Eu, Germany Fail To Resolve Vw Aid Row

European Competition Commissioner Karel Van Miert and German economics minister Guenter Rexrodt met in Brussels but could agree only to continue their efforts to reach a solution.

I don't think you can say we were able to overcome the problems today, Van Miert told a news conference, during which both men were obviously wide apart on the issue of aid for Volkswagen to develop plants in the eastern state of Saxony.

Reflecting the controversial nature of the case, Rexrodt said there was a strong possibility that Bonn would decide to challenge the Commission in the European Court of Justice.

Van Miert, who says Saxony has paid illegal aid to Volkswagen, also reiterated his threat to take the case to the Luxembourg-based court.

 

Today we can't say we have made enough progress (not to proceed with court action) an illegal situation still exists in our view, Van Miert said. He added that the Commission would discuss the situation at its first meeting after the summer break on September 4.

Meanwhile Bonn and Brussels would continue their talks.

We have agreed that in the next few days we shall be trying to come to a pragmatic settlement for the VW case..., Rexrodt said. told the same news conference.

The row over public aid to VW erupted last month when Saxony state premier Kurt Biedenkopf overrode Commission objections to the aid package size and paid out extra funds.

Biedenkopf, a Christian Democrat (CDU) ally of Chancellor Helmut Kohl, warned that the state stood to lose thousands of jobs in the towns of Mosel and Chemnitz if it did not pay.

VW had suspended plans to develop plants in the two towns after the EU executive rejected 241 million marks ($161.7 million) of a total promised aid package of some 780 million.

Van Miert reacted furiously to Saxony's defiant move, saying that the decision to pay 91 million marks in unauthorised support to VW could touch off an EU subsidy war.

If there were no discipline it would undermine our whole aid policy which would lead to total anarchy, he told Friday's press conference.

Van Miert has previously threatened to block other aid to Europe's largest carmaker or to exclude it from public tenders.