EUROPEAN UNION: Banking Secrecy Out for Non-Residents

By Mario de Queiroz Reprint | | Print |

Mario de Queiroz

SANTA MARIA DA FEIRA, Portugal, Jun 20 2000 (IPS) - The 15 European Union (EU) heads of state agreed Tuesday in this Portuguese city to abolish banking secrecy for accounts belonging to non-residents as part of a package of measures to fight money laundering.

At the two-day European summit,leaders made decisions that suggest radical changes in the integration framework the EU has followed to date, adopting a “multi-speed” integration model to give member countries the option of holding back on certain measures.

The EU leaders agreed that by the end of 2002 banking secrecy will end within the bloc and obstacles to collecting taxes on savings accounts of non-residents will be removed. Both measures are meant to combat the laundering of money originating from drug- trafficking and other crimes.

In Santa Maria da Feira, 300 km north of Lisbon, the government leaders of Austria, Belgium, Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Sweden approved the negotiating agenda for an overhaul of the Union Treaty – the focus of this week’s summit.

The heads of state also confirmed the admission of Greece into the area of the euro, the EU currency.

But some points on the summit’s agenda were far from the routine. The EU leaders, for example, expressed their concern for political problems in Austria and the fiscal standardisation of the bloc.

The accord on tax collection and the end of banking secrecy, however, proved to be the most difficult.

Most EU countries, whose banking systems are tightly controlled, interpret the existence of tax havens like Luxembourg and ardent defenders of banking secrecy like Austria as important threats.

The first to give in on the issue at the meeting of Finance ministers was Luxembourg. Austria waited until the last minute before agreeing to the standards set by the 14 other members, and even delayed the final joint declaration by nearly two hours.

Tensions arising from the diplomatic isolation of Austria following the rise to power of Joerg Haider’s right-wing Freedom Party apparently made the country’s delegates an undesirable faction at the summit in Feira.

Vienna is fighting the sanctions imposed by the other 14 EU nations that reduce political and diplomatic relations to a bare minimum, arguing that the Freedom Party in the government does not preclude the principles of democracy and tolerance that supposedly guide the EU.

Austrian demonstrators, meanwhile, set up camp along the roads leading into Feira, waving signs declaring “We want justice for Austria” and handing out chocolates made in the country’s Alps.

In the political sphere of the summit, the concessions Austria made in terms of tax standardisation bore immediate fruit for the nation’s government.

Portuguese Foreign Minister Jaime Gama, coordinator of the EU’s joint diplomacy, declared that “with this constructive posture, Austria has demonstrated a change, which could accelerate a solution to the problem” of sanctions.

The EU summit agenda also included the relaunching of the French- German axis, the true engine driving the EU economy, in an effort to replace the United States as the world’s economic superpower within 10 years.

The expansion of the EU to southern, central and eastern Europe (the Czech Republic, Cyprus, Estonia, Hungary, Poland and Slovenia in the first group and Bulgaria, Latvia, Lithuania, Malta, Romania and Slovakia in the second) is the pretext for the institutional revamping of the bloc.

According to a report from the EU president’s office, once the bloc admits the new members, the number of European Commission members – the EU’s maximum executive body – should remain the same. Portugal proposes limiting the number of Commission delegates, and extending the issues that are decided by a qualified majority.

The European leaders also accepted the Portuguese presidency’s initiative to reinforce cooperation under a multi-speed framework that would allow a group of countries to advance certain integration policies, even if others do not want or cannot take part in the policies.

The outgoing Portuguese president sent a positive signal to the 12 nations awaiting EU membership, though the summit in Santa Maria da Feira did not establish a date, leaving it to December, when France will preside over the EU conference.

As far as foreign policy and EU security, the summit created a joint working group with the North Atlantic Treaty Organisation (NATO) to study ways to transfer the pact to the EU and to assess the ongoing relations between the two organisations.

The discussions involve the official embryonic beginnings of a common European army, while attempting to prevent offence to the United States, the most powerful member of NATO.