* Vienna drops blockade of EU negotiations with other
* Finance Minister Fekter backs approach
* Unity emerges ahead of initial EU talks next week
(Recasts with government statement, Fekter comment)
By Michael Shields and Georgina Prodhan
VIENNA, April 26 Austria dropped its blockade of
European Union efforts to negotiate accords cracking down on
cross-border tax cheats, unveiling on Friday proposals that
would allow scrutiny of foreigners' accounts while keeping bank
secrecy for Austrians.
After weeks of political wrangling, leaders of the two
coalition parties laid out joint priorities for talks with EU
partners starting next week that could pave the way for deals
with countries like Switzerland and the United States.
Finance Minister Maria Fekter, who had taken the hardest
line in defence of Austrian banking secrecy, said she supported
the joint position and would fight for it in Brussels.
Austria is the only one of the EU's 27 states yet to agree
to routinely share data on bank accounts held by foreigners
after Luxembourg bowed to pressure this month to end decades of
banking secrecy that helped make it a major financial centre.
Austrian Chancellor Werner Faymann's centre-left Social
Democrats and their centre-right People's Party partners
reiterated in a government statement that banking secrecy had to
remain intact for people subject to taxation in Austria.
But eager to avoid any impression that foreign tax dodgers
could abuse the country's bank secrecy, they said they were now
ready to support EU negotiations with other countries as long as
three main points got special attention.
Austria wants negotiations to require an exchange of bank
account data at least in line with Organisation for Economic
Cooperation and Development (OECD) standards, reveal owners of
trusts and mailbox companies, and take into account bilateral
tax deals Vienna has struck with Switzerland and Liechtenstein.
Those accords preserve bank secrecy but are set to bring in
more than 1 billion euros from mid-2013 from accounts Austrians
have quietly stashed across the border.
Domestic political friction had threatened to scupper a
joint position leading up to next week's expert-level meetings.
Tensions burst into the open when a finance ministry draft
proposal - crafted as a joint letter to Brussels from Faymann
and Fekter, but which further detailed Fekter's hardline
position - was leaked to the Austria Press Agency.
A furious Faymann immediately said he would not sign such a
letter and accused Fekter of "bad style" for negotiating in
public. He said the flap had made Austria a "laughing stock".
Friday's breakthrough does not mean a deal is in the bag.
Thomas Wieser, an Austrian bureaucrat who heads the staff
group that coordinates meetings of euro zone finance ministers,
told the Kurier paper that creating a public register of
trusts was not part of the EU negotiating mandate.
Austria also cannot hope to have bilateral tax accords run
alongside similar EU treaties, he added.
Still, Austria's new stance could help foster a more
positive atmosphere for global talks by cash-strapped
governments keen to track down and tax citizens' offshore funds.
OECD guidelines now call for sharing savings information
with other countries only on demand, but this may change given
growing political momentum for tougher action.
"The political support for automatic exchange of information
on investment income has never been greater," OECD
Secretary-General Angel Gurria said this month, citing
Luxembourg's switch and a U.S. campaign to track down its
citizens' wealth abroad.
Austria now has banks withhold tax on foreigners' interest
income and returns the money anonymously to home EU countries.
(Additional reporting by Angelika Gruber in Vienna and Ilona
Wissenbach in Brussels; Editing by Catherine Evans)