EU counters Austrian threat

The row followed Joerg Haider's party's inclusion in government

The European Commission has said that Austria could face high interest charges if it carries out its threat to delay payments to the European Union's budget.

Austria threatened to disrupt EU business in the latest escalation of its row with the other 14 members of the organisation.

Austrian Finance Minister Karl-Heinz Grasser told Austria's Kurier daily that Vienna might withhold its payments to the EU.

But an EU spokeswoman said Austrian tax payers would bear the cost.

Mr Grasser also said Austria could use its veto to block decisions which required the consent of all members.

Unwise?

Asked if he was wise to make such a threat, he replied: "Absolutely. The veto threat is appropriate. The EU needs Austria. That is why the Union should move away from prejudice and intolerance."

European Parliament members protest against Mr Haider

He added: "The sanctions should be ended and we should return to normal. Everything else is damaging to Europe."

The EU spokeswoman said that although the threat was unprecedented, the organisation had always won late payment cases at the European Court.

The other 14 EU countries froze their official contacts with Austria two months ago after the far-right Freedom Party was brought into a coalition government in Vienna.

Mr Grasser is the most powerful Freedom Party member in the Austrian coalition and his comments represent the strongest threat of retaliation against diplomatic sanctions, which the Austrian Government sees as unfair and illegal.

Austria could throw EU business into confusion if it used its veto to block decisions due to be made this year on faster decision-making procedures and on preparations for the entry of eastern European states such as Poland and Hungary.

Call to ease sanctions

Mr Grasser's remarks are also likely to put the Austrian coalition under strain.

Chancellor Wolfgang Schuessel, leader of the conservative People's Party, has said he wants to use persuasion to get the sanctions dropped, and would not deliberately disrupt EU business.

Most EU states say the sanctions should remain in place until Austria's partners are satisfied about the coalition's democratic behaviour.

However, Finland has broken ranks with other member states and called for the measures to be eased before July, when France takes over the rotating presidency of the EU.