BBC News Online: World: Europe

Austrian minister dismisses threat

Finance Minister Karl-Heinz Grasser warned on Monday that Vienna might withhold payments and veto important EU decisions that require the consent of all member states.

However his colleague, Foreign Minister Benita Ferrero-Waldner - on a visit to New York - said Austria would continue to pay its contributions to the EU. "We should not exchange one injustice for another," she said.

Mr Grasser, the most powerful member of the Freedom Party in the coalition, told Austrian television that his comments had been intended "to show in an intelligent way what are the limits of the EU".

Speaking on the fringe of international finance meetings in Washington, he added: "It would not be intelligent to violate the EU treaty. We will not do it."

Foreign minister Ferrero-Waldner, a member of the People's Party, said she thought Mr Grasser had merely reflected anger among Austrians at the freezing of bilateral political relations.

"Many believe it can't go on this way forever," she said at a news conference at Austria's UN mission.

Asked whether a minister should not rise above Mr Grasser's comments, she said: "That's what I'm trying to do."

Ms Ferrero-Waldner added that Austrian officials would continue to battle for their rights in Europe.

In the face of Mr Grasser's warning on Monday, the European Commission said that Austria could face high interest charges if it carried out its threat to delay payments to the EU's budget.

The EU said that it had always won late payment cases at the European Court.