The Week in Europe 27/01-02/02/01

EU news in brief

10m euro more aid announced for victims of Indian earthquake

A further 10m euro in aid for the victims of the earthquake in Gujurat was announced by the Commission on 31 January. This follows an initial 3m euro emergency package that the Commission brought forward the day after the disaster occurred. As most of the current relief operations are targeting the main urban centres, the European Community Humanitarian Office is aiming to reach smaller towns and remote areas that have been badly affected, to which less aid has been getting through. The first aid package is addressing immediate needs such as materials for shelter, blankets and warm clothing, food, safe drinking water, emergency healthcare and generators. This support is being directed through non-governmental agencies including Oxfam, Save the Children and CARE. Commission staff in Gujarat and Brussels are monitoring the situation closely with other organisations working in the crisis zone. An expert went to the area as soon as the news broke. Commissioner Chris Patten was able to discuss the aid effort on the last day of a five-day visit to India, when he met external affairs minister Jaswant Singh and finance minister Yashwant Sinha. [Background texts: IP/01/150, IP/01/134 & IP/01/130]

'Beef crisis needs wider action'

The EU beef market needs a broader package of measures to deal with the crisis caused by BSE, Commissioner Franz Fischler said on 29 January. Warning that beef consumption could fall by more than 10% this year, he told the Agriculture Council that changes were needed to limit future production. These could take the form of an early marketing premium for calves or payments to encourage more extensive farming. EU consumption had fallen by 27% and many third countries had banned EU beef, Fischler pointed out. This year a surplus of 795,000t is forecast. Buying into intervention is not a solution, because of both the cost and the limits on storage. He called on Member States instead to make use of the purchase-for-destruction scheme (for cattle over 30 months old) that ministers had agreed in December. It is the lesser evil, as it is cheaper, offers a solution to farmers who cannot sell their animals, disposes of the poorest quality beef, and creates a minimum price for producers, Fischler concluded. The scheme has started only in France, Ireland, and to a lesser extent in Luxembourg and Spain. The UK already operates a scheme of this kind, and four other countries are exempted: Finland and Sweden because of their low BSE-risk, and Denmark and the Netherlands because of full testing capacity. Germany, Italy, Portugal and Greece have not yet started, and Austria and Belgium have requested an exemption. Fischler urged EU countries' authorities to notify to the Commission all the measures they were taking at a national level. Finally, he said the Commission was working on a report on protein-rich crops that could replace meat and bonemeal as animal feed. [Background texts: IP/01/131 & MEMO/01/24]

· The Commission published a report on 29 January on the implementation of BSE control measures in the Member States. See http://europa.eu.int/comm/dgs/health_consumer/library/press/press104_en.html

Further 971m euro to tackle BSE

An extra 971m euro would be allocated to the EU budget to deal with the BSE crisis, under a proposal put forward by the Commission on 31 January. Financed by savings made in the previous year, this spending would be earmarked for the costs of measures agreed by the Agriculture Council in December. These include 700m euro for the purchase for destruction scheme, for animals over 30 months that cannot enter the food chain; intervention in the beef market (238m euro); and co-financing of BSE tests (33m euro). Commissioner Michaele Schreyer said agricultural expenditure had reached the previously agreed ceiling, so any more measures needed had to be financed from savings. The latest proposal is both urgent and carefully targeted; the BSE crisis in October arose too late to be included in the budget procedure already underway. [Background text: IP/01/143]

Bridging the rich-poor divide

EU efforts to reduce regional disparities have made significant progress, but enlargement involves a huge challenge for cohesion policy. According to the second report on economic and social cohesion, adopted on 31 January, income per head in the three poorest EU countries (Portugal, Greece and Spain) rose from 68% of EU average in 1988 to 78% in 1999. Disparities between regions fell by almost one-fifth. At the same time, pockets of poverty remain, and some regions are still too isolated, lack investment and skilled labour, and are poorly equipped to take part in the Information Society. Large numbers of people suffer long-term unemployment, particularly young people and women. Enlargement of the EU will increase the ratio in wealth between the richest and poorest region from 5.8:1 now to more than 10:1 in a Union of 27 Member States. The proportion of the population living in 'cohesion countries' (GDP per head less than 90% of EU average) would double from one-sixth to almost one-third. The least well-off 10% of the population would earn only 31% of EU average income, compared to 61% in today's EU15. If it is to continue and remain effective, cohesion and regional policy will need rethinking, Commissioner Michel Barnier said. The report, which reviews and assesses economic and social cohesion, will feed into wide-ranging discussions on policy in the coming months. The full text will be available from

http://www.inforegio.cec.eu.int

[Background text: IP/01/148]

Tougher rules on cybercrime

A series of measures to tackle cybercrime was unveiled by the Commission on 30 January. It focuses on improving security to prevent computer-based crimes and ensuring that law enforcement authorities have the appropriate means to take action if prevention fails. The latest Communication includes a proposal to harmonise Member States' laws on child pornography offences, to deny offenders the scope to exploit inconsistencies within the EU. In the longer term the Commission is planning measures on high-tech crime such as hacking and denial-of-service attacks over the Internet. It will also examine possible action against racist and xenophobic activity on the Internet. The legislative proposals are complemented by measures to encourage awareness and training among those involved in information security. The strategy's aim is to combat cybercrime effectively without hindering the development of e-commerce and infringing the fundamental right to privacy. The freedom of the Internet - the source of its success - has to be preserved said Commissioner Erkki Liikanen. At the same time, the impressive forecasts for the growth of e-commerce would remain pie in the sky if people do not trust electronic transactions, he said. Comments on the proposals are invited for the next two months. See http://europa.eu.int/ISPO/eif/InternetPoliciesSite/Crime/crime1.html

[Background text: IP/01/135 ]

Work programme for 2001

Improved governance, enlargement, economic and social reform, and the quality of life are the key themes of the 2001 Work Programme adopted by the Commission on 31 January. The first of these concentrates on bringing Europe closer to people and making institutions more open and democratic. This year should also see significant progress in accession talks to prepare for new Member States joining the EU. Economic and social policy centres on jobs and competitiveness, and quality of life will address areas such as the environment, respect for individual rights, food quality and mobility. The priorities of the programme reflect the strategic objectives agreed last year for the Commission through to 2005 (its current term of office). It will be available from

http://europa.eu.int/comm/off/work/index_en.htm

[Background text: IP/01/149]

The proposed takeover of Finnish paper-maker Metsä Tissue by Swedish rival Mölnlycke was blocked by the Commission on 31 January because of concerns about the impact on competition. The merged company would have had a market share of up to 90%. [Background text: IP/01/147]

Smith & Nephew's medical product joint venture with Beiersdorf AG of Germany has been cleared by the Commission after the companies made substantial concessions to resolve competition issues.

[Background text: IP/01/126]

Egypt and the EU have finalised an Association Agreement on trade and economics, political dialogue and cooperation on a wide range of issues.

[Background text: IP/01/123]

The EU and Chile have resolved trade disputes on spirits and managing swordfish stocks.

[Background texts: IP/01/121 & IP/01/116]

Unemployment remained unchanged in December at 8.1% in the EU and 8.7% in the euro zone. [Background text: ES 16/2001]

Enlargement news

Wishes and promises for Romania

The new Prime Minister of Romania, Adrian Nastase, came through Brussels on January 24-25 with his new team, to make a first formal contact with the European institutions. He and his colleagues were full of promises of a new start. Overall, the European reception amounted to a cautious welcome and an invitation to deliver evidence.

European Enlargement Commissioner Günter Verheugen made clear a readiness to help Romania along its difficult path to reform: "We are fully prepared to cooperate", he said, at a joint press conference with the Romanian prime minister. But he insisted on the need for deeds: "We want to see clear results. Promises are not sufficient", he said.

“We are not fully satisfied with the performance of Romania", said Verheugen. "The new government must be a champion of change". He pointed particularly to the "chances for change" in economic reform, new administrative structures, and a tougher fight against organised crime. There were human rights problems with minorities (particularly the Roma) and with the care of orphans. Nastase insisted himself that there was "a new beginning in economic policy", and he claimed: "If we focus on the main objectives, we can succeed". Similarly, he told the European Parliament's foreign affairs committee that re-establishing confidence was his first priority. He conceded that in the past Romania had made commitments it could not live up to. But now things were different, he said - pointing as evidence at the new public administration law just adopted, which will give language rights to minorities representing more than 20% of the population (most notably, the large Hungarian population of Romania).

Enlargement Will Not Affect EU Energy Strategy, Says de Palacio.

Speaking at the World Economic Forum in Davos on 29 January, European Commissioner for Energy Loyola de Palacio said "it seems unlikely that enlargement will affect our wider strategy" on energy. She explained that the enlarged EU's energy mix would more or less be the same as today: "fossil fuels would be the most popular choice". Growing energy demand will be even more marked as a result of enlargement, she added. But the question of nuclear energy required attention, the Commissioner admitted. "Some accession countries have not previously had to comply with the very high standards of safety we are accustomed to in the EU", the Commissioner said.

She also said "some countries will need to adapt to new form of pollution", without, however, going into detail. de Palacio was at pains to emphasise that the EU's dependence on Russia for gas supplies will increase due to historical links between eastern Europe and the former Soviet Union. As for renewables, she pointed that this new and alternative energy source "is a relative newcomer on the energy market in certain accession countries", hence this could complicate the EU of increasing the share of renewables in energy production. She remained optimistic, though: "the political will is there, and together we can find workable solutions".

Pavol Hamzik, Slovak Deputy Prime Minister for European Integration and Walter Rochel, Head of the European Commission Delegation to Bratislava, have signed financial memoranda for pre-accession aid of Euro 64 million. Euro 28 million will be for the Phare national programme - projects aimed at institution building, legislative harmonization, and social and economic cohesion (including Euro 3.8 million for improving the situation of the Roma). Euro 20 million is for decommissioning programmes for the V1 units at the Bohunice nuclear power plant, and Euro 4 million is for additional investment support programmes. There is provision too for cross-border co-operation programmes: Euro 6 million for Slovakia-Austria, Euro 2 million for Slovakia-Hungary, and Euro 4 million for Slovakia/Poland.

The European Savings Banks Group has won a contract to provide seminars for its member banks in the EU candidate countries. Together with the Technical Assistance Information Exchange Office (TAIEX) of the European Commission, they will be organising on March 8-9 the first in a series on preparations for EU membership in EU banking and financial law, e-commerce and consumer protection, and the logistical implications of the introduction of euro notes and coins. Two further seminars will be organised on April 24-25 and June 21-22.

Rila Solutions, an internet and wireless solutions company with operations in Sofia, Bulgaria, is the first business to benefit from a new Euro 32 million facility set up by the European Bank for Reconstruction and Development to support internet and high-technology firms in central and eastern Europe. EBRD will make a $3 million equity investment in Rila Solutions, providing the rapidly growing company with essential early-stage capital. "Over the last 12 months the e-commerce sector in central and eastern Europe has become one of the most rapidly growing and dynamic sectors," said Jean Lemierre, President of the EBRD. "This is a fast-moving sector demanding a new method of financing." Aiming to provide equity finance during the start-up phase for companies, the framework facility is structured to allow the EBRD to make small investments quickly. By keeping investments small, the Bank will be able to build up a diversified portfolio, thereby minimising the risk of exposing itself to just one or two large investments. Individual projects are expected to be co-financed by the company's founders and other investors.

The UK government is working at raising the profile of enlargement among UK citizens. It produces a quarterly newsletter, it has expanded coverage on government websites, it has produced a brochure for business, and it has organised public open days at the Foreign Office for exhibitions of all the candidate countries. It is holding a reception in early March to bring together opinion formers from the candidate country communities in the UK to promote contacts and increase public awareness. And it will publish a new brochure explaining the benefits of enlargement, and develop a video/CD-ROM for use in libraries, universities and schools. Czech EU minister Pavel Telicka has agreed to join UK European minister when he visits Cambridge as part of his continuing round-Britain EU roadshow, and other candidate country ministers have been invited to join future trips.

Bulgarian President Petar Stoyanov suggested during the Davos World Economic Forum that all 12 EU candidates currently in negotiations should be granted what he called "political membership" of the EU by 2004, and become full members later, when they meet economic criteria. Political membership would mean having a seat in the EU policy making bodies, and continuing to work on meeting the bloc's economic criteria at its own pace. Bulgaria's current target date for accession is 2006.

European Commission DG Enlargement Director General EnekoLandaburu has appealed to candidate countries and member states to honour their commitments on enlargement. It is not enough, he said, for candidates just to send Brussels general negotiating positions calling for transition periods. They must also show they are capable of transposing and implementing the acquis. And member states, he said, must also make an effort to adopt common negotiating positions at least on the chapters set out in the "road map" of the Commission. On a visit to Malta, Landaburu also repeated his opposition to what he termed premature and hasty setting of target dates for ending accession negotiations.

Swedish interior affairs minister Maj-Inger Klingvall told the European Parliament on 23 January that Sweden is "in a position to pave the way for a political breakthrough, even in the more difficult chapters now being negotiated, such as that of free movement of persons". But she insisted that each candidate country will be judged on its own merits, and new member states "must develop their migration policy legal systems and share in the responsibility of admitting asylum seekers and of giving protection to those needing it."

Estonian foreign minister Toomas Hendrik Ilves told the Estonian parliament, the Riigikogu, that "a decisive year has started for Estonia" in accession. He confirmed Estonia's readiness to conclude negotiations on most chapters during the Belgian Presidency, in the second half of 2001, and to sign an accession agreement in the summer of 2002. "This is the only way to ensure the accession of the first new member states in 2004 at the latest. At the same time I would like to underscore that the governing coalition stands firmly by its standpoint: Estonia must be ready for accession in the year 2003", Ilves remarked.

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