Prodi Pushes for Firmer Brussels Hand on Eu Purse

The European commission president, Romano Prodi, appealed for less national intervention in the EU's financial decision-making yesterday, while acknowledging that the Swedish referendum's rejection of the euro illustrated a problem of popular hostility to the union.

He urged member states to help streamline decision-making on tax fraud and evasion and in deciding the union's budget by reducing their use of the national veto.

He also proposed that eurozone finance ministers should be able to take policy decisions for themselves without involving the non-members, Britain, Sweden and Denmark.

Some see this as a slippery slope to a formal"two-speed Europe" with the three non-members of the euro in the slow lane.

Although Valéry Giscard d'Estaing's European convention has reached broad agreement on the new constitution, governments do not begin their tough negotiations on the final treaty until next month.

Britain, Ireland and some others have rejected majority voting on anything to do with tax, and the political mood after the Swedish referendum is certain to make members adopt a tougher line.

EU governments now face the grim prospect of engaging in lengthy haggling over the treaty, only to have it held hostage by referendums in several member states, including the 10 newcomers.

Mr Prodi said he opposed ending the practice of having a commissioner from every country, though critics say that with 25 members from next May this will be unworkable.

"The Swedish referendum has demonstrated how difficult the relation is between the institutions and member states," he said.

"If a country has no commissioner, then the distance between the union and that country will increase."

Small countries back the commission on this point. But Gary Titley, leader of Britain's Labour MEPs, accused Mr Prodi of opening a "Pandora's box".

"If we go down a road where everything is up for trading, then we are in danger of unravelling the most delicately-crafted compromises," he said.

Mr Prodi insisted that further reforms were necessary.

"Unanimity still applies to an overly large number of decisions," he said. "I have heard many argue that we are not realistic when we push for more majority voting. But on certain well-targeted, detailed issues progress has to be achieved, unless we want people and businesses to suffer because of our inability to take decisions.

"These are real issues affecting the real world, where the cost of a failure to push ahead with European integration will be a real problem for many, if not all, of us."

Feelings about the division of power between Brussels and national capitals were not helped by the remarks of a French commissioner, Michel Barnier, who described a larger commission as a "veritable government".

Britain's white paper on the EU constitution earlier this month insisted that national sovereignty must remain in decisions on the economy, defence and foreign policy.

A government spokesman said tax fraud and evasion could not be separated from issues of rates and collection.