The Week in Europe 8-14/07/02

17.07.2002 | Euroskop

EU news in brief

European capitals of culture: the new selection procedure

Viviane Reding, Member of the Commission responsible for education and culture, welcomed a delegation from the city of Graz (Austria), which will be European capital of culture in 2003. Until 2004, the European cities of culture were chosen on the basis of an intergovernmental decision; as of 2005, a new Community-based selection procedure will apply to European cities of culture: after Bruges and Salamanca in 2002, Graz in 2003, and Lille and Genoa in 2004, Ireland will play host to the European capital of culture in 2005. The Irish city selected under the new procedure is Cork. In 1985, on the initiative of Mélina Mercouri and the European Parliament, the idea was conceived to declare one or more cities each year "European capitals of culture". In view of the wealth represented by European cultures and the prominent role played by cities in creating and developing these cultures, the aim of the European capitals of culture is to bring to the attention of both locals and visitors some of the special features of the city, region and country in question and to promote events involving cultural players from other European cities.

[Background paper MEMO/02/162]

European administrations should share open source software resources, says report published by Commission

European administrations should share software on an open source licensing basis, to cut soaring eGoverment information technology costs (set to rise by 28% to € 6.6 billion this year), says an independent study published by the European Commission. The "Pooling Open Source Software" study, financed by the Commission's Interchange of Data between Administrations (IDA) programme, recommends creating a clearing house to which administrations could "donate" software for re-use. This facility, which would concentrate on applications specific to the needs of the public sector, could encourage the replication of good practice in eGovernment services. The findings of the "Pooling Open Source Software" study are available from the IDA website at http://europa.eu.int/ispo/ida.

[Background paper IP/02/1010]

Youth Convention on the future of Europe: the European Commission is represented by four young women

From 9 to 12 July, 210 young people met in Brussels for the "Youth Convention" on the future of the European Union. This afforded them an opportunity to say how they think Europe should develop. These young people, between the ages of 18 and 25, represented the members of the European Convention chaired by Valéry Giscard d'Estaing and their alternates. For the European Commission, four young women (German, British, Danish, and Czech) were designated by the Commissioners Michel Barnier and António Vitorino.

More information can be found at the following website: Youth Convention:

http://www.youth-convention.net/en/home.html

[Background paper IP/02/1019]

Eurobarometer "15 to 24-year-olds": young people want Europe to be tangible

Before the Youth Convention on the future of the Union opened, the European Commission had wanted to obtain the views of 15 to 24-year-olds on the functioning of the European Union as well as their vision of Europe. The survey carried out between 27 May and 16 June 2002 on a representative sample of 7,558 young people examined two main questions: what practical measures can be taken to make young people identify with Europe and what are the key issues that the Convention should address? This Eurobarometer Flash reveals that 15 to 24-year-olds feel that employment, solidarity, mobility and respect for democratic values are crucial for the European project. The full results of this study are available at the Europa website:

http://europa.eu.int/comm/public_opinion/index_en.htm

[Background paper IP/02/1017]

"Towards sustainable farming": Commission presents EU farm policy mid-term review

The European Commission has tabled a mid-term review of the EU's Common Agricultural Policy (CAP). The Commission is of the opinion that public expenditure for the farm sector must be better justified. Besides supporting farming incomes, it must yield more in return regarding food quality, the preservation of the environment and animal welfare, landscapes, cultural heritage, or enhancing social balance and equity. This review will free farmers from red tape, encouraging them to produce at high standards for the highest market return, rather than for the sake of the maximum possible subsidy. For European consumers and taxpayers, the review will ensure better value for money. To achieve those goals, the Commission proposes 1) to cut the link between production and direct payments, 2) to make those payments conditional to environmental, food safety, animal welfare and occupational safety standards, 3) to substantially increase EU support for rural development via a modulation of direct payments with the exemption of small farmers, 4) to introduce a new farm audit system, 5) new rural development measures to boost quality production, food safety, animal welfare and to cover the costs of the farm audit. As to the market policy, which remains an essential pillar of the CAP, the Commission proposes 1) to bring to a close the process of cereal reforms, notably with a final 5% cut in the intervention price and a new border protection system, 2) a decrease in the additional durum payment accompanied by a new quality premium, 3) a compensated decrease in the rice intervention price and 4) adjustments in the dried fodder, protein crop and nuts sectors. The proposals fully respect the objectives, policy direction and financial framework for the CAP set in Agenda 2000. For further information on the mid-term review (the Commission proposal, Commissioner Fischler's presentation, background material, etc.) go to:

http://europa.eu.int/comm/agriculture/mtr/index_en.htm

[Background paper IP/02/1026]

Eurostat News Releases

Second estimation for the first quarter of 2002: Euro-zone and EU15 GDP up by 0.3%; +0.3% and +0.4%, respectively, compared to first quarter of 2001

Gross Domestic Product (GDP) grew by 0.3% in both the euro-zone and the EU15 during the first quarter of 2002, according to estimates from Eurostat. These results follow a drop of 0.3% in the euro-zone and 0.2% in the EU15 in the fourth quarter of 2001. In comparison with the first quarter of 2001, euro-zone GDP grew by 0.3% and that of the EU15 by 0.4%, after increases of 0.4% and 0.6%, respectively, in the previous quarter.

[Background paper STAT/02/82]

Enlargement news

"The cost of enlargement?" 1/1000 of the aggregate GDP of the enlarged Union, says the presidency

The new Danish Presidency of the European Union assumed its role on 1 July with a heavy insistence on the priority it attaches to meeting EU targets on enlargement.

As it says in its programme for the Presidency - entitled "One Europe" - the "main priority is to conclude the enlargement negotiations with up to 10 new member countries," and to complete a virtuous circle from Copenhagen in 1993, where conditions for EU accession were defined, to the summit in Copenhagen in 2002. "A successful conclusion to the enlargement negotiations will contribute to the creation of one whole and undivided Europe," says Denmark.

The Danish timetable foresees that the European Council will decide "in the autumn of 2002" on the candidate countries with which negotiations can be concluded. It aims to close all outstanding issues that are not related to the financial package during July and September. The EU's position on all the financial questions concerning enlargement will then be established for presentation to the candidate countries no later than early November. The period between the Brussels summit and the summit in Copenhagen will then be spent on negotiations with candidate countries. As the Presidency says: "We will need some weeks before the December European Council for these negotiations. These are sensitive issues - also in candidate countries. Therefore, we cannot wait until December for EU to decide on these issues."

Denmark also insists that "the backing of the people is vital to the enlargement process," and promises that it will exert itself "to ensure that the final phase of the accession negotiations is conducted in such a way that the people's support is maintained, in both candidate and member countries". After the conclusion of the accession negotiations two to three months will be needed for the completion of the accession treaty. Then, after approval by the European Parliament, it will be signed in the candidate and member countries, and can be ratified. In most of the candidate countries, the ratification will entail a referendum - and "without popular support, part of the purpose of this gigantic peace and union process will crumble away," Denmark warns.

Denmark has pointed clearly to the scale of the challenge. "Concluding the enlargement negotiations is not a task that the Danish Presidency can shoulder alone," it concedes. It will demand "a substantial effort and a willingness to compromise from all concerned". "Enlargement is not a gift from West to East. Enlargement is in the interests of Europe as a whole," remarked Danish Prime Minister Anders Fogh Rasmussen on 3 July.

Other leading figures in the Danish government have been making similar points. Danish Minister for European Affairs Bertel Haarder said in London on 2 July: "If we do not meet the agreed deadline, it would risk postponing the entire enlargement process for years. The credibility of the EU is at stake," he said. He pointed out that the direct costs in the field of agriculture linked to enlargement would amount to less than 0.1% of GDP in the current budgetary period - "a very limited amount, indeed, seen in the context of the increased opportunities for trade and investment that enlargement would bring," he argued.

Minister for Foreign Affairs Per Stig Moller also aimed to provide reassurance on the financial questions on 3 July when he said: "The Commission's proposal on the financial questions remains within the European Union's financial framework for 2004-2006, even if the working hypothesis today is ten countries." The 40 billion earmarked for the accession of new member states in these three years "is about one thousandth of the aggregate GDP of the member states and the candidate countries. Not a high price to pay for the reunification of Europe".

The Presidency is also being hard-headed about the criteria the candidates will have to meet. "Not all the candidate countries negotiating are expected to be able to conclude accession negotiations under the Danish Presidency," says Denmark. The ten countries mentioned at the European Council meeting in Laeken "will all need to maintain the fast pace in the negotiations and reform processes in order to achieve the objective of concluding the negotiations in 2002," it warned last week.

The Danish Prime Minister, emitting a warning that "even a small delay can put back the entire process," insisted that "no country should be asked to wait for other countries," as that would be "unfair" to those among the Laeken ten who have completed their preparations. "If only some of the ten countries are ready, then we must conclude negotiations with them, so that they may be admitted," he said. As a consequence, particular efforts must be made to ensure that the progress towards membership of those countries (which will certainly include Bulgaria and Romania) "is continued and intensified". Meanwhile, "like other candidate countries, Turkey must fulfil the political conditions for membership in order for negotiations to commence".

See the Danish Presidency web site on http://www.eu2002.dk/main/

Regions vital for enlargement

The 3-4 July plenary session of the EU's Committee of the Regions focused heavily on EU enlargement, with participation from European Enlargement Commissioner Günter Verheugen, Danish Minister for European Affairs Bertel Haarder, and representatives of regions from the candidate countries. Commissioner Verheugen stressed the importance of local and regional levels of government in preparing candidate countries for EU accession. But he also put in a strong bid for a more reasoned approach to the entire enlargement project. And leading members of the Committee urged a stronger role for them in making enlargement work, particularly in relation to ensuring that information circulated adequately to citizens in the EU and in the candidate countries.

The representatives from the candidate countries offered a parallel view. Despite the diversity of their situations, one common theme that emerged from their interventions was a desire to play a more active role in the enlargement process in their respective countries, and to see the decentralisation process go further.

For a full report of the plenary, see http://www.cor.eu.int/corz203.htm.

The theme of local and regional participation in the enlargement process was taken up in a conference on 5 July sponsored by the Presidency and the Commission. The conference, "Enlargement from a local and regional perspective", brought together representatives of regional and local government from current and future member states to discuss participation in the enlargement process, and in the EU after accession.

(See http://www.kk.dk/5julyconference/)

Slower growth in transition countries?

After satisfactory performance of the transition countries in 2000, growth slowed down in 2001 as the external conditions deteriorated. And this tendency was not checked in the first quarter of 2002, according to "Transition Countries in 2002: Losing Steam", the latest publication from WIIW Research Reports. Industrial production has weakened, in some countries even declined. Expanding consumption has been the major growth factor, it says. Meanwhile, capital formation weakened or contracted. "This does not augur well for economic growth in the medium-term future." The report predicts that current account deficits will continue to be financed largely - "and safely" - by inflows of foreign direct investment. But it warns that while persistent unemployment will generally have no destabilising political consequences because of its associated social problems, this cannot be so safely assumed for Poland.

Meanwhile, the new WIIW-WIFO data compilation of foreign direct investment in central and eastern Europe and the former Soviet Union suggests that the world-wide decline of FDI in 2001 had no major direct impact on the transition countries. But stagnation in leading economies and the loss in market value of a number of transnational corporations led to the scaling back of investment plans for 2002 and this has affected direct investments in eastern European countries. In the central European transition countries the FDI inflow in the first three months of 2002 was about one-half of the previous year's level.

"For Poland, a country with home-made economic stagnation, the prospects are bleak for the rest of the year as well," it says. "But in the Czech Republic, energy sector privatisation may give a boost. As to Hungary, the record FDI of 2001 will certainly not be achieved." Slovakia and Slovenia represent the main exceptions to the declining trend. A major increase of FDI will be booked in Slovakia, which sold 49% of the gas transit transport company in March for US$ 2.7 billion. Together with the expected electricity sector privatisation the annual inflow may double compared to the previous year. Slovenia had a record level of FDI inflow in 2001 that will most likely be surpassed in 2002. The privatisation of the banking sector has finally started and also companies privatised earlier to dispersed owners and funds are attracting new foreign capital. Romania and Bulgaria are pursuing a slow privatisation policy that can attract only modest FDI for some years. They also feature a growing economy and low wages attracting investors to the labour-intensive light industries.

Recent developments have not changed the basic features of per capita FDI in central and eastern Europe. The Czech Republic, Estonia and Hungary report the highest per capita stocks, followed by the Slovak Republic, Croatia, Slovenia and Poland. These, says the report, are the countries with intensive corporate integration with the European Union. For the rest of the countries in the region the amount of FDI is meagre. However, foreign companies may acquire great economic importance even if the invested amount is small. For instance, the amount of FDI in Romanian manufacturing is only US$ 2 billion, but the result is that 38% of the sales and 44% of the exports is produced by foreign affiliates. In the case of Bulgaria, only about US$ 800 million has been invested into the banking sector, but with this amount foreign affiliates acquired 70% of the banking assets. To achieve a similar rate of control in the Slovak Republic US$ 1.2 billion was necessary, and in the Czech Republic more than US$ 4 billion.

For details of how to obtain the full report, see http://www.wiiw.ac.at/datafdi.html

Another Phare boost for Czech roads

New bridges on the E442 international road across the Czech Republic are being opened in early July. Supported with 2.1 million euro from the European Union's Phare programme, and with a loan from the European Investment Bank, the project will help make transport smoother and safer transport to and from Germany. It forms part of a high-capacity four-lane connection to the Hradek nad Nisou border crossing to Germany. The dilapidated old three-lane bridge has been demolished and replaced without interruption of traffic over the last five years.