Tuesday, 27 May 2008

Threat to US-EU relations by Transatlantic Economic Council

The Transatlantic Economic Council (TEC) was created in April 2007 at the EU-US Summit in Washington to foster transatlantic economic integration. It aims to achieve better regulation, barrier-free and secure trade, protection of intellectual property rights, and integration of financial markets although it is doubtful that it will be able to achieve such objectives. On 13 May, the TEC met for the second time. According to the US Chamber of Commerce and BusinessEurope, if all the outstanding regulatory barriers could be resolved by the TEC, that could add €6.5 billion ($10bn) to the transatlantic economic relationship in saved costs and potential market growth. The transatlantic business community are hoping that the TEC will begin to manage the bilateral tensions between the US and EU. American businessmen are particularly concerned about regulatory barriers in the cosmetics and poultry sectors. The EU’s ban on the marketing of cosmetics ingredients that were tested on animals will enter into force in March 2009 and it is becoming quite difficult for the US to meet that deadline. Moreover, the US cosmetics firms have been objecting to the EU’s REACH chemicals regulation deadline on June 2008, for registering certain chemicals used in cosmetics made outside the EU. The US believes that the deadline is almost impossible to be meet which will lead to millions of dollars in lost sales as product formulas will be prevented from being sold within the EU. The main concern of this industry is that its products would be classified as new substances therefore they must be registered with the European Chemicals Agency by 1 June 2008 however they are not entitled to the extended registration deadlines that some European companies are. Furthermore, the EU has been also calling to recognise the US accounting system since it has became too expensive for one company to settle its accounts in accordance with the other system. US business has also called for a lifting of the EU’s 11 years ban on importing US chickens that are washed in chlorine. Under the EU rules, poultry meat must be washed in water of drinking quality. According to the European Food Safety Authority there are no risks from treating poultry meat with chlorinated water yet Mariann Fischer Boel, the Agriculture Commissioner, believes that such move will upset EU farmers as importers would be allowed to meet lower standards. In the meantime, according to the Financial Times, “European poultry producers are using a chlorine-washing process on exported chicken, while the same cleaning method in the US has led to a de facto ban on American sales in the EU.” On the other hand, the US is urged to scrap its low-voltage procedure approval for electrical products which requires products to be tested in independent laboratories which, according to BusinessEurope, leads to €77 million a year in lost sales opportunities. On poultry, the Commission has promised that it will work with the Member States and the European Parliament to find an agreement on this issue, before the next TEC meeting, scheduled to take place in the autumn 2008. The Commission has also guaranteed US officials that it will “take concrete action” to make sure that trade in cosmetics is not disrupted by the REACH regulation. The Commission has said that will propose “a positive decision” on the equivalence of US accounting standards to EU rules in the course of 2008. It seems that the progress made on the TEC agenda consists only of promises. According to the joint statement “Neither side, for example, is completely satisfied that its concerns are yet being fully addressed in the TEC process.” It remains to be seen if the European Commission will be able to honour its commitments. Nevertheless, it seems that the TECs credibility is already at stake. Soon transatlantic businesses will realise that TEC will achieve nothing in removing barriers to transatlantic trade.

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Commission presents 2009 Budget

On 6 May, Dalia Grybauskaité, European Commissioner for Financial Programming and the Budget, presented the preliminary draft of the 2009 budget, launching the negotiations on the annual budget procedure between the Parliament and the Council. 2009 will be no exception to the predictable rule of thumb: that the EU budget wastes millions of euros and pounds of taxpayer’s money. The Commission has proposed €134.4 billion in commitment appropriations, which represents 1.04 per cent of the Union’s GNI and an increase of 3.1 per cent compared to 2008. The payment appropriations are €116.7 billion, representing 0.9 per cent of the EU’s GNI and a fall of 3.3 per cent compared to the 2008 budget. Grybauskaité has explained that this decrease was due to certain payment appropriations, mainly those funding structural actions, were finalised and paid in advance in 2008 and consequently will not be paid in 2009.

Last year, the European Commission proposed that economic growth and employment would be the largest part of the Union’s 2009 budget, representing 45 per cent of the budget. Although agricultural expenditure is not the main spending it still represents almost 43 per cent of the budget. Hence, €60 billion will be allocated for growth and employment. A total €11.7 billion will be channelled into areas such as research, innovation and lifelong learning which represents a 5.5 per cent rise from 2008. For the ‘Lifelong learning programmes’ a total appropriation of EUR 935,4 million was proposed by the Commission for operational expenditure for 2009. The organisations which receive funding are the ones which promote EU integration. As Chris Heaton-Harris MEP has said “… most ‘educational’ material emanating from the EU is more like pro-integration propaganda.” The Lifelong learning programmes are a significant waste of UK taxpayers’ money. Around €57 billion will be allocated to ‘Agricultural and Rural Development. With an increase of 2.5 per cent compared to last year, €48.4 billion will be allocated to programmes to support cohesion across Europe. In 2009, around €40 billion will be allocated to the structural funds and over €9 billion for the Cohesion Fund.

The 2009 budget has been called the “green budget” as around €17 billion will be allocated to energy and climate change packages. A massive €14 billion of funds will go toward environmental targets and funding for energy objectives such as the development of sustainable energy, which demands around €2.3 billion. The spending on ‘EU as a global partner’ will be allocated €7.4 billion which represents an increase of 1.8 per cent compared to 2008. There is an increase of 1.1 per cent in the freedom, security, justice and citizenship heading budget which amounts to 1.5 billion in commitment appropriations, an 8.6 per cent rise over 2008. €839 million will be allocated to fight crime, terrorism and manage migration flows. There is a significant increase concerning security and safeguarding liberties which will rise by 32 per cent, with €90 million being spent on combating crime. €52 million will go on citizens’ programmes focusing on European culture. The Commission also wishes to see an increase of 5 per cent in the budget for administrative expenditure across all EU institutions. The Commission has therefore proposed €7.6 billion for administration. It wants to create around 250 new posts taking into account the enlargement to Bulgaria and Romania.

There is no clear added value in spending such amounts at the EU level. The EU has been spending UK taxpayer’s money on policies that clearly do not benefit them. Taxpayers are forced to spend millions of pounds on the Commission’s projects such as Galileo and the European Institute of Technology which they do not want. The UK is contributing to EU programmes that are of no benefit to British people. The UK net contributions have been increasing. Under the financial perspectives agreement reached in December 2005, Tony Blair agreed to increase the UK contribution to the EU budget for 2007-13. The UK’s 2005 net contribution was £3.6 billion, £3.9 in 2006 and according to HM Treasury European Community Finances Statement on the 2007 EC Budget the UK’s 2007 net contribution is estimated to be £4.7 billion. According to several researches in this area, the UK’s 2008/09 net contribution is estimated to be around £6.1 billion and in 2009/10 around £6.4 billion.

The Commission has not taken into account expenditure related to the Lisbon Treaty, such as new provisions for the European external action service, because the Treaty has not been ratified yet. According to the Commission, that spending will not be significant as it will mainly be covered by national governments. Instead, there will be a budget correction in due time. The Commission does not want to touch these delicate issues in order not to upset the Lisbon Treaty’s ratification. Nevertheless, the EU Member States have already started discussions on the proposed new President of the EU such as possible salary and staff. Nobody knows yet precisely what will be the job of the EU President however according to the EUobserver, the EU Member States are already talking of providing the President with “a salary of around €270,000, a chauffeured car, a housing allowance and a personal staff of around 20” which will be almost equivalent to what the President of the European Commission is getting. Another innovation of the Lisbon Treaty which will have repercussions on the budget is the change to the European Council, which will become an EU institution and therefore it will have its own budget. There is also the expenditure for the post of the EU High Representative for Foreign and Security Policy which also needs to be covered by the budget.

The European Commission presented the preliminary draft budget for 2009 to the Ecofin Council on 14 May. The Council is planning to present a draft budget at first reading on 17 July. The EU Member States will now analyze the draft budget and they will in all likelihood, attempt to cut spending in areas where the European Parliament would like to increase it. Several MEPs are not pleased with the tight margins of the draft budget in several areas, particularly that dedicated to the Union’s external actions. According to Europolitics, Jutta Haug said that the budget for “the EU as a global partner” does not take into account everything that needs to be funded. Nevertheless, several MEPs have already shown their satisfaction with the increase in funds for the Seventh Framework Programme for Research, the Trans-European Networks and Galileo. It should be mentioned that the Lisbon Treaty amends the budget procedure conferring further powers on the European Parliament. The Lisbon Treaty abolishes the distinction between compulsory and non-compulsory expenditure, hence the European Parliament will be on equal footing with the Council. The European Parliament will be able to influence the entire budget.

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Planning the future of the euro

On the tenth anniversary of the euro, the European Commission has called for better coordination of economic policies, to strengthen co-ordination of structural reform in the euro area and for a single seat in international financial institutions. On 7 May, the European Commission adopted a communication “EMU@10: successes and challenges after 10 years of Economic and Monetary Union” which assesses the first ten years of EMU highlighting its achievements while identifying the goals and challenges facing the euro area. The Commission has described the euro as “a resounding success.” The Commission has referred to the main benefits of the euro such as price stability, job creation, low interest rates, reduced costs for travellers, lower costs for businesses and increased trade. The Commission has highlighted that the “euro area has become a pole of stability for Europe and the world economy.” However the euro has not fulfilled all expectations. There were not many changes concerning economic growth have stood at around 2 per cent per year since the inception of euro which is roughly the same rate as in the previous ten years. The Commission has pointed out that “the euro area’s per capita income has stalled at 70 per cent of that of the United States.” Nevertheless, the Commission believes that “the public image of the euro does not fully reflect EMU's successful economic performance.” According to the Commission the euro is “used as a scapegoat for poor economic performances” which it believes is the “result from inappropriate economic policies at the national level.” The Commission has denied the beliefs of citizens that the euro increased prices when it was introduced. The Commission has stressed that the next decade will be marked by new global challenges which will have an impact on the EMU weaknesses such as globalization, the rising of food and energy prices, climate change and an ageing population. The Commission has put forward a three pillar agenda to address the challenges facing the EMU. The Commission has stressed that the euro area’s governance and coordination of economic policies must be improved which involves deepening as well as broadening economic surveillance arrangements to guide fiscal policy over the cycle and in the long term and, at the same time, address divergences in growth, inflation and competitiveness. The Commission has called for a deeper budgetary surveillance. The Commission believes that public debt developments in the euro-area should be closely monitored whereas “medium term budgetary objectives should be strengthened to address implicit liabilities.”

The second element of the Commission domestic strategy intends to better integrate structural policies within the coordination process in EMU. The Commission has pointed out that low growth has been more marked in Member States where structural reforms have been lagging behind and so the Commission recommends strengthening the co-ordination of structural reform in the euro area. According to the Commission, “reforms should be a top priority for EMU members.” The Commission has stressed that such measures should be addressed to remove the remaining barriers to product market integration, enhancing competition, fully implementing the Services Directive and promoting better-functioning labour markets. According to Joaquín Almunia, Commissioner responsible for Economic and Monetary Affairs, in order to achieve stronger incentives for reforms the Eurogroup should closely monitor the implementation of the specific euro area recommendations of the Lisbon Strategy. Such a recommendation would have political and economic implications. Mr Almunia has already stressed that “the Eurogroup should take a more active role in monitoring and coordinating structural reforms.” There will be further policies at EU level. It would represent a further impetus for Member States to carry out economic policies as a matter of the EU’s common concern. Moreover, the Commission has stressed that the euro area “has to play a more active and assertive role both in multilateral fora and through its bilateral dialogues with strategic partners.” The Commission is calling for the euro area “to speak with a single voice on exchange rate policies.” The Commission believes that “the most effective way for the euro area to align its influence with its economic weight is by developing common positions and by consolidating its representation, ultimately obtaining a single seat in the relevant international financial institutions and fora.” Presently, Member States still represent themselves in front of financial institutions such as the International Monetary Fund and the G7 group. Obviously, it would be quite difficult for several Member States to accept such a suggestion, whether that be Germany, France or Italy as they do not want to lose their influence in those institutions. The third pillar of the Commission policy agenda aims to improve the EMU’s system of governance. According to the Commission, “better coordination and surveillance of national economic and budgetary policies is needed within the ECOFIN Council and the Eurogroup … in order to address imbalances and promote structural reforms that foster adjustment, stability and growth.” Further coordination of Member States’ economic policies within the Union might harm the economic interests of several Member States. Presently, there are no binding instruments for the EMU’s economic coordination. The Commission believes that better use can be made of the institutions and instruments governing the EMU in order to tackle emerging policy challenges. The Commission has called for a closer coordination between the ECOFIN and the Eurogroup, especially taking into account the expansion of the euro area. According to the Commission, the “Eurogroup should continue to serve as a platform for the deepening and broadening of policy coordination and surveillance in EMU.” The Commission has recalled that the Lisbon Treaty formally recognises the Eurogroup strengthening its role on questions affecting the functioning of EMU. Unsurprisingly, the Commission wants to play a stronger role to ensure the effective functioning of EMU. The Commission wants to promote further economic and financial integration. Moreover, it wants to enhance its role in international dialogues. The Commission has pointed out that the Lisbon Treaty provides the necessary basis to “adopt measures specific to euro-area Member States” as well as “to strengthen the coordination and surveillance of their budgetary discipline” and to set out economic policy guidelines for euro area Member States whilst ensuring that they are compatible with those adopted for the whole of the Union. The Commission is provided, under the Lisbon Treaty, with the power to issue direct warnings to a Member State, therefore it does not have to wait for the EU finance minister’s approval when Member States economic policies are not consistent with the broad guidelines or risk jeopardising the proper functioning of EMU. At the moment, the Commission wants to promote discussion on the several issues raised in this communication yet Almunia has already said “Then, in time, the Commission will come back with appropriate, concrete proposals.” The Commission suggestions will have far reaching implications for Member States’ structural, financial and economic policies and so the Commission might not achieve the level of consensus that it is hoping for between the EU institutions on further policies for the EMU.

The discussions will take place during the French EU Presidency. France has already announced that it wants to look at the eurozone governance during its presidency. In the meantime, according to the EUobserver, Dutch finance minister, Wouter Bos, has recently spoken at the Brussels Economic Forum pointing out that “high-debt states may undermine the stability of the whole monetary union.” According to Mr Bos, such Member States “will be forced by political pressure to borrow more and increase their budget deficit, with consequences for interest rates and inflation.” He believes, therefore that the “long-term chances of survival of the euro should be questioned.”

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UK to face European Commission sanctions for Government deficit?

The Commission is set to send a strong political message to the UK Government on its deficit: according to the Commission’s spring economic forecast, the UK is not setting a good example of budgetary discipline. Joaquin Almunia already announced on 11 June that the Commission will put forward a proposal to open an excessive deficit procedure against the UK for breaching the 3 per cent rule on deficits.

On 28 April, the European Commission presented its spring economic forecast 2008-2009 which is marked by high inflation and low growth. The EU’s growth is expected to come down from 2.8 per cent to 2 per cent this year and to 1.8 per cent in 2009 whereas the autumn forecast had foreseen growth of 2.4 per cent. The slowdown in the eurozone is even more marked as growth in the eurozone is foreseen to fall from 1.7 per cent in 2008 and 1.5 in 2009 from 2.6 per cent in 2007. The Commission had previously foreseen rates of 2.2 per cent this year and 2.1 per cent in 2009 in the eurozone. The turmoil in the financial markets, the United States market slowdown and soaring prices of oil and raw materials are the reasons given by the Commission for “the moderation in growth.” Employment growth is predicted to slow down to 0.8 per cent this year and 0.5 per cent next year in the EU (0.9 per cent and 0.5 per cent, respectively, in the euro area). The unemployment rate is estimated at 6.8 per cent in the EU this year and 7.2 per cent in the euro area.

Even with slow growth, the Commission believes that “the EU economy is holding up relatively well thanks to sound fundamentals and is expected to create 3 million new jobs in 2008-2009.” Consumer price inflation is expected to surge temporarily in 2008 to 3.6 per cent in the EU and 3.2 in the eurozone against 2.4 per cent and 2.1 per cent respectively in 2007 due to soaring energy and food prices. The inflation is expected to come down to 2.4 per cent in 2009 and 2.2 per cent in the euro area. The Commission has projected the public deficit to deteriorate in 2008 and 2009. The 2008 overall deficit is foreseen to increase to 1.2 per cent of the GDP in the EU and 1 per cent in the eurozone but in 2009 the deficit should broadly stabilise.

According to the Commission’s spring economic forecast, the foreseen economic slowdown will also have a negative impact on the public debt of Member States. Things do not look well, in particular for the UK. The Commission has pointed out that “the significant depreciation of the pound's nominal effective exchange rate (by over 11 per cent between August and March) is likely to improve the price competitiveness of UK exports” whereas “at the same time aggravating inflationary risks in the short term.”

Moreover, the Commission envisages “a marked slowing of private consumption in 2008, driven by more restrictive borrowing conditions and a downward correction in house prices, and only a limited recovery in 2009.” The Commission has stressed that “Whilst moderate earnings growth will support private consumption, employment growth will no longer do so as it slows to almost zero over the forecast horizon.” The Commission has stated that “growth in the UK economy is expected to slow to around 1¾ per cent in 2008.”

The Maastricht Treaty has set out the reference value for government deficit at 3 per cent of gross domestic product (GDP). Taking into account the Commission’s opinion the Council decides, by a qualified majority, whether an excessive deficit exists establishing a deadline for effective action to be taken. If no effective action is taken, the Council may give notice to the Member State in question to take measures to reduce the deficit. Then, if no effective action has been taken in compliance with a notice, the Council may decide to impose sanctions which take the form of a non-interest-bearing deposit with the Community.

According to the Commission’s spring economic forecast, the UK as well as France are not setting an example for budgetary discipline as the Commission foresees they will breach rules on public deficit. Outside the eurozone the Member States likely to perform worst are the UK, Hungary and Romania. The UK deficit is predicted to rise from 2.9 per cent of GDP in 2007/08 to 3.3 per cent in 2008 and 2009. It should be mentioned that in September 2005, the Commission initiated the procedure against the UK based on a general government deficit of 3.2 per cent of GDP in financial year 2004/05. In 2006/07 the deficit fell further to 2.7 per cent of GDP. Last September, the UK excessive deficit situation has been corrected and the Commission has recommended to the Council to abrogate its decision on the existence of an excessive deficit in the United Kingdom.

However, Joaquin Almunia has already announced that the Commission on 11 June will put forward a proposal opening an excessive deficit procedure against the UK for running a deficit on public expenditure over revenue, of over 3 per cent of its gross domestic product (GDP). However, the Council’s formal notices and sanctions do not apply to Member States which do not participate in the euro. Therefore, the launch of an excessive deficit procedure against the UK would be seen as a political embarrassment to Alistair Darling. The Commission should not interfere in UK public finances, especially taking into account the credit crunch. If the excessive deficit procedure goes through Alistair Darling might be forced to raise taxes to reduce the deficit.

The eurozone finance ministers debated on 13 May the growing deficits in different Member States which may be jeopardised as the Eurogroup aims to balance the budget. According to the Eurogroup declaration from 13 May the commitment accepted by eurozone Member States, in April 2007 (Berlin Agreement), to achieve budgetary balance by 2010 was relaxed. France, whose public deficit is estimated to rise to 2.9 per cent in 2008 and 3 per cent in 2009, was able to negotiate a delay for all eurozone Member States to eradicate their deficits by 2010. Portugal and Italy are also raising concerns. According to Europolitics, a diplomat has said “nobody believes that we will all be in balance by 2010.” Nevertheless, the Commission will launch an excessive deficit procedure against France on 2 June, one month before it takes over the EU presidency.

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A new job for Europe? Responding to national disasters

The duty of civil protection is usually the responsibility of Member States yet the Commission now wants to go beyond its merely supportive role and interfere in national civil protection. The European Commission intends to interfere with Member State civil protection capabilities as well as coordinate their response to disaster. Last March, the European Commission adopted a communication with the purpose “to reinforce the EU’s disaster response capacity.” The Commission wants to put in place an integrated disaster response for the EU. It has presented an action plan with proposals for enhancing the EU’s response capacity and recommends the actions to be implemented by the end of 2008. The communication covers natural or man-made disasters as well as conflict-related emergencies which have taken place either inside or outside the EU.

Presently, there is no specific Treaty basis but the absence of legal basis on civil protection has not prevented the Union from taking action. The Community measures in this area have been adopted on the basis of Article 308 TEC (flexibility Clause) under which unanimity at the Council and consultation to the European Parliament is required. The Lisbon Treaty creates a new legal basis for civil protection which has been among the key areas where the Member States should have retained exclusive competence and the Union was only to provide a support or co-ordination role. The Parliamentary Under-Secretary at the Cabinet Office, Tom Watson, has explained to the European Scrutiny Committee that “any such Commission proposals for action under existing instruments would be decided by the comitology procedure by qualified majority voting.” However, if the Commission puts forward proposals which alter current legislation, then unanimity is required. Under the Lisbon Treaty, it is required that the proposal pass through qualified majority voting in the Council and co-decision with the European Parliament.

The Commission believes that in order to achieve better inter-institutional cooperation itself the Council and Member States should define “multifaceted scenarios” for disaster relief operations, and deploy joint planning and operational teams to deal with particular disasters. The Commission has proposed to transform the Monitoring and Information Centre into an operational centre for European civil protection intervention.

Tom Watson believes “… that such a move would draw limited expertise away from Member States where it is most likely to be needed in an emergency, or if this led to duplication with other EU structures such as the Council’s SitCen.” Moreover, he has pointed out that “At present, the MIC does not have the skills or capacity to become itself a fully operational centre to manage disaster response activities whether within or outside the EU.”

The Commission has said in its communication that the European Parliament has urged it to put forward a proposal on a European rapid reaction force for emergencies based on the civil protection mechanisms of the Member States. The Commission wants to improve the European civil protection response capacity. It has made clear that it wishes to coordinate the Member State civil protection resources. The Commission has stressed that the response to disasters, such as floods and forest fires presently come solely from national sources. The Commission therefore wants to develop reserve resources available for European civil protection operations. It will present proposals for enhancing the European civil protection response capacity based on “a voluntary pool of key standby civil protection modules to be available for deployment at any time” and “additional reserve capacities designed to complement national responses to major disasters such as forest fires and flooding.” These proposals are likely to raise subsidiarity concerns. According to the minister, “The HMG views with caution the proposal for complementary reserve resources at EU-level” pointing out that “the Commission has neither the expert capability, nor the legal competence, nor the finance to hold such disaster response resources at present.”

It remains to be seen if the Council will back the Commission proposals. The Council is yet to deliver conclusions on the Commission’s communication.

Furthermore, on 11 March, the European Parliament adopted a report approving the mobilisation of the EU solidarity fund for an amount of €162.4 million (£110m) relating to the floods in the United Kingdom in June and July 2007. However, it has recently been exposed that the UK will receive only £31m. Timothy Kirkhope MEP has blamed it on Tony Blair, who in December 2005 renegotiated the UK rebate. Timothy Kirkhope said: “…They were very triumphant when the money was secured but they must have been well aware then that they would not be receiving anywhere close to all of it.”

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Tuesday, 20 May 2008

Prime Minister of Bavaria on the Sudeten Germans

The Prime Minister of Bavaria has addressed a conference of the Sudeten Germans, saying that only dialogue with Prague will resolve the “problems” which still exist over the issue between Germany and the Czech Republic. Like other groups of ethnic Germans expelled from Eastern Europe after 1945, the Sudeten Germans continue to campaign for restitution of their property. They specifically attack the so-called Beneš decrees, a series of over one hundred legislative acts which provided the legal structure for the mass expropriation and expulsion which we would nowadays call ethnic cleansing. They overlook the fact that these decrees were themselves signed as a result of the executive decision taken by the Allies at Potsdam to cleanse Central Europe of Germans. The Sudeten Germans, of course, were the cause of the Munich conference in 1938, when France and Britain agreed to carve up Czechoslovakia and hand the Sudetenland to Hitler.

The fact that the Bavarian Prime Minister addressed the conference, which some 8,000 people attended, shows how closely linked the Bavarian conservatives are with the expellees. The organisation also campaigns – together with support from the Bavarian government – for other issues related to Expellees, for instance for the inclusion of the Expellees president, Erika Steinbach, in the governing council of the new Museum of Expulsion to be set up in Berlin, and for the maintenance of German language tuition in German schools in Romania, where there was a community of 250,000 ethnic Germans until 1989. Their numbers are now greatly reduced to some 100,000. [Handelsblatt, 11 May 2008]

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Monday, 19 May 2008

Most Germans want the D-Mark back again

Ten years after the decision to introduce the euro, the Germans still hanker after their beloved deutsche Mark. One German out of two continues to think in terms of D-Marks, while an online poll showed 65 per cent wanting the old national currency back again. As prices rise in Germany as elsewhere, nostalgia for the old stable German currency is stronger than ever.

A poll conducted by the Federal Association of German Banks, however, finds that only 34 per cent of Germans want the D-Mark back again. Many Germans blamed the euro for price rises when it was introduced in 2001. [Die Welt, 2 Mai 2008]

---- An excerpt from John Laughland's Intelligence Digest. For a free e-mail subscription to the Intelligence Digest, please click here ----

Friday, 16 May 2008

Germany: two foreign policies

According to one commentator, Germany currently has two foreign policies, one conducted by the conservative Chancellor, Angela Merkel, the other conducted by the Social Democrat Foreign Minister and Vice-Chancellor, Frank-Walter Steinmeier. On her visit to Latin America, Chancellor Merkel visited only countries with pro-American governments, Steinmeier has been strengthening Germany’s links to Cuba; Steinmeier visits Moscow and refuses to meet the Dalai Lama while Merkel has aligned with George Bush and calls for the spread of democracy around the planet.

The Foreign Ministry under Steinmeier has become distinctly left wing (following the precedents set by the last Chancellor, Gerhard Schröder, for whom Steinmeier worked at the Chancellery. (He was head of the Chancellor’s office under Schröder.) The Chancellor’s office, meanwhile, has become distinctly conservative. This is because the coalition agreement between the Christian Democrats and the Social Democrats did not require that each side recruit civil servants from the other’s political camp: as a result, they have recruited their own. (Senior civil servants in Germany have party political affiliation.) The competition between the two sides is made more acute by the possibility that Steinmeier might be Merkel’s opponent in the parliamentary election in 2009. [Andreas Rinke, Handelsblatt, 11 May 2008]

---- An excerpt from John Laughland's Intelligence Digest. For a free e-mail subscription to the Intelligence Digest, please click here ----

Steinmeier calls for European army

At the very moment when Irish voters are being reassured that the Lisbon treaty will not threaten their country’s cherished constitutional neutrality, the German Foreign Minister, Frank-Walter Steinmeier, has spoken of the need for a European army. Addressing a conference of the Social Democratic Party’s parliamentary fraction in Berlin on 5 May 2008, Steinmeier started his speech with the old socialist greeting, “Dear Comrades” and immediately launched into the theme, saying that only a few years ago the title “Towards a European army” for a lecture would have seemed to be pure fantasy. “Today, after more than 20 civilian and military operations which we have run or are running from Macedonia to the Congo or in the Palestinian territories, it no longer sounds so distant or theoretical.” Steinmeier said that the EU could look back with pride over “15 years of common foreign and security policy” – i.e. since the ratification of the Maastricht treaty in 1993. He said that most of the operations conducted within the framework of the European Common Foreign and Security Policy (CFSP) were civilian but added that the EU was always being reminded that military operations could not be excluded as a matter of last resort. “It is also a part of our European credibility,” he said. Steinmeier claimed that if opinion polls showed dissatisfaction with Brussels’ tendency to over-regulate the size of tomatoes or the length of bananas, Europeans wanted the EU to speak with one voice in foreign affairs.

Steinmeier said that Europe now had its famous “telephone number” – Javier Solana, the High Representative for Common Foreign and Security Policy – but that the EU needed to go further still. He said that “a new era” would dawn with the ratification of the Lisbon treaty (recently ratified by the Bundestag). Saying that he was convinced that the treaty would enter into force punctually on 1st January 2009, Steinmeier said that it would give the Representative for Common Foreign and Security Policy much more power than before, since the Representative would also be Vice-President of the European Commission and because he would have far greater resources than those currently at Solana’s disposal.

Steinmeier used the phrase “European Foreign Service” to characterise the new post, something which the British government energetically denied that Lisbon would create. “With the Lisbon treaty it will be possible for a group of states to go forward in security and foreign policy,” he said, referring to the fact that Lisbon allows subgroups of EU states to act in foreign policy as the EU without all states participating (or having a veto). Steinmeier said that France was shortly due to take over the EU presidency and that it had declared its intention to make security policy the cornerstone of its six-month stint.

Steinmeier said that France’s coming reintegration into the integrated military structures of NATO would strengthen the EU’s weight in NATO and NATO’s cooperation with the EU: the NATO summit at the end of 2009 in Kehl and Strasbourg would, he said, he a potent symbol for the Franco-German axis within the alliance. The creation of the Franco-German brigade was, he said, a nucleus for the new CFSP. He concluded his speech with a rallying cry. “We Social Democrats will definitely continue to struggle for a European army, for Europe to become a strong peace power, and against any backsliding into old thinking!” [www.auswaertiges-amt.de]

---- An excerpt from John Laughland's Intelligence Digest. For a free e-mail subscription to the Intelligence Digest, please click here ----

Friday, 9 May 2008

European Commission wants to “debate” Europe

It is well known that the European Commission has been attempting to deal with the citizen’s lack of trust in the EU. It has responded to the European Council’s call for a period of reflection in June 2005 after the ‘No’ votes of the French and Dutch referenda, by adopting “Plan D for Dialogue, Democracy and Debate.” Under Plan D, the European Commission co-funded six trans-national projects aimed at connecting citizens with decision makers, for a total amount of €4.5 million. These projects organised debates across the EU which has amounted to nothing else but EU propaganda.

On 2 April, the European Commission adopted a communication, “Debate Europe, building on the experience of Plan D for Democracy, Dialogue and Debate.” The Commission’s approach, it claims, will be widened and deepened in 2008 and 2009 with the intention of showing that it has learned its lesson about listening and communicating with EU citizens. The European Commission has made clear that it wants to change the idea that EU affairs “are too abstract and disconnected from the national public debate to be of interest to the citizens” and “to overcome the divide between national and European issues.” The Commission communication refers to the European Parliament elections and to the ratification and entry into force of the Lisbon Treaty and taking into account the events of 2009, there will be an increased importance in communicating with citizens in order to provide them with misleading information on the European Union.

The Commission will put forward several actions at both the national and EU level in order to promote a general and permanent debate on the future of the European Union among European citizens even though it continues to support only federal integrationist debate. ‘Debate Europe’ will hold citizens’ consultations organised by civil society in each Member State. The objective is to send the citizens’ conclusions to elected politicians, political parties and foundations. A debate between citizens and politicians will be organized to discuss the proposals contained in the citizens’ platforms. The Commission’s main aim is to increase the involvement of citizens in the EU decision making process and to provide citizens with access to information in order to enable them to contribute, it says, more actively to the debate about the European Union. The EU is seeking to involve citizens, social partners, civil society in the Union democratic life but this is misleading. Only organised citizens' groups can attain the expertise needed if they want to influence the EU in a specialised field and NGOs, citizens organizations who lobby the EU institutions are largely funded by the Commission and will therefore not be critical of the EU project. Obviously, the European Commission is not only concerned in getting citizens involved in decision making but also in making the EU more popular. According to the Commission, ‘Debate Europe’ will strengthen the Commission's endeavours to explain the added value of EU policies to citizens such as “internal market related success stories – roaming mobile charges, low cost flights, closing the gap in regional development, environmental protection and the fight against climate change.”

The Commission has also stressed that ‘Debate Europe’ will benefit from the EU regulation on political parties and foundations as “the development of European political foundations, will play an important role in involving citizens in a permanent, genuine and informed political dialogue.” However, it should be recalled that political foundations which do no support further European integration will not be able to get any EU funding.

The Commission has proposed to co-fund several civil society projects in 2008 and 2009 under ‘Debate Europe’ not only at the EU level but also at national level. ‘Debate Europe’ will have a budget of €7.2 million. Soon, the Commission will publish a call for proposal for new projects. However, the UK’s portion of the fund to be allocated under ‘Debate Europe’ will not reach those who are critical of European integration.

The European Commission has stressed that “Public support for the EU can only be built through lively and open debate and by getting citizens actively involved in European affairs.” According to Margot Wallström, the European Commission had learned a number of lessons from the no votes and from the period of reflection, it has “listening better, explaining better and going local.” It is ironic that despite this, according to a Global Vision/ICM poll 74% of those surveyed in the UK, the people still want their say on the Lisbon Treaty in a referendum yet are not being heard. A more democratic Europe has been promised. In order to achieve a democratic Union which is closer to its citizens, a referendum on the Lisbon Treaty should have been held in all Member States.

Nevertheless, despite the refusal of referendums in Europe, the Commission wants to spend €7.2 million of taxpayer’s money in engaging EU citizens in EU affairs. The European Commission is keen to promote debate on EU issues but delicate issues such as the budget reform would be left to be publicly debated after the Irish referendum. The debates are never informed and are constantly focusing on EU achievements but not on real problems. In order to not jeopardise the ratification process of the Lisbon Treaty, the so called open and informed debate would be simply focused on the EU’s popular measures so that debate of delicate issues would not be promoted. Important issues such as how the Lisbon Treaty would be implemented would not be debated in public.

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The threat of the European police force

The European Law Enforcement Organisation’s (Europol) mission entails analysing intelligence information pooled from different Member States, preparing threat-assessment reports and deploying officers to serve alongside national police in multinational investigation teams. In December 2006, the Commission put forward a draft Council decision to replace the Europol Convention of 26 July 1995 with all the amendments already incorporated in the three Protocols, as well as some new provisions. Presently, the Europol Convention is amended through protocols which are then ratified by national Parliaments. Since the Europol Convention was replaced by a Council decision, national ratification is no longer required. The Commission has also proposed that Europol’s competence should not be limited to cross-border organised crime and that it should be extended to any serious cross border crime.

The Commission proposed that Europol be funded from the EU budget and not via contributions from each Member State. The Minister of State at the Home Office, Mr Tony McNulty, was initially concerned about Europol being funded from the Community budget which would lead to the UK losing influence over Europol’s budget. According to the Government, the introduction of EC staff regulations and community financing would not bring operational benefits to Europol, but it will, in fact, increase costs. The EU’s staff regulations would need to be extended to include Europol employees and so there will be an increase in running costs.

The Minister recently said to the ESC, “it would appear that the effect of applying the EC Staff Regulations to Europol (…) would result in an increase of about 4.9 per cent (€1.7 million) a year in the staff costs of Europol.” The UK’s contribution to Europol is about €9.1 million a year. According to the Minister if Europol is to be funded from the EU budget, the total cost of Europol would be greater, but the UK’s contribution would be significantly less because of abatement. The UK which initially demanded that the proposal be budget-neutral has decided to withdraw its reservations claiming that the issue was not serious enough to justify blocking a deal.

According to the Minister “the Government believes it has got as much as it is likely to get out of the negotiation as a whole. We believe we have got a good overall deal.” The Commission has proposed to apply the EC staff regulations to Europol and according to the original draft the secondment of law enforcement staff from Member States to Europol would not have been possible. Tony McNulty has explained to the ESC that the proposal has been amended in order to enable “bold posts” to continue to be filled by officers seconded from Member States’ law enforcement authorities.” The Commission has also agreed that Europol officials would not be immune from prosecution when taking part in a joint investigation team.

After 15 months of intense negotiations, on 18 April, the Justice and Home Affairs Council reached a political agreement on the draft Council decision establishing Europol. The Council still has to formally adopt the document – scheduled to take place in October. Europol will become an EU agency in 2010. It will then be subject to the Financial Regulation and the Staff Regulations of officials and other servants of the European Communities. The Europol mandate was also extended to all serious cross-border crime. Presently, Europol is solely authorised to assist Member States in preventing and combating organised crime but soon it will also be able to assist Member States in fighting terrorism and other serious crimes, even where there is no link to organised crime. The competence of Europol will be significantly increased as its remit will no longer be limited to organised crime.

With the Lisbon Treaty and the collapse of the pillars, legislation relating to Europol will be subject to the Community method. Hence the European Parliament and the Council, acting by QMV, through the co-decision procedure will adopt regulations concerning Europol’s structure, operation, field of action and tasks. The Lisbon Treaty puts forward some tasks that Europol will have in the future. Member States will no longer be able to block the further extension of Europol’s powers. Europol is developing into a European police force, able to co-ordinate, organise and even undertake investigations and operations together with the national police forces.

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European Commission’s thought police criminalise radical opinions under EU terror legislation

It was reported in the European Journal Nov/Dec 2007 issue that the Commission had presented a proposal amending the Council Framework Decision 2002/475 on combating terrorism. The aim is to bring the framework decision into line with the Council of Europe Convention on the prevention of terrorism. According to the European Scrutiny Committee the principle of subsidiarity permits the EU to take action “only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States.” The ESC believes that is not essential for the EU to adopt the Framework Decision, whereas the Council of Europe has already adopted a Convention which achieves the same result.

However, according to the Minister of State for Security, Counter-Terrorism, Crime and Policing at the Home Office, Tony McNulty, Member States are responsible for combating terrorism but the EU “has an essential supporting role especially in establishing minimum legal standards.” The Government therefore believes that by adopting the Framework Decision, the EU “achieves a better result” than would be achieved if Member States were simply to ratify and implement the Council of Europe Convention. Moreover, the Minister has stressed that five Member States have implemented the 2005 Council of Europe Convention while the 2002 Framework Decision “became EU law and was in the process of implementation in all Member States within seven months.”

The EU Member States have taken different views on the Commission proposal which requires them to criminalise the public provocation of terrorism, terrorist training and terrorist recruitment. Under the original Framework Decision, there is an obligation to criminalise attempts of terrorism. Under the Council of Europe Convention, attempts to commit recruitment and attempts to commit training are criminalised with a reference to national law. Whereas some Member States, such as Italy, Portugal and Spain were demanding that all attempts at terrorist training and recruitment be included in the scope of the legislation, whether they are successful or not, other Member States such as Sweden, Germany and the Czech Republic believe that unsuccessful attempts should not be criminalised as this would contravene their national law. According to the Slovenian presidency, as a compromise, there will be a reference to the two types of offences but it is optional to criminalise them.

Under Article 9 of the 2002 Framework Decision “Each Member State shall take the necessary measures to establish its jurisdiction over the offences referred to in Articles 1 to 4 where: the offence is committed in whole or in part in its territory, each Member State may extend its jurisdiction if the offence is committed in the territory of a Member State; the offence is committed on board a vessel flying its flag or an aircraft registered there; the offender is one of its nationals or residents; the offence is committed for the benefit of a legal person established in its territory; the offence is committed against the institutions or people of the Member State in question or against an institution of the European Union or a body set up in accordance with the Treaty establishing the European Community or the Treaty on European Union and based in that Member State.”

The European Scrutiny Committee has stressed that it is not required under the Commission’s proposal for a public provocation to commit a terrorist offence, recruitment for terrorism and training for terrorism, to take place within the territory of a Member State. Instead, it is required that it is directed towards or results in a terrorist offence over which another Member State may assert jurisdiction. Therefore, according to the ESC, “the provision would seem to require the laws of the UK to provide for jurisdiction on an extra-territorial basis.” Tony McNulty has explained to the ESC that some Member States have supported the inclusion of rules of jurisdiction over the new offences in all the situations covered by Article 9 which would give the Framework Decision a wider scope than the Council of Europe Convention.

Other Member States have argued that taking extra-territorial jurisdiction for these offences would go too far and would not be necessary. The Government wants to keep the scope of the Framework Decision close to the Convention and therefore believes it should be optional for Member States to prescribe rules of jurisdiction. Obviously, Member States should not be obliged to adopt provisions which might lead to conflicts of criminal jurisdiction.

On 18 April, the Council has already reached a general approach on the Commission proposal from last November to amend the Council Framework Decision on combating terrorism aimed at criminalising internet use for terrorism purposes. The Framework Decision provides for rules as regard the type and level of criminal penalties and compulsory rules on jurisdiction which will be applicable to the offences. The existing framework decision will be updated in order to include public provocation to commit terrorist offences, recruitment for terrorism and training for terrorism. Moreover, inciting a terrorist act or providing instruction for making a bomb in the internet would be considered a terrorist offence. Incitement to commit terrorist acts, the training and recruitment of terrorists, will be considered among criminal acts in all EU Member States. Under the new legislation, it would be easier for law enforcement authorities to demand cooperation from internet service providers in order to identify criminals. However, as Syed Kamall MEP has said “how can we be certain it will not be misused to lock up people whose views we may disagree with but which they are entitled to air in a democratic society?”

The Member States have agreed that they are not obliged to start criminal proceedings for incitement and unsuccessful attempts to train and recruit terrorists. Some Member States have shown concerns over this proposal interference with some having national traditions of free speech. The Slovenian presidency has proposed to introduce a new provision with the aim of exempting Member States from requirements that might contradict “freedom of expression, in particularly freedom of the press”, as recognised by constitutional traditions. All Member States accepted the introduction of a new Article in the amending Framework Decision containing a paragraph on freedom of expression.

According to a compromised text of the Slovenian Presidency from 14 April, “mandatory grounds for jurisdiction will be maintained (including points (d) and (e) for the new offences, as they currently stand in the existing Framework Decision.” The ESC has held the document under scrutiny although they informed the Minister that this would not prevent him from participating in a general approach but only “on the basis that there is no requirement to criminalise attempts to commit the new offences and that the extended rules of jurisdiction in Article 9(1)(d) and (e) are made optional ….” Nevertheless, it seems that Member States would also be obliged to accept jurisdiction for offences committed for the benefit of a legal person established in their territory and offences committed against the institutions or people of the Member State in question or against an institution of the European Union located in their territory. The amending Framework Decision also provides for the terrorist-related offences to be punished by “effective, proportionate and dissuasive” sanctions. Member States are also required to ensure that criminalisation is “proportionate” to the criminal’s aims and to exclude “any form of arbitrariness and discrimination”.

The Council still has to formally adopt the agreement. The Justice and Home Affairs Council is expecting to vote on the proposal at its meeting in June. At present, unanimity is still required at the Council.

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European Commission gets a visa negotiating mandate

On 13 March, at the EU-US Ministerial Troika, a “twin track” approach was agreed so that the Commission would be able to negotiate matters under EU responsibility with the US whereas EU Member States will negotiate those issues under their responsibility. There have been serious tensions between the Member States and the European Commission over the conduct of negotiations.

On 18 April, the Justice and Home Affairs Council adopted, by a QMV, a decision providing the European Commission with a mandate to start negotiations for an agreement with the USA on the Visa-Waiver Programme. The Council decision authorises the Commission, on behalf of the European Community, to open negotiations with the US on those conditions for participation in the US VWP that fall under the responsibility of the European Community. Having reached this agreement on the mandate, the EU can carry on with its “twin track” approach on visa-waiver negotiations with the US.

The US has been refusing to grant visa-free access to the EU as a whole on the grounds that it would not be able to ensure that all EU Member States meet its security requirements. The Commission has now got what it wants: a mandate to allow it to conduct the negotiations in the name of all Member States. The US would have to negotiate with the Commission the framework of an EU-wide visa waiver scheme before concluding agreements with individual Member States. The Commission has already made clear that it would not grant to the US access to the EU policy database, Schengen Information System in order to guarantee a visa-free access to the United States for all its citizens. According to Vice-President Jacques Barrot, “the Commission would not accept an agreement at all costs, above all an agreement without reciprocity.”

Up to now, the Czech Republic, Estonia, Latvia, Lithuania, Hungary, Slovakia and Malta have signed Memoranda of Understanding with the US on its Visa Waiver Program. The European Commission has been particularly concerned that Member States concluding bilateral agreements with the US would give more information about their citizens than allowed under EU rules. Therefore, the Commission has stressed that it “reserves the right to take action in accordance with the Treaty.”

Member States are required to observe the scope of the mandate and to keep the Commission informed about the negotiations content with the US. Under the mandate the Commission is entitled to negotiate in four areas. The Commission has the power to negotiate with the US on its intended Electronic Travel Authorisation scheme. The Commission will seek information on the US intention with regards to its Electronic System of Travel Authorisation (ESTA) on which there are suspicions that it will impose an obligation comparable to a visa. The Commission is also in charge of the exchange of information in the areas of migration, border management and visas.

According to Europolitics, diplomats have said that “this does not concern the contents of exchanged information, but rather the data protection provisions and a possible reciprocal reaction to any new demands.” The issues over the precise data are within the Commission’s power (data which belongs to Member States) and it would be fully defined when the US presents a finalised list of precisely which data it demands. The Commission will also deal with the strengthening of standards of travel documents as well as the issues of airport security. Even as this happens, the presence of armed air marshals falls under national competence agreements.

The Commission wants to open negotiations with the US as soon as possible. An EU delegation is due to travel to the US to open negotiations. According to New Europe, one spokeswoman from the US State department has said that “According to the US Constitution, we are supposed to talk bilaterally with other countries and I don’t know about this decision.” On the other hand, Jacques Barrot has said that the Commission wants to secure the membership of all EU Member States in the US VWP, adding that the current situation is an “injustice which gives the impression that there are two different categories of European citizens”.

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European Commission Will Not Publish Terror Objects List

In 2002, the Council and the European Parliament adopted a regulation establishing common rules in the field of aviation security such as searching and checking aircraft, screening of passengers, cabin baggage, staff and diplomats. One year later, the Commission adopted a regulation laying down measures for the implementation of the common basic standards on aviation security. The Annex containing a list of the prohibited items on airplanes was not published. The Annex was amended several times.

In September 2005, Gottfried Heinrich was ordered to leave an aircraft by the security staff of Vienna-Schwechat Airport for boarding the plane with tennis rackets in his baggage which are considered prohibited items. Heinrich has argued that such treatment was unfair since he was not informed in advance that rackets were a prohibited item. However he was not allowed by the security staff to see the official list of banned items. Gottfried Heinrich has decided to bring proceedings before the Independent Administrative Chamber for the Land of Lower Austria which has referred questions to the ECJ. The referring Court has pointed out that not only States but also individuals are required to base their conduct on such regulations yet this is not possible because the Annex containing prohibited items to take into airplanes was not published in the Official Journal and is consequently not accessible to the public.

On 10 April, the Advocate General, Eleanor Sharpston, delivered a very strong opinion in the case [Case C-345/06] against the Commission’s position. Article 254 of the EC Treaty requires regulations to be published in the Official Journal of the European Union. The Advocate General believes that the publication of the Commission regulation in 2003 without its Annex is an inadequate publication which therefore does not satisfy the requirements of that article. According to the AG “An annex is an integral part of a legislative measure.” Taking a different view would allow authors of the legislative measure to avoid publication requirements by including substantive provisions in an unpublished annex. According to the AG, “That is, indeed, precisely what the Commission sought to do in the present case.” Moreover she said that, “The reader cannot ascertain the effects of the regulation without having sight of the Annex, because the Annex contains the whole substance of the regulation.” The Advocate General has deemed the Commission explanation for the lack of publication as a “fundamental absurdity.” The European Commission published in January 2004 a press release which included a detailed list of prohibited articles that passengers were not allowed to carry onto flights. Tennis racquets are not in the list of prohibited articles.

However it is impossible to know if the press release list of prohibited articles is the same of that Annex without being aware of its text. According to the AG, if the Commission was required under regulation 2320/2002 to keep the list of prohibited articles secret, it has breached such requirements when it published the press release. On the other hand, if the Commission has deemed that the list is not covered by the secrecy obligation, it should have published it in the Official Journal. Moreover, the AG believes that “it is self-contradictory to state in the preamble to regulation No 68/2004 that ‘there is a need for a harmonised list, accessible to the public’ and then to fail to place such a list in the public domain.” The AG has stressed that the Commission deliberately adopted new measures and failed to publish the annex each time, so the failure to publish the list was not accidental. The Advocate General has suggested to the Court to declare the regulation non-existent. According to the AG, the “… persistent and deliberate disregard of the mandatory publication requirements in Article 254(2) EC in respect of the whole substance of the regulation – is one whose gravity is so obvious that it cannot be tolerated by the Community legal order.” The ECJ is not bound by the Advocate General’s Opinion. It remains to be seen if the ECJ reaches the same conclusion.

The Commission has recently adopted a regulation on common rules in the field of civil aviation security and repealing regulation (EC) No 2320/2002 which was published in the Official Journal on 9 April. According to the EU spokesman on transport issues, Michele Cercone, a list "of concerns to citizens" would be published soon.

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