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'India threatens L'bourg not to ratify accord'

Luxembourg Prime Minister Jean-Claude Juncker said that India had threatened not to ratify a double taxation accord with the Grand Duchy.

india Updated: Feb 15, 2006 21:18 IST

Luxembourg Prime Minister Jean-Claude Juncker said on Wednesday that India had threatened not to ratify a double taxation accord with the Grand Duchy.

Speaking at a business luncheon, Juncker did not say whether the threat was tied to his vocal opposition to a bid by Mittal Steel, majority owned by Indian-born billionaire Lakshmi Mittal, to buy Arcelor.

"The (Indian) government, although full of wise men, has just threatened the Grand Duchy with not ratifying a double taxation agreement between India and Luxembourg," he said.

Mittal's bid has met political opposition in Europe because it has raised the spectre of job losses.

Based in Luxembourg, Arcelor is the biggest private employer in the Grand Duchy with a staff of some 5,900.

The state of Luxembourg is Arcelor's single biggest shareholder with a 5.6 per cent stake.

Juncker has been one of the most vocal opponents to the bid.

Days after Mittal announced the bid in January Juncker toured European capitals to try to build a political defence against it. He has described the bid as hostile and Mittal's industrial plan for a merged company as lacking in details.

At the business luncheon Juncker rejected accusations of racism.

"The fact that it concerns an Indian industrialist ... is not, for me, something to worry ahout," he said. "It does not matter whether he his Indian, Portuguese, or Belgian."

Luxembourg was also on the defensive in a statement issued late on Tuesday in which it rejected criticism that a bill it presented to Parliament last week was an act of protectionism.

The bill proposes the ratification of the European Union's corporate takeover directive.

All EU member states are expected to ratify the directive.

But legal experts say the bill preserves the right of Arcelor's board to adopt defensive measures against Mittal such as making acquisitions without prior shareholder approval.

Luxembourg has hired investment banker JP Morgan to advise it on the bid, saying it wanted an independent and professional opinion about it.