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Debates
Tuesday, 4 April 2006 - Strasbourg OJ edition

14. Commission Question Time
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  President. The next item is Question Time (B6-0017/2006).

The following questions have been submitted to the Commission.

Part One

 
  
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  President. Question No 40 by Sarah Ludford (H-0208/06)

Subject: Money-laundering directive

Is the Commission planning an EU-wide information campaign to ensure that organisations which will have to comply with the new directive on money-laundering and terrorist financing 2005/60/EC(1) (e.g. banks and legal firms) have sufficient information on new procedures?

 
  
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  Charlie McCreevy, Member of the Commission. The Commission recognises the importance of raising awareness on the new, more comprehensive EU regime against money laundering and terrorist financing. That is why the Commission has already undertaken a number of information initiatives. In that context I would like to mention: first, the Commission's participation in outreach efforts vis-à-vis European professional organisations initiated by the OECD Financial Action Task Force on Money Laundering and Terrorist Financing; secondly, the ongoing consultation on the impact of the second Anti-Money Laundering Directive on the legal profession, which will lead to the publication of a report this summer, probably in July; thirdly, an extensive consultation of all stakeholders in the context of the preparation of possible implementing measures under the third Anti-Money Laundering Directive; fourthly, participation in conferences organised by Member States as part of their responsibilities for implementing EU money laundering directives.

In view of those ongoing initiatives, the Commission currently is not planning to conduct a further EU-wide information campaign. However, the Commission continues to monitor closely the implementation of the directive, and it would not rule out further actions if there are shown to be problems in particular sectors and EU action would have added value.

 
  
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  Sarah Ludford (ALDE), author. Commissioner, that all sounds very good, but my eye was caught by something in the Law Society of England and Wales’s new money laundering newsletter. It referred to an extensive industry that has developed around services aiming to help lawyers with their compliance duties. It struck me that, as the third money laundering directive brought in the notion of proportionate checks of risk sensitivity, we need to make sure that the compliance falls where the really serious risks are. Often constituents come to me because as individuals they have difficulties opening bank accounts. I hope that you will convey that message. It truly has to be risk-sensitive compliance.

 
  
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  Charlie McCreevy, Member of the Commission. In this particular directive the point about risk sensitivity is well made. There are different categories of risk and the authorities should draw up their procedures on the basis of those risk assessments. That is clearly specified in the third directive, and the point is well taken by the MEP.

I would not like to see a whole industry developing around people charging exorbitant fees for what should be a relatively reasonable procedure. The levels of risk should be assessed. There is very little to be done for those at a low level of risk, and there are higher categories. That is clearly set out in the directive. I thank the honourable Member for raising this question, because it gives me an opportunity to emphasise the point that she made in her supplementary question.

 
  
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  James Hugh Allister (NI). – Commissioner, bearing in mind that the IRA is believed after its Northern Bank robbery to have exploited money-laundering opportunities in Bulgaria, what specific steps are being taken to ensure that the authorities and organisations there, and indeed in Romania, are ready and able to implement the legislative requirements on money laundering and terrorist financing?

 
  
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  Charlie McCreevy, Member of the Commission. The honourable Member will be aware that part of the procedure that any applicant country must go through is that it must ensure that the directives of the Community are put into effect. That will apply equally to Bulgaria and Romania. The Member is probably also aware that these recommendations stem from the Financial Action Task Force – FATF, as it is known – and most countries around the world are bound to implement the recommendations of that particular body. In the EU we have taken it upon ourselves, in a directive, to implement the recommendations, which has been done in the third money laundering directive.

You can rest assured that Bulgaria will be taking those measures into account in its legislation, as it is part of its deal to acquire full membership of the European Union.

 
  
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  President. Question No 41 by Philip Bushill-Matthews (H-0241/06)

Subject: Protectionism amongst EU Member States

Does the Commission have sufficient practical and legal powers to force tough and timely action to prevent Member States drawing up national legislation, for example, permitting company poison-pills to deter extra-territorial takeovers? Does the Commission have sufficient powers to effectively challenge countries that unilaterally choose to label certain industrial sectors as off-limits because of a declared national interest that is self-defined? Should the EU be granted any further powers in order to take control of this situation and if so what should these be and how should they be advanced?

 
  
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  Charlie McCreevy, Member of the Commission. The President has pointed out that I am taking this question on behalf of my colleague, Mrs Kroes.

The Commission has significant powers to ensure that Member States fully respect the internal market rules and do not create unlawful obstacles to cross-border mergers. If a Member State violates internal market rules, the Commission can launch an infringement procedure pursuant to Article 226 of the EC Treaty. This procedure may require a certain time, as the Commission has, at two separate stages, to grant the Member State the opportunity to express its view before introducing an action before the Court of Justice, which then has to take the final decision on the alleged infringement. Where justified by the circumstances of the case, the Commission can act more speedily by giving very short deadlines to Member States in the pre-litigation phase and asking the court to grant interim measures. Even in that case, the Commission is obliged to take into account the observations of the Member States, including late responses, as it is settled case-law that the proper conduct of their pre-litigation procedure constitutes an essential guarantee required by the EC Treaty, not only in order to protect the rights of the Member State concerned but also to ensure that any contentious procedure would have a clearly defined dispute as its subject-matter.

Moreover, in cases where a Member State intervenes with regard to concentrations with a Community dimension, the Commission has special powers to adopt a decision under Article 21 of Regulation (EC) No 139/2004, known as the Merger Regulation. Pursuant to that provision, the Commission has the exclusive competence to assess concentrations with a Community dimension. Member States can adopt measures which could prohibit or prejudice de jure or de facto such operations only if, first, the measures in question protect the interests other than those taken into account by the Merger Regulation and, second, those measures are necessary and proportionate for the protection of interests compatible with EC law.

Public security, plurality of media and prudential rules are considered to be interests compatible with EC law. Measures adopted in pursuit of those interests must in any event be necessary and proportionate, and the Commission may seek information from the national authorities about the intended measures in order to verify this. The other interests must be communicated to the Commission before the adoption of those measures. The Commission must then decide, within 25 working days, whether the national measures are justified for the protection of an interest compatible with EC law.

The Commission considers that the abovementioned provisions can allow it, in a timely manner, to act against any unlawful protectionist measures adopted by Member States. The Commission is, moreover, firmly committed to use all the powers at its disposal to ensure full compliance with EC law.

 
  
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  Philip Bushill-Matthews (PPE-DE), author. That was a very lengthy response, but with respect it was not really an answer because I appreciate what the powers are. My question is whether you really needed any more powers. Specifically you said that the pre-litigation phase could be speeded up. I should like a specific answer please: as regards the post-litigation phase, would you not agree that sometimes that can take several years and then again several years before a penalty is applied? Would it not be handy to have powers to cut that short and make it even sharper?

 
  
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  Charlie McCreevy, Member of the Commission. I can understand the intent of the supplementary question put by the honourable Member. Yes, it is sometimes frustrating to have to wait for a considerable period of time before there is action. However, we are a Community of laws and we must abide by settled law on this. The procedures must be followed.

Even in Member States these types of actions take some time. Although sometimes there are mechanisms to expedite the process in Member States, and even in the Community you can exercise rights to expedite the process, it is still pretty time consuming. So, I am afraid that we cannot rule by fiat or by dictat in this Community. It would be an abuse of privilege. I do not think anybody would advocate that.

On the other hand, it is sometimes frustrating that there is such a considerable period of time, but I do not see any other way around it. Furthermore, I do not foresee any Member State rushing to give the Commission more immediate new powers or powers to expedite the process. We have to live by what is there.

 
  
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  President. Question No 42 by Harlem Désir (H-0268/06)

Subject: 'First job contract' (contrat première embauche): violation or non-violation of Directive 2000/78/EC

The ‘first job contract’ that has been introduced in France allows businesses with more than 20 employees to take on a young person of under 26, with a two-year trial period during which s/he can be dismissed without reason. These employees would not benefit from the protective labour-law clauses requiring an employer to justify dismissal. Article 2.2 of Directive 2000/78/EC(2) deems discrimination to have occurred ‘where one person is treated less favourably than another is’, inter alia on grounds of age. Does the Commission think that the ‘first job contract’ complies with the principles of the directive? If not, what steps does it intend to take vis-à-vis the Member State concerned?

Second part

 
  
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  Vladimír Špidla, Member of the Commission. (CS) Mr President, ladies and gentlemen, Mr Désir, the Commission has not yet received notification of the French law referred to earlier in the question raised by the Member, and the Commission is therefore not ready to express a detailed opinion on the law.

The aim of Directive 2000/78/EC, as already mentioned, is in fact to prevent discrimination in the area of employment, especially age discrimination. The Directive also sets out several exceptions to the general rule. Allow me to quote directly from the Directive.

(FR) ‘Nevertheless, differences in treatment in connection with age may be justified under certain circumstances and therefore require specific provisions which may vary in accordance with the situation in Member States. It is therefore essential to distinguish between differences in treatment which are justified, in particular by legitimate employment policy, labour market and vocational training objectives, and discrimination which must be prohibited’. Another quotation: ‘Putting in place special conditions regarding access to employment and vocational training, and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities, in order to promote their vocational integration or ensure their protection’.

(CS) So you see, the situation from the standpoint of the Directive is of a twofold nature. The Directive acknowledges different forms of handling, where there are legitimate grounds, and different measures, where such measures are of a character that is in proportion with the purpose for which they are intended. I have nothing further to say about the situation that currently prevails. The definitive viewpoint on any notified law must understandably rest with the Court of Justice in Luxembourg.

 
  
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  Harlem Désir (PSE), author. (FR) Commissioner, I think, in fact, that when the Commission receives notice of the First Employment Contract, it will be important that it can conduct a precise analysis of the conditions in which this law would authorise allowing the employment contract of young people under the age of 26 to be terminated during the first two years.

If, as you have said, directive 2000/78 allows differences in treatment, including on grounds of age, it is within the framework of positive actions, of actions proportionate to the desired objective. Recently, a judgment was delivered by the Court of Justice – Mangold judgment of 22 November 2005 – concerning another piece of legislation, the German ‘Hartz 4’ law, which relates to provisions for older workers. This judgment took the view that, in this case, the way of renewing fixed-term contracts exclusively for these older workers was not proportional to the desired objective.

I think that, in the case of the First Employment Contract, nobody believes that the measure in question is favourable to young people under the age of 26. This is therefore clearly an act of discrimination towards them, which denies them the benefit of a number of elements of employment law. I hope that the Commission will rely on Court of Justice case law in order to condemn this First Employment Contract.

 
  
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  Vladimír Špidla, Member of the Commission. (CS) Mr Désir, you cited one particular case which is very important for assessing similar situations, since the Directive does in fact assume that each measure will be on the one hand proportionate and on the other hand legitimate in relation to its purpose. In the case you mentioned relating to older workers, the Court of Justice in Luxembourg ruled that the purpose was legitimate but the measure was not proportionate and therefore the measure was rejected. At this point in time, as I have said, due to the fact that the law has not yet been notified, we do not know what form it will take, and indeed I have even read reports in the media that its final form has still not been determined, so it is impossible for me, as a representative of the Commission, to provide further details.

 
  
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  Andreas Mölzer (NI).(DE) Mr President, in EU Member States such as France, Germany, Spain and Italy, a full-blown labour market for trainees has developed. Increasing numbers of regular workers are being replaced by unpaid or poorly paid trainees, or in Germany, for example, by state-financed ‘1 euro jobs’ – in which previously unemployed persons are entitled to earn EUR 1 per hour on top of their unemployment benefit – which are not liable to tax or social-security contributions. To what extent is the Commission aware of this problem?

 
  
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  Vladimír Špidla, Member of the Commission. (CS) The Commission, of course, monitors the labour market in the individual Member States, as well as developments in employment legislation. Incidentally, a Green Paper on the development of employment legislation in Europe will be published shortly, and will become, I hope, the basis for some very far-reaching discussions on the customs, methods and development of employment law and employer-employee legal relationships in the EU Member States. Otherwise, of course, the Commission can monitor and take decisions only within such frameworks as have been provided under the Treaty, and here it must be said that the Treaty does not provide direct links to employment legislation.

 
  
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  President.

Question No 43 by Bart Staes (H-0204/06)

Subject: Evaluation of Regulation (EC) n° 485/2005 Transfer of European vessels to the Indian Ocean

Council Regulation (EC) n° 485/2005(3), consideration 3, stipulates that 'it is appropriate to extend the possibility of withdrawal of fishing vessels from the Community fishing fleet with public aid to vessels which are transferred to the countries affected by the tsunami for the benefit of the fishing communities concerned.'

Since this Regulation requires the Member States to inform the Commission on a regular basis, could the Commission tell me how many demands to deliver such vessels came from which countries that are victims of the tsunami, how many vessels have been offered from the Member States and how many vessels actually have been sent to which countries in the Indian Ocean?

 
  
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  Joe Borg, Member of the Commission. Council Regulation (EC) No 485/2005 to which the honourable Member refers extends the possibility of withdrawal of fishing vessels from the Community fishing fleet with public aid to vessels which can be transferred to the countries affected by the tsunami for the benefit of the fishing communities concerned. This possibility is granted on an exceptional basis, under certain conditions and only during a limited period.

While several countries in the Indian Ocean whose fishing sectors were affected by the tsunami disaster enquired about the possibility of a transfer of vessels, only Sri Lanka submitted a formal request for vessels. It concerned 120 vessels with an overall length of 9 to 12 metres. The Commission informed Member States of the request and reminded them on several occasions of the obligation to report on the transfer of vessels.

Despite the unanimous adoption of the regulation by the Council, all 20 Member States which are engaged in maritime fisheries have now informed the Commission that they have not identified any possibility of transfers of vessels in response to the Sri Lankan request. As the regulation sets a deadline of 30 June 2006, there are at present no more prospects of transfers of vessels under the scheme.

 
  
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  Bart Staes (Verts/ALE), author. (NL) Mr President, I have, then, no option but to conclude that the regulation we approved was a meaningless exercise, which is in fact what we predicted. I think that the regulation as it was presented was nothing but an act of public relations and it is evident from the Commissioner’s response that this was a bad piece of legislation. I would like to ask the Commissioner an additional question: if this regulation does not help the countries affected by the tsunami rebuild their fishing fleet, can he say whether the Commission has taken other measures in order to really help those countries build their own boats and organise a more appropriate way of fishing in the regions that were hit by the tsunami last year?

 
  
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  Joe Borg, Member of the Commission. Obviously, when this legislation was enacted, by way of exception to the rule that had been established, under which it was no longer possible to effect transfers of vessels to third countries, it was made subject to certain significant restrictions, one of which related, for example, to the length of the vessels. I remember the discussion here in Parliament that we should not allow a situation where vessels would be transferred to third countries stricken by the tsunami without imposing any conditions because that could, in actual fact, increase the fishing effort and therefore intensify the problems that existed in certain fisheries in those third-country waters, but that the vessels should be suitable and appropriate to the fisheries that were traditionally carried out in those countries. Therefore, we had restrictions with regard to the size of vessels, the age of vessels, the fact that vessels should not use towed gear and other conditions relating to ecological resource management and seaworthiness.

Having said that, I must underline the fact that the responses we have received from the Member States on why it was not possible to identify vessels for transfer to Sri Lanka were either that there were no appropriate vessels available among those to be decommissioned in certain Member States, or that decommissioning was not foreseen in certain other Member States, or that the incentives provided for the transfer of vessels were not sufficiently attractive.

I must also underline the fact that this was a Commission initiative aimed at trying to help the countries affected by the tsunami, with regard to the fisheries sector specifically, if there was scope to do so. There was an element of additionality which was therefore the main thrust of the assistance, albeit under the general umbrella of development cooperation rather than under the fisheries portfolio. It was an ‘optional extra’ that was not taken up.

I must underline that the end result was that certain individual Member States gave assistance to the tsunami-affected countries by providing funds for the acquisition of vessels which have been purchased without any control measures. The end result today is that there is a significantly larger fleet in the tsunami-affected areas, which creates much more pressure on the fishing effort than before and creates further problems. Rather than moving in the direction of sustainable fisheries, according to the information we have, there are significantly more problems than there were before.

 
  
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  Reinhard Rack (PPE-DE).(DE) Mr President, is the very example the Commissioner has just given not a typical indication that the Union should endeavour to view disaster relief as a separate entity and provide funds promptly to this end – as, indeed, had already been done in the case of the floods – rather than attempting to push things forward by way of derogations within traditional policy areas: fisheries, transport or other policy? After all, experience has shown that that takes far too long and does not work.

 
  
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  Joe Borg, Member of the Commission. Yes, obviously it is important to try to strike the right balance between the needs of the countries that would be affected by such disasters and long-term assistance, which should aim not to create further pressures or difficulties for those countries by trying to help rebuild the economy in a sustainable way. We are trying to do this specifically with regard to fisheries; however, unless there is closer coordination between Commission initiatives and the individual initiatives of Member States, the chances are that the possibility of success will be limited.

 
  
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  President. Question No 44 by Rosa Miguélez Ramos (H-0205/06)

Subject: Ban on deep water gillnets

The Commission has admitted that the ban on deep water gillnets approved by the Council in December 2005 is not backed up by scientific reports on the subject, nor have any studies been conducted on its socio-economic impact. At a meeting with the coordinator for interested parties on 25 January 2006, the Commission indicated that it planned to resolve the problem as quickly as possible by amending the TAC regulation, saying that the ban would be a temporary one until use of such fishing gear could be regulated. The launch of the schedule of measures was to depend on the decision taken by the Regional Advisory Committee for north-eastern waters on 31 January 2006. At that meeting, it was unanimously agreed to inform Commissioner Borg that there was disagreement with the process leading up to the ban and it was decided to set up a working party to regulate the use of fishing gear of this kind.

Given that a rapid decision is needed, because of the adverse socio-economic effects of the ban, when will the Commission submit its legislative proposal? Has it made plans for any transitional measures to attenuate the effects of the ban until the proposal is submitted?

 
  
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  Joe Borg, Member of the Commission. Mrs Miguélez Ramos’ question concerning the ban on the use of deepwater fixed gillnets to the north and west of Britain and Ireland follows a number of written questions on the same subject from her and from Mrs Fraga Estévez and Mr Varela Suanzes-Carpegna.

The ban, which took effect on 1 February 2006, was introduced in the TAC and Quota Regulation that was adopted at the Council in December 2005. It was proposed in response to the report of the DEEPNET investigation, which highlighted the potential damage that those fisheries may be causing to deepwater sharks and other species. The DEEPNET Report was carried out by reputable scientific organisations in Ireland, the United Kingdom and Norway, and so was taken seriously by the Commission.

In parallel to the prohibition in Community waters, at its annual meeting in November 2005, the North-East Atlantic Fisheries Commission adopted an identical prohibition of deep-sea gillnets in its regulatory area from 1 February 2006.

First, I should like to reassure you that this ban is intended as a temporary measure in response to serious concerns about the practices of some of the participants in such fisheries and in particular about the impact of those practices on vulnerable species such as deep-sea sharks. Those species are in such a poor state and take so long to recover their numbers once depleted that the Commission has to react very quickly without waiting for definitive scientific advice from the Scientific, Technical and Economic Committee for Fisheries (STECF).

The prohibition was originally envisaged as an emergency measure in September but deferred until the December Council to give time for consultations. Unfortunately, no concrete suggestions for alternative measures were presented in time for inclusion in the proposal discussed at the Council in December.

I am aware that most of the fishermen using such gear behave responsibly and that it is a minority who are causing concern. For that reason, I would like to introduce measures to regulate the activity of deep-sea gillnets at the earliest opportunity. The Commission has already had some feedback on possible approaches, especially from the North-Western Waters Regional Advisory Council, which suggests an earlier reopening of the hake fishery and a limited number of vessels participating in the monkfish and deep-sea fisheries with observer coverage.

The Commission services will meet with the North-Western Waters Regional Advisory Council and scientists on Friday, 7 April 2006, where we will discuss those possibilities. Depending on the outcome of that meeting, a proposal to allow a limited fishery under an observer programme could be made in May 2006. The data collected by such a programme could then be made available to the STECF, which will address the issue in late June or early July.

The geographical limits of the prohibition were determined by the coverage of the DEEPNET study. I am aware that there may be similar problems in other areas, but we currently have no information that would justify enlarging the area of the prohibition. That is another reason for bringing in effective legislation applicable in all areas as soon as practicable. Unfortunately, the prohibition is bound to create economic difficulties for the fleets concerned.

No transitional measures to mitigate the effects of the ban have been planned, but I would encourage Member States to make full use of the possibilities that are already available for the temporary cessation of activities under the Financial Instrument for Fisheries Guidance to help those most severely affected.

 
  
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  Rosa Miguélez Ramos (PSE), author. (ES) Commissioner, the truth is that I have heard all of that on previous occasions; I thought that you were going to tell me something rather newer. For example, that you would insist rather more on those dates that you have mentioned; May and June.

What I really wanted to ask was what possibility is there of amending this decision immediately, what possibility is there of amending the Regulation on TACs and quotas, so that the pelagic longlines at least – which fish hake with nets that do less harm, as you yourself acknowledge in letters that I have seen – can return to those waters; and what timescales the Commission has in mind for the definitive regulation of fixed gillnets, so that the sector does not have to remain in a situation of uncertainty.

I ask this, Commissioner, because this decision had and has still having very negative effects, in particular socio-economic effects.

 
  
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  Joe Borg, Member of the Commission. Yes, there are two aspects to it: one concerns the action that can be taken in the short term to try to soften the impact of the temporary imposition of the ban on deep sea gillnets. We are discussing this with the North-Western Waters RAC, and a meeting is scheduled for 7 April when, hopefully, we will be able to discuss this matter with the North-Western Waters RAC. Immediately afterwards, we will hopefully be able to take certain decisions on introducing the possibility of limited fisheries for hake and perhaps look at the possibility with regard to monkfish, establishing a system of supervision on board vessels.

We are also looking into establishing permanent measures which would replace the driftnet ban to cover all Community waters. Later in the year, we could then come up with a proposal to withdraw the driftnet ban and replace it with permanent measures, satisfying ourselves that there is no longer any risk of irreparable damage to the stock of deepwater sharks as a result of fishermen leaving nets in the sea for extensive periods, fishing on their own account and causing significant damage to the habitat.

 
  
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  John Purvis (PPE-DE). – The Commissioner probably finds himself between Scylla and Charybdis in this argument, but I am sure that he will bear in mind the great damage that drift nets and gill nets have done in the past to, for example, the wild salmon in the North Atlantic, and that he will be robust in protecting the fisheries from that method of fishing.

 
  
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  Joe Borg, Member of the Commission. Yes, one needs to draw a distinction, because we are speaking here of deep-sea gill nets, which are normally used very selectively, and therefore we do not want to discourage the use of this type of gear. However, if nothing is done, such fishing for an extensive period of time causes significant damage. Therefore, we want to curtail the abuse of the use of gill nets, not their proper use. So, on the one hand, given that the use of gill nets is quite selective as a gear, we would not want to discourage that; but on the other hand, we certainly want to discourage the abuse of gill nets, as that would create so-called ‘ghost nets’, which continue to be used for fishing for a period of a month or so, causing significant damage to the species concerned.

 
  
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  President. Question No 45 by Pedro Guerreiro (H-0273/06)

Subject: Fisheries agreement with Morocco and protection of the Sarawi people's legitimate rights

In view of the fact that negotiations are currently being held on the partnership agreement between the European Community and the Kingdom of Morocco relating to the fisheries sector, and given that the legitimate rights and interests of the Sarawi people must be protected and safeguarded, has the Commission made any contact with the Polisario Front (the Sarawi people's legitimate representative) in order to find out what its view is of the above-mentioned agreement? If it has, what was the outcome of that contact?

 
  
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  Joe Borg, Member of the Commission. I would like to remind the honourable Member that the negotiations on the new EC-Morocco Fisheries Partnership Agreement are concluded and that the Commission and the Moroccan Government initialled the draft agreement in July 2005. With respect to its territorial application, the text of the new agreement is no different from the previous agreement, which ended in 2000.

With regard to the honourable Member’s specific question, I would like to point out that the Polisario Front is not formally accredited with the European Community. There is no formal policy dialogue between the Commission and the Polisario Front. Concerning fisheries negotiations, the Commission has been authorised by the Council to negotiate with the Kingdom of Morocco. It has no mandate to extend the negotiations to third parties.

In the framework of the preparations for the negotiation of the EC-Morocco Fisheries Partnership Agreement, the Commission thoroughly evaluated the political, legal and economic implications of an eventual agreement. In this case, as in others, the Commission is taking care to avoid a situation where the conclusion of new agreements in the field of fisheries could become a factor in international disputes or conflicts.

Regarding the issue of the EC-Morocco Fisheries Partnership Agreement and the question of Western Sahara, the Commission took special care to fully respect the relevant principles of international law and support the efforts of the United Nations in finding an appropriate solution with regard to Western Sahara. The content of the initial text, as in the case of the previous fisheries agreement, does not in any way prejudice the issue related to the international status of Western Sahara.

The Commission is convinced that the new EC-Morocco Fisheries Partnership Agreement is in conformity with international law and with the opinion of the UN Legal Advisor of 29 January 2002. The Commission’s view with regard to the geographical scope of the agreement has been confirmed and endorsed by the opinion of the Council’s legal service and the European Parliament’s legal service.

 
  
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  Pedro Guerreiro (GUE/NGL), author. – (PT) Within the context of the EU’s development policy, the Union has earmarked funding for refugee camps for the Sahrawi people run by the Polisario Front in the Western Sahara region. I should therefore like to ask, once again, whether, as part of its approach to the problem of Western Sahara, the Commission intends to ask the Polisario Front what it thinks of this agreement, given that it will have far-reaching implications for Western Sahara.

 
  
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  Joe Borg, Member of the Commission. As I said in my previous response, the negotiations were conducted by the Commission with the representatives of the Government of the Kingdom of Morocco. The authorisation that we had from the Council was to negotiate with Morocco. The negotiations concluded with an agreement which entails that any fisheries carried out in waters within the jurisdiction of the Kingdom of Morocco should benefit the communities directly adjacent to where the fisheries are carried out. It is therefore the responsibility of the Kingdom of Morocco to see to it that any benefits deriving from fisheries carried out in waters adjacent to the Polisario Front area would go to the communities living there.

 
  
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  Manuel Medina Ortega (PSE). – (ES) Commissioner, this morning Parliament agreed to reject the Council’s request to apply the urgent procedure to the Agreement with Morocco. What will be the consequences of the European Parliament’s decision this morning in terms of the entry into force of that agreement?

 
  
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  Joe Borg, Member of the Commission. Yesterday, I took part in a meeting of the Fisheries Committee of the European Parliament, and the understanding is that the rapporteur will present his report to the Fisheries Committee in early May, with the possibility of submitting amendments, which would then be put to the vote in the Fisheries Committee in mid-May, and then come to the plenary for a decision during the Strasbourg part-session in May. I will be discussing with the Austrian Presidency the possibility of having the Council decide on this agreement in the meeting of the Council of Ministers later on in May, so that if it works in that way, the agreement can come into effect from the beginning of June. That would mean only month’s delay as regards the terms agreed between the Commission and the Kingdom of Morocco.

 
  
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  President. Question No 46 by Manuel Medina Ortega (H-0203/06)

Subject: Financial perspective and regional development for the outermost regions

The European Council has reached an agreement on the financial perspective for the period 2007-2013. What impact will the latter have on development policies for the outermost regions?

 
  
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  Danuta Hübner, Member of the Commission. On the basis of the European Council agreement dating from 16 and 17 December 2005, the situation of the outermost regions for the period 2007-2013 is as follows.

For the parts of Europe concerned, there will be a higher co-financing rate under the structural funds and the Cohesion Fund. It will be 85%, both for regions under the convergence objective and for those outermost regions which are part of the regional competitiveness and employment objective. There will also be a specific additional financial allocation to help finance operating aid to offset the additional costs which are incurred in these regions due to their geographical location. The co-financing rate under this additional allocation will be at the level of 50%; this additional allocation amounts to EUR 35 per year per capita in each of the seven outermost regions.

We then have specific situations as regards individual outermost regions. There is Madeira, which will be keeping the status of a phasing-in region, but at the same time will benefit from more generous financial transitional arrangements, similar to those of the statistical phasing-out regions. There are also the Canary Islands, which will benefit from an additional envelope of EUR 100 million over the period between 2007 and 2013.

With regard to territorial cooperation – the objective set for the policy – all the outermost regions will be eligible for the transnational strand of the European territorial cooperation objective, and the French outermost regions, like the Canary Islands, will be eligible for the cross-border strand. In addition, Madeira, the Azores and the Canary Islands will benefit from special provisions applicable to Portugal and Spain. As you know in the case of Portugal, Madeira and the Azores will also be eligible for the Cohesion Fund, as also for the temporary application of the n+3 rule for the period 2007-2010. In the case of Spain and the Canary Islands, that means they will also be eligible for the Cohesion Fund and for an additional allocation that was awarded to Spain in the form of a technological fund. The participation of the Canary Islands would be by decision of the government.

As you may know, the outermost regions can also benefit from specific measures, which aim at supporting traditional sectors of these regions. There will be specific measures for agriculture in the outermost regions of the Union, as well as specific treatment under the rural development policy, in particular concerning the intervention rates of the new European agricultural fund for rural development. On top of that, of course, there are the ordinary instruments that exist under our policies, and all the regions will have access to all the Community programmes envisaged under all the titles of the European budget.

Those in brief are the specific measures available under the new financial perspective for the outermost regions.

 
  
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  Manuel Medina Ortega (PSE), author. (ES) Commissioner, so far the Commission has done great work helping the outermost regions, but it is clear that in the new financial perspective there is a reduction in the European Union's overall effort.

I would like simply to ask you a very specific question: whether, within the new context of the crisis taking place in regions close to the European Union, North Africa in particular, it is possible for the European Union, through the outermost regions and the new fund allocated to the neighbourhood policies, to help to resolve the problem, which affects the whole of the Union, of mass access to the European Union for immigration. In other words, what cooperation instruments could we have in order to prevent the immense crisis taking place in the regions close to these outermost regions of the European Union?

 
  
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  Danuta Hübner, Member of the Commission. As you know the regions in Europe can also use part of the funds allocated to them to invest in those regions that are not in EU Member States, but which are part of neighbouring countries, so this possibility of using part of the allocation on neighbouring territory is open to the outermost regions.

Additionally, within the European neighbourhood and partnership instrument, which is still currently under preparation with regard to its legal form by the Commission, there will be the possibility of working together with neighbouring countries and regions on issues related to those that you are addressing to create jobs and employment opportunities on the other side of the border.

In the Canaries, in particular, they will be able to allocate part of the money in the new neighbourhood and partnership instrument and thus will be able to have external cooperation, for example, with the border areas of Morocco. So that is what this policy, through the financial instruments, can do. But on top of that comes a political concern. Within the Commission we had a discussion a week or so ago on the situation in some of the outermost regions in the context of migration and the difficult situations experienced. So, within other instruments and politically, the Commission will be involved in the very near future to help address this issue.

We have some financial instruments, which are restricted. As you have said yourselves, the budget is not what we expected when the Commission put the proposal on the table, nevertheless, in addition to those restricted financial means, there are also efforts to work with neighbouring countries, or regions next to our outermost regions, to find political solutions to some of the problems.

 
  
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  Piia-Noora Kauppi (PPE-DE). – The challenges faced by the outermost regions of the Union are very similar to those challenges which are facing the northernmost regions of the EU. Would you say that the balance between EU support to the outermost regions and EU support to the northernmost regions is now met in the proposals for cohesion?

In addition, could you briefly outline what the cofinancing rates and special targeted measures are for the northernmost regions of the European Union, especially the northern parts of Finland and Sweden?

 
  
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  Danuta Hübner, Member of the Commission. It is a very difficult question. It is very difficult to see what balance is in this case, because the issues and problems faced by those regions are very different. Some of our regions suffer because they are very sparsely populated and that means that infrastructure costs are very high. This is a challenge not only for us at European level but also for the governments involved. Other regions suffer from overpopulation and from problems of migration. Therefore, it is very difficult to measure what is balanced and what is not.

As you know, within this very restrictive budget during the Council – which is also part of the European tradition – there were also additional requests put on the table. What I presented – all those additional measures which were offered to the regions – is something that came during the Council and was not part of a global balanced proposal of the Commission.

We have to look at the current situation and try to make those resources work as well as possible and try to use the resources that were allocated to the sparsely populated regions of Sweden and Finland in the most efficient way and do the best we can. However, I do not see a need to compare the EUR 540 million that Finland and Sweden received for those regions to the money allocated to the outermost regions. The situations are very different: the money has a different value. The Commission will certainly work with both types of problems – in the outermost regions and the sparsely populated regions – to get the best we can from the funds which will be available.

 
  
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  Richard Seeber (PPE-DE).(DE) Commissioner, the Commission indeed presented a very ambitious financial framework. The Council cut it drastically at its December meeting. Negotiations are currently being held in the trialogue. What I find a little lacking here is the role of the Commission. If the Commission presents such an ambitious proposal, why is there nothing more to be heard from it, and why is Parliament no longer willing to fight to receive the budgetary resources we need for the implementation of these programmes? This particularly concerns rural development – not only in the outermost regions, but in rural areas in general, where a massive transfer of funds is required to reach necessary levels.

 
  
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  Danuta Hübner, Member of the Commission. I do not have the feeling that the Commission is not strong in the negotiations. My understanding is that we are trying to help reach a compromise at a level that would be satisfactory for all three institutions. It so happens that the two institutions – the Council and Parliament – have gone quite far in financial terms; in terms of the level of the budget that is on the table. The Commission’s efforts should go, in my view, towards helping them to find a compromise. The level of budget is extremely important. We hope that we will have the funds also for those areas that were cut so seriously in December. But it is also important to reach agreement. I do not know what the trialogue looks like as I do not participate in it, but I can imagine that there are moments when the Commission’s role is to be the one who helps to find a compromise. That might give you the impression that we do not care about money, but that is not the case. We do care. We know that if we had more money we could do more for Europe, with Europe and in Europe for all citizens. However, sometimes realism and the challenge of timing are also important. That is my understanding.

 
  
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  President. Question No 47 by Dimitrios Papadimoulis (H-0217/06)

Subject: Take-up of Community funding and the n+2 rule

Under the n+2 rule, one of the CSF criteria, funds earmarked for a particular programme must have been disbursed within two years. Can the Commission indicate the amounts and programmes in respect of which the Greek Government has requested an exemption from the n+2 rule? What stage has been reached by the Commission in considering these requests?

Is it possible, under the third CSF, to extend beyond 2006 the deadline for the signing of contracts? If so, under what conditions? Is it possible for Community funding under the third CSF to be used after the end of 2008? If so, under what conditions?

 
  
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  Danuta Hübner, Member of the Commission. You may be aware that the before the end of last year the Greek authorities submitted to the Commission a list of requests for exemptions from the n+2 rule. The total amount was more than EUR 655 million. The intention was to cover an amount of EUR 342 million, potentially subject to the n+2 rule. The request submitted relates to 12 operational programmes in Greece and also implies the intervention of three funds: the ERDF, the ESF and the agricultural fund.

The Commission has completed the processing of the Greek request concerning the application of the n+2 rule and reached the conclusion that what is left as the potential cut due to the n+2 rule is EUR 8 638 000, which is much less than what was initially on the table. We are still waiting for confirmation by the Greeks and, if they confirm this, this will be the amount the Commission effectively expects as the commitment.

The second part of your question concerns the eligibility period for the commitments and payments. As you know, for the 2000-2006 programming period, the eligibility period ends on 31 December 2008. Commitments are, theoretically – and I would like to stress that – possible during the entire eligibility period, which means 2008. However, commitments should be made early enough to allow the final recipients to implement the operations and projects and to carry out the payments before the final eligibility date for the expenditure, which is the end of 2008. We will close the expenditure for all the Member States under the current financial perspective on 31 December 2008, with the exception of programmes and measures which are covered by state aid. According to the rules, this eligibility date is 30 April 2009.

I also want to inform you that, according to all our legal analyses and the information we have in the Commission, there could be no exceptions to these conditions – I mean the end of 2008 or April 2009 – as regards the final possible date of eligibility. So the final date is the end of 2008 or April 2009, and that is the situation.

 
  
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  Dimitrios Papadimoulis (GUE/NGL), author.(EL) Mr President, Commissioner, allow me to ask you something else.

Given that acceptance of the exemption requests shifts the pressure to forthcoming years, I should like the Commission to tell me how Greece's obligations for the years 2006 and 2007 are being formulated and what is the Commission's prediction, if there is one, for the application of the n+2 rule for these two years?

 
  
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  Danuta Hübner, Member of the Commission. With this kind of question it is too risky to embark on an effort to respond without good checking and preparation, so I can make a commitment that we will try as early as possible in the next few days to respond and come back to you with an assessment of the current situation as regards the payments and commitments for Greece.

 
  
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  President. Questions 48 to 59 will be answered in writing.

 
  
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  President. As they deal with the same subject, the following questions will be taken together:

Question No 60 by Bernd Posselt (H-0210/06)

Subject: Introduction of the euro in the ten new Member States

What is the Commissioner's view of the current state of preparations and the schedule for the introduction of the euro in the ten EU Member States which acceded to the EU on 1 May 2004?

Question No 61 by Justas Vincas Paleckis (H-0222/06)

Subject: Accession of new EU Member States to the euro zone

According to opinions expressed in the press and in official statements, assessment of new EU Member States’ readiness to join the euro zone will take account not only of the Maastricht criteria but also of each country’s general economic level of development. Specifically, it has been declared that Slovenia, on account of its higher level of GDP per head than that of Lithuania and Estonia, can be invited to join the euro zone, whereas the latter two countries will not be invited to do so even if they fulfil the Maastricht criteria, including the level of inflation.

Are these statements accurate? Can the Commission give a clear assurance that any decision on the accession of new Member States to the euro zone will be made on the basis of the Maastricht criteria alone and not of any other criteria?

 
  
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  Joaquín Almunia, Member of the Commission. (ES) I shall respond to Mr Posselt’s first question by saying that Estonia, Lithuania and Slovenia have set 1 January 2007 as their target date for adopting the euro; Cyprus, Latvia and Malta propose adopting the euro on 1 January 2008; Slovakia intends to do so on 1 January 2009; the Czech Republic and Hungary hope to enter the eurozone in 2010 and Poland has not set a target date.

At least every two years, or at the request of a Member State, the Commission and the European Central Bank must report to the Council on the progress made by the Member States in terms of compliance with their obligation to become full members of the Economic and Monetary Union.

In February 2006, the Commission, in agreement with the European Central Bank, announced that the next convergence report, on all of the States that are not members of the eurozone, except the two with an opt-out clause, the United Kingdom and Denmark, will be published in October 2006, that is, two years after the last assessment. Nevertheless, in accordance with Article 122 of the Treaty, two Member States, Slovenia and Lithuania, have asked the Commission and the European Central Bank for an individual report on the progress they have made in terms of convergence; the Commission and also the European Central Bank intend to adopt this report on these two Member States on 16 May 2006.

In the event that the assessment of compliance with the economic and legal convergence criteria is positive, the Commission would present the corresponding proposal and, following consultation of this Parliament, in the middle of June the European Council could analyse and, if appropriate, adopt, a decision, and definitive proposed derogation could therefore be discussed by the Ecofin Council on 11 July.

Independently of this process, we in the Commission of course maintain regular contacts with all of the States intending to enter the eurozone, we monitor them very closely and we cooperate with them in relation to the practical preparations for this important decision.

(ES) In response to Mr Paleckis’s question, I must say to him that of course the Commission will apply the principle of equal treatment when assessing the progress of the ten new Member States in terms of economic and legal convergence. As I have just said, the countries will be assessed according to the procedure and the criteria laid down in the Treaty, in particular Article 122, and the Commission obviously has no intention of changing this procedure or introducing additional criteria.

With regard to the inflation criterion, as you are aware, the Treaty states that the Member State in question is obliged to maintain sustainable price trends and an average inflation rate which does not exceed that of the three Member States with the best price stability results by any more than 1.5%. The Commission proposes applying this criterion rigorously in the future, just as it has done in the past.

 
  
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  Bernd Posselt (PPE-DE), author. – (DE) Mr President, I am much obliged to the Commissioner for his precise answer. However, if I may say so, he spoke so fast at the beginning that the German interpretation was practically incomprehensible. I should like to query whether I have understood correctly, therefore, that the last two of these ten Member States, namely the Czech Republic and Hungary, are due to join in 2010? I should like to ask the Commissioner whether developments have really been finalised, or whether there are some of the ten Member States who have requested postponement beyond 2010.

 
  
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  Justas Vincas Paleckis (PSE), author. Thank you for your response to my question. The Maastricht criteria are being strictly applied to those countries which are applying for entry into the eurozone. Lithuania cannot be accepted into the eurozone, even though it currently exceeds the inflation criteria by a mere 0.1%. Lithuania complied with this condition over the past six years, as did others. In the current eurozone, many members are infringing one or other of the Maastricht criteria. For instance, some large countries for many years breached the conditions on budgetary deficit without receiving a red card, the same with inflation and other criteria. Are the new Member States not being discriminated against here with these double standards?

 
  
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  Joaquín Almunia, Member of the Commission. (ES) I shall begin by responding to Mr Posselt and I shall not speak too quickly.

The objectives I have mentioned in relation to when Members States wish to enter the eurozone, are dates defined by those States themselves.

The first three countries, Estonia, Lithuania and Slovenia, originally stated that they wished to enter the eurozone in 2007. For its part, Hungary has set a target date of 2010, as you have mentioned.

As I said before, the only one not to have set a target date is Poland.

That is a necessary condition, but it is not a sufficient condition. The sufficient condition is that the assessments of both the Commission and the European Central Bank, of compliance with the criteria laid down in the Treaty, indicate that the Member States that wish to enter the eurozone have indeed complied with those criteria.

Both sides must demonstrate will: the Member States and ultimately the Council, on the proposal of the Commission, once the Commission and the European Central Bank have judged that the criteria have been complied with. That is the situation.

In the case of Poland, which is the only one of the Member States that has not yet set a target date for entering the eurozone — Sweden is also in this position following the ‘no’ vote in the 2003 referendum — the Commission would point out that it is the obligation of the Member States themselves — except in the case of those with an exception clause, which are just the United Kingdom and Denmark — to propose their entry into the eurozone and it is our obligation and responsibility to assess whether or not they conform to the requirements.

I cannot tell Mr Paleckis in advance what the content of the report that the Commission will adopt on 16 May will be and it would be even more difficult for me to anticipate the content of the European Central Bank’s report, for obvious reasons. What I can say once again to the honourable Member — and I have said this on many occasions — is that the Commission is going to assess whether or not the criteria have been met as defined in the Treaty.

The Commission does not set these criteria on a whim. It is a requirement of the Treaty and our obligation is to comply with the Treaty, and I would repeat that in making that assessment, we shall be treating everybody equally, and we shall not be applying certain yardsticks to some countries and other yardsticks to others.

In short, therefore, compliance with the Treaty, a clear and rigorous assessment of whether or not the criteria are met and equal treatment for everybody.

I will be able to inform you and all of the honourable Members of the conclusions of this analysis on 16 May.

 
  
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  Gábor Harangozó (PSE). – (HU) New Member States must comply with the convergence criteria in order to introduce the euro. In order to ensure compliance with the convergence criteria, the Commission and Council are formulating various proposals for these Member States. My question is this: may a Member State follow an economic policy that ignores the proposals of the Council and Commission, and if it does, what does it risk by doing so?

 
  
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  Joaquín Almunia, Member of the Commission. (ES) Mr President, in general, for all of the Member States with derogations, which are not members of the eurozone, but with an obligation to join in the future, we carried out that assessment in October 2004 and we will repeat it in October 2006. In the case of the two Member States that have made individual requests for that assessment — to which they have the right, according to the Treaty — that is, for Slovenia and Lithuania, we shall present our individual assessment for each of them on 16 May. I cannot tell you the result of a report that will be adopted by the College of Commissioners on 16 May in advance.

If you wish, I shall come to Parliament on the afternoon of 16 May to explain the content of the report to you, but I cannot say anything before then.

 
  
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  Reinhard Rack (PPE-DE).(DE) Mr President, the Commissioner has already mentioned one of the problems. We are discussing how seriously new Member States are taking their commitments, but what we are not really discussing is how, specifically, a Member State that has been meeting the criteria for some time but obviously does not wish to join the eurozone, namely Sweden, sees its future. The question is whether the case of Sweden could potentially set a bad example to others, who are now new Member States. The Commissioner named a new Member State that has not yet announced a date. If sanctions are not imposed, will this not set a negative precedent?

 
  
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  Joaquín Almunia, Member of the Commission. (ES) I agree with Mr Rack that we are facing a problem, because there is one Member State that called a referendum, the result was negative and, on the basis of that negative result, it cannot, it does not wish to, or it does not intend to, comply with an obligation that falls to it as a Member State.

We must deal with the issue of how to resolve this question. The Commission felt it prudent not to do so immediately after a referendum. The Commission must fulfil its obligation to comply with the Treaty while at the same time taking account of the opinion expressed by the citizens of that Member State, but I have not forgotten that the Commission must hold talks with Sweden to consider how that country can fulfil its obligations as a member of the European Union in the future.

The same thing is happening in relation to Poland, which had originally proposed a particular year as an objective for its entry into the euro. The new Polish authorities say that they do not accept the objective of their predecessors and that they are not setting a future objective at the present time. And I have had the opportunity to remind the new Polish Government that it will have to do so.

We do not want to apply pressure, but we cannot forget that this is an obligation for the Member States. As I said before, we must combine fulfilling our responsibilities with political prudence, but what I will say — and I have said this publicly on other occasions — is that compliance with an obligation which falls to the 25 countries of the European Union as Member States cannot not be put to a referendum.

In this case there is an exception in place for two countries, the United Kingdom and Denmark, but, the State’s obligations should not be put to a referendum generally, and neither should the 23 States without an opt-out clause do so, because the question of whether or not a Treaty is complied with cannot be put to a vote.

 
  
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  Danutė Budreikaitė (ALDE). – (LT) Commissioner, I wanted to ask about inflation. As we are aware, inflation in the eleven countries, which were first to join the economic and monetary union and were ready to introduce the Euro, has surpassed the index for a significant period. Only two countries did not exceed the index. The others exceeded it for between 10 months and almost six years from the end of 1998 to the end of 2005. My question: are we applying double standards to the new states and is the economic and monetary union a technical union or is it simply a political union.

 
  
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  Joaquín Almunia, Member of the Commission. (ES) Mr President, the Commission’s obligation is to ensure compliance with the Treaties and it goes without saying that on previous occasions, when the eurozone was created, or when the twelfth member of the eurozone joined, the Commission and the Council of the time, with the opinion of the European Parliament, took account of the obligation to ensure compliance with the Treaties.

Myself as Commissioner, and the Commission, headed by Mr Barroso, are naturally not going to fail in our obligation to apply the Treaties and ensure compliance with them. The economic criteria, including that of inflation, are stipulated in a protocol annexed to the Treaty and of a legal value identical to that of the provisions and articles of the Treaty. We cannot therefore ignore them or amend them.

It is true that an academic discussion is under way on a correct definition of the criteria, but the procedure for changing the Treaties will consist of an Intergovernmental Conference and a process of ratification when the time seems right and when there is a sufficient majority to do so. It is not for the Commission to change the Treaties and it has the obligation to apply them.

It is true that there is asymmetry, because compliance with the criteria is required in order to enter the eurozone, but then, once a country is a member, it can fail to comply with the criteria; once a country is a member of the eurozone, it can have more inflation, more debt or more deficit. In the case of deficit and debt, there are rules relating to budgetary discipline – Article 104 of the Treaty – and the Stability and Growth Pact but, in the case of inflation, those rules do not exist, but there are some rules that are probably tougher than legal rules in application of the Treaty: the rules of the market. There are currently countries in the eurozone that are suffering considerably because they are not able to moderate the evolution of their inflation or their unit labour costs.

I believe that we must also take account of the harsh reality of how the markets judge those who do not comply with certain rules, quite apart from the Commission’s obligation to ensure compliance with the rules of the Treaty.

 
  
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  President. Question No 62 by Brian Crowley (H-0226/06)

Subject: Stability and Growth Pact

Is the European Commission satisfied with the practical operation of the Stability and Growth Pact or does it envisage changes to the rules governing the operation of this Pact into the future?

 
  
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  Joaquín Almunia, Member of the Commission. (ES) Mr Crowley, the revised Stability and Growth Pact was agreed by the Ecofin Council almost a year ago, in June 2005, following a political agreement within the European Council in March last year.

Our initial experience of the revised Pact has been positive, encouraging, and the indications are that the Member States have a renewed commitment to that framework.

In all recent cases that have been dealt with, when the Commission and the Council have applied the rules of the excessive deficit procedure, in accordance with the letter and the sprit of the revised Pact, there has been full consensus and there have not been the political discrepancies and difficulties that arose last time.

With regard to the preventive aspect of the Pact, the assessment of the 2005 stability and convergence programmes, which have been carried out during the first months of 2006, have shown that the Member States have set their medium-term budgetary objectives in accordance with the agreed principles. Some countries have even decided to set more ambitious objectives, which reflect a national strategy aimed at guaranteeing greater sustainability of public finances. With regard to adjustment to the mid-term objective, the Member States that are not yet in a situation of medium-term balance are generally fulfilling the requirement to make a budgetary effort at least equivalent to 0.5% of their GDP, in structural terms.

To name certain cases, I would remind you that, since the new Pact was approved last year, the excessive deficit procedure has been applied to Italy, Portugal, Hungary, the United Kingdom and Germany, with unanimity in the Council and without the problems of political acceptance which arose during the previous stage.

In response to your question, therefore, the Commission is pleased with the way the new Pact is operating.

 
  
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  Brian Crowley (UEN), author. Thank you, Commissioner, for your response. On the last point that you made with regard to the rules concerning excessive public deficits and the fact that proposals have been made to Italy, Portugal, Hungary and the United Kingdom, what about France and Germany? Both of them have public deficits that are well beyond the limits agreed under the criteria. In particular, what about the undermining of confidence in the Stability Pact which that creates on the wider market? That is particularly apparent when we look at the current difficulties concerning the recognition of the euro and the eurozone economy within the United States and in the Far East, and at the constant questioning concerning the enforcement of the rules concerning the Stability and Growth Pact in those areas.

 
  
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  Joaquín Almunia, Member of the Commission. (ES) Mr Crowley, Mr President, the excessive deficit procedure is being applied to France and it is subject to the procedure laid down in Article 104(7) of the Treaty. In accordance with its obligations to apply the Council’s recommendations within the framework of the excessive deficit procedure, the French authorities were obliged to bring their public deficit to below 3% in 2005. Last week, the French authorities notified the Commission that the public deficit at the end of 2005 was below 3%.

Over the next three weeks, by 24 April, Eurostat must analyse the figure notified by the French authorities, and will explain whether or not those figures, a deficit of 2.87%, are correct. In the event that they are – I hope that they are, although I cannot anticipate Eurostat's decision – France would have complied with the recommendations in 2005.

The French Government also intends to bring its deficit to below 3% during 2006; the European Commission takes note of this and is pleased with the French Government's intentions, but we are going to publish our spring economic forecasts on 8 May. Until then I will not be able to predict what our economic forecast will be for this year, but, without anticipating the final assessments, I believe that the budgetary situation in France is improving with regard to our forecasts a year ago, amongst other things because the French Government, and in particular the Finance Minister, Thierry Breton – whom I thank, as I did publicly the other day in Brussels – are politically committed to complying with the Stability and Growth Pact.

This is a sign of the way the renewed consensus in relation to the new Stability and Growth Pact is working. A year ago, before the revision of the Pact, we would have been unlikely to hear the French, the German, or the Italian Minister repeatedly expressing their political commitment to bring their public accounts into line with the recommendations to them from the Commission and the Council for the application of the Stability and Growth Pact.

Two years ago it would have been impossible; a year ago it was difficult. Today it is a reality, a genuine political commitment. But we still have difficult times ahead of us, because we must not be content with deficits of 2.8%. Europe, the European Union and the largest economies of the eurozone must pursue fiscal consolidation until public accounts, in the medium term, are in a situation of balance in structural terms so that we can deal with the significant challenges facing us for the future, the first of which is the consequences of the ageing of the population.

With regard to the euro, confidence in the eurozone’s economy is growing day by day, and certain indicators of confidence, such as the German IFO index, are showing fifteen-year highs. Figures on the indicators produced by the Commission services for which I am responsible were published yesterday, and they show that levels of confidence are at their highest for five years. We had not achieved such levels of confidence since the previous expansionary phase.

Our currency is remaining perfectly stable in the currency markets, in fact it is over-valued according to certain economic sectors. The euro is used in the financial markets, in the debt markets and in the capital and money markets at world level to a degree that is disproportionate to the relative weight of the eurozone’s economy within the world economy. I therefore believe that we must be vigilant, but we must also be pleased with our achievements during the first seven years of economic and monetary union.

 
  
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  Piia-Noora Kauppi (PPE-DE). – Has the introduction of the longer-term presidency for the eurozone had any practical implications for your work as guardian of the Treaties and guardian of the Stability and Growth Pact? What are the practical effects of the longer-term presidency of the eurozone?

 
  
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  Joaquín Almunia, Member of the Commission. (ES) When the Member States of the eurozone decided to appoint a stable President of the Eurogroup, I expressed my great satisfaction. I was convinced that regular, continuous and permanent dialogue with the President of that body, which is not a Council body, but which in practice holds very important debates and responsibilities, was going to be an effective decision.

When I found out that the President was going to be Jean-Claude Juncker, my confidence was confirmed.

I can now say that relations with the President of the Eurogroup are excellent, our contacts have been continuous and the preparation of meetings has improved considerably. I believe that the role it plays towards the outside, expressing the views and the criteria of the eurozone countries, is greatly appreciated. I take an extremely positive view of the institution, of its institutionalisation, of its President and of the work of that institution and its President.

I believe that the eurozone’s needs in terms of the coordination of economic policy are obvious. Earlier I mentioned the problems faced by certain eurozone economies, in dealing with losses of competitiveness resulting from an evolution above their average unit labour costs for example. Certain economies of the eurozone are facing problems with inflation of assets, there is a clear need to improve the dialogue between the Eurogroup and the President of the European Central Bank. All of these functions are being carried out by the Eurogroup, and this is largely due to President Juncker’s effective and intelligent direction of the Eurogroup’s work.

 
  
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  Gay Mitchell (PPE-DE). – I would like to ask the Commissioner what level of discussions he has had with Member States of the eurozone in relation to their performance and their potential performance. In the case of Ireland, for example, asset inflation, the price index for houses, went up 1.5% in February. We have had double-digit inflation in housing for some time and it looks like we will continue to have that. If there is a hard landing in the construction industry; it has implications for revenue; it has implications for unemployment payments and therefore revenue; it has implications for consumer confidence. Have you had discussions with the Irish Government on this issue, and to what extent has the Commission considered the implications for a eurozone member of the possibility of a hard landing?

 
  
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  Joaquín Almunia, Member of the Commission. (ES) Of course I discuss the evolution of the eurozone economy, and not just the eurozone, but the whole of the European Union. In particular, however, since you have asked about the eurozone, I discuss the economy of the eurozone bilaterally with the various Ministers of the zone and with the President of the European Central Bank, and collectively once a month in the meetings of the Eurogroup.

In the majority of meetings of the Eurogroup, an item is dedicated to analysing the economic situation. Sometimes the economic situation is analysed in a general sense, and sometimes a specific aspect of that economic evolution is looked at.

With regard to inflation, the body responsible for maintaining inflation, in accordance with the objectives set by the European Central Bank, is the European Central Bank itself. It is an independent institution, which, pursuant to the Treaty, has a mandate from the other European institutions to preserve price stability, and which makes its decisions entirely independently, but also holds a dialogue with the other institutions.

The President of the European Central Bank participates in the meetings of the Eurogroup each month. Furthermore, the President of the Eurogroup and the Commissioner responsible for Economic and Monetary Affairs are invited to take part, with the right to speak but not to vote, in the meetings of the Governing Council of the European Central Bank, and we accept those invitations.

On the issue of housing, in particular, in one of the items at the last meeting of the Eurogroup in Brussels in March, we discussed the situation of the housing markets, which is not the same in all of the countries of the eurozone. Certain countries in the eurozone have the problem of property inflation, while other countries have the opposite situation, in some cases with total stability and, in others, a decrease over several years in the price of houses and other real estate property.

This internal divergence within the eurozone with regard to real estate prices creates problems, because, by definition, there can only be one monetary policy in the eurozone, while its impact varies from country to country. We have discussed this issue. The European Commission has undertaken to present new analyses and new considerations to the Eurogroup over the coming months. If you are particularly interested in knowing our analysis of property prices in certain countries of the eurozone, I will send you the latest three monthly report on the economy of the eurozone which was published a few days ago by the Commission services under my responsibility.

 
  
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  President. The questions that have not been taken due to lack of time will be answered in writing (see Annex).

That concludes questions to the Commission.

(The sitting was suspended at 7.45 p.m. and resumed at 9.05 p.m.)

 
  
  

IN THE CHAIR: MR FRIEDRICH
Vice-President

 
  

(1) OJ L 309, 25.11.2005, p. 15
(2) OJ L 303, 2.12.2000, p. 16.
(3) OJ L 81, 30.3.2005, p. 1.

Last updated: 21 June 2006Legal notice