Row erupts over EC plan to borrow pounds 100bn: Summit likely to be overshadowed as Clarke hits at Delors move to strip powers from finance ministers

Click to follow
The Independent Online
A FURIOUS row between Britain and the European Commission erupted yesterday, as Kenneth Clarke attacked new plans to borrow more than pounds 100bn and strip powers from national finance ministers. 'It is no way to run any sensible organisation at all,' the Chancellor of the Exchequer said.

The argument comes only days before the European summit in Brussels, which now looks certain to be overshadowed by a row between the Commission and the member states, including Britain and Germany, which rejected the ideas out of hand yesterday.

The initiative, part of an ambitious plan from Jacques Delors, President of the European Commission, has still not been put formally before finance ministers, a move that the Commission has carefully avoided, British officials say. The plan seems to have been stripped of earlier controversial elements concerning work-sharing and social costs.

But Henning Christophersen, the European commissioner for economics, yesterday outlined the new ideas, drawing strong criticism from Mr Clarke. He characterised the scheme as 'a question of how many billions of ecus get put in a press release, or how many jobs you aspire to create in your latest speech'. He said of Mr Christophersen that 'it's impossible to tie him down' on details.

The plan also conflicts with broad economic guidlines which finance ministers discussed today, Mr Clarke said. 'The general economic guidelines contain no mention of investment in capital infrastructure for the purpose of tackling the recession.' Instead they emphasise budgetary control, he said.

He questioned whether the plan should be discussed at all when heads of state meet next week in Brussels. 'I personally can't conceive that anyone is seriously proposing that we take a decision (with only three days of preparation).'

The initiative involves spending 124bn ecus over six years on infrastructure, in the areas of energy, telecommunications, and transport. This involves borrowing 7bn ecus a year more than the European Union already raises on capital markets, according to Mr Christophersen, though no document with numbers has been distributed.

The money would be raised by the Commission itself, Mr Christophersen said, rather than by the European Investment Bank, which is the EU's financial arm. The move would thus remove power over some lending and borrowing operations from finance ministers, who control the EIB as its board of directors, and have been cautious about expanding its role. It would be an important boost to the Commission.

Mr Clarke was fighting side by side with his German colleague, Theo Waigel. 'We have objections of principle against such a credit programme,' the German Finance Minister said. There was already plenty of cash for such schemes, he said, including a loan facility agreed at the Edinburgh summit last year. 'That is enough for now,' Mr Waigel said. The Dutch Finance Minister also raised objections.

Mr Delors has long been known to be angry about the approach taken by finance ministers towards initiatives of his that require spending. This move would in effect cut them out of future initiatives, and lay the groundwork for the EU to operate its own fiscal policy. The tactic seems to be to appeal to Chancellor Helmut Kohl above the head of his finance minister, and assume that Britain will then be isolated in opposition.

This is may cause an internal split within the EU institutions as well, as it seems likely to draw an outraged response from the EIB. Mr Christophersen said that they faced problems of 'capacity' because they are heading towards the lending limits imposed by their capital base.