Discord at EU summit over globalisation aid fund

27th October 2005, Comments 0 comments

27 October 2005, HAMPTON COURT, ENGLAND - Calls for using state funds to soften the impact of globalisation on European workers swiftly ran into opposition at a summit of European Union leaders Thursday.

27 October 2005

HAMPTON COURT, ENGLAND - Calls for using state funds to soften the impact of globalisation on European workers swiftly ran into opposition at a summit of European Union leaders Thursday.

British Prime Minister Tony Blair is backing a European Commission proposal for a 3.5 billion euro (4.2 million dollars) "shock absorber fund" to cushion employees who lose their jobs due to global competition.

E.U. leaders are divided over whether the economic rise of China and India present more of an opportunity - or a threat.

Blair sees the globalisation fund as a peace-offering to French President Jacques Chirac who has been highly critical of what he terms Europe's failure to help out the victims of foreign competition.

Agreement on the fund at a one-day E.U. summit at Hampton Court Palace near London has become entangled in efforts to strike a deal on the bloc's 875 billion euro budget for 2007-2013.

The globalisation cushion came under attack from an alliance of wealthy E.U. nations such as Germany, the Netherlands and Denmark as well as some of the bloc's new members, such as Estonia, which have pushed through painful reforms.

"We do not have to reward those countries that did not make structural reforms in time," said Estonian Prime Minister Andrus Ansip, adding: "It is pretty difficult to understand why we would need the globalization fund."

Danish Prime Minister Anders Fogh Rasmussen said he was skeptical.

"I do not believe in subsidizing old-fashioned industries and an artificial prolongation of non-competitive sectors," said Rasmussen.

Outgoing German Chancellor Gerhard Schroeder also said he opposed the fund.

Schroeder said it was vital to clinch agreement on the E.U. budget in December and that these efforts should not be complicated by fresh spending by Brussels.

"This is also the view of the new German government," said Schroeder in reference to Angela Merkel who is due to become chancellor at the head of a grand coalition with party next month.

"Therefore (I) am more than sceptical on whether the ... globalisation shock absorber fund can be financed," said Schroeder.

Berlin is the E.U.'s largest paymaster, contributing about 20 per cent of its annual 100-billion-euro budget.

Defending the globalisation fund, a spokeswoman for European Commission President Jose Manuel Barroso insisted no new money was required.

The cash would come from the bloc's budget by creaming off funds allocated to programmes which were not spent.

"We must focus on people," Barroso told E.U. leaders, adding that the fund would "help people get back to work, not prop up failing businesses."

For Blair the stakes are high. The British prime minister believes winning agreement on the controversial fund will pave the way for a budget breakthrough deal at an E.U. summit this December.

E.U. leaders last June failed to hammer out the budget accord after Britain said it would forego its budgetary rebate only if France accepted a radical revamp of E.U. farm subsidies.

French farmers receive about 10 billion euros a year in aid from Brussels and London gets over 4 billion euros from the E.U. each year as part of its budget rebate agreed under former British Prime Minister Margaret Thatcher.

Boosting Blair's chances for clinching a budget deal by the end of the year, German chancellor-designate Merkel - who is not attending the Hampton Court summit - said the E.U. budget had to be agreed by December.

"Europe urgently needs a success. The E.U. must prove that it is able to take action," Merkel said in an interview with German newspaper, Handelsblatt.

Merkel stressed that Germany would be "cooperative" in order to make an E.U. compromise possible.

The E.U.'s previous seven-year budget was only secured in 1999 after the then newly-elected Schroeder caved in to French demands on farm spending.

However, many E.U. insiders believe there will be no financial breakthrough in December and the budget battle will be passed on to the Austrian presidency in the first half of 2006.


Subject: German news

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