Freedom Party minister warns Austria could stop EU cash unless sanctions end

Austria's dispute with Europe escalated yesterday as one of its ministers threatened to delay paying its EU contributions and disrupt business in protest at political sanctions against Vienna.

Karl-Heinz Grasser, the most senior member of the far-right Freedom Party in the Austrian coalition government, said that unless the 14 member states end their policy of ostracising his country, retaliation may ensue.

"Austria must show the EU more strongly that we cannot accept the dictates of the 14," he said in an interview with the Kurier newspaper, published on Sunday. "I do not want to push it so far that we would be condemned for violating the [EU] treaties. But there can be delays in payment of our contributions. Being unpunctual - we can do that."

The minister also told the newspaper that threats, made by his former party leader, Jörg Haider, to veto EU decisions which require unanimity, were "appropriate".

However, the threat seemed to cause more turbulence in Vienna than in Brussels, where the European Commission pointed out that late payment would expose Austria to interest charges of up to 5.85 per cent.

Austria is one of the four biggest net contributors to the EU, paying around 800 million euros net into European coffers per annum. Payments are made monthly and the next one is due on 2 May.

Technically, Vienna could throw EU decision-making into disarray, but a government spokesman distanced himself from the Finance Minister's stance saying: "Austria is, and will continue to be, a loyal European Union partner and will act according to the ground rules."

Mr Grasser's aggressivetactics were seen as particularly counter-productive coming at a time when several countries, including Finland, appear unhappy with the policy of isolating Austria.

The decision to suspend bilateral political contacts with Vienna was taken by the 14 member states over the admission of the Freedom Party to the coalition. Mr Haider, who recently stepped down as Freedom Party leader, is infamous for his praise of Naziemployment policies and support for former members of the SS.

A spokeswoman for the European Commission said that"if Austria were to delay its budget, it's the Austrian taxpayer who would end up paying the bill for that delayed payment". Ultimately Austria could be taken to the European Court if it refused to pay.