about.
By way of conclusion it is perhaps true to say that Feira has merely set in motion a 10-year process that will unfold in stages, but at least some idea is starting to emerge of where we are heading.
A totally unexpected reference to sport. One remark made in the Feira conclusions was completely ignored by the observers (most of them probably never read it): this was a reference to sport. And yet, if the EU leaders decided to place it in a context where, on the face of it, it does not belong, there must have been a reason. This remark was so unexpected it deserves to be commented upon at some length. I will be returning to this subject soon, in this very same column.
Ferdinando Riccardi
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(1) See section "texts of the week" in EUROPE of 23 June p.3
(2) See the 21 June issue p.8 for comments by Finance Ministers, and the 22 June issue pp.6/7 for the outcome of the Ecofin Council in Feira