Protest wave moves but fuel price anger remains

By CATHERINE FIELD

PARIS - The first wave of Europe's oil shock appeared to be receding this weekend after a turbulent fortnight that saw two of the world's largest economies crippled by truckers angered at the spiralling cost of fuel.

Petrol supplies in France were returning to normal, while in Britain tanker trucks fanned out to replenish filling stations. In Belgium, truckers lifted a ring of steel from around the heart of Brussels and in Germany, blockades remained limited despite angry noises from the freight industry.

But tensions remained high in the Czech Republic, Denmark, Ireland, Italy, the Netherlands, Norway, Poland and Spain, where truckers have threatened to jam roads, stop access to oil refineries or stage go-slow convoy protests to voice their anger at high fuel taxes.

The action began two weeks ago after French trawlermen blockaded their country's Channel ports. They, and the French truckers and farmers who emulated them, wrung $880 million in fuel tax cuts and social charges from the Paris Government. Within a couple of days of these concessions, the protest movement caught fire in Britain and in France's neighbours. Using mobile phones, fax machines and the internet to identify their targets and rotate shifts on the picket lines, the demonstrators caught the British Government on the hop. Stunned by the emergence of this unlikely army of ill-shaven, tubby men, the authorities have made a show of firmness, leavened with a promise or hint of concessions, that appears to have won them a breathing space.

In Britain, Prime Minister Tony Blair stared down the protesters, accusing them of mounting illegal blockades and inflicting human suffering. In Germany, Chancellor Gerhard Schroeder flatly refused to scrap a detested green tax on fuel but suggested that corrective measures could be found within the social system to help the worst affected hauliers. Belgian Premier Guy Verhofstadt declared the public's patience is running out, as he put forward a compromise, accepted by the protesters that involved cuts in road taxes, insurance levies and social charges amounting to $165 million.

The truckers' protests have put the spotlight on fuel levies that are the highest in the world, triggering resentment among many drivers that they have become milch cows for the taxman.

According to the Paris-based International Energy Agency, taxes for regular unleaded petrol in Britain, the highest in the European Union, amounted to 76.8 per cent of the price of $US1.13 ($2.57) a litre. In contrast, the percentage in New Zealand is 45.5 per cent, and in the United States it is 24.1 per cent.

The tax burden for diesel for non-commercial use is respectively 75.1 per cent in Britain, 11.7 per cent in New Zealand and 30.8 per cent in America.

But the political room to cut Europe's taxes is very limited, because they are highest in northern EU countries where powerful Greens parties demand high fossil-fuel levies to encourage the use of clean energy.

Then there is the economic situation, which suddenly appears delicate.

The president of the European Central Bank (ECB), Wim Duisenberg, warned against any fuel tax cuts that weakened budget discipline or wage concessions that drove up inflation.The ECB would be obliged to drive up interest rates, which have already risen six times in the past 10 months to combat inflation, he said.

The only other alternatives for the EU are to harmonise fuel taxes across its 15 members - about as feasible as nailing jelly to a tree, given the continued opposition to this in national capitals - or impose a windfall profits tax on the oil giants.

Against this background, the mood in Europe is one of helplessness mixed with hope that oil costs will quickly ease, averting a second bout of turmoil. The eyes are being turned towards the Organisation of Petroleum Exporting Countries, in the hope it will boost production; to the United States, in the hope that it will add volume to the market by releasing some of its strategic petroleum reserves; and finally to the barometer, in the hope that the Northern Hemisphere has a warm winter that will depress demand.