The New York Times

Friday, December 10, 1999

Many Issues on the Agenda at European Union Conference

By WARREN HOGE

HELSINKI, Finland -- European Union leaders gathered here Thursday for a summit conference aimed at reforming and reshaping their organization, but the start of the two-day meeting was distracted by alarm over the Russian assault on Chechnya and a sudden outbreak of quarrels among member nations.

The conference is a significant one for the 15-nation bloc, with the agenda including the likely creation of a European defense force, agreement on expansion to as many as 28 members and clearing the path for Turkey to realize its deeply felt ambitions to join.

The Helsinki gathering was also once envisioned as a way of improving the European Union's relations with Russia by capitalizing on Finland's role as a bridge between Moscow and the West. But that objective has been overtaken by recent events.

Dominating the eve of the conference were anxiety over the continuing Russian offensive in Chechnya, anger by Britain at the refusal of France to accept British beef, and a dispute between Germany, France, Britain and Luxembourg over a plan to withhold a 20 percent tax on savings and investments.

The French foreign minister, Hubert Vedrine, said he would seek to move the Russian attack on Chechnya to the top of the agenda, saying, "We cannot discuss the other issues -- which are very important, but mainly in the long term -- without dealing with this crisis."

Paavo Lipponen, the prime minister of Finland, the current president of the European Union, said the conference should decide to apply financial as well as political pressure on Moscow.

The withholding tax proposals, championed by Germany and France, were aimed at clamping down on tax dodgers and tax havens within the 15-nation union. But Britain complained that the taxes would trigger an exodus of money and jobs from the huge London-based Eurobond industry. Luxembourg, where many nonresidents invest their savings tax-free, said it was firmly opposed.

The European Commission and Finland presented a compromise that would allow Britain to avoid imposing the tax as long as it notified home countries of their citizens' investments, but the British withheld official comment on the measure.

Prime Minister Tony Blair was not reluctant to comment on learning Wednesday night that France was continuing to refuse British beef in defiance of the European Commission's decision in August to lift its ban. It was imposed three years ago after the outbreak of mad cow disease in British herds. Blair telephoned his French counterpart, Lionel Jospin, to tell him he had delivered a "totally wrong" verdict.

It is uncertain whether the dispute can be moved onto the agenda.

On the issue of increasing membership in the union, Latvia, Lithuania, Slovakia, Bulgaria, Romania, and Malta are slated to join Estonia, Poland, the Czech Republic, Hungary and Slovenia and Cyprus, which are countries already accepted for membership. It will take at least three years for the first fully approved nations to become formal members, and more years than that for Turkey, even if it succeeds in adding its name to the list this weekend.

Turkey is a strategically placed country and a member of NATO, but it will have to improve its human rights record and accept political and economic reforms if it is to join the rich Western club. A vote on Turkey's aspirations must be unanimous, and Greece, the sole opponent, has signaled willingness to reconsider.

The Greek prime minister, Costas Simitis, was an early arrival in Helsinki, seeking the agreement of Finnish officials to link acceptance of Turkey with an agreement by the Turks to solve their territorial disputes with Greece through the International Court of Justice.

For Finland, this meeting completes its first tenure as European Union president -- the final step in its march to acceptance by the nations at the continent's core after decades of Cold War marginalization at Europe's fringe.

Finland joined the European Union only five years ago, after the collapse of the Soviet Union in 1991 liberated it from the diplomatic tightrope it was obliged to walk in its dealings with its northern neighbor and former ruler.

Martti Ahtisaari, the Finnish president, used his country's linkage to Russia to become a key mediator in the dispute between Russia and the West over the bombing of Yugoslavia. Lipponen tried to carry that mission forward with a project called the Northern Dimension, but it has died under the weight of the Russian offensive in Chechnya.