Summit to review E.U. progress

SANTA MARIA DA FEIRA (PORTUGAL) JUNE 18. The European Union is in the process of reinventing itself - preparing to double in size, taking on a new role in defence and reshaping its complex institutions. European leaders meet here tomorrow and Tuesday to examine just how far they have come and how far they still have to go.

Enlarging the organisation from 15 to 27 or 28 means more than long negotiations with candidate countries.

It requires major changes in the way its executive body, the E.U. Commission, operates, how the European Parliament does its business, and the way member governments make decisions.

Backing up the foreign policy with a credible military force capable of acting in peacekeeping and humanitarian situations without stepping on the toes of NATO means careful planning, heavy spending and new thinking about security in Europe.

Then there are the ongoing issues: the progress in Europe's march to a single currency, bringing the number of countries participating in monetary union to 12 with the addition of Greece; wrestling with the sticky question of cross-border tax dodges; and stamping out international crime.

The European summit marks the end of Portugal's six- month term at the helm. Portugal turns E.U. business over to France on July 1. Most E.U. watchers considered the Portuguese presidency an interim stage during which a lot of behind-the- scenes work was done to ready the E.U. for meeting several very important goals to be finished off by the French at year-end.

Nothing is ever easy in the E.U., however. Finance Minister scheduled a pre-summit meeting on Sunday to look for agreement on a tough money issue, but there didn't seem to be much hope they would be able to end years of wrangling over how to tax revenues from citizens hiding savings in other E.U. nations.

Faced with the loss of billions of euros (dollars) in lost tax revenue, Germany has been leading calls for a common withholding tax on interest earned from savings held in bank accounts anywhere in the Union.

The deal has stalled on resistance from Luxembourg, which thrives as a low-tax banking centre, and Britain which had demanded an exemption for its $ 3- trillion-a-year eurobond market.

Most E.U. nations now support a compromise that will allow members to choose between imposing a 20 per cent withholding tax or sharing information on foreign savers so they can be taxed in their homeland. But the holdouts are adamant.

The main subjects, however, will be enlargement and reforming E.U. institutions so they will be able to function efficiently with twice as many members.

At 25 or 28 members, the E.U. is going to have to abandon the idea of unanimity on all but the most crucial issues. So far, however, member countries have not been able to come to terms with majority voting - even one weighted in favour of the larger countries. Each loss of national sovereignty is tough to swallow.

- AP

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Section  : International
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