Developments during two very influential presidencies are assessed in this chapter: first during the Luxembourg presidency, which moved the Habitats Directive proposal forward significantly and secured political agreement regarding certain key issues; and second the Dutch presidency, during which political agreement was finally reached regarding the Habitats Directive proposal as a whole and the LIFE funding instrument in parallel.

Discussion focuses on the negotiation of the Natura 2000 site designation and site protection parts of the Habitats Directive, plus the issue of financing, which emerged as one of the central issues of importance during this final phase in the negotiation of the instrument.

The territorial extent of the Habitats Directive in the marine area became an issue during the Luxembourg presidency. Even more significantly, during this period the Court of Justice handed down its judgment in Case C-57/89 Commission v. Germany (Leybucht dykes). The ramifications of this are discussed in detail, including the negotiation of the Article 6(4) derogation to allow Member States to permit damaging plans/projects for imperative reasons of overriding public interest, including socio-economic reasons.

Additional tricky issues handled during the Dutch presidency are discussed, including, for example, territorial extent; the fallout from the Leybucht dykes judgment and the negotiation of the Article 6(4) derogation; the site designation process; and financing for nature conservation. Political developments are also addressed, including the lead-up to the signing of the Maastricht Treaty and a major dispute between the European Commission and the UK government regarding alleged non-compliance with the Environmental Impact Assessment Directive in the context of a motorway.

On the brink of being withdrawn, the Habitats Directive is finally agreed in December 1991, following a difficult final Council meeting.