This spring one of London's premier financial institutions will, briefly, swap the Square Mile for the Silk Road. The European Bank for Reconstruction and Development holds its annual meeting in Tashkent, the capital of Uzbekistan and one of the great cities along that historic trade route.
Tashkent may symbolise east-west trading links but the EBRD's foray to the farther reaches of the former Soviet Union, also highlights a dilemma facing the bank. As countries such as Poland, Hungary and the Czech Republic head for membership of the European Union, the EBRD is being forced to look ever further south and east - deep into the former Soviet territories of central Asia; a region where concerns about human rights and the absence of economic reform present serious challenges.
The EBRD lends to 27 countries in the old Soviet Union to aid their transition from central planning to the free market. Based on the bank's 2002 figures, its cumulative investment in and lending to the eight first wave EU accession countries in which it operates has amounted to euros 7.6bn (pounds 4.75bn), more than a third of the total. Add in Romania and Bulgaria, which are aiming for EU membership by 2007, and the figure rises to euros 10.6bn, close to half the total.
By contrast, direct EBRD support for the central Asian "stans" - Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, all close to Afghanistan - is euros 1.9bn, less than 10% of the total.
A crude analogy would be a company which is losing between eight and 10 of its best markets and, as result, is forced to put a lot more effort into half a dozen of its most challenging.
The EBRD and its backers do not see it that way. The British government's position is clear. "We strongly support the bank's move to do more in Russia and the poorer countries in the Balkans, Caucasus and central Asia, which have benefited least from transition," said a spokeswoman for the Department for International Development, whose boss, Clare Short, will chair the meeting in Tashkent.
Accession
"There will still be important transition challenges in central Europe and the Baltics after accession, and the EBRD will continue to have an important role supporting the new EU states in their transition," added the spokeswoman.
Certainly the EBRD is not giving up its work in the accession countries. Lending in what it terms the advanced countries - Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia - is expected to run at about euros 1bn over the next few years, down on the recent past but not by much.
But should it? The EU already has plenty of experience with accession countries and has an institution through which to channel funds. The European Investment Bank was active in Spain, Portugal and Greece as they went through the transition process and is already operating on the EBRD's turf. In 2001, for example, it lent the 10 accession countries (the EBRD eight plus Cyprus and Malta) euros 2.7bn, more than double the EBRD total for that year.
EBRD officials argue that the two institutions target different areas: the EIB is big on infrastructure projects, for example, but is by no means limited to the sector. The EBRD is supposed to have a bias towards the private sector but as the accession countries mature that must change. It would hardly be a ringing endorsement of accession if the EBRD were forced to prop up the efforts of private sector lenders rather than letting them get on with it.
EBRD president Jean Lemierre insists there is still plenty of work for the bank to do in the accession countries. "The needs are so huge there is room for all of us; that's a view shared by the countries themselves, the (bank's) shareholders and by the European commission.
"The EU wants our help to build projects using a mixture of (EU) subsidies and our own funds. We've agreed."
Nevertheless, there has to be a time limit. As one non-European shareholder which applauds the EBRD's work in central Europe and central Asia notes: "We consider the bank's role in accession countries should become more limited over time. There is no point in a multilateral institution remaining in the region after private sector and domestic financing could provide (what is required)."
The EBRD has plenty of work to do elsewhere. Russia is a central part of its strategy, with reform of the banking system, and the knock-on effect on the rest of the economy high on the agenda. The Balkans is another area where the bank is needed.
The choice of Tashkent, made years ago, may be symbolic of the bank's changing focus but it has attracted controversy. Uzbekistan has been under fire for the lack of reform since independence more than 10 years ago. Recently the EU expressed concern over the reported use of torture in Uzbek jails. A forthcoming United Nations report is expected to be sharply critical.
So what is the difference between holding a high profile meeting in Tashkent and playing cricket in Zimbabwe? Ms Short will have none of that. "In Zimbabwe seven million people are starving and there is great repression. It is unimaginable to play cricket, eat cucumber sandwiches and shake hands with those responsible. Central Asia is desperately poor, highly indebted, badly governed and corrupt. The region was in receipt of considerable resource transfers before the collapse of the Soviet Union and has been in trouble since. External engagement, as with other highly indebted poor counties, is needed to drive reform spending and an improvement in standards of governance."
Economic progress is hindered by regional tensions. Uzbekistan and its neighbours are often at loggerheads; the Associated Press last month reported Uzbekistan was reviving a railway project which would link several regions, connect with Tajikistan - but bypass Turkmenistan.
The lack of reform coupled with the political tensions mean the region, about the size of Europe but with a population of some 50m, is hardly spilling over with projects which the EBRD could back and still meet its criteria of encouraging the private sector while only taking on deals which represent sound banking practice.
On the plus side, the bank's founding charter made it clear that the EBRD was not simply an instrument of economic growth. It has always had a mandate to encourage political change, too.
Mr Lemierre says he has raised the issue of torture with Uzbekistan's president, Islam Karimov, despite an apparently reluctant interpreter. "The message has to be delivered. There are questions of the legal position, of human rights, of the capacity to create business. These are serious questions and progress has to be made."
Even some of those critical of the choice of Tashkent acknowledge that it can be used as a lever to prod the Uzbek government along the path to reform.
Steve Crawshaw at Human Rights Watch argues: "We are not against the meeting as such. But merely saying tough things on arrival in Tashkent is a second or third best option to setting basic benchmarks now, ahead of the meeting.
"That would really make sure that this is an incentive towards democracy and not, as the Uzbekistan (government) sees it at the moment, an endorsement of what they are doing."
Monitor
In particular his organisation would like to see the Uzbek government register non-governmental organisations, which would give them legal status, as well as releasing a number of political prisoners.
Mr Lemierre has already met NGO representatives in Tashkent and is keen to see the EBRD meeting used as a forum for such issues. He is adamant, too, that the EBRD will monitor strictly what happens once the annual meeting is over.
He believes in what could be called constructive engagement, telling the region's governments that respecting the democratic process and developing a civil society are an integral part of the transition process. He is keen to see the bank use its expertise in trade finance to bring aid to the region, helping to break down barriers between the different countries.
"You have to improve the situation of the people day after day. It is a long term process, a very long term process. You can't drop them."
Classification
Language: ENGLISH
Subject: EUROPEAN UNION (90%); DEVELOPMENT BANKS (90%); INTERNATIONAL ECONOMIC ORGANIZATIONS (90%); INTERNATIONAL ECONOMIC DEVELOPMENT (89%); TALKS & MEETINGS (77%); EMERGING MARKETS (76%); EUROPEAN UNION ACCESSION (75%); ECONOMIC POLICY (69%)
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If you spot Patrick Cunnane drinking coffee at a bar in Amsterdam it will probably be spring-time and the chairman of the Reed-Elsevier works council will be relaxing after a round of meetings with his continental colleagues.
The pounds 9bn Anglo-Dutch publishing group has operations in 10 countries across Europe that qualify for works council representation and when staff reps meet - one of two meetings a year - the sessions can be intensive and exhausting.
In addition to the coffee, he admits, there is a chance he might even accept an invitation to a local hostelry for a glass of slow brewed Dutch beer to prepare for the second day's action, when Reed's director of personnel - a Frenchman - explains what the company is up to and takes questions from delegates.
But even though the trips are not all hard work and involve two days away from his job as features editor of transport magazine Commercial Motor, he rejects claims by employer organisations that works councils are a cover for junkets on the company tab.
He says Reed, which has huge investments in internet publishing plus its business magazines and science publishing divisions, benefits from the dialogue as much as the workers.
He believes relations will improve even further when an EU directive, published in March, takes effect in the UK in three years. At that point, every employer with more than 150 staff will need to establish a works council. By 2008, all employers with 50 or more staff will need to organise one. Currently UK workers only get involved in works councils if their employer has operations in other EU countries.
The seismic shift in industrial relations is potentially huge. The new rules and the potential implications are highlighted in a booklet published by the Industrial Relations Service*. The authors argue: "Once the directive is implemented into British law, businesses employing three-quarters of all UK employees will for the first time be faced with statutory requirements for ongoing information and consultation on a range of business and employment matters. The impact is likely to be massive. No other EU legislation on collective aspects of employ ment has had the potential to affect such a wide range of employers and employees, or such a wide range of everyday workplace issues."
The scope of the directive might have been wider and been implemented sooner had the the government not lobbied to water down the rules. In the rest of the EU the directive applies to all business with 20 or more employees and across the board from 2005.
Government lobbying was strongly supported by employer groups such as the Confederation of British Industry, which believe works councils will have the power to prevent businesses from moving swiftly, whether it is to shut offices and factories or open new ones.
Jonathan Cridland, the deputy director of the CBI said after the European parliament passed the directive: "Businesses have to implement decisions quickly and these changes would throw a monkey-wrench into the works. We believe in proper consultation but these proposals are a recipe for grind ing business decisions to a halt."
Proper consultation is, at present, a largely voluntary process. A firm must give unions 90 days' notice when it makes 10 or more people redundant. Usually the consultation is a sham and the cuts go ahead anyway. Pretty much everything else the company does can be carried out behind closed doors - and usually is, unless the union has forced the door open. A merger with another company or shifting production from one country to an other are decisions that have traditionally been the preserve of company directors.
Under the new directive, employers will be forced to consult on any proposed changes in working conditions or anything that might constitute a threat to employment and to provide information about "the recent and probable development of the (business) or the establishment's activities and economic situation".
Peter Booth, a union official at the Transport and General Workers Union, believes the CBI is out of touch with many employers, especially multinationals, which are beginning to embrace the proposals. He points to firms such as General Motors and Italian tyre maker Pirelli as companies ready to move forward now. Two years ago it was GM that allowed factory workers at its Vauxhall plant in Luton to find out about its closure over the radio. Mr Booth says the company has now agreed to a moratorium on closures and to discuss all future moves with the works council.
Jane Wills, a lecturer at Queen Mary University of London has attended the meetings of several works councils as part of a government funded project to examine the implications for industrial relations in the UK. She acknowledges that reps are given more information about the company's strategy and attitude to employees than ever before, but she believes the lack of a dialogue between workers and managers in the UK has seriously undermined their work.
"Delegates now have a better sense of the company and how it works. But there was no genuine consultation going on. Consultation means getting involved in decisions before they are made. What I saw was still management led, organised by the personnel department and in one case involved the management giving a very slick presentation much like they would to City analysts."
Even within this limited forum, she says UK reps shrank in their seats while they watched the German and French delegates blossom. She says continental delegates would turn up accompanied by experts in employment law or negotiating tactics and would prepare their delegates for the question and answer session with directors.
She believes that unless UK employers take on the responsibility for training their works council reps in time for 2005, the reps will be steamrollered much as the EU reps are at the moment. Unless they drop their opposition to the directive, training funded by the company seems remote.
Trade unions will also be called on to extend the support on offer to EU works council reps to all UK reps, which Mr Booth admits will stretch the unions' resources.
Mr Cunnane, who is also a local union official, says next month the Reed works council will be pressing its UK management to establish a network of works councils in Britain ahead of the 2005 deadline. He is heavily involved in discussions over the fate of workers who have joined Reed as part of a pounds 4bn acquisition. That's at a European level. With a network of UK works councils he would have even more support for his plans to make sure the new staff are included in discussions about their future.
Like his EU counterparts he has been given a separate office in the building where he conducts works council business. He has also re quested secretarial support when the works council meets in the UK and got it.
"It's early days for us. The European works council has only been going since 1999. But already we believe the council is a useful channel for information and consultation on the future direction of the company," he says.
He remains enthusiastic about the potential for co-operation rather than a reawakening of the "them and us" that employers have highlighted. The Trades Union Congress is hopeful that most works councils will be established through local agreement rather than through legal disputes in the courts. But that depends largely on how prescribed the legislation becomes when the government decides to interpret the directive and turn it into UK law.
*Works Councils For the UK? is published by the Industrial Relations Service. Tel: 020-7354-6742.
Classification
Language: ENGLISH
Subject: EUROPEAN UNION REGULATION & POLICY (89%); EUROPEAN UNION (89%); EUROPEAN UNION INSTITUTIONS (89%); EUROPEAN UNION LAW (89%); BUSINESS & PROFESSIONAL ASSOCIATIONS (89%); ASSOCIATIONS & ORGANIZATIONS (78%); TALKS & MEETINGS (77%); LEGISLATIVE BODIES (77%); WRITERS (77%); MANUFACTURING FACILITIES (77%); LEGISLATION (66%)
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Industry: PUBLISHING (90%); BEER & ALE (78%); MAGAZINE PUBLISHING (77%); WRITERS (77%); MANUFACTURING FACILITIES (77%); ELECTRONIC PUBLISHING (72%)
Geographic: AMSTERDAM, NETHERLANDS (79%); UNITED KINGDOM (94%); EUROPEAN UNION MEMBER STATES (94%); EUROPE (92%); NETHERLANDS (79%)
Nej means nej - and not just in Sweden. Here in Britain, the anti-Europeans gloat and jump for joy, their many newspapers whooping that any euro referendum is now a duck as dead as a dodo. The Europe minister glumly records a bumptious Euro-sceptic MP bouncing up to him in Westminster mocking: "What's the Swedish for 'Good on yer, lads'?"
A fog of despair descends on pro-Europeans; it's all over for the foreseeable future. Gordon Brown has cut his team assessing the euro tests from 100 civil servants to a desultory 10. Clinging to a toehold of credibility inside the EU, the prime minister keeps up the charade that we may still soon join. But with the no-show of his promised euro roadshows, no one believes him. For the euro enthusiasts, the question is not what to do next, but what to think next.
The chill Scandinavian wind sent shudders right across Europe. Can any government now be sure of winning a referendum on anything? At least six countries are bound to hold votes to confirm the new EU constitution: every nation needs to ratify, or the whole project falls. That would leave an ungovernable community of 25 countries, each with a veto, a recipe for stalemate. Late in the day, EU leaders are examining what has gone wrong. Why are citizens everywhere dangerously inclined to stick two fingers up at Brussels if given the chance?
When enthusiasts are driven back to pointing out that the EU has delivered the first ever 50-year period of total peace within its borders, you know they are indeed in trouble. Yeah, yeah, say the ungrateful post-war masses, sure 16,000 British boys died in just the first two days of the Somme offensive, but that was then. Right now the filthy French farmers - only 4% of the population earning only 2.3% of the country's GDP - have helped to wreck the World Trade Organisation negotiations, when most EU citizens wanted to open the gates to third world agricultural produce. The European Central Bank looks stubbornly anti-Keynesian in refusing to let countries borrow enough to pull themselves out of recession. Meanwhile, we EU citizens blush to find Silvio Berlusconi strutting the world stage as our president.
The one genuine outpouring of authentic Europe-wide, grassroots passion was the howl of opposition to the Iraq war and George Bush's White House. But there was no one to seize that moment and build a new European political identity.
Tony Blair was on the wrong side, plunging catastrophically across the Atlantic. President Chirac, conservative and nationalistic, failed to relinquish petty French interests that blocked a popular Europe-wide foreign policy. His old French insularity left him clinging to his handful of farmers instead of plunging into Cancun as an internationalist, challenging the Americans to do likewise.
Europe lost its chance to show the world a better model of globalisation than America's. To be sure, in 2006 some reform of the common agricultural policy (CAP) will help, but the British delegation was unable to protest loudly enough at what the rich west did, all for the sake of a puny 1.7% of EU GDP earned in farming.
Some wilder rightwingers such as David Heathcoat-Amory went on the stump around Sweden during the campaign, but it's hard to imagine it was him wot won it. The Swedes, after all, voted no for fear of reactionary Brussels economics undermining their social democratic spending. In Britain, most of the left sees Europe as a force for progress - winning better social and employment protection against the wishes of British governments. But this enthusiasm is mild. Europe is always a political also-ran, as is evident in Labour's appointing of six different Europe ministers in as many years. The blood is only stirred when provoked by Eurosceptic mania.
Political fire is all on the other side, where hatred of Brussels has swelled to monster proportions since 1989, filling the confusing void left in its demonology by the fall of Moscow. The evil empire is transfigured into a galloping federal superstate. Never mind that the entire EU government in Brussels has a civil service of just 23,000, compared with Whitehall's 480,000 (and fewer than Surrey county council). What's more, the new constitution has thrown out the famous Treaty of Rome trajectory towards an "ever closer union". And now it will require only a million EU citizens to sign a petition to bring a pressing question to the council, making people power easier.
How damaging will staying outside the euro be? Sweden voted no, even though its inward investment had halved since the euro's launch. Britain's inward investment from outside the EU has fallen horribly from the highest in the EU at 27% in 1998 to just 7% now.
Just more fiddled statistics, an unimpressed public suspects. But how bad do things have to be before people see with their own eyes a two-tier Europe taking off, with Britain left behind? The government dare not speak the truth (except in private). When Peter Hain this week told of the inward investment collapse, the Mail lammed him for bad-mouthing Britain.
The limping Britain in Europe campaign now needs to reform itself into a radical anti-government voice, not the pet of ministerial patronage. Time to lay into both Brown and Blair with full euro knuckledusters. Time to attack Brussels, too, and lead the charge for reform; it will never be credible to defend the inadequate status quo.
The European idea is magnificent, but pretending that current reality matches the rhetoric only heightens scepticism. Constitutions are dull - but real issues are not. So forget general principles, and campaign to send decision-making where it belongs pragmatically, according to whoever does it best. So they should be campaigning for third world aid - badly spent in Brussels - to return to nation states, but for Brussels to seize hold of compliance with Kyoto protocols, where nation states are failing shockingly.
Most pro-euro analysis of the Swedish disaster has focussed on how badly the campaign was fought - too establishment, too complacent, too late starting. But maybe the way the EU operates just isn't good enough to inspire trust, let alone enthusiasm. People can smell a conspiracy to cover up its faults among those who support it.
Lord Haskins yesterday joined a growing group of pro-euros with a suicidal tendency, suffering that dangerous vertigo that makes people fearful of falling want to jump. They advocate a big-bang, in-or-out referendum with a single vote for joining the euro, ratifying the constitution and staying in. Wiser heads say wait until the time is ripe - when the euro economy booms, when the CAP is dead, when Europe has a proper leader and a political sense of direction. It may be a little time yet.
p.toynbee@guardian.co.uk
Classification
Language: ENGLISH
Subject: REFERENDUMS (90%); EUROPEAN UNION (90%); VOTERS & VOTING (77%); EURO (77%); RECESSION (75%); PRIME MINISTERS (74%); EUROPEAN UNION INSTITUTIONS (74%); HEADS OF STATE & GOVERNMENT (74%); VETO (74%); FRENCH PRESIDENTS (72%); INTERNATIONAL ECONOMIC ORGANIZATIONS (71%); CIVIL SERVICES (70%); GROSS DOMESTIC PRODUCT (67%); ASSOCIATIONS & ORGANIZATIONS (65%); IRAQ WAR (62%); CENTRAL BANKS (61%); INTERNATIONAL RELATIONS (50%)
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Tony Blair last night rebuffed criticism that he was too close to rightwing European leaders such as Silvio Berlusconi, as the Barcelona summit grappled with disagreements over the liberalisation which is at the heart of the EU's ambitious economic reform agenda.
As the prime minister went into talks about opening markets, he rejected an accusation by John Monks, the TUC general secretary, that the government was hostile to workers.
He was reportedly furious after Mr Monks accused him of being "bloody stupid" in sharing the Italian prime minister's opposition to employee protection laws - part of the so-called "social dimension" of making the EU more competitive.
But Mr Blair - echoed by the chancellor, Gordon Brown - robustly defended the government's record in helping business while investing in education and skills. This had made Britain the fourth largest economy in the world, with the lowest unemployment of any major economy.
"That is the modern way to build a more prosperous country," he said. "We have got to work with the modern world as it actually is. That does mean that we have to have flexible labour markets."
Downing Street added that Mr Blair had not made alliances only with Jose Maria Aznar, the centre-right Spanish prime minister and summit host, and Mr Berlusconi.
Across Europe the three have become known as "the BAB axis", committed to deregulation in contrast with the more cautious approach of France and Germany.
But Mr Blair insisted: "I work with leaders from all around the world, whatever their political party." Another alliance was made between the German chancellor, Gerhard Schroder, and the Swedish and Dutch prime ministers, Goran Persson and Wim Kok, all three from the centre-left.
The prime minister's public spat with Mr Monks came as the summit delegates sought to prove that they were making progress towards their goal of giving the EU the most competitive economy in the world by 2010.
Last night they were struggling against France's opposition to fully opening its domestic energy sector, with doubts emerging even about a minimalist deal on the liberalisation of Electricite de France, the state-owned monopoly.
Its EU partners complain that while they have no access to the French energy sector, EDF has embarked on a buying spree across the union.
Britain has been openly critical of France, but recognises that a shift on this issue - as on the continued French ban on British beef imports - will be impossible at least until after the presidential election, which begins on April 21.
Although Mr Blair has called the two-day summit a "make or break" moment for the EU, expectations were being lowered by all sides last night.
Apart from increased labour market flexibilityand energy liberalisation, Barcelona's priorities are the linking up of European transport networks, integration of financial markets, and improvements to education systems.
Progress is expected on financial services, but negotiations on common patents and takeover rules are stuck.
Mr Schroder, who also faces an election battle later this year, insisted that he would not expose domestic companies to foreign predators. "Germany has by far the largest and strongest and most interesting economy for foreign investors, and is more viable for takeovers than smaller economies," he said.
The Blair-Monks row - and protests by unions and anti-globalisation groups - served as a reminder that the erosion of employment rights or welfare spending in the name of flexibility would anger electorates who are less concerned than their governments by the yawning gap between the European and US economies.
Mr Monks added: "They will find it very difficult to sell the euro to British workers if there is no social dimension in parallel.
"After all, there will be a big restructuring in the economy if there is a single currency."
EU productivity has fallen in the past two years from 74% to 72% of US levels, while per-capita wealth in America remains more than 40% higher than in the EU.
Edward Bannerman, of the Centre for European Reform, said: "Many Europeans like to think of their continent as a global economic superpower, but compared to the US over the last decade or so, Europe looks like a laggard."
Ian Black's summit audio report: guardian.co.uk/audio
Classification
Language: ENGLISH
Subject: PRIME MINISTERS (90%); EUROPEAN UNION (90%); HEADS OF STATE & GOVERNMENT (90%); ECONOMIC NEWS (90%); ENERGY & UTILITY DEREGULATION (89%); BRITISH PRIME MINISTERS (79%); GERMAN CHANCELLORS (78%); DEREGULATION (77%); POLITICAL PARTIES (76%); LABOR UNIONS (76%); CAMPAIGNS & ELECTIONS (73%); ELECTIONS (72%); HEADS OF GOVERNMENT ELECTIONS (72%); UNEMPLOYMENT RATES (72%); AGRICULTURAL EXPORT & IMPORT CONTROLS (70%); IMPORT CONTROLS (70%); MEAT EXPORTS & IMPORTS (50%)
Company: ELECTRICITE DE FRANCE SA (EDF) (64%); ELECTRICITE DE FRANCE SA (EDF) (64%)
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The European Union's stability and growth pact has failed. No other serious conclusion can be drawn from the decision by EU finance ministers on France and Germany's budget deficits. The essential facts are not difficult to understand. The pact imposes financial sanctions on nations that run budget deficits of more than 3% of their total gross domestic product. France and Germany have broken those rules this year. This week the finance ministers allowed them to get away with the breaches, by allowing the deficits to continue if economic growth remains low. The principle at stake here is no more difficult to understand than the facts. If you have rules, you either enforce them or you change them. The ministers have funked both options. Instead they have allowed the rules to be broken while doing nothing about rewriting them. By backing away from sanctions against the two nations, the finance ministers are conniving in a political and economic fiction. That is no way to run the European Union.
In substance, of course, the finance ministers got it right this week. Financial discipline, always desirable in itself, must never become so rigid as to kill the economic activity that it seeks to nurture. Under the pact, France and Germany should have been penalised for spending money they do not have when times are hard. Yet this central principle of the pact ignores the reality that when times improve those deficits can be redressed - as a set of marginally encouraging indicators from Germany yesterday suggest they soon may. The human reality behind the theory is that governments are right to spend during recession - partly because a society has a collective responsibility to protect its most vulnerable members in times of hardship, and partly because to do so is to create a stimulus which assists economic recovery. Either way, manageable deficits are the right policy during recession. The problem is that the excessively strict rules do not permit it.
The answer, naturally enough, is to change the rules so that income and expenditure balance over the economic cycle - the good times replenishing the spending that is necessary in the bad times. The ministers, however, continue to shy away from that essential course. As a result, the EU commission is left wringing its hands on behalf of breaches of a system which has proved itself to be unworkable. But they should not spend their time denouncing the finance ministers for doing a sensible thing. They should spend it demanding that the ministers should follow up the logic of their own action. They should press governments to rewrite the pact in a more sensible and less doctrinaire manner.
This, though, is something that too many governments and too many in the commission are reluctant to do. They are reluctant because they see loosening the rules as a challenge to the integrationist and welfarist form of the European project to which many of them are intellectually and emotionally committed. This is an honourable commitment, and it is an essential component of the kind of Europe that progressive governments should be trying to construct. Ministers like Gordon Brown should not mock or misrepresent it, especially by playing to rightwing galleries. But ever closer union is not the only component of the project. Europe has always been and will always be a balance between the centralised and integrationist on the one hand and the devolved and pluralist on the other. In a different part of the European forest, that is what the whole debate on the EU constitution is about and how it must be judged. Both the stability pact and the constitution will only work if governments and ministers are honest about them. Dishonesty has made a mockery of the one. It must not be allowed to make a mockery of the other.
Classification
Language: ENGLISH
Subject: GOVERNMENT BUDGETS (90%); EUROPEAN UNION (90%); PUBLIC FINANCE (90%); ECONOMIC CONDITIONS (90%); ECONOMIC GROWTH (90%); PUBLIC FINANCE AGENCIES & TREASURIES (90%); RECESSION (89%); ECONOMIC POLICY (89%); INTERNATIONAL ECONOMIC ORGANIZATIONS (89%); ECONOMIC NEWS (89%); EUROPEAN UNION INSTITUTIONS (78%); ECONOMIC RECOVERY (78%); GROSS DOMESTIC PRODUCT (78%); ECONOMICS (73%); ECONOMIC DEVELOPMENT (70%)
Company: EUROPEAN UNION LEISURE LTD (92%); EUROPEAN UNION LEISURE LTD (92%); EUROPEAN UNION (94%); EUROPEAN UNION (94%)
Organization: EUROPEAN UNION (94%); EUROPEAN UNION (94%); EUROPEAN UNION (94%); EUROPEAN UNION (94%)
Industry: GOVERNMENT BUDGETS (90%); BUDGETS (90%); PUBLIC FINANCE AGENCIES & TREASURIES (90%); BUDGET DEFICITS (77%)
Geographic: GERMANY (94%); FRANCE (93%); EUROPE (92%); EUROPEAN UNION MEMBER STATES (92%)
Macedonia was given a blunt warning by the European Union last night to seek a political solution to its problems with Albanian rebels or forgo aid from Brussels.
Meeting after another shaky ceasefire was imposed by their foreign policy representative, Javier Solana, EU governments insisted that there was no military solution to the crisis, and urged Skopje to resume negotiations.
But they underlined their determination to stick to efforts to contain the latest Balkan flare-up by appointing Francois Leotard, a former French defence minister, their permanent envoy to Macedonia.
Britain announced that Jack Straw, the new foreign secretary, will visit Skopje today.
"There is no military solution to the present crisis," said a communique issued after talks in Luxembourg. "The political dialogue must now resume with the facilitation of the international community and lead to rapid results.
"Such results will determine the further development of the EU's relations with the former Yugoslav republic of Macedonia and the possibility of further assistance."
Ministers expressed "concern" about the build-up of arms in a volatile region which has been teetering on the edge of civil war for more than three months.
The thinly veiled threat to cut off up to 90m (pounds 55m) in aid is the strongest sign yet that the EU is losing patience after the repeated failure of diplomatic efforts.
In April the country was given a tailor-made "stabilisation and association" agreement with the union to encourage it to seek a peaceful solution to the conflict with the ethnic Albanian minority.
"We would like to support confidence-building measures, but it is difficult to build people's confidence when money, which is very clearly in short supply, is being spent on bombs and rockets," Chris Patten, the external relations commissioner, said yesterday. "There is little we can do in terms of financial support until there is a political settlement."
Nato said last week it was ready to send several thousand men as a "disarmament force" but only once a durable ceasefire and political process was in place. It called the weekend attack on rebels "madness".
Spokesmen in Luxembourg for the rebel force, the National Liberation Army, insisted that Nato still had an important role to play.
Macedonia's foreign minister, Ilinka Mitreva, was told by EU colleagues in "frank" talks that they were disappointed by the failure to make progress in negotiations on constitutional change by yesterday's deadline.
The German foreign minister, Joschka Fischer, said the EU needed a more permanent representation in Skopje - in the form of Mr Leotard and the former French justice minister Robert Badinter - to push Macedonia to reconciliation and ensure its independence.
"It is in our interest that Macedonia's territorial integrity remains intact," he said.
Classification
Language: ENGLISH
Subject: EUROPEAN UNION (91%); FOREIGN RELATIONS (90%); INTERNATIONAL RELATIONS (90%); WAR & CONFLICT (90%); PEACE PROCESS (90%); STATE DEPARTMENTS & FOREIGN SERVICES (89%); POLITICS (89%); REBELLIONS & INSURGENCIES (89%); TALKS & MEETINGS (78%); CIVIL WAR (78%); INTERNATIONAL ECONOMIC ORGANIZATIONS (78%); ARMS CONTROL & DISARMAMENT (77%); FOREIGN POLICY (77%); AGREEMENTS (77%); APPOINTMENTS (76%); JUSTICE DEPARTMENTS (70%)
Company: EUROPEAN UNION (93%); EUROPEAN UNION (93%)
Organization: EUROPEAN UNION (93%); EUROPEAN UNION (93%); EUROPEAN UNION (93%); EUROPEAN UNION (93%)
Person: JAVIER SOLANA (58%); JACK STRAW (57%)
Geographic: SKOPJE, MACEDONIA, THE FORMER YUGOSLAV REPUBLIC OF (93%); BRUSSELS, BELGIUM (79%); MACEDONIA, THE FORMER YUGOSLAV REPUBLIC OF (95%); EUROPEAN UNION MEMBER STATES (93%); ALBANIA (92%); FRANCE (92%); LUXEMBOURG (92%); EUROPE (92%); GERMANY (79%); BELGIUM (79%)
There was "undisguised relief all round" said the Guardian recalling not least France's handling of the recent Nice summit which fell short of expectations. Austria's Der Standard , meanwhile, carried a cartoon entitled "Handover", showing a winter landscape and a Swedish elk on skates and with an EU flag in its mouth effortlessly taking over from a stumbling French cockerel in the likeness of French President Jacques Chirac.
In the Financial Times , Peter Norman rejected claims by France's Le Monde newspaper that "Sweden will be cold towards the EU" because opinion polls show less than 40% support for the union. This ignores "the commitment of Goran Persson, Sweden's prime minister Sweden is anxious to be seen as a 'good European' It is likely for reasons of local prestige to aim for more than a minimalist presidency." Sweden's Expressen agreed. "Swedish politicians generally dream of roles as international mediators. Goran Persson can hardly be accused of suffering any kind of de Gaulle complex, he has been involved in the EU sufficiently to know what is required of him." But, it warned, "don't expect any sudden shift in Swedish eurosceptism".
Sweden's official agenda for the six-month presidency will focus on enlarging the EU, increasing employment and protecting the environment. Vienna's Die Presse welcomed enlargement. "The often eurosceptical Scandinavians are considered extremely enlargement-friendly," it said. The Guardian thought that "Paris's loss looks increasingly like Berlin's gain", and that the future accession of Poland, Slovenia and other candidates - "a matter close to Germany's heart" - would go ahead largely on German terms. "Managing German aspirations is going to constitute one of the great challenges of EU policy during the next few years," it added. A further challenge, according to the French business paper, La Tribune , would be in riding the wave of criticism which will come with "bringing the Euro to the people" - the launch of Euro notes and coins this year.
Classification
Language: ENGLISH
Subject: EUROPEAN UNION (91%); FRENCH PRESIDENTS (78%); HEADS OF STATE & GOVERNMENT (76%); EURO (76%); EU PRESIDENCY (76%); INTERNATIONAL ECONOMIC ORGANIZATIONS (73%); CARTOONS & COMICS (72%); EUROPEAN UNION REGULATION & POLICY (71%); PUBLIC POLICY (71%); POLLS & SURVEYS (71%); PRIME MINISTERS (69%); EDITORIALS & OPINIONS (67%)
Company: FINANCIAL TIMES GROUP (83%); FINANCIAL TIMES GROUP (83%); EUROPEAN UNION (84%); EUROPEAN UNION (84%)
Organization: EUROPEAN UNION (84%); EUROPEAN UNION (84%); EUROPEAN UNION (84%); EUROPEAN UNION (84%)
Industry: EURO (76%)
Person: JACQUES CHIRAC (58%)
Geographic: VIENNA, AUSTRIA (79%); BERLIN, GERMANY (79%); PARIS, FRANCE (79%); SWEDEN (95%); FRANCE (94%); EUROPEAN UNION MEMBER STATES (94%); EUROPE (92%); GERMANY (91%); SLOVENIA (79%); POLAND (79%); AUSTRIA (79%)
The EU is drawing up plans to erode the rights of refugees fleeing from persecution making it easier for governments to repatriate them, according to officials privy to closed discussions in European capitals.
Under a proposed new EU directive, refugees would be granted temporary status which could be withdrawn under sweeping and vague criteria.
These include minor criminal offences and claims that the refugees were "a danger to the security of the host country".
Details of the EU negotiations have been passed to Statewatch, an independent London-based journal which monitors threats to civil rights.
Tony Bunyan, editor of Statewatch, said yesterday: "Those seeking sanctuary from persecution, torture and inhuman treatment are only to be given temporary status as a matter of policy.
"Their status is to be under constant review so that they can be repatriated at the earliest opportuntiy - potentially even through forced return if EU governments decide it is safe for them."
According to the draft directive - due to come into force next June - people would also be excluded from refugee status if they had committed crimes with an allegedly political objective directed, for example, against repressive regimes.
Such broad offences reflect the definition of terrorism adopted by EU countries, including Britain.
The 1951 Geneva convention, which set up the UN's refugee agency, does not discriminate against people who have committed such crimes when defining who is eligible for refugee status.
Statewatch says that the proposed directive, which would be binding on all EU members, is designed to make it much easier for governments to deport refugees.
Other independent groups familiar with the issue said yesterday that the idea of giving refugees temporary protection followed the mass exodus from Kosovo in 1999, when it was assumed that most of the ethnic Albanians expelled from the Serbian province would return within a year.
"EU states, including Britain, considered that as a model for the future", said a senior refugee expert.
But he said there was a widespread fear was that this would become the norm rather than the exception.
Last year, Britain introduced a law making it easier for the government to withdraw refugee status on "national security" grounds, from people who had been sentenced to two years or more in prison.
Britain gave initial approval to about 11,000 people asking for refugee status in 2001, according to the latest Home Office figures.
Danish officials in Brussels angrily dismissed the Statewatch report, insisting that it was false that the proposed directive breached the Geneva convention.
Any changes had been negotiated with the full agreement and support of the United Nations high commissioner for refugees, a spokesman said.
They also denied that the proposals arose as a result of a Danish initiative linked to the country's tough new domestic laws on immigration and asylum.
The proposals were part of continuing efforts to produce workable asylum and immigration policies across the EU and they would not lead to the expulsion of bona fide refugees, the officials said.
Classification
Language: ENGLISH
Subject: REFUGEES (95%); EUROPEAN UNION (91%); CRIMINAL OFFENSES (90%); IMMIGRATION (89%); POLITICAL ASYLUM (89%); IMMIGRATION LAW (86%); APPROVALS (78%); DEPORTATION (78%); EUROPEAN UNION REGULATION & POLICY (78%); HUMAN RIGHTS & CIVIL LIBERTIES LAW (78%); PUBLIC POLICY (78%); EUROPEAN UNION INSTITUTIONS (78%); EUROPEAN UNION LAW (78%); AGREEMENTS (78%); UNITED NATIONS (78%); SENTENCING (76%); NATIONAL SECURITY (76%); PRISONS (76%); JAIL SENTENCING (76%); DISCRIMINATION (75%); LEGISLATION (75%); CIVIL RIGHTS (73%); RACE & ETHNICITY (73%); RELIEF ORGANIZATIONS (73%); TREATIES & AGREEMENTS (70%); UNITED NATIONS INSTITUTIONS (70%); TERRORISM (51%)
Company: EUROPEAN UNION (84%); EUROPEAN UNION (84%); UNITED NATIONS (55%); UNITED NATIONS (55%)
Organization: EUROPEAN UNION (84%); EUROPEAN UNION (84%); UNITED NATIONS (55%); UNITED NATIONS (55%); EUROPEAN UNION (84%); EUROPEAN UNION (84%); UNITED NATIONS (55%); UNITED NATIONS (55%)
Geographic: LONDON, ENGLAND (79%); BRUSSELS, BELGIUM (73%); EUROPEAN UNION MEMBER STATES (96%); SERBIA (92%); DENMARK (92%); ALBANIA (79%); KOSOVO (79%); EUROPE (79%); BELGIUM (73%)
Zimbabwe's embattled white chief justice finally agreed to take early retirement yesterday after extracting an assurance from the government that it would not embark on an immediate purge of the judges who have incurred Robert Mugabe's wrath.
The compromise deal came as a diplomatic row threatened to erupt in Europe over Mr Mugabe's planned meeting with a European Union commissioner in Brussels, with the Belgian prime minister Guy Verhofstadt on Monday and with the French president, Jacques Chirac, in Paris on Tuesday.
In Zimbabwe, sceptics question the value of the signed agreement between Anthony Gubbay, the 68-year-old chief justice, and the justice minister, Patrick Chinamasa.
The deal was signed several hours after Mr Gubbay received a visit at the supreme court from one of the most notorious leaders of the "war veterans", Joseph Chinotimba, who openly threatened him with violence.
"I talked to him personally and I told him to vacate the office today. No one is above the law," Mr Chinotimba said afterwards. "We ought to teach him how cases are finalised here. We will declare war."
Earlier this week, Mr Gubbay withdrew an agreement to take early retirement in July after the justice minister announced that he intended to appoint a government supporter as the new chief justice.
Mr Mugabe is keen for Mr Gubbay's chosen successor, Godfrey Chikausikyu, to set up a tribunal to hear accusations of misconduct against judges who ruled that the government's seizures of white-owned farms is illegal.
The first targets are expected to be the other four supreme court judges and several high court judges who are likely to rule against the government if, as expected, it tries to raise legal barriers against the opposition in the looming presidential election.
Under yesterday's agreement, Mr Gubbay will retire in July and go on immediate leave. An interim chief justice - Mr Chikausikyu, it is presumed - will be appointed but Mr Gubbay will be able, technically, to block any purge of other judges until July.
In Brussels yesterday, the European commission was forced to defend a controversial decision taken unilaterally by Poul Nielson, the EU's development and humanitarian aid commissioner, to have lunch with Mr Mugabe on Monday.
The lunch has already been condemned by the Zimbabwean opposition, but Brussels signalled that it would not back down. Gunnar Wiegand, a commission spokesman, said that there were no sanctions in force against Zimbabwe to prevent a meeting.
"We will soon start a critical dialogue with Harare and it is very normal under those circumstances that Nielson would meet the president."
The commission's weekly calendar, which records any meetings with heads of state, omitted to mention the lunch. Mr Wiegand denied that this was deliberate.
A source told the Guardian that Mr Nielson would, nevertheless, express his alarm at the treatment of the media and the judiciary on Monday.
"Mugabe is not a nice guy but there are worse. When UN sanctions were still in place on Libya people were queueing up to meet Gadafy. The fact is that Mugabe is in power and has been elected and the commission has to deal with him."
There were signs yesterday afternoon, however, that Mr Verhofstadt might be getting cold feet. A spokeswoman at his private office said that no decision had yet been taken. However, the political counsellor at Zimbabwe's Brussels embassy said the meeting would happen.
More on the crisis in Zimbabwe on the Guardian network at guardian.co.uk/zimbabwe
Classification
Language: ENGLISH
Subject: JUDGES (90%); AGREEMENTS (90%); APPOINTMENTS (90%); LAW COURTS & TRIBUNALS (89%); TALKS & MEETINGS (89%); EUROPEAN UNION (89%); SUPREME COURTS (89%); HEADS OF STATE & GOVERNMENT (89%); PRIME MINISTERS (78%); EUROPEAN UNION INSTITUTIONS (78%); EARLY RETIREMENT (78%); FRENCH PRESIDENTS (78%); JUSTICE DEPARTMENTS (78%); INTERNATIONAL RELATIONS (77%); INTERNATIONAL ECONOMIC ORGANIZATIONS (76%); ELECTIONS (73%); CAMPAIGNS & ELECTIONS (73%); MISCONDUCT (72%); HEADS OF GOVERNMENT ELECTIONS (71%)
Company: IF AS (65%); IF AS (65%); EUROPEAN UNION (91%); EUROPEAN UNION (91%)
Organization: EUROPEAN UNION (91%); EUROPEAN UNION (91%); EUROPEAN UNION (91%); EUROPEAN UNION (91%)
Person: ROBERT MUGABE (79%); JACQUES CHIRAC (55%)
Geographic: BRUSSELS, BELGIUM (90%); HARARE, ZIMBABWE (79%); PARIS, FRANCE (79%); ZIMBABWE (94%); EUROPE (93%); EUROPEAN UNION MEMBER STATES (93%); FRANCE (92%); BELGIUM (92%)
* On the Middle East
We are gravely concerned by the developments in the Middle East. We welcome and support the report by the Sharm el-Sheikh fact-finding committee.
We urge both sides to implement the report's recommendations, in all aspects, including ending the violence, taking confidence-building measures and resuming negotiations. We welcome the constructive initiative taken by Egypt and Jordan to that end. We see no alternative . . . to the principle of land for peace . . .
* On climate change
We had an interesting and open dialogue here in Gothenburg on climate change, which will continue. We recognise that climate change is a pressing issue that requires a global solution.
The EU and US are both committed to providing strong leadership on climate change. Prompt, effective and sustainable action is needed, consistent with the ultimate objective of the UN Framework Convention on Climate Change (UNFCCC) of stabilising greenhouse gas concentrations in the atmosphere.
We are determined to meet our national commitments and our obligations under the UNFCCC through a variety of flexible means, drawing on the power of markets and technology. In this context, we agree on the importance of intensifying cooperation on climate-related science and research.
We disagree on the Kyoto protocol and its ratification but we are determined to work together in all relevant fora to address climate change . . . our efforts must ultimately result in an outcome that protects the environment and ensures economic growth compatible with our shared objective of sustainable development for present and future generations.
Classification
Language: ENGLISH
Subject: CLIMATOLOGY (90%); CLIMATE CHANGE (90%); UNITED NATIONS (90%); ENVIRONMENTAL TREATIES & AGREEMENTS (90%); EUROPEAN UNION (88%); EMERGING MARKETS (78%); INTERNATIONAL ECONOMIC ORGANIZATIONS (77%); AIR QUALITY REGULATION (76%); SUSTAINABLE DEVELOPMENT (74%); TREATIES & AGREEMENTS (73%); SUSTAINABILITY (70%); GREENHOUSE GASES (70%); CONSERVATION (69%); ECONOMIC DEVELOPMENT (64%)
Company: UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE (90%); EUROPEAN UNION (84%); EUROPEAN UNION (84%); UNITED NATIONS (56%); UNITED NATIONS (56%)
Organization: UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE (90%); EUROPEAN UNION (84%); EUROPEAN UNION (84%); UNITED NATIONS (56%); UNITED NATIONS (56%); UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE (90%); EUROPEAN UNION (84%); EUROPEAN UNION (84%); UNITED NATIONS (56%); UNITED NATIONS (56%)
Geographic: EUROPE (91%); MIDDLE EAST (90%); EUROPEAN UNION MEMBER STATES (87%); JORDAN (78%); EGYPT (73%)
Agrippa Mukando was walking near Robert Mugabe's official residence on Monday when soldiers guarding the grounds leapt on the 63-year-old gardener and accused him of being an opposition supporter. They beat him as they beat several others that day.
In many African countries the all-too-common victims of assaults by soldiers consider themselves lucky to escape with their lives. They would laugh off any suggestion that they go to the police; that would just invite more trouble.
But in a telling act of faith in what remains of the rule of law in Zimbabwe, Mr Mukando headed for Harare central police station and laid charges. Other victims did the same.
The complaints are not likely to come to anything; the police are now too deeply compromised by their failure to stop the violence unleashed by Mr Mugabe's "war veterans" and other thugs.
In much of Africa, the rule of law long ago ceased to be more than a meaningless phrase. Due process was sacrificed to the arbitrary decisions of the powerful. Zimbabwe stands on the edge of that abyss.
As Mr Mukando demonstrated, some Zimbabweans still have faith in the judicial process, although the courts are more trusted than the police, but it is being eroded by the week.
The Harare township of Chitungwiza is living in terror of armed thugs unleashed by the government. Sometimes it is the army on the rampage, sometimes it is men too young to have fought Ian Smith's regime but who still call themselves veterans. Their tactics are not always the same but their intent is.
The gangs burst into bars and night clubs, forcing revellers to lie on the floor. Anyone giving a hint of supporting the opposition is singled out for a severe beating. The rest are forced to sing songs in praise of Mr Mugabe's Zanu-PF and the liberation war.
Charity Gwanzura did not even have to leave her home to become a target.
"I was sitting in my house and I looked up and there was a soldier standing there," she said. "I didn't understand at first. I thought maybe he was looking for someone or wanted some water. I was about to speak when he smashed his foot down on my table. I couldn't run because he was between me and the door, and then he started hitting me. He never said a word."
It did not take long for the soldier to get bored with beating Mrs Gwanzura. All along the street, doors were kicked in and furniture smashed. When the sound of breaking wood stopped, the screams began. Men were hauled into the streets and forced to pledge support to Robert Mugabe and to sing songs praising him. Then the army left as fast as it arrived.
The army and war veterans are intent on breaking the opposition's spirit. It is working to some extent. Many are disillusioned at the opposition's apparent powerlessness and inactivity. Its MPs make a lot of noise in parliament, Chitungwiza's residents say, but that does not stop the terror.
Mrs Gwanzura says the attacks are also having another effect. "I'll tell you what has changed. A year ago you could have been a Mugabe supporter living in this street and no one would have touched you. They would have said you are a fool or asked how much Mugabe is paying you, but you would have been safe. That is not true now. People are angry.
"They tried to get the police to protect us but now they say the police won't help. It has been made a crime to read a newspaper.
"They say the law can burn in hell with Mugabe, we are going to look after our own interests. They will make criminals of all of us. They have unleashed something."
The "war veterans" in particular are above the law. One of their more notorious leaders, Joseph Chinotimba, is on bail for the attempted murder of a neighbour he is alleged to have shot because she is an opposition supporter. It is unlikely he will ever be brought to trial, but yesterday he turned up at the supreme court anyway with a handful of thugs to threaten Zimbabwe's white chief justice, Anthony Gubbay.
The trampling of the law by the government has been widespread and systematic. White farmers and black workers are murdered with impunity. The killers' identities' are frequently known.
Similarly, the killers of opposition activists are free from the threat of arrest. Reporters have been illegally detained and tortured.
If anyone is in any doubt about the government's view of this they only have to listen to Mr Mugabe's ministers. The information minister, Jonathan Moyo, told new police officers this week that maintaining the "rule of law" does not mean obeying the courts but rather "upholding the gains of the liberation struggle".
Any court judgments which "might result in moving away from Zimbabwe, back to Rhodesia, cannot be considered the rule of law", he said. He means court rulings that have declared the land seizure programme illegal.
Questioned about the use of repressive colonial-era security laws to detain opponents, the defence minister, Moven Mahachi, said that if the internal security act was used to convict innocent blacks under Ian Smith then there was no reason why the present government cannot do the same.
And for all the independ ence of many judges, the courts are increasingly used not only as political weapons but to settle scores.
Last week a bus driver was jailed for three years after for attempting to murder Mr Chinotimba. The inappropriately named Luckmore Chakanyuka was set upon by "war veterans" at a roadblock after an argument about driving standards. In his terror, Chakanyuka jerked his bus forward. He was promptly arrested for trying to "kill" Mr Chintimba.
The court dispatched the bus driver to prison. Mr Chinotimba still walks free.
Classification
Language: ENGLISH
Subject: RULE OF LAW (90%); POLICE FORCES (78%); DUE PROCESS (75%)
Company: EUROPEAN UNION (84%); EUROPEAN UNION (84%)
Organization: EUROPEAN UNION (84%); EUROPEAN UNION (84%); EUROPEAN UNION (84%); EUROPEAN UNION (84%)
Industry: NIGHTCLUBS (63%)
Person: ROBERT MUGABE (92%)
Geographic: HARARE, ZIMBABWE (90%); ZIMBABWE (93%); AFRICA (73%)
The citizens of Europe's most pro-integration countries are losing faith in the EU, but getting more enthusiastic about the single currency as they prepare to use euro notes and coins in January.
Support for the euro is up 4% to 59%, according to the latest Eurobarometer poll.
But in further evidence of a sharpening crisis of confidence between the union and its 375m people, the poll paints a picture of citizens increasingly ready to question the value of being in the 15-member EU club. Belgium, the Netherlands and Luxembourg, the "Benelux" founders of the European Economic Community, all saw significant drops in support for membership, according to the survey, released yesterday by the European commission.
Support has also fallen in Spain, where there is a sharp 10-point drop in the belief that membership had benefited the country, and an eight-point drop in trust in the commission.
The Irish are still the EU's strongest supporters, with 72% agreeing that membership is a good thing. Britons, as usual, are at the other end of the scale, with 29% in favour.
But British support for the euro has risen by four points to 25%, although it is still the lowest in the EU, while UK ignorance about the union is far deeper than in any other member state, the poll shows.
Some 24.9% of Britons admit they know nothing about the "EU, its policies and institutions" - more than twice the EU average of 11.9%. A further 16.7% know next to nothing.
The findings come a day after Jack Straw, the foreign secretary, said the EU needed to slow integration to combat growing apathy and hostility, and as the Europe minister, Peter Hain, urged an end to "Euro-babble".
Britain scored lowest of all 15 EU states on whether membership is a good thing; on trust in the European commission, support for the euro, and for common foreign and defence policies.
Only on support for enlargement into eastern Europe does Britain struggle into second last place, with 35 points after 33 for Austria.
Britons are also more ignorant on EU issues than they have been since the Eurobarometer survey, run by the commission, began in 1997.
In a week that saw EU governments launch a heart-searching public debate about the need to reconnect Europe with its people, the poll found just 48% of EU citizens believe membership is a good thing.
The findings are down 2% from a similar poll conducted six months earlier.
But they follow a turbulent period that includes last month's shock Irish referendum rejection of the Nice treaty. Ireland's vote is constitutionally vital for the eastern enlargement of the union. Backing for enlargement - the EU's biggest single project since the launch of the single currency in 1999 - also saw a one-point drop in support, with the union average now 43%.
Since last month's rioting at the Gothenburg summit, EU governments have become more sensitive to charges that they are encouraging globalisation without mitigating its negative effects. European leaders can expect more protests at this weekend's G8 Genoa summit.
Belgium's europhile foreign minister, Louis Michel, chairing a televised debate in Brussels on Monday, warned that EU bodies were seen as "anonymous and distant, even hostile", and thus their legitimacy was being challenged.
Spanish views have been affected by a series of bruising rows over EU funds for its poorer regions. Those regions may lose money to even poorer candidates, such as Poland.
France, where 49% back membership, is the exception to an otherwise gloomy pic ture, showing improvements in all categories after disastrous ratings during its turbulent presidency of the union last year.
Officials in Brussels said that the findings confirmed the sense of disconnection, but attempted to give them a positive spin.
"The Eurobarometer results don't show that people don't want the EU or international cooperation on drugs, crime and jobs, but it's the face of Europe that turns them off," said one. "They just don't feel a sense of familiarity or affection for it."
Neil Kinnock, the commission vice-president, told the Guardian: "The EU institutions, with member states and the media, need to do a much better job of informing and explaining as a matter of democratic necessity."
Romano Prodi, the president of the commission, plans to seize the momentum of this intensifying debate to unveil his own views on the "governance" of Europe next week, following on from a recent series of big speeches by national leaders.
Foreign ministers agreed on Monday to step up efforts to encourage popular support by stressing the benefits of membership and the union's role in promoting peace and prosperity.
Polly Toynbee, page 16 Special report on economic and monetary union at guardian.co.uk/emu
Classification
Language: ENGLISH
Subject: EUROPEAN UNION (91%); POLLS & SURVEYS (90%); EURO (90%); EUROPEAN UNION INSTITUTIONS (89%); INTERNATIONAL ECONOMIC ORGANIZATIONS (89%); EUROPEAN UNION REGULATION & POLICY (78%); STATE DEPARTMENTS & FOREIGN SERVICES (78%); CURRENCIES (78%); FOREIGN POLICY (69%); INTERNATIONAL RELATIONS (64%); DEFENSE & MILITARY POLICY (64%); REFERENDUMS (60%)
Company: EUROPEAN COMMUNITY (57%); EUROPEAN COMMUNITY (57%); EUROPEAN COMMISSION (56%); EUROPEAN COMMISSION (56%)
Organization: EUROPEAN COMMUNITY (57%); EUROPEAN COMMUNITY (57%); EUROPEAN COMMISSION (56%); EUROPEAN COMMISSION (56%); EUROPEAN COMMUNITY (57%); EUROPEAN COMMUNITY (57%); EUROPEAN COMMISSION (56%); EUROPEAN COMMISSION (56%)
Industry: EURO (90%); CURRENCIES (78%); DEFENSE & MILITARY POLICY (64%)
Person: JACK STRAW (50%)
Geographic: EUROPE (96%); EUROPEAN UNION MEMBER STATES (95%); UNITED KINGDOM (94%); BELGIUM (92%); BENELUX (91%); SPAIN (79%); AUSTRIA (79%); IRELAND (79%); NETHERLANDS (79%); LUXEMBOURG (78%); EASTERN EUROPE (58%)
German leaders of both left and right made it clear yesterday that they were backing an all-out push for the political integration of Europe by the end of the decade.
The text of a document drawn up under the guidance of the chancellor, Gerhard Schroder, showed that he was aiming for the key decisions on the continent's future to be taken within the next 10 years.
It also showed that Mr Schroder and his fellow Social Democrats see it as essential to harmonise taxes in the European Union: a policy which is anathema to both of the main parties in Britain and to governments in some other EU states.
The document, which was leaked at the weekend, was unveiled at a press conference in Berlin by the general secretary of Mr Schroder's Social Democratic party, Franz Munterfering. "The debate must begin urgently, even if everyone does not agree on everything," he said.
He and other senior Social Democrats will get their first opportunity to lobby for their ideas at a meeting of the pan-European Party of European Socialists in Berlin on Monday.
Mr Munterfering presented the scheme as an attempt to democratise the workings of the EU, and the German opposition seized on this aspect to welcome it.
"We have a democratic deficit in the EU and that must change," the leader of the Christian Democrat Union (CDU), Angela Merkel, said .
Mr Schroder expressed delight at the reaction of the opposition conservatives, describing it as "great".
At the heart of his plan is a transformation of the European commission, the union's unelected executive.
The Social Democrats' chief spokesman, Michael Donnermeyer, said: "We want the EU commission from now (on) to be strengthened to become a government - a real European government beside the national governments."
In essence, senior party sources said yesterday, the chancellor would like a set-up similar to that in Germany with the considerable powers of the states serving as a model for the future powers of nation states.
But it remains unclear, for example, how the proposed European government would be chosen, and whether its leader would be elected by one or both of the chambers in a new, two-tier legislature.
While the document contains several nods in the direction of preserving national identities, it is emphatic that the SPD wants a pan-continental structure to emerge from the talks on the future of Europe due to begin in 2004.
"There is no alternative to further integration and Europeanisation", the paper says.
Its key passage is set out in the language of cast-iron inevitability: "In 10 years we shall live in a Europe with a constitution. In 10 years we shall live in a Europe with a (single) currency."
The document says: "An internal market and a common currency demand more energetic harmonisation of fiscal policy, especially with regard to taxes on business, the taxation of capital gains, the taxation of investment in energy and the organisation of value added and corporation tax".
If that is enough to provoke apoplexy in some British MPs, then there are plenty of other passages capable of inciting an angry reaction elsewhere in the community.
A proposal that EU spending should be controlled by parliament will be seen in France as an attempt to slash spending under the Common Agricultural Policy.
The chancellor's blueprint represents the latest, and by far the most decisive, attempt by Germany to set a new European agenda.
Mr Schroder and his aides and ministers are convinced that an enlarged EU will prove unmanageable unless it is rapidly integrated politically as well as economically.
Downing St and the foreign office played down the significance of the proposals last night, Michael White adds
They insist that they are merely an internal party document of the German Social Democrats, and "one contribution to the debate".
Special report on EU integration at guardian.co.uk/eu
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Sweden takes over the EU presidency today, promising to bring a touch of Nordic pragmatism and rigour to some of the toughest challenges facing the union.
Goodwill and expectations are unusually high as Goran Persson, the prime minister, settles into the rotating hot seat after disappointment at France's rocky stewardship, which ended last night to near universal relief.
Sweden joined the club in 1995, and this is the first time it has run the rotating presidency, always a demanding job for any small country but still a golden six-month opportunity to make an impression on union business.
France will be remembered for the Treaty of Nice, an ill-tempered and unambitious affair that just about agreed the long-overdue institutional reforms needed to allow the EU to take in up to 13 new members in the coming years.
Enlargement is Mr Persson's biggest priority, not only because success is central to the future of the entire EU, but also because leading candidates such as Poland, Estonia and Latvia are situated in Sweden's own Baltic backyard.
And closely linked to this issue is the thorny question of relations with Russia and Ukraine, which will become the union's immediate neighbours when the first newcomers join.
"I find it hard to think that anything is more important for the enlargement process than that we have a good relationship between the EU and Russia," Mr Persson said recently.
The Swedish social democrat wants to quicken the glacial pace of negotiations and may even set a date for the first accessions, which France repeatedly refused to do.
But with concern growing in Germany and elsewhere about the cost of the project, and some of the toughest issues such as agriculture and aid funds still looming, it remains to be seen how much progress can actually be made.
Mr Persson has big ideas on the environment and employment. In Brussels, the Swedish environment commissioner, Margot Wallstrom, has established solid "green" credentials and the Gothenburg summit in June will be devoted to sustainable development.
Sweden also wants to use its presidency to help salvage a deal on climate change, after the collapse of the Hague conference over huge differences between the EU and US.
In March, at the Stockholm summit, leaders will review progress made since ambitious targets for social and employment policy were set in Lisbon last year.
Not surprisingly, the country that is the home to the telecoms giant Ericsson will be pushing for better opportunities to exploit new technologies and bring Europe up to enviable US levels of growth and job generation.
Transparency is a key concern - Sweden's instinctive openness has often brought clashes with more secretive member states. Its presidency website is already a model of clarity and accessibility.
Exuding probity and Scandinavian values, Mr Persson has pledged to work for a union "characterised by cost efficiency and budget restrictiveness" as well as "mainstreaming" gender equality - the theme of a ministerial strategy session later this month.
Other challenges include the difficult defence dossier, currently stuck on the crucial question of relations between the EU's nascent rapid reaction force and Nato, and specific difficulties with France and Turkey. As Sweden is a long-standing neutral which sat out the cold war, this is an especially intriguing and delicate mission.
Further afield, the crisis in the Middle East will be a test for Stockholm's ability to represent the union on the world stage, and an important time for the foreign policy supremo, Javier Solana, repeatedly upstaged by France.
North Korea, emerging from its long years as the Stalinist hermit kingdom, will be a preoccupation.
More widely, President George W Bush will be less of an enigma by the time Mr Persson greets him at the EU-US summit in June.
"Assuming the presidency for the first time is a proud moment for relative newcomers to the EU scene," commented the Brussels European Voice, widely read by Eurocrats. "It will be up to Sweden to restore faith in the current system and show that it can work in the way that it should."
Mr Persson has got that message loud and clear. "The EU is not only talk," he declared. "But it is also hard facts, delivery, a practical approach about politics that make a difference and change the daily lives of citizens."
*The former German chancellor Helmut Schmidt said in an interview published yesterday that the EU had achieved very little over the past decade, and criticised its expansion plans.
"With the sole exception of the euro, it has achieved nothing in the last 10 years," Mr Schmidt, 82, told the Tagesspiegel daily.
As Social Democrat chancellor from 1974 to 1982, Mr Schmidt, in partnership with French president Valery Giscard D'Estaing, helped forge the Exchange Rate Mechanism - the forerunner to European monetary union.
But in the outspoken interview, Mr Schmidt criticised the EU's latest steps aimed at accepting new members.
"The more members join, the harder it will be to change. Expectations are developing too quickly, internal rules too slowly," he warned.
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Eddie Fenech-Adami paused dramatically before delivering the line the crowd was waiting to hear. "The right choice for Malta is to join the European Union," the prime minister roared as thousands cheered and waved a forest of blue and yellow-starred flags under a high crescent moon.
Emotions were running high on Thursday night at the final mass rallies before today's vote on EU membership, the most momentous decision the island has taken since independence from Britain four decades ago.
The referendum is the first being held in any of the 10 countries set to join the union next year: Malta may be the minnow of the new intake, but bigger countries, such as Poland, are watching closely to see what its 380,000 people decide.
Maltese laughingly describe themselves as passionate and deeply divided about football, saints' days, party loyalty - and Europe. This tense and occasionally nasty campaign has proved the point.
Mr Fenech-Adami and his conservative Nationalist party argue fiercely that EU membership is a national issue, not a party one. "We can choose to be part of the world's most powerful economic bloc," says the iva (yes) camp. "Or we can choose to be irrelevant to the rest of the world for the rest of our lifetime."
The man called simply "Eddie" by his admiring supporters had put it more succinctly: "No island is an island."
The le (no) camp, led by the opposition Labour party, wants Malta to have a loose but hazily defined "partnership" with the union, to be a "Mediterranean Switzerland" which somehow keeps its options open and holds Brussels and its laws at a distance.
Polls predict a close result, with attention focusing on a few thousand floating voters and worries that the "no" side will claim the result is invalid. That is a distinct possibility since they are calling on supporters to vote against, abstain or spoil their ballots. Turnout will be crucial.
Formally, the referendum is non-binding, but it is unlikely that a clear "yes" could be ignored even if Labour wins general elections that could be held as early as next month.
Malta, with a GDP of about 50% of the average among the 15 member states, applied to join the EU under the nationalists in 1990, but the bid was suspended under the 1996-98 Labour government.
Now, as then, Labour is led by Alfred Sant, author of Confessions of a Maltese European, the fruit of the five years he spent with his country's mission in Brussels.
But Mr Sant is no diplomat. When Gunther Verheugen, the EU's German commissioner for enlargement, visited recently, the Labour leader talked of the damage done by Luftwaffe bombs during the second world war. He dismissed the ex-president of the European parliament Nicole Fontaine as a bossy "Taliban".
Pro-EU supporters complain of the scaremongering familiar from Denmark's referendum on the euro and Ireland's on ratifying the Nice treaty.
Labour attacked the EU working time directive for banning overtime. It does no such thing.
Mr Sant named Maltese companies which he claimed would be threatened by mem bership. Most quickly countered that they saw new opportunities in the single market.
The anti-EU campaigners invoked restrictions on hunting, a non-existent danger of legalised abortion and a threat that the neutrality of what was once imperial Britain's unsinkable island fortress would become a modern bastion for an "EU army".
And figures for the pounds 120m in cash Malta is to receive in its first two years of membership were creatively massaged downwards. "Sant has made a political issue out of this referendum," said Mark Vella, a retired bank manager at Thursday's rally. "But it should be about the good of Malta."
The "yes" campaign has been accused of dominating the media, with anger directed at the European commission office and the government-funded information centre.
"The referendum is a farce," said Sharon Ellul Bonici, leader of the No2EU group. "People believe the EU is giving us a blank cheque. It's all lies but they've been repeated so many times people believe them."
The Maltese are split into those who fear staying out will leave them an isolated backwater and those, cheered on by Europhobes like the UK Independence party, who are fixated on outdated notions of national sovereignty.
"We've been dominated by others for 2,000 years," said Charlie Kitcher, a technician. "The EU has a lot of laws that are not suitable for small countries."
Carmelo, a hotel employee, disagreed. "It is better being in the EU than having Malta full of Arabs."
The "no" supporters want to wait for a better deal, but they are unlikely to get one. Malta did very well in the negotiating endgame at the Copenhagen summit, winning 77 special arrangements and transitional periods from EU law.
It has seven years to regulate the influx of workers, a special zone to manage its seas and a unique package on agriculture. And Maltese, unlike Irish or Luxembourgeois, won recognition as an official EU language.
"The thing about being on an island is that it's sometimes like a bubble," one diplomat said. "What's at stake here is the future of Malta. Europe is not going to grind to a halt if the 'no' camp wins. But this place might well regret it."
Hunting under fire
'Say no to EU' banners are draped across the facade of the Malta Labour party's social club in Valletta, and the talk inside is of rules from Brussels that will spoil the sport of the island's hunters.
Hunting and trapping have been part of the Maltese landscape since Phoenician times. Quail, turtledoves and woodcock are considered fair game for the island's 17,000 licensed hunters, many of them Labour supporters. Some 200,000 birds are blasted out of the sky every year on their way from Russia to Africa.
Such activities may soon become a thing of the past. In the EU, the government would get seven years to comply.
It is a highly sensitive issue. 'As often happens with compromise, no one is happy,' sighs an EU official. 'The environment groups went mad and the hunters said they would vote "no". The whole point is sustainability, but it's not seen that way here.'
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Turkey's prospects of receiving an early date for talks on entry to the European Union are in the balance today, as EU leaders meet in Copenhagen for a summit to launch the union's biggest enlargement.
With strong pressure from the US for a favourable outcome for its strategic Nato ally, and high expectations from the new government in Ankara, the stakes could hardly be higher.
But receding chances for a speedy peace settlement in Cyprus cast a cloud over the summit, whose main mission is to invite 10 new members, eight of them from eastern Europe, to join and erase cold war boundaries.
Tayyip Erdogan, the leader of Turkey's newly elected Islamist Justice and Development party, said on arriving here from the US that he was confident that EU leaders would award his country "an appropriate date by the end of 2003".
EU diplomats believe that he may have been influenced by powerful backing from Washington and has underestimated divisions within the union, which is worried about the European credentials of a poor and populous Muslim country.
"This summit will not finish without giving a powerful country like Turkey . . . a date to begin negotiations," Mr Erdogan predicted confidently.
Earlier, he was reported as saying: "If the EU doesn't accept us then we will find a solution on our own," and telling President George Bush that Turkey could join the North Atlantic Free Trade Area.
It seems certain however, that Poland, Hungary, the Czech Republic, Slovakia, Estonia, Latvia, Lithuania, Slovenia, - all former communist countries - as well as Cyprus and Malta will join the EU in an unprecedented "big bang" in May 2004, posing difficult questions about how it will develop in future.
It is far less clear whether the pressure of expectations and time - the summit is due to end tomorrow but may well run into the weekend- will produce a satisfactory outcome for Turkey, desperate for an early date to start talks on joining what some EU politicians still see as a "Christian club".
President Bush kept up the pressure on the Copenhagen summit by calling the Danish prime minister Anders Fogh Rasmussen yesterday.
"We will do our utmost to support the reform process in Turkey but at the same time, I stressed that according to the rules of the EU a candidate country must fulfil certain political criteria to get a date for the start of accession negotiations," Mr Rasmussen said later.
"I will not be pressured, but of course I listen carefully to those who offer me good advice. President Bush is well aware of the fact that this is a European decision," he added.
The US is supporting Turkey, crucial to any plans to invade neighbouring Iraq. So are Britain, Spain and Italy, the EU's most pro-American members. But others are distinctly lukewarm.
The majority support a Franco-German call to start accession negotiations in 2005 and then only if Turkey passes a human rights review in 2004.
Romano Prodi, the president of the European Commission, reflected these doubts, warning in Brussels against giving Turkey special treatment, and saying the EU had set out strict rules for all newcomers.
Hopes were also fading for a speedy resolution of the Cyprus dispute, where the union badly wants Ankara to bring pressure to bear.
Rauf Denktash, the ailing Turkish Cypriot leader, said bluntly that it would not be possible to reach agreement on the basis of a UN peace plan during the Danish summit, making it impossible for the island to join as a reunited single entity.
Kofi Annan, the UN secretary general, had been considering flying to Copenhagen to support a deal, but that now seemed unlikely, UN officials said.
Mr Rasmussen, meanwhile, said he was confident the summit could finalise the laboriously negotiated enlargement package.
Like previous EU enlargements, its biggest-ever boils down to hard cash. Four years after negotiations began on issues ranging from financial services to the environment, the last unresolved issue is a demand that the newcomers be given the full euros 42.5bn (pounds 27bn) originally budgeted in 1999.
Denmark's "final" offer falls euros 2bn short of that, but the EU's main net contributors, led by Germany, insist they can afford no more.
Other problems have been resolved over ostensibly trivial but highly symbolic issues such as Baltic herrings, Maltese finches, Latvian lynx, and Czech potato starch.
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The European Union's biggest ever enlargement passed its crucial first popular test yesterday when voters in Malta, the union's smallest newcomer, said a narrow Yes to membership.
Final returns showed 53.6% of voters in the tiny Mediterranean island had opted to join the EU, quashing fears that a No might trigger a domino effect among millions of east Europeans who will make the same decision over the coming months.
Eddie Fenech-Adami, the prime minister and leader of the ruling nationalist party, claimed victory and his deputy, Lawrence Gonzi, said: "The electorate has given a clear-cut indication that it wanted the country to join Europe."
But the membership issue could be challenged in a new general election as soon as next month.
Romano Prodi, the president of the European commission, said: "This is a historic choice which will have a lasting impact for the future of Malta for generations to come. This is a choice for stability and growth, as well as for the peaceful reunification of Europe and the European people."
Triumphant Yes campaigners led honking motorcades through the streets of Valletta and waved blue and yellow-starred EU flags alongside red and white Maltese ones as the results were announced. One slogan read: "Vote Yes, for us, for our children, for our country."
Mr Fenech-Adami had called for a national, not a party-political decision, arguing that it was common sense for the island's 380,000 people to join the world's most powerful economic bloc.
The No camp, led by the opposition Labour party and the largest trade union, proposed a "partnership" with the EU but failed to explain how their "Mediterranean Switzerland" would actually work.
Alfred Sant, the Labour leader, demonstratively failed to vote on Saturday, having argued that the issue should be tested in a general election, not a referendum. He had urged supporters to stay away, vote No or spoil their ballots by writing "Viva Malta".
But Mr Fenech-Adami is now expected to call an early election to consolidate his victory, probably in April, just before all 10 candidate countries sign their accession treaties at a grand ceremony at the Acropolis in Athens.
Malta's vote was the first in a series of polls over the next few months which will seal the expansion of the union, from the current 15 to 25 members in May 2004.
Slovenia and Hungary are next, with the final membership referendum due in Latvia in September. Most attention is likely to focus on Poland, the largest country in the new intake, when it votes in June.
EU officials had been nervous about the outcome in Malta, a former British colony, because it is the only candidate country in which the main opposition party opposes membership.
Malta had to overcome a tradition of political isolation and economic protectionism which will be replaced by the stringent but potentially rewarding requirements of EU membership. When it joins, it will have one commissioner in Brussels, a proportionate number of members of the European parliament, and votes in the council of ministers. Maltese will become an official EU language.
In a country where the conduct of politics is intense and often highly personalised, the campaign was acrimonious. Labour was accused of scaremongering when it warned of job losses, price rises and an influx of foreigners.
But at last December's Copenhagen summit, Malta won generous membership terms and long transition periods before it must comply with all aspects of EU legislation on issues ranging from food safety to financial services.
Maltese divided into those who feared that staying out of the EU would leave them an isolated backwater, and those who were who were worried about national sovereignty.
The government made a strong economic case, arguing that EU membership would be a boost for a country which relies heavily on services, tourism and shipping. "This will bring investment to our economy and create jobs," Mr Fenech-Adami said.
In the final days of the campaign there was a whiff of panic from the No camp, which was widely perceived as exaggerating or lying.
Eurosceptics from Britain and elsewhere pitched in to play on fears about domination by Brussels, abortion and neutrality - issues which had also featured in the referendums in Denmark on the euro, and Ireland's on the Nice treaty.
More at guardian.co.uk/eu
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Asylum seekers arriving in Britain may be sent to a "transit processing centre" just outside the EU boundaries to have their claims decided, under plans to be presented by the home secretary, David Blunkett, to his European colleagues tomorrow.
The scheme, which would apply to all asylum seekers arriving in the union, and could involve them being sent to Ukraine or Russia, has been drawn up by the government's asylum task force as a further deterrent to those who enter the EU illegally and make unfounded asylum applications.
The "medium-term" plan for "transit processing centres" is intended to operate alongside the government's "longer-term" scheme, disclosed earlier this year, for UN safe havens to provide a much higher level of protection to refugees in regions close to the main areas of global conflict.
Although last week's EU summit in Brussels was dominated by Iraq, Tony Blair found time to raise the issue formally with Britain's EU partners, which have already privately expressed interest in the scheme.
Last night Mr Blunkett told the Guardian that the new provisions were needed because the EU could not carry on pursuing old solutions to the asylum problem which did not work.
"The common European asylum package to bring in common minimum standards is good as far as it goes, but we need a radically new approach to delivering the reduction in asylum seeker numbers that we need," he said.
The transit zones would undercut the operation of gangs which charge thousands of dollars to help asylum seekers enter the EU illegally.
"They would process claims without people travelling to the countries in which they want to seek asylum. They would be safe and decently treated while their claims were being looked at."
The Brussels summit agreed that tomorrow's meeting of justice and home affairs ministers would consider a British paper outlining the scheme and the European commission, in consultation with the UN High Commissioner for Refugees, is drawing up detailed proposals to be put to the next EU summit in June.
The British paper says that the transit processing centres should be set up on the routes currently taken by illegal migrants into the EU.
"Those given refugee status could then be resettled in participating member states on a burden-sharing basis. Others would be returned to their country of origin.
"This approach could act as a deterrent to abuse of the asylum system, whilst preserving the right to protection for those who are genuinely entitled to it."
The paper says the scheme would be in line with Britain's duties under the 1951 convention on refugees and the European convention on human rights, since there is no obligation to handle asylum claims in the country of application.
The paper says: "The centre would be located outside the EU. It could be managed by the International Organisation for Migration, with a screening system approved by the UNHCR. It could be financed by participating member states - but we would also wish to closely involve the European commission."
Although no names of potential sites for centres are mentioned in the paper, an earlier leaked version suggested that Ukraine or Russia might be suitable candidates.
Illegal migrants intercepted en route to the EU might be sent to the transit processing centres but the paper says that certain categories of people, such as disabled people and minors, would never be included in the scheme.
The Labour MEP Claude Moraes, a member of the European parliament's home affairs committee, said: "Improved in-region protection of asylum seekers as part of a comprehensive EU approach is hugely desirable, but extending the concept to transit processing centres may run the risk of the EU being accused of 'dumping' asylum seekers in less developed non-EU countries."
More at guardian.co.uk/refugees
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Only days before the treaty bringing the Poles into the EU goes to the European parliament, Poland's powerful Roman Catholic church is demanding that wording must be added to the treaty guaranteeing the country's strict anti-abortion laws against interference from Brussels.
The hugely divisive issue looks likely to help Polish eurosceptics in their No campaign for the June referendum on joining the union. They are painting Brussels as a bastion of liberal, secular pro-abortionists. The Polish government is worried that the potency of the abortion issue could strengthen the No vote in the next few months.
Poland, like all east European countries joining next year, will be holding a referendum within the next eight months to decide whether it will join the EU.
The government caved in to pressure from the church by sending a note to Brussels this week seeking assurances that "no EU treaties or annexes to those treaties would hamper the Polish government in regulating moral issues or those concerning the protection of human life".
Cardinal Jozef Glemp, head of the Polish church, recently called for a special clause in the EU membership treaty recognising the "separateness" of Poland's position on abortion and also proposed that an eventual EU constitution should single out Poland's national sovereignty on the abortion issue. His demands have been taken up by Poland's bishops.
But the leftwing government of the prime minister, Leszek Miller, failed to raise the abortion issue when negotiating the terms of Poland's membership, concluded last month, not least because the government favours legalising abortion or liberalising the conditions under which abortion is allowed.
Michal Tober, a government spokesman, told journalists in Warsaw on Tuesday that the note to Brussels would "prevent EU opponents from using false arguments that the EU would impose on Poland any regulations concerning moral and religious issues".
While there is no direct challenge from Brussels to Poland's abortion laws, conservative Poles see a threat in last year's European parliament resolution calling on all member states and the east Europeans entering next year to legalise abortion. Anti-abortion campaigners in Poland and Ireland are also outraged at proposals going through the European parliament to provide aid, via the United Nations population fund, to help pay for abortions in developing countries.
Poland has the most restrictive abortion laws in eastern Europe, partly as a reaction to Soviet communism. During the cold war, abortion was available on demand throughout the Soviet bloc where it was in effect practised as a means of birth control.
With Poland's Pope John Paul II profoundly opposed to abortion, a new law banning the practice was enacted in 1993 but amended in 1997 to allow abortion in cases where the mother's life was in danger or when pregnancy was a result of rape or incest.
But the Pope is also a strong and hugely influential supporter of Poland's EU membership. While some Catholic nationalist media in Poland are running a virulent anti-Brussels campaign, the church leadership is firmly behind EU membership while also seeking to defend conservative family values.
One result of the abortion ban has been to generate a flourishing market in illegal abortions as well as a stream of traffic across the border into the Czech Republic where abortions are legal.
The leftwing government of Mr Miller came into office last year pledging to liberalise the abortion regime, but has since got cold feet. Mr Miller now says there will be no reform under the current government, while Poland's president, Alexander Kwasniewski, last week declared: "The present abortion law works."
The parliamentary speaker, Marek Borowski, wants a national referendum. "The present measure is simply bad," he said. The governing Social Democrats (ex-communists), he said, are "against such tough abortion laws and understand women's rights differently from groups linked to the church or those on the political right".
That may be true, but the president and the prime minister, both from the same post-communist party, oppose a referendum because it would be conflated with the EU referendum and would provide a rallying point for the Eurosceptics.
Uniquely in the EU, Ireland enjoys a special provision declaring that no EU laws or rules can affect its constitutional ban on abortion. Malta, joining the EU at the same time as the Poles, negotiated a dispensation with Brussels safeguarding its abortion ban.
Classification
Language: ENGLISH
Subject: ABORTION (92%); EUROPEAN UNION (91%); REFERENDUMS (90%); CHRISTIANS & CHRISTIANITY (90%); EUROPEAN UNION INSTITUTIONS (89%); LEGISLATIVE BODIES (89%); LIBERALISM (89%); CATHOLICS & CATHOLICISM (89%); CLERGY & RELIGIOUS VOCATIONS (89%); RELIGION (89%); ABORTION LAWS (89%); LEGISLATION (78%); EUROPEAN UNION ACCESSION (78%); CONSERVATISM (78%); CATHOLIC POPES (78%); HEADS OF STATE & GOVERNMENT (78%); EUROPEAN UNION LAW (78%); TYPES OF GOVERNMENT (78%); PRIME MINISTERS (73%); UNITED NATIONS (73%); DEVELOPING COUNTRIES (72%); HUMAN SUBJECTS (69%); COLD WAR (64%); UNITED NATIONS INSTITUTIONS (60%)
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Organization: EUROPEAN PARLIAMENT (84%); EUROPEAN PARLIAMENT (84%); EUROPEAN PARLIAMENT (84%); EUROPEAN PARLIAMENT (84%)
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Jack Straw moved yesterday to put a positive gloss on the debate over Europe's new constitution when he contrasted Eurosceptic charges of rampant federalism with his own bland 10-point summary.
Ahead of this week's EU summit in Greece, where the draft constitution will be discussed, the foreign secretary insisted that the text "settles the balance between the (25 current and future member) nations and the EU where it should be - with the nations as the anchor of the union", much as Britain wants.
In a speech made inside his own department Mr Straw denied that the constitution - to be finalised during an inter-governmental conference over the next year - creates either "a substantial expansion of EU-wide powers or a radical overhaul of its existing treaties and competences".
That claim is fiercely disputed, not just by the Daily Mail, which yesterday claimed an 89.8% vote in favour of a referendum on the constitution after an unofficial ballot in which it claimed 1.7m votes had been cast.
The former Tory Europe minister David Heathcoat-Amory, who was a British member of the 15-month con stitutional convention, published a withering analysis of the draft. It suggested that proposed safeguards would count for little against "a determined European commission and an activist (European) court" determined to expand EU powers at the expense of nation states.
He added: "The government's refusal to admit a referendum is based on deceit and cowardice: deceit in trying to disguise the importance of the undertaking; cowardice in not having confidence in their own arguments."
Mr Heathcoat-Amory's analysis contrasted sharply with that of Mr Straw, himself a reformed Eurosceptic who now argues that only "hysterical" critics - intent on promoting "myths" - can deny "the treaty confirms the EU as a union of nations, not a superstate".
His 10 points, written in voter-friendly language, describe the EU as a body where countries agree "to work together where they need to" and anyone can leave; he cites the basic human rights on which it rests, its openness and its commitment to exercise "only the powers the member states give it".
He adds that "there will be common action, more in some areas than others" and stresses the foreign and defence policy will remain "subject to una nimity" by all 15 - soon to be 25 -states.
Mr Heathcoat-Amory's critique, before the EU heads of government council in Salonika, points to the drive by what he calls the EU's "centralised, technocratic elite" to expand their powers.
The Tory MP for Wells cites "rubber articles" of existing EU treaties that allow officials to use the single market legislation to harmonise and regulate laws beyond their agreed powers. He also takes issue with points made by Mr Straw, including his insistence that taxation and foreign policy will not become subject to EU majority voting.
He also notes that the draft being promoted by former French president Valery Giscard d'Estaing states explicitly for the first time that EU laws "shall have primacy over the law of the member states".
Yesterday Mr Straw swept aside such concerns, quoting the French paper Le Monde's conclusion that London "has every right" to feel pleased with the Giscard draft. As for majority voting, he said: "It has long served our interests."
He defended the creation of a permanent president of the European council, arguing that Nato works better because the secretary general always chairs meetings of sovereign member states.
guardian.co.uk/eu
Classification
Language: ENGLISH
Subject: EUROPEAN UNION (91%); CONFERENCES & CONVENTIONS (90%); VOTERS & VOTING (90%); REFERENDUMS (89%); TREATIES & AGREEMENTS (88%); TYPES OF GOVERNMENT (78%); FOREIGN POLICY (77%); EUROPEAN UNION INSTITUTIONS (77%); STATE DEPARTMENTS & FOREIGN SERVICES (77%); EUROPEAN UNION LAW (77%); INTERNATIONAL ECONOMIC ORGANIZATIONS (77%); HEADS OF STATE & GOVERNMENT (73%); INTERNATIONAL RELATIONS (72%); DEFENSE & MILITARY POLICY (50%)
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Irish voters face a month of intensive campaigning and a crucial vote on the enlargement of Europe after Bertie Ahern's government yesterday announced that its long-awaited second referendum will be held on October 19.
Mr Ahern's decision on the date for a second Irish vote on the EU's Nice treaty injected new drama into plans to expand the union by up to 10 new members.
Ireland is the only EU member constitutionally required to ratify the treaty, a complex and bitterly contested document which reformed EU voting mechanisms and institutional arrangements to enable it to function in the future, but last year Irish voters voted against by 54% on a 32% turnout.
"I think it would be a disaster for this country not to ratify this," warned Mr Ahern.
"The vote on the second referendum on the Nice treaty will be a defining moment for Ireland and for Europe," said Pat Cox, the Irish president of the European parliament.
"There is a lot at stake. A second rejection of the treaty would plunge the European Union's main strategic agenda, that of enlargement, into a pe riod of uncertainty and potential crisis."
The EU summit in Copenhagen in December is expected to name the successful candidates for EU entry. The treaty has to be ratified by then.
Last year's rejection of the treaty was a devastating blow for the EU and starkly underlined concerns about the sense of "disconnect" between ordinary citizens and remote and distant institutions.
Opponents, including Sinn Fein, mobilised support by claiming Ireland would lose its military neutrality and forfeit control of economic growth and immigration in an enlarged Europe.
It was all the more alarming since Ireland had benefited hugely from its membership since joining the then EEC along with Britain in 1973 and was always considered one of the most Europhile countries.
EU governments and candidate countries stretching from Estonia to Malta are fervently hoping that this campaign will be more effective than the last.
"This, in terms of a campaign, will be a real campaign," Mr Ahern promised. "We're spending a large amount of money which we don't have, but we feel obliged to do that."
The background is not promising. The referendum commission, a government- appointed body designed to encourage people to vote, said on Wednesday that it had polled 300 people on the treaty - and found that only 16% understood it. Only 24% of young voters planned to participate.
Another recent poll showed 44% of voters were undecided.
The poor prospects may serve as a lesson for a future euro referendum in Britain.
Last year, the Irish opponents' most memorable slogan was: "If you don't know, vote no." This time round, "no" campaigners are expected to argue the very fact that the referendum is happening again is evidence of a lack of respect for democracy, suggesting the Irish will be forced to vote until a majority says "yes".
In Brussels, EU officials insist publicly there is no politically acceptable alternative to ratification by the Irish, but privately some admit that complex legal moves could solve the problem.
The treaty, negotiated on the French Riviera in December 2000, reduces national veto powers but preserves the dominance of big countries such as Britain, France and Germany.
All the main Irish political parties and business groups support a yes vote. But that was also the case when Denmark rejected the euro two years ago.
Classification
Language: ENGLISH
Subject: EUROPEAN UNION (92%); VOTERS & VOTING (91%); TREATIES & AGREEMENTS (90%); REFERENDUMS (89%); EUROPEAN UNION ACCESSION (78%); EUROPEAN UNION INSTITUTIONS (78%); APPOINTMENTS (78%); INTERNATIONAL ECONOMIC ORGANIZATIONS (76%); LEGISLATIVE BODIES (73%); POLLS & SURVEYS (62%); IMMIGRATION (50%)
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Person: BERTIE AHERN (79%)
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Plans for a constitutional convention on the future of the European Union have fallen foul of a row about pay and perks for Valery Giscard d'Estaing, the former French president who has been asked to preside over the great debate.
The final figures have yet to be agreed, but Mr Giscard could be paid euros 20,000 (pounds 12, 335) a month tax free, plus expenses, for his year-long mission to think about how to make the expanding union work better.
Leaked reports about the wrangling behind the scenes jar with the convention's task of seeking to "reconnect" the EU's disenchanted citizens with their distant and unloved institutions.
Sources close to "VGE", as Mr Giscard is known in France, have denied that he is insisting on staying in a palace.
He will manage with a suite in a decent hotel for the two to three days a week he will spend in Brussels from the end of February.
"We are looking at what sort of hotel deal we can get, but you can't expect him to share a bed with his security guard," an official involved in the arrangements said.
"We're talking about the future of Europe. It's a constituent assembly, not a local council meeting. We will pay the going rate for the job, and it's a huge amount of work."
Mr Giscard, 76, was chosen at last month's Laeken summit, to the annoyance of London and some other governments which would have preferred the more forward- looking Dutch prime minister, Wim Kok.
The current French president, Jacques Chirac, campaigned hard for his fellow countryman.
Many observers thought an elderly ex-president, however eminent, was the wrong choice to lead this unprecedented effort to sort out big issues and end the sense of disconnection between ordinary people and the union.
Reports about the row have caused much irritation in the EU council of ministers, which was trying yesterday to limit the damage.
"These stories aren't going to do much to excite people about the future of Europe," one eurocrat complained.
"It looks like deliberate sabotage."
The job of the convention is to chart a course for future constitutional reform when the EU takes in new members in about two years' time.
Its brief includes such highly sensitive issues as replacing national vetoes by majority voting, the division of power between national capitals and Brussels, and the charter of fundamental rights, whose incorporation into EU treaties has been long resisted by Tony Blair.
The 109 members will comprise representatives of the 15 current EU states, the 13 candidate countries, the commission and the national and European parliaments. It will have a staff of 12 to 15.
The total cost of the conven tion, which is due to complete its work by March next year, may be euros 40m, including an operating budget of euros 5m.
If Mr Giscard is paid euros 20,000 a month, his salary will be similar to that of the EU commission's president, Romano Prodi.
Proportional salaries would go to his convention deputies, the former Belgian and Italian prime ministers Jean-Luc Dehaene and Giuliano Amato.
Classification
Language: ENGLISH
Subject: CONFERENCES & CONVENTIONS (90%); EUROPEAN UNION (89%); FRENCH PRESIDENTS (89%); TALKS & MEETINGS (78%); ELECTION LAW (78%); EUROPEAN UNION ACCESSION (78%); INTERNATIONAL ECONOMIC ORGANIZATIONS (78%); VETO (78%); HEADS OF STATE & GOVERNMENT (77%); LEGISLATIVE BODIES (77%); HUMAN RIGHTS & CIVIL LIBERTIES LAW (73%); EUROPEAN UNION LAW (73%); REGIONAL & LOCAL GOVERNMENTS (71%); PRIME MINISTERS (50%)
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Person: JACQUES CHIRAC (57%); TONY BLAIR (50%)
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The EU's looming enlargement into eastern Europe ran up against its first big external obstacle yesterday, when Moscow and Brussels were deadlocked on how to deal with a Russian pocket that will be locked territorially inside the expanded union.
After 15 months of hard bargaining, a Russia-EU summit in Moscow disagreed fundamentally on freedom of movement for the people of the enclave when its neighbours, Lithuania and Poland, join the EU and end visa-free travel for Russians crossing their territory. Kaliningrad is bordered on three sides by the members-to-be and by the Baltic sea on the other.
Russia's president, Vladimir Putin, warned that the issue was one of principle and would determine the future of Moscow's relations with Brussels.
But with immigration the hottest political topic in western Europe, the EU commission made it plain that Brussels would not relax its insistence on introducing EU visas for Russians travelling to and from Kaliningrad via Lithuania or Poland.
Mr Putin described the EU proposals as an affront to the "civilised community" and cast the dispute as a quarrel about basic human rights. "We don't have the right not to observe fundamental human rights there," he said after meeting the European commission president, Romano Prodi, and the Spanish prime minister, Jose Maria Aznar, current holder of the EU's presidency.
A senior EU source said: "There will have to be some movement, but that will have to come from the Russian side."
Mr Putin said Brussels had ignored Moscow's suggestions for resolving the dispute. "They are making proposals to us which essentially mean only one thing: (that) the right of Russians to free communication with relatives inside Russia will depend on the decisions of other states," he said.
His apparent strength of feeling may be reinforced by the fact that his wife, Lyudmila, is from Kaliningrad.
The pocket, with an estimated population of 900,000, is disease-ridden, criminalised and very poor. Much of its population depends on smuggling and cross-border trading. A bad situation will worsen when Lithuania and Poland join the EU within three years.
"Kaliningrad should not become a bone of contention between Russia and the enlarged EU," the EU's external affairs commissioner, Chris Patten, said last year as the talks got under way.
But both sides have dug in their heels. A fortnight ago the EU dismissed as unacceptable Russian proposals for special 160-mile rail and freight corridors through Lithuania linking Russia and Kaliningrad.
The Kaliningrad conundrum will be raised at the EU summit in Seville in a few weeks to see whether more flexibility can be introduced into the Brussels proposals.
But given the prominence of immigration issues in recent elections, and ahead of a German ballot in September, EU insiders said western Europe could not afford any breach in the Schengen rules - the system that enables free movement within most of the EU while reinforcing its external borders.
An EU official said that proposals for visa-free rail travel for Russians across Lithuania would result in Channel tunnel-type scenarios of illegal immigrants clinging to the trains to enter the EU.
Senior EU officials said Mr Putin was extremely tough yesterday on the issue, which contrasted graphically with the bonhomie of the past week's summits between Moscow, the US and Nato.
While those summits were long on the rhetoric of burying the cold war, the haggling about Kaliningrad recalls divided cold war Germany, with talk of transit agreements and new iron curtains.
Although Mr Prodi said the EU was about to recognise Russia as a market economy, he also raised Moscow's hackles by demanding energy price rises inside the country. In Brussels' view, the low cost of gas inside Russia amounts to an annual pounds 3bn subsidy to the country's industry.
Special report on Russia at guardian.co.uk/russia
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Language: ENGLISH
Subject: EUROPEAN UNION (92%); EUROPEAN UNION INSTITUTIONS (90%); EUROPEAN UNION ACCESSION (89%); PASSPORTS & VISAS (76%); IMMIGRATION (76%); INTERNATIONAL ECONOMIC ORGANIZATIONS (75%); ELECTIONS (74%); HEADS OF STATE & GOVERNMENT (74%); EU PRESIDENCY (73%); DISEASES & DISORDERS (71%); PRIME MINISTERS (68%); HUMAN RIGHTS (66%)
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The emergency summit of European leaders last night closed ranks to present a united front with the US as Tony Blair predicted widespread international support for George Bush's ultimatum to the Taliban regime.
Flying to Brussels from talks with Mr Bush in Washington, the prime minister joined European Union colleagues in signalling determination to accept their share of the burdens in the war against global terrorism.
At the end of Mr Blair's 9,000-mile round trip, Downing Street officials dismissed predictions that European sol idarity would start to crumble once military action starts.
All governments are now stating that short-term attacks against Osama bin Laden and his associates are only part of a long-term, two-strand agenda to destroy the "terrorist machine".
The 15 leaders endorsed a series of practical measures which would tighten police and intelligence cooperation; clampdown on the financing of terrorist networks, including asset freezing; and improve airline security.
A parallel meeting of finance ministers in Liege was working to minimise the deflationary impact of the attacks on the fragile world economy.
British officials confirmed that new legislation could be required as Whitehall makes a fresh attempt to ease "the red tape around extradition".
Officials are aware that past bills, including the Terrorism Act of 2000, have proved cumbersome or ineffectual. The current crime bill may be used to adapt existing laws.
"We would expect in the com ing session of parliament there to be possibly some new primary legislation in relation to terrorism, such as extradition," Mr Blair's spokesman said.
EU diplomats made clear that the union is not involved as an organisation in military planning, and that any participation is a matter for individual member states.
But the US is actively seeking EU help in bringing Iran and Syria into the emerging anti-terrorist coalition President Bush wants to build.
EU leaders were paying special attention to the need to close down funding for terrorist groups by tracking financial transactions and money-laundering routes.
The ceasefire between the Israelis and Palestinians was the subject of separate talks.
Underlining security concerns, Belgian police sealed off the EU area of Brusselsand banned jets from flying over the capital. Rumours, which proved false, swept the city that terrorist attacks had been mounted in France and the Netherlands.
The leaders of Sweden and Finland - both non-Nato countries - yesterday expressed support for the US but urged caution.
British officials stressed that Mr Blair is convinced by his conversation that Mr Bush attaches great importance to a wide coalition.
Classification
Language: ENGLISH
Subject: TERRORISM (91%); TERRORIST ORGANIZATIONS (90%); LEGISLATION (90%); TERRORIST ATTACKS (89%); EUROPEAN UNION (89%); WAR & CONFLICT (89%); COUNTERTERRORISM (89%); INTERNATIONAL ECONOMIC ORGANIZATIONS (89%); EXTRADITION (87%); PRIME MINISTERS (78%); TALKS & MEETINGS (78%); HEADS OF STATE & GOVERNMENT (78%); BRITISH PRIME MINISTERS (78%); PEACE PROCESS (78%); LEGISLATIVE BODIES (77%); AVIATION SECURITY (76%); PUBLIC FINANCE (76%); TALIBAN (72%); PUBLIC FINANCE AGENCIES & TREASURIES (72%); ASSOCIATIONS & ORGANIZATIONS (72%); MONEY LAUNDERING (71%); DIPLOMATIC SERVICES (71%); DEFLATION (67%)
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Industry: AVIATION SECURITY (76%); AIRLINES (72%); PUBLIC FINANCE AGENCIES & TREASURIES (72%); DEFLATION (67%)
Person: TONY BLAIR (79%); OSAMA BIN LADEN (72%); GEORGE W BUSH (58%)
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The development of young British rugby players and cricketers could be hampered by a European court ruling that may prove as influential on the two sports as the Bosman ruling was in football.
Legal experts and leading figures in rugby warned yesterday that a European Court of Justice ruling has the potential to destroy the quota system on foreign players that has been operating in both sports and could open the door for an unlimited number of players from countries such as South Africa and the South Sea islands to come into the games.
The case in question concerns Maros Kolpak, a Slovakian handball player whose name could become as infamous as that of the Belgian footballer now synonymous with the free transfer.
Last year Kolpak, a goalkeeper with German second division team TSV Ostringen, took the German handball federation to court to protest at a quota preventing more than two non-EU nationals playing for any team.
In May the ECJ found in his favour, ruling that the quota amounted to discrimination in employment law and that the system should not apply to nationals of countries that have an association or co-operation agreement with the EU who are legally employed within the EU.
More than 100 countries have such agreements, including South Africa and the South Sea islands, which have strong rugby heritages. The case establishes a precedent that players, once granted a work permit, will be able to play in this country without restriction.
Yesterday Howard Thomas, chief executive of Premier Rugby, warned that the ruling would have dire consequences for the development of home-grown talent if it forces the end of the quota system that allows only one non-EU player in domestic matches and two in European games.
"The decision of the Rugby Football Union to continue automatic promotion and relegation for another six years means that sides will be tempted to put short-term success before long-term planning," Thomas said.
"We warned the RFU of the dangers of continuing with one up, one down. We have seen in the last two seasons that clubs who are near the bottom of the table around Christmas time react by bringing in players from abroad and it is going to be easier to do that because of this ruling. We have told our clubs what the ruling means and it is up to them how they react to it."
Despite Thomas's warning the RFU said it did not expect a rush of foreign imports to hamper British player development.
"We do not believe this case will lead to an avalanche of foreign players into the Premiership and we believe there will be continued investment in club academies," said a spokesman. Players from the South Sea islands and South Africa will no longer be regarded as foreigners and will have the same rights as EU workers but they will still need to obtain a work permit."
A leading club official said that the ruling could prevent England producing a team capable of winning the World Cup. "England may win the World Cup this year but they will be hard pressed to do so in 2007," he said. "I think this ruling will lead to more and more foreign players coming into our league at the expense of home-grown talent."
Domestic cricket operates a quota that limits overseas players to two in any match, and four in a squad, but in contrast to rugby the implications of the ruling appear not to have reached the highest level.
Mark Roper-Drimie, director of legal affairs at the England and Wales Cricket Board, said he was unaware of the case and declined to comment. South Africans who qualify as EU nationals because of their parents' passports have already caused some controversy in the game, and disquiet is likely to increase if the ruling prompts more players to try their hand in county cricket. Football does not operate a quota system so is largely unaffected by the ruling.
Non-EU nationals require a work permit to play in Britain and should have played in 75% of their country's internationals over the previous two years to qualify. Premier League clubs approached the Home Office about introducing a quota system that would scrap the 75% rule in exchange for limiting the number of foreign players at any club to three. They had hoped the change would allow English clubs to bid for promising young foreign players, rather than limiting them to established international stars, but they were swiftly rebuffed.
Classification
Language: ENGLISH
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Company: SOUTH SEA HOLDING CO LTD (84%); SOUTH SEA DEVELOPMENT CO LTD (84%); SOUTH SEA HOLDING CO LTD (84%); SOUTH SEA DEVELOPMENT CO LTD (84%); EUROPEAN COURT OF JUSTICE (84%); EUROPEAN COURT OF JUSTICE (58%)
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Geographic: GERMANY (92%); EUROPE (92%); EUROPEAN UNION MEMBER STATES (92%); BELGIUM (79%); SLOVAKIA (79%)
It is 10.19pm when the party leader rises to make his speech to parliament. When he sits down, the clock has moved on to 10.20pm. There is total silence. It is broken only by the sound of an orgasmic stage-whispered scream of approval from the balcony: "Yessssssssss!" It is coming from the leader's speechwriter: "He did it! He did it! To the second! One minute 30 seconds precisely. Perfect!" By now the next speaker is already on his feet. He is greeted with silence too. Silence is the characteristic response to speeches here, especially when it is well past dinner time in the best city for eating out in Europe.
This is the European parliament in Strasbourg, where the debate - on the harmonisation of laws relating to food supplements - is being attended by precisely 17 of the 626 parliamentarians, plus 18 members of staff, eight people in the public galleries and 33 interpreters (three for each of the European Union's 11 official languages). The vast and stunning egg-shaped chamber is lit for the occasion by enough wattage to illuminate a fair-sized third world capital.
The strict time limit is one of the mercies. Hence the speechwriter's delight: a fraction longer than the allotted 90 seconds and the microphone would have been switched off. But the silence that greeted this particular leader's speech was more than normally profound.
The speaker was Jeffrey Titford of the UK Independence party, which - according to its 7% win of the vote in the 1999 European elections - is the fourth-largest party in Britain. (The big four party leaders are thus Tony Blair, William Hague, Charles Kennedy and Titford.) It is also the only one of the dozens of parties represented in this place totally committed to withdrawal from the EU. Titford was against harmonisation, surprisingly enough, arguing that British law was perfectly adequate. He's always against. He is the clergyman addressing the sinners in the whorehouse. Or Lucifer in the cathedral, depending on your point of view.
Somewhere between a half and three-fifths of Britain's electorate agree with Titford that Britain should seek an amicable divorce from the EU, and in 1999 Ukip (pronounced you-kip) won three MEPs. However, the former party leader, Michael Holmes, has not been sighted in almost a year, partly through ill-health, partly through disaffection. He is rumoured to be on the brink of joining the Greens, leaving just Titford and his sidekick, Nigel Farage.
Holmes's disappearance is merely one strand in a skein of vituperation and hatred that characterises Ukip. Earlier this month, the party's founder, Dr Alan Sked, claimed in the Spectator that the party was now enmeshed with the extreme right. The front page advertised "Ukip and the fascists".
Sked's evidence seemed slender. Much rested on a meeting between Farage and a party member who also belonged to the openly racist British National party. Farage says this was someone recruited by Sked, and that the meeting was to tell the man he was unwanted. If there was serious evidence linking the party with racists, at least 600 people in Strasbourg would be delighted to use it. But even Chris Huhne, the Liberal Democrat MEP who is one of their sternest critics, admits: "They're not fascists, they're not corrupt and they're not morons. Some of their members are headbangers, though."
They certainly are. The party's Scottish organiser has just been kicked off the executive for a year after questioning, in letters to newspapers, the extent of the Holocaust. Farage claims Ukip is the victim of "entryism". For what it's worth, the two men sit dead-centre of the parliament's semi-circle, close to the Lib Dems but at the back: traditional refuge of the most truculent members of any class. They are in a loose alliance known as EDD (Europe of Democracy and Diversities): a ragbag of 16 anti-federalists, comprising six French rustics, four Danes, three Dutch Calvinist ministers and the two Britons, but not rightwingers such as Jean-Marie Le Pen.
Even in the EDD, the Britons are out on a limb. Farage and Titford want Britain out, plain and simple. Thus John Bowis, the former Tory minister who is now an MEP, can say: "They are a tiny, tiny extreme element of a fringe part of the parliament. I just think they're irrelevant." But they may be very relevant in many rural constituencies come the general election. And they do at least have a coherent position - unlike the Tories, whose representatives here are horribly split.
Ukip, however, is an incoherent party, and its internal schisms are certainly worthy of the far right. It was founded in 1993 by Sked, a lecturer at the London School of Economics, and bumbled on quietly until the 1997 election, when it was totally swamped in the anti-Europe market by Jimmy Goldsmith's big-money, high-profile Referendum party. Then Goldsmith died, leaving a vacuum which Ukip filled with vicious infighting. But at the 1999 European elections, it was suddenly well-placed to pick up protest votes. And, since Britain was now using a regional proportional representation system, it was even better placed to turn them into seats. "It was a delicious double irony," says Farage, elected from the south-east region. "For a parliament I want no part of, under a system I despise, I found myself blinking into the cameras at one in the morning saying how proud I was."
With just a few more votes, Ukip might have won five seats. But when Holmes, the abrasive millionaire who had succeeded Sked, was dumped and then had a stroke, only this odd couple were left.
Titford is usually referred to as the Frinton undertaker (Frinton-on-Sea is generally presumed to be a good place for the trade). Actually, he had a string of funeral businesses on the east coast until he sold up in 1989 and retired at 55 to concentrate on sea fishing and golf. He had been in politics before, as a Tory, reaching the dizzy heights of chairman of the public health committee (and vice-chairman of recreation and gardens) on the old Clacton urban district council.
Titford was a bit bored by retirement, but he has now ridden his little anti-Euro hobby-horse out of control. In 45 years of marriage, his job never took him much further than Harwich. Now he is away perpetually, spreading Frinton's world- view; his wife is "supportive but a bit exasperated". Except when talking about Sked ("he's demented"), Titford is an emollient man, a sort of Willie Whitelaw figure, and an ideal leader for such a fractious party - "8,000 members and 9,000 egos", as one supporter put it.
Titford says little, which means he is outshone by Farage, a 36-year-old metals broker with wild eyes and the air of a successful estate agent. Both men are rather obviously British: non-linguists in a building of suave polyglots. Together, they can come over like Caldicott and Charters, the old buffers who kept talking about the Test score while travelling Europe in Strangers on a Train. But they are not obvious xenophobes (Farage's wife is German) and have a nice - very British - line in self-deprecating humour. Indeed, the Ukip's European parliament contingent laugh a lot, a rarity in Strasbourg.
They have a fair bit to laugh about. It is not difficult for them to embarrass the establishment, and their most successful ongoing stunt has been to pool the excess on their travel expenses and use it to fund the defence of "the metric martyr", the Sunderland greengrocer prosecuted last month for selling fruit in pounds and ounces. The parliament has demanded the MEPs return pounds 11,500.
Last Wednesday, Titford and Farage were summoned to appear before Richard Balfe, a long-serving Labour MEP who is on the College of Quaestors, a souped-up privileges committee. The meeting was inconclusive. Balfe refused even to confirm it had taken place.
"Can you tell me what the issue is?" I asked Balfe.
"Of course not. It's the College of Quaestors, not a public meeting," said Balfe indignantly.
"Isn't it public?"
"It never has been. Whoever I talked to, (it) is between me and them."
In a Europe full of Balfes, it is not difficult to portray the whole project as ludicrous.
It is easy to subvert the parliamentary process as well. At the EDD group meeting last Tuesday, it was decided on the spur-of-the-moment to turn up en masse at that night's plenary session to try to get the food supplement measure sent back, and thus delayed for ages. It was not a well-planned plot, but the European parliament's sittings are so thinly attended it did not need to be. Their procedural move failed by just one vote: 16-15, with 595 members missing, presumed at dinner.
This would have been a routine oppositional ploy at Westminster, but other (non-British) MEPs were incensed. "Immoral!" they kept saying. The British view is more phlegmatic. It is accepted that the debating chamber is a waste of time. Except for votes (members have to vote to get paid), the room is empty even when it is not dinner-time. "The place where you change minds is in committee," says Huhne. "You can actually alter legislation quite effectively there, and that's where Ukip doesn't play a part. They're a waste of space."
"Yes, it's true," says Richard North, the Ukip staffer who was so proud of his leader's timekeeping. "If you're very, very good, and work very, very hard, you can get to change a couple of words. Wow!"
"I'm supposed to be on the fisheries committee," says Farage. "The cod recovery scheme was introduced with no reference to the committee whatever, because total competence rests with the commission. There's no point in going. We send a staff member to observe instead. We haven't come here to do a Billy Graham bit and convert everybody. We haven't come to change Europe. We've come to find out how it works and what it costs, and take that message back to the British people."
They take the message round tirelessly, despite Mrs Titford's reservations. And there is no doubt it keeps being well received. What that means in electoral terms remains to be seen in May, and in the referendum on the euro that will follow. But clearly few people in Britain doubt that much of what goes on in European institutions is damnable. The question, which we all have to ask ourselves, is whether it is an acceptable price to pay for the greatness of the project.
The two Ukip men left doubt behind long ago. In the members' cafe I asked how they would vote if the European commission proposed a motion in favour of motherhood and apple pie.
"I'd abstain," said Farage, "on the grounds that it's none of Europe's business."
"I'd vote against," said Titford. "There'd probably be a hidden agenda."
Classification
Language: ENGLISH
Subject: EUROPEAN UNION (90%); LEGISLATIVE BODIES (90%); EDITORIALS & OPINIONS (89%); POLITICS (89%); ELECTIONS (78%); EUROPEAN UNION INSTITUTIONS (78%); LANGUAGE & LANGUAGES (78%); INTERNATIONAL ECONOMIC ORGANIZATIONS (73%)
Company: EUROPEAN PARLIAMENT (91%); EUROPEAN PARLIAMENT (91%); EUROPEAN UNION (55%); EUROPEAN UNION (55%)
Organization: EUROPEAN PARLIAMENT (91%); EUROPEAN PARLIAMENT (91%); EUROPEAN UNION (55%); EUROPEAN UNION (55%); EUROPEAN PARLIAMENT (91%); EUROPEAN PARLIAMENT (91%); EUROPEAN UNION (55%); EUROPEAN UNION (55%)
Person: NIGEL FARAGE (79%); TONY BLAIR (58%)
Geographic: UNITED KINGDOM (94%); EUROPEAN UNION MEMBER STATES (93%); EUROPE (90%)
Newly merged drugs company Glaxo SmithKline is slashing more than 1,000 manufacturing jobs across Britain, in an announcement which has provoked fury from unions and politicians.
The redundancies are the first big cuts since the group was created last year through a tie-up between Glaxo Wellcome and SmithKline Beecham.
The casualties will include 500 workers producing asthma inhalers at a plant in Speke, Merseyside, which is to be shut down over the next three years.
Another 400 jobs will be lost at a factory in Barnard Castle, Durham, which makes medicines such as migraine treatment Imigram and ulcer drug Zantac.
The Manufacturing, Science and Finance union said it was "particularly angry" at the Speke closure, which is in an "objective-one" area, designated in need of investment by the European Union.
An MSF spokesman said: "We're pissed off with the European competition authorities - they approved this merger without including a clause to protect these kinds of areas."
He said the union would be writing to EU president Romano Prodi, asking him to provide aid to compensate for this "lack of diligence".
Liverpool MP Maria Eagle said she was "saddened and appalled" by the news, and complained that until recently, Glaxo had refused her requests for a meeting.
Glaxo said the Speke closure was partly due to environmental guidelines prohibiting the use of CFCs in inhalers. A company spokesman said: "Clearly, we regret the need for loss of jobs and we're committed to providing extensive support for the employees and communities affected."
Glaxo intends to sell a chemicals site in Montrose, Scotland, which has 720 staff, although it still intends to buy products from the factory. A toothpaste plant in Plymouth is to close, with the loss of 170 jobs, and about 110 staff will be cut at a facility in Dungarvan, Ireland.
The MSF said the cuts reinforced its view that the merger could result in a reduction of between 2,000 and 5,000 from Glaxo's 25,000-strong workforce in Britain. Its spokesman said: "5,000 is probably a conservative estimate."
Glaxo insisted there would be no more big redundancy programmes in manufacturing. However, several hundred jobs are likely to go in research and development, and job losses in administration could number more than a thousand as Glaxo and SmithKline combine their vast head office complexes in a new site in Brentford, west London.
Despite the cuts, the Transport & General Workers Union praised Glaxo's record as an employer. Its national organiser Jim Mowatt said: "Any merger of this size means a blitz of P45s. The company are treating people well and there have been no surprises."
Mr Mowatt said he was relieved that Glaxo was still demonstrating a commitment to Britain: "The good news is that the company's staying British and staying here."
A quarter of Glaxo's workforce is in Britain, including 40% of all research and development staff and a fifth of its manufacturing employees.
Glaxo's French-born chief executive, Jean-Pierre Garnier, has shown little sentimentality about the company's home country. He has based himself in Philadelphia and he said last year that if the environment becomes "hostile" in Britain, he will not hesitate to move operations abroad.
Glaxo has 115 manufacturing sites in 40 countries. It expects the merger to yield annual savings of pounds 1.6bn by 2003, including pounds 570m of cuts from combining production facilities.
Reviews of research, sales and administration jobs are continuing.
Classification
Language: ENGLISH
Subject: MANUFACTURING FACILITIES (89%); LAYOFFS (89%); LABOR UNIONS (78%); EUROPEAN UNION (78%); FACTORY WORKERS (78%); LABOR FORCE (78%); BUSINESS FINANCIAL TROUBLE (78%); ASTHMA (76%); RESEARCH & DEVELOPMENT (73%); SEVERANCE PAY (72%); HEADACHES (70%); INTERNATIONAL ECONOMIC ORGANIZATIONS (70%)
Company: GLAXOSMITHKLINE PLC (92%); GLAXOSMITHKLINE PLC (92%); EUROPEAN UNION (56%); EUROPEAN UNION (56%)
Organization: EUROPEAN UNION (56%); EUROPEAN UNION (56%); EUROPEAN UNION (56%); EUROPEAN UNION (56%)
Ticker: GSK (NYSE) (92%); GSK (LSE) (92%); BIOC (EGX) (92%); GSK (NYSE) (92%); GSK (LSE) (92%); BIOC (EGX) (92%)
Industry: DRUG DELIVERY SYSTEMS (90%); PHARMACEUTICAL PREPARATION MFG (90%); PHARMACEUTICALS INDUSTRY (90%); SOAPS & DETERGENTS MFG (89%); MANUFACTURING FACILITIES (89%); AEROSOL DRUGS (78%); GASTROINTESTINAL AGENTS (78%); FACTORY WORKERS (78%); TOOTHPASTES & GELS (72%)
Person: ROMANO PRODI (51%)
Geographic: LIVERPOOL, ENGLAND (79%); LONDON, ENGLAND (78%); UNITED KINGDOM (92%); EUROPEAN UNION MEMBER STATES (88%); IRELAND (79%); SCOTLAND (79%); EUROPE (76%)
The government is planning to block or hold up foreign takeovers of British energy companies in retaliation for Europe's failure to open up gas and electricity markets.
Among the first casualties could be the pounds 10bn takeover of PowerGen by E.ON, the German multi-utility, which the government will refer to the European Union competition authorities for investigation.
Electricite de France, the state-owned group which already owns London Electricity and the supply business of South West Electricity, would face a similar block or even veto if it makes its long-expected bid for electricity supplier Seeboard.
Senior government officials said yesterday: "We are looking at ways of holding up European forays into the UK market. It may not be possible but, at the very least, we would force Brussels to intervene and impose an investigation on competition grounds, holding up the process."
This emerged as the European commission referred France to the European court of justice for failing to legally open up its gas market to com petition in line with a 1998 directive which requires 20% of that business to be liberalised.
Ministers' outrage at the ease with which big French and German players can buy into Britain's energy sector while there is no reciprocity in their own markets has risen since the failure of the March Stockholm summit to bring further deregulation.
France and Germany, which fell out at the Nice summit over EU institutional reform, combined to block progress on a new directive that would see Europe's market wholly competitive by 2005 at the latest.
Many leading UK groups, including Centrica, the dominant player, have become increasingly exasperated and frustrated at their exclusion from an EU market worth billions of pounds potentially.
Reflecting this, Peter Hain, trade and industry minister, said: "We want to see rapid liberalisation of the energy market in Europe and so do the vast majority of EU members . . .We are pressing the commission to bring forward this new directive."
Welcoming yesterday's "encouraging decisive action", he said: "We feel especially aggrieved when EdF is pursuing takeover negotiations with British companies, including Seeboard, but our own companies are blocked from reciprocal ventures."
Whitehall sources indicated that the new directive should be reactivated by the Belgians who take over the EU presidency on July 1 but no genuine movement is expected until after next year's French presidential election.
Even then, it is thought that the Germans, whose utilities enjoy substantial political support, are the most reluctant to see full-scale competition.
EdF, which paid pounds 2.4bn for its two UK electricity businesses, also owns two British power stations. It claims to have just 5% of the generation market and, with 3m domestic customers, to be the fifth largest in energy supply.
Sources refused to comment on any move for Seeboard which is owned by US group AEP which would want pounds 1.5bn for the business. But they made no secret of the French group's interest in acquiring Seeboard's 2m customers to give it critical mass in the UK.
Mr Hain yesterday approved pounds 25m in state aid to four British pits under a scheme to help the coal industry through short-term energy market problems and low world prices.
Classification
Language: ENGLISH
Subject: TAKEOVERS (90%); EUROPEAN UNION (90%); EUROPEAN UNION INSTITUTIONS (90%); DEREGULATION (90%); ENERGY & UTILITY DEREGULATION (89%); FRENCH PRESIDENTS (78%); INTERNATIONAL LAW (78%); INTERNATIONAL ECONOMIC ORGANIZATIONS (76%); VETO (76%); ELECTIONS (73%); CAMPAIGNS & ELECTIONS (73%); INTERNATIONAL COURTS & TRIBUNALS (71%); EUROPEAN UNION COURTS (71%); EU PRESIDENCY (71%); COMMERCE DEPARTMENTS (68%); PETITIONS (67%); HEADS OF GOVERNMENT ELECTIONS (60%)
Company: CENTRICA PLC (90%); ELECTRICITE DE FRANCE SA (EDF) (90%); E.ON SE (58%); CENTRICA PLC (90%); ELECTRICITE DE FRANCE SA (EDF) (90%); E.ON SE (58%); EUROPEAN UNION (57%); EUROPEAN UNION (57%); EUROPEAN COURT OF JUSTICE (56%); EUROPEAN COMMISSION (56%); EUROPEAN COMMISSION (56%); EUROPEAN COURT OF JUSTICE (56%)
Organization: EUROPEAN UNION (57%); EUROPEAN UNION (57%); EUROPEAN COURT OF JUSTICE (56%); EUROPEAN COMMISSION (56%); EUROPEAN COMMISSION (56%); EUROPEAN COURT OF JUSTICE (56%); EUROPEAN UNION (57%); EUROPEAN UNION (57%); EUROPEAN COURT OF JUSTICE (56%); EUROPEAN COMMISSION (56%); EUROPEAN COMMISSION (56%); EUROPEAN COURT OF JUSTICE (56%)
Ticker: CNA (LSE) (90%); EDF (PAR) (90%); EOAN (FRA) (58%); EOAN (BIT) (58%); CNA (LSE) (90%); EDF (PAR) (90%); EOAN (FRA) (58%); EOAN (BIT) (58%)
Industry: ELECTRIC POWER INDUSTRY (90%); NATURAL GAS & ELECTRIC UTILITIES (90%); ELECTRIC POWER PLANTS (90%); ELECTRICITY TRANSMISSION & DISTRIBUTION (90%); ELECTRICITY MARKETS (89%); ENERGY & UTILITY TRADE (89%); ENERGY & UTILITY DEREGULATION (89%); ENERGY & UTILITY REGULATION & POLICY (78%); FUEL MARKETS (78%); UTILITIES INDUSTRY (78%); OIL & GAS INDUSTRY (78%)
Geographic: LONDON, ENGLAND (79%); BRUSSELS, BELGIUM (78%); EUROPE (95%); FRANCE (94%); UNITED KINGDOM (94%); GERMANY (94%); EUROPEAN UNION MEMBER STATES (94%); BELGIUM (92%)
British, Dutch and German unions yesterday joined forces to demand mandatory, binding votes at company annual meetings on executive pay and public disclosure by institutional investors of their voting records.
The TUC and its Dutch and German equivalents, the FNV and DGB, representing 16m workers, issued a joint appeal to the European commission and their three national governments to enforce greater control over boardroom remuneration.
They also demanded a statutory role for employee representatives in determining executive pay packages.
The TUC, which has 1,000 trustees in pension schemes managing pounds 260bn, has been at the forefront of groups demanding rejection of the remuneration report at tomorrow's annual meeting of the HSBC banking group and has been urging fund managers to vote "no" rather than abstain. Brendan Barber, who takes over as general secretary today, said: "We are making the argument to fund managers about transparency and some have said they would be prepared to declare how they have voted. It's only a minority so far and many say it's got nothing to do with us."
He added: "There's clearly a shared concern in Europe that we are in danger of seeing American-style practices introduced here."
The joint appeal said: "Excessive executive pay is now an issue pressing at the very heart of European capitalism. Business legitimacy is being eroded as Europe's citizens are shocked by further examples of this new creed of greed."
The three union bodies said supervisory boards or remuneration committees should be able to limit stock options as well as the scale of overall pay packages.
In Holland, where listed companies have been forced from this year to publish annual remuneration reports, the FNV is considering legal action to end "rewards for failure" by forcing departing executives to return their pay-offs. In Germany the DGB is urging the authorities to enforce public disclosure of individual directors' pay packages.
Mr Barber said European unions were also holding talks with their counterparts in North America where big pension funds such as Calpers had been persuaded to adopt more ethical policies.
Classification
Language: ENGLISH
Subject: EXECUTIVE COMPENSATION (94%); WAGES & SALARIES (91%); LABOR UNIONS (90%); MANAGERS & SUPERVISORS (90%); TALKS & MEETINGS (89%); BOARDS OF DIRECTORS (78%); EUROPEAN UNION (77%); EUROPEAN UNION INSTITUTIONS (77%); ETHICS (70%); INTERNATIONAL ECONOMIC ORGANIZATIONS (70%)
Company: EUROPEAN COMMISSION (58%); EUROPEAN COMMISSION (58%)
Organization: EUROPEAN COMMISSION (58%); EUROPEAN COMMISSION (58%); EUROPEAN COMMISSION (58%); EUROPEAN COMMISSION (58%)
Industry: INVESTMENT MANAGEMENT (90%); MUTUAL FUNDS (78%); PENSION FUNDS (78%); (78%); BANKING & FINANCE (78%)
Geographic: EUROPEAN UNION MEMBER STATES (91%); NETHERLANDS (90%); GERMANY (90%); EUROPE (88%); UNITED STATES (79%); NORTH AMERICA (79%)
Early on Saturday morning, Borisovo second-hand car market on the outskirts of the small Russian enclave of Kaliningrad offers a wealth of bargains.
Some of the German-made cars here have new Russian number plates. Some still have German plates. All have ridiculously low price tags. A top-of-the-range 1998 BMW with tinted windows, leather seats and a CD sound system is going for pounds 4,000.
Some of Kaliningrad's second-hand car markets are the nexus of eastern Europe's lucrative underground trade in stolen cars. Borisovo epitomises the trade: dealers pay a small fee to put their cars on display, with legal and illegal wares indistinguishable.
Western intelligence agencies have estimated that 60% to 70% of cars stolen in nearby Germany end up in the Baltic republics or in Russia. Here in Kaliningrad, a town where a doctor earns less than pounds 40 a month, the streets brim with BMWs and Mercedes. In any other former Soviet town, Ladas would still be the order of the day.
The criminal opportunities created by Kaliningrad's location - its a unique position with regard to both Russia and the EU -are such that western law enforcement is now extremely worried for the future.
The EU's Copenhagen summit, opening tomorrow, is expected to rubber-stamp the entry of Poland and Lithuania to the union in 2004. The two countries entirely surround Kaliningrad's land borders.
The enclave is often used as a pitstop before stolen cars are moved on to Russia's mainland, only a trip across the Baltic republics away. Western intelligence agencies estimate there are 600,000 stolen cars on Moscow's streets. The city's police say that in a day they may recover as many as 120 cars which are on the Interpol list of missing vehicles.
"Cars can get new documents here, be sold on legitimately and then even stolen again," said Igor Rudnikov, the editor of a local newspaper, Noviye Kolyosa, and a member of the Kaliningrad parliament.
"There are many different methods. Some gangs will even steal your car, call you, and ask for a fraction of its original price to return it."
Kaliningrad's low salaries and poor state infrastructure contributed to the region's massive black economy, Mr Rudnikov said.
The car trade is highly competitive. Last month Alexander Klauser, a mobster involved in the car racket, was shot dead by rivals.
A former engineer in the Soviet army's tank division, Klauser had spent 33 of his 55 years in jail. He was infamous for his role in the underground economy, which uses sophisticated chains of thefts, document changes and bribery to ensure that expensive cars stolen in Germany are untraceable by the time they are sold in Russia.
Local police declined to comment on the trade. Techniques are now so sophisticated that regular checks by authorities against Interpol's stolen vehicle list are often fruitless.
The schemes are as numerous as they are devious. Some cars are stolen to order, and others sold on the open market by legitimate businesses.
Alexei, a taxi driver, bought his shiny red Mercedes for pounds 1,900."Cars are cheap here," he said. Kaliningrad benefits from a few tax exemptions and does rely heavily on the motor industry, but Alexei still smiles wryly and prefers not to answer when asked how such a poor population seems to drive only BMWs, Mercedes and Audis.
Organised crime is not limited to cars. A litre of vodka, two kilos of sugar and two cartons of cigarettes bought in Kaliningrad can make a pounds 6 profit in the richer streets of Warsaw. For many ordinary Kaliningraders, four such trips amount to the equivalent of their monthly wage.
Organised gangs also make much larger trips, often adding more dangerous com modities to their cargoes.
"Kaliningrad is probably the biggest hotspot for organised crime in all of Russia, bigger than Moscow," said a senior western intelligence officer.
"The problem is that in 2004 is will be sandwiched right in the middle of the European Union."
"It has many ports enabling large amounts of trafficking, be that drugs, guns, cars, or people. It does not have to be illegal goods trafficked illegally - it can be legal goods trafficked illegally, like fags or booze. These all generate profits for the gangs."
Additional reporting by Beate Steinhorst in Berlin
Classification
Language: ENGLISH
Subject: EUROPEAN UNION (90%); VEHICLE THEFT (89%); LAW ENFORCEMENT (88%); POLICE FORCES (75%); UNOFFICIAL ECONOMY (75%); INTELLIGENCE SERVICES (74%); ORGANIZED CRIME (74%); WAGES & SALARIES (70%); BRIBERY (66%); INTERNATIONAL RELATIONS (66%); JAIL SENTENCING (66%); EDITORIALS & OPINIONS (60%)
Company: MERCEDES & AUDIS (57%); MERCEDES & AUDIS (57%); EUROPEAN UNION (77%)
Organization: EUROPEAN UNION (77%); EUROPEAN UNION (77%)
Industry: (90%); AUTOMOTIVE TRADE (78%)
Geographic: MOSCOW, RUSSIAN FEDERATION (79%); RUSSIAN FEDERATION (94%); GERMANY (93%); BALTIC STATES (92%); EUROPEAN UNION MEMBER STATES (90%); LITHUANIA (79%); EUROPE (79%); POLAND (77%); EASTERN EUROPE (58%)