TIME EUROPE
October 2, 2000, Vol. 156 No. 14
To the Last Drop
As blockades threaten to clog still more of the Continent's arteries, European politicians are starting to feel the pain
By ROMESH RATNESAR
The talk was tough. "No specific category of people should be allowed to hold the rest to ransom," declared Loyola de Palacio, the European Commision's top transportation official, in a speech before the European Parliament last week. But hardly anyone was listening. The revolt against fuel taxes continued to spread across the Continent like an outbreak of influenza. In Spain, 100,000 farmers snarled traffic by driving 15,000 tractors through 34 cities, while fisherman blocked cargo ships from entering Barcelona and other Mediterranean ports. In Germany, 300 truckers formed their vehicles into a glacial convoy on an autobahn at Mainz, and 32 more trucks clogged the streets of Frankfurt. Even in countries where the worst seemed to be over, the slightest hint that pickets might have returned to the barricades caused widespread panic. Offhand remarks about fresh fuel shortages made by two D.J.s in South Wales sent motorists scurrying back into queues to top up their tanks. Within hours, stations that had just begun to replenish their supplies were empty again.
If Europe's fuel crisis — now close to a month old — has demonstrated anything, it is that in the age of round-the-clock news, cell phones and the Internet, nothing travels faster than discontent. The rumors in Wales were spread by e-mail; German drivers monitored prices at individual stations thoughout the country on the Web at www.clever-tanken.de. The blitzkrieg of antitax protests left European governments shellshocked. British Prime Minister Tony Blair, who wrongly gambled that voters would support his hard line against pickets, saw his Labour Party fall behind the opposition Conservatives in polls for the first time in eight years.
Governments who felt the full brunt of the crisis last week struggled to avoid a similar fate. German Chancellor Gerard Schröder appeared to take a tough stance when he ruled out the possibility of a cut in the country's environment tax, which is raising gasoline duties by 2.6¢ a liter annually until 2003. But Schröder did make concessions in the form of a tax credit for regular commuters. Spain's center-right government also refused to take steps to reduce the cost of fuel, which has soared by 55% for farmers in the last year. But there, too, officials professed to feel protesters' pain: in a meeting with union leaders that ended in the early hours of Thursday, the government offered farmers and fishermen income tax cuts and compensation for value-added taxes. At week's end, though, the tractors were still in the streets. "If the government doesn't give in," said Miguel López, a spokesman for the Farmers and Cattle Breeders Association, "the whole country will be blockaded."
While Europe's national governments have done little to quell the disgruntlement, attempts to fashion a coordinated E.U. approach have been even more futile. At an emergency meeting of European transport ministers in Luxembourg last week, nine countries voted down a French proposal that the ministers call for harmonization of fuel taxes. The most the group could agree on was the creation of an early warning system to alert the public to road blockades. Despite urgings from De Palacio that the E.U. begin to deal with energy policy "on a community footing," few governments believe the situation would be improved if Brussels were in charge.
Although some leaders insist on holding the line on fuel taxes, the absence of a coordinated policy seems certain to accelerate the race to the bottom. Last week the French government, which bowed to picketing fishermen last month by promising a raft of transportation tax cuts, pledged to increase the size of the promised fuel tax cut and to phase it in faster — a move that will cost $395 million in lost revenue. In Italy, the government headed off the threat of rebellion by offering truckers a 5¢-a-liter diesel tax rebate. Avoiding the crippling impact of blockades took priority over hewing to the E.U. line against tax concessions. "The Italian situation is very different," a government spokesman insisted. "You need a little flexibility."
As the crisis spreads, other European governments may soon be looking for some wiggle room of their own. In March, Portuguese truckers refrained from organizing mass strikes when the government hiked fuel prices by 12%. But they are unlikely to sit still next time. "We are afraid there will be a big price increase after January," said Carlos Cazenave, head of the commercial hauliers' association. "I can't say what measures we will take. But it could mean strikes and blockades."
German truckers vowed to expand their slowdowns this week, with convoys set to jam traffic on autobahns surrounding Berlin. It might work. Transport Minister Reinhard Klimmt signaled he was receptive to one of the main trucker demands: that the government press other E.U. countries to eliminate subsidies on insurance fees and haulage taxes that leave German drivers at a disadvantage.
Some frustrated politicians have tried to use the crisis to go on a populist offensive against the oil industry. Klimmt blamed the crisis on "the greed of the oil companies," while Schröder bitterly charged German companies with price fixing after Shell, amid last week's protests, raised the cost of a liter of gasoline by 1.3¢. And yet E.U. governments know they have little chance of bringing down the cost of motor fuels without OPEC's cooperation to boost production. The Continent's transport ministers rejected a French proposal to call for an early meeting of E.U., U.S. and OPEC to discuss high oil prices — but they were not above issuing a plea to the cartel to lower the cost of crude. They recommended that the E.U. "ask OPEC to introduce measures to supply the market in a manner better suited to consumer demand."
The Clinton administration's decision to dip into the U.S. petroleum reserves may nudge prices down in the short term, but even that won't stem the mounting public outrage over fuel costs. And as long as antitax protests continue to inflict political damage on Europe's politicians, discussions about more sustainable energy policies will remain on the shelf. Heidi Hautala, co-leader of the Greens in the European Parliament, pointed out last week that reducing fuel levies now will only compound Europe's looming energy crunch. "It would be like reducing the price of heroin on the drugs market," she said. "This is not a mistake we should make now." But the howls of discontent drown out such warnings. Among politicians as much as voters these days, forward thinking — like fuel itself — is in short supply.
Reported by Greg Burke/Rome, Martha de la Cal/Lisbon, David Cemlyn-Jones/Madrid, Gareth Harding/Brussels, J.F.O. McAllister/London and Steve Zwick/Cologne
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October 2, 2000
EUROPE
To the Last Drop
As blockades threaten to clog still more of the Continent's arteries, European politicians are starting to feel the pain
A Rationale for Murder
Police arrest 36 people suspected of links to the Basque separatist movement ETA, but triumph is overshadowed by more violence
Terrorism
License to kill
MIDDLE EAST
Shalom to All That Gravity
TIME's Jerusalem bureau chief bids farewell to Israel, a land burdened by its history and lightened by its humanity
New Blood to Shed
A rising generation of young Palestinians rallies to fan the flames of opposition to Israeli occupation
OLYMPICS
Europe's Grabbing the Gold
No amount of Yankee brashness and Aussie hometown hype could steal the thunder of the Continent's swimming sensations
Olympic Innovations
When still waters run fast
FINANCE
Doing Well By Doing Good
After a tumultuous first decade, the European Bank for Reconstruction and Development searches for new approaches to fulfill its conflicting mandates
Paying the Price
For most of the '90s Czech governments delayed the necessary restructuring of the country's banking system. Now the bill has come due
A League of Their Own
German women — and some financial firms — have learned that investing is not necessarily man's work
THE ARTS
The Girls' Night Out
The dominant theme at Toronto's festival was women's problems and glories — and frequent superiority to men
DEPARTMENTS
On Your Own Time
Sophia Antipolis, France
World Watch
WHAT DO YOU THINK?
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