Tyrolese choke on truck trade for Europe

In her second report, Sarah Helm finds Austrians paying a high price for monetary union

Steinach -High above the Austrian alps, there are lorries in the sky. Alpfen Appel, a 40-tonner, is passing through a mountain cloud. A solid line of trucks snakes over the Tyrolese village of Steinach every day, spanning a dramatic bridge, on the edge of the Brenner Pass.

"There are more and more each year," said Hubert Rauch, the mayor, who points to where trees are dying of pollution. He realises the traffic will be worse when the euro comes. As trade increased, spurred by the single market and open frontiers, the volume of goods passing through the Brenner Pass reached 30 million tons. When currency barriers fall, traffic is expected to double by 2020.

Not only is this shattering the peace and ecology, it is also shattering Austrian support for the euro and the EU. Its new Austrian "citizens" see that the leaders pushing through the single currency have no intention of paying for improved transit networks or enforcing environmental protection.

Recently Neil Kinnock, the EU transport commissioner, saw the Brenner problem, from a helicopter. But his proposals for a pounds 3.5bn rail tunnel have been shelved, because no country wants to pay, particularly when member-states are cutting back to meet the Maastricht criteria for the single currency.

At Steinach, all the contradictions of Europe's drive for political and monetary union are writ large. Increased trade has benefited the Austrian Tyrol, which depends heavily on links with Bavaria and northern Italy. There is a de facto common currency, as traders take lire, shillings or marks. The Austrian and Italian Tyrolese regions recently banded together as a "European region".

Innsbruck banks will lose 2,000 jobs when exchange-rate transactions end but they support the euro overall. Mr Rauch admits he went shopping in Italy when the lira was cheap but he also welcomed news that Italy is rejoining the exchange rate mechanism. A stronger lira may stop his trips but it should also stop German tourists by-passing Austrian resorts like his for Italian ones.

The merits of a barrier-free Europe, are, however, countered by the attractions of protectionism in Austria. When 66 per cent of people voted "yes" to Europe in the 1994 referendum, many said they did so because they felt they had no choice but to join after years of living shoulder- to-shoulder with the former Soviet bloc. Now they doubt the benefits as Vienna imposes "Euro taxes" to meet the Maastricht criteria.

In the Tyrol, the traffic problem makes people reappraise the value of economic and physical barriers. Switzerlandbarred lorries over 28 tons, which means the juggernauts are funnelled through Austria. When Austria decided to raise the toll on lorries through the Brenner Pass, the European Commission launched proceedings against it for breaching single-market rules. "People are making the connection between the traffic problem and Europe," said Fritz Staudigl, an official in Innsbruck. "They see goods being carried for miles ...And they are asking: `What's the point? Why should we suffer so Swedes can have Italian grapes in winter?' "

The Tyrolese also question European agricultural policies. They want to know why German over-production of meat and milk should be forcing such large Bavarian exports to Italy. There is also anxiety about illegal immigration. Three hundred customs officers from the Brenner area have lost their jobs since EU membership. Soon Austria is to join the Schengen agreement, which means ending all passport checks at its EU frontiers. At the Brenner, according to rumours in Steinach, 20 illegal immigrants are stopped a day.

Austria's fears about the euro are most commonly voiced in the simplest ways. People are scared of losing their strong currency. "People ...remember how they lost their savings during the post-war hyper-inflations," said Mr Staudigl. "Older people still talk of how they sold a house and found they could only buy a loaf of bread."

Tomorrow: Northern Italy