Liege, 24/09/2001 (Agence Europe) - Having adopted a code of conduct on Saturday for the reinsurance of airline companies following the attacks on the United States, the finance ministers of several Member Sates of the European Union began negotiations with their airline and insurance companies Monday morning. The United Kingdom and Germany had already reached an agreement on this subject last week, while Spain began talks on Monday with Consorcio de Seguros. "The government has not yet chosen a solution", declared Spanish Finance Minister Rodrigo Rato, on the fringe of the EcoFin Council. "From what we worked out together, I have just taken a decision for reinsuring companies concerning France" said France's Finance minister Laurent Fabius, for his part. Portugal and Ireland were also to begin talks with their national airline companies on Monday.
The code of conduct that was adopted on Saturday, enables those Member States so wishing, either to pay insurance premiums linked to the "risk of war" and "terrorism" for their airline companies, or grant them a State guarantee against such a risk. This code does, however, stipulate that reinsurance is only authorised under three conditions: 1) limited to one month; 2) not to cover the short-term shortcomings of insurance markets so as to guarantee the willingness of an insurance firm to cover the risk of war; 3) governments must pay an insurance company a "reasonable insurance fee that reflects as closely as possible the risks covered", even "if it is possible to suspend this premium in the short-term". The code stipulates that "State aid to help companies in deficit is excluded", and that measures adopted by Member states "will be notified to the European Commission".
It is a question of measures "taken in emergency" to respond to a case of "force majeur", as insurers had threatened to increase from Monday the premiums on the risk of war and terrorism by 10 to 15%, stressed the President of the Council and Belgian Finance Minister Didier Reynders. "For the Commission", commissioner Pedro Solbes declared: "it is a question of a good decision in the sense that, different to previous occasions, it avoids Member states acting unilaterally", and it is only temporary, while waiting for a return to market rules". In the medium-term, the Council has asked the Commission to broaden the issues of funding insures to a mandate of the "ad hoc group" responsible for reflecting upon the alignment of air safety measures in Europe. The Group should be handing in an initial report on the issue of safety and insurance at the Transport Council of 15 October, in Luxembourg.
"We were several at qualifying this situation as blackmail", noted Luxembourg Finance Minister and Prime Minister Jean-Claude Juncker before the press, stressing that he was "neither proud nor happy with this nevertheless necessary decision". "When we need them, insurance companies are no longer there", he waxed indignant before the press. He also remarked that "fourteen ministers wondered what difference there was between State aid and State guarantees, from the time a State substitutes itself for the market…", but, at least, this aid will be implemented in a uniform manner by the Fifteen and for a temporary lapse of time". "We have refused recourse to State aid in a generalised manner or to a return to the policy of subsidies", but we have envisaged a mechanism to supplement market shortcomings", said Austrian Minister Karl-Heinz Grasser. Ministers finally did not agree to the guidelines wanted by some Member states which would have wanted a longer times-span, of three months, or others who had wanted a precise code of conduct of a ceiling for premiums covered.
Adopted in face of the urgency of the situation, the code of conduct allows for a transition insurance until the Transport Council of 15 October and the EcoFin Council of 16 October, a source close to Didier Reynders notes. At the two Councils, the Europeans should globally assess the financial situation of airline companies, Didier Reynders stressed. In that framework, it will be a question of the measures to take to ensure the competitiveness of European companies faced with the assistance announced, notably by the United States.
The American Congress approved direct aid on Friday of $5 billion and aid in the form of State guarantees of $10 billion for American airline companies. The European Commissioner for Transport, Loyola de Palacio, will discuss this issue with the American Secretary for Transportation, Norman Mineta on the fringe of the General Assembly of the International Civil Aviation Organisation (ICAO), which begins work on 26 September. As her meeting with the Association of European Airline Companies (AEAC), last week, she did not rule out the setting up of a system to compensate for American aid, while refusing to "make a priority" out of it. It is necessary to "avoid all imbalance between American and European aid to airline companies and to aeronautical companies affected by the attacks on 11 September", French Transport Minister Jean-Claude Gayssot said on Sunday. Aeronautical construction companies are soon to meet the Commission to take stock of their economic difficulties, he announced. "We shall make suggestions at European level, to take measures that will comprise margins of manoeuvre in each Member State", said the French minister.