After foreign ministers were briefed on the plan by Jacques Delors, diplomats said it was unlikely to be considered in detail at this week's European summit. It would form one part of a general discussion, but there would be no action plan.
If the initiative collapses, it will be a serious disappointment for Mr Delors. The White Paper on growth, trade and employment, aimed at reducing the number of jobless and boosting Europe's exports, is his last important effort as Commission President before he leaves the Commission next year.
Diplomats said the plan would not be agreed at the summit. 'It won't be agreed, it can't be agreed,' said one, because with only three days to go, copies of the document - more than 200 pages - had still not been seen by most member states. Though the summit is likely to produce political conclusions on the subject, these will be based on a variety of suggestions, not just the Commission paper, according to diplomats. 'Others have ideas,' said one.
In particular, plans for the Commission to raise 7bn ecus ( pounds 5.25bn) a year for several years by issuing its own bonds continued to attract controversy. It seems unlikely that these will be agreed, with several member states criticising the idea. Their budgetary implications, the impact on world capital markets and interest rates and the targets for such funds are all uncertain, said officials.
The Commission's argument for raising the capital itself is based on the fact that it can borrow cheaply, as it has a triple-A credit rating. It would then lend the cash to member states and private companies. Banking sources in London and New York said the creditworthiness of the European Economic Community - the legal entity that would borrow the cash - depended on the fact that borrowings were backed by the European Union budget, and that if neccessary, the EU would bail out debtors.
The Commission has previously borrowed to finance earthquake recovery in Italy, and for balance of payments support in some member states. Borrowing on the scale considered, and for the purposes put forward in the White Paper, has always been carried out by the European Investment Bank, the EU's financial arm. But the EIB appears to have been kept in the dark over the Commission's strategy, with officials still awaiting details yesterday. The comments by Commission officials on Sunday indicate that the EIB would be marginalised in the Commission's new plan.
The move is part of a power battle between the Commission and finance ministers, who have repeatedly blocked spending initiatives and who jealously guard controls on raising cash. The Commission has often made clear its intention to break out of the confines imposed by these disciplines.
'They have been constantly seeking the right to lend and raise money,' said a European financial official. Finance ministers control the EIB and constitute its board of directors.
A Commission official said that neither Mr Delors nor Jean-Luc Dehaene, the Prime Minister of Belgium - which holds the EU presidency - had wanted finance ministers to get too close a look at the White Paper. There was still disagreement yesterday over whether they would be involved in discussions at the summit.
The British Treasury refused further comment on the subject yesterday and said it was still awaiting details of the plan. After the blast by the Chancellor, Kenneth Clarke, against the plan on Sunday night, London seems to want to keep its head down and prepare its ground for the summit. Officials in Brussels still believe John Major will agree to the proposals, but British officials discounted this view.Reuse content