Brussels, 18/01/2002 (Agence Europe) - The European Economics and Finance Ministers will be meeting in Brussels on Tuesday from 9: 30 hrs onwards, chaired by the Spanish Economics Minister, Rodrigo Rato. The ECOFIN Council will begin with a two-hour public debate on the Spanish Presidency's priorities and will then assess the Stability Programmes of Belgium, Luxembourg, Austria, Finland and the Netherlands, and Sweden's Convergence Programme. It will exchange views on an export report for the European Spring Council (Barcelona) giving an overview of the work that needs to be carried out to boost Europe's position in the R&D league table. Ministers will note progress since the last Council by the Member States that had not ratified the decision on the new own resources system and will be given a presentation by Commissioner Frits Bolkestein on the state of play in negotiations with third countries on savings taxation.
Over dinner, Ministers will discuss the economic situation in Argentina (the Presidency arguing that it is "desirable and possible" to reach a common position on measures to counteract the potential impact of the crisis), the idea of setting up a financial institution for the Mediterranean region, and the strategy for the three institutions to find a definitive solution to the application of the legislative process outlined in the Lamfalussy report. An outline of the most important areas:
Stability and Convergence Programmes. In the view of a high-ranking Spanish official, rather than making pointless criticisms, the Council should welcome the high quality of the Stability and Convergence Programmes of the six countries concerned (which the Commission found to meet the Stability and Growth Pact criteria, see EUROPE of 16 January, p.9). Four of the six countries (with the exception of Belgium and Austria) have a balanced budget or a budget surplus, a sign of healthy financial policies in 2001 and 2002.
The Presidency's priorities. The Commission and the Member States will debate the Spanish Presidency's programme for the next six months. Mr Rato is expected to explain that Spain will be focusing on three areas - determining the best way to manage the benefits provided by the single currency and strengthening the role of the euro as a basic reference currency on the international capital and bond markets); stepping up co-ordination of economic policies in order to counteract the impact of economic slowdown; and greater integration of the financial markets (making full use of the political stimulus of the financial services action plan) with the aim, for example, of moving further in the direction of turning the pledge to set up an integrated risk capital market into reality (integrating securities markets in 2003) and reaching agreement on the legislative process outlined in the Lamfalussy report.
Report on policies for promoting research and development. The Ministers are likely to endorse the report by the Economic Policy Committee that shows how R&D and innovation are crucial drivers of growth and productivity and concludes that the EU and its Member States should ensure that the appropriate framework conditions are in place to foster innovation. A fieldwork study of EU Member States, the US and Canada were carried out for the report, which encourages Member States to pool resources to meet the targets set by the Commission (highlighted recently by Romano Prodi), namely to devote 3% of their GDP to R&D, rather than 1.9% as at present.
Own resources. Only Belgium and Luxembourg have yet to complete their national ratification procedures for Council Decision of 29 September 2000 on the European Communities' own resources system, missing the 1 January 2002 deadline. In December 2001, Commissioner Michaele Schreyer unveiled a temporary solution when she sent the Council and Parliament Budgetary Authority a draft amending budget for 2002 extending the current own resources system (see EUROPE of 6 December, p.13). Germany was not very happy with the idea since it would mean that it would have to provide some EUR 60 million a month extra while waiting for the decision to be ratified by all the Member States and the federal government had not catered for this in its 2002 budget (which was already pretty tight). When the situation has been sorted out, the Member States that have contributed the greatest amounts will be reimbursed.) The new own resources decision should enable Germany, the Netherlands, Sweden and Austria to cut their contributions to the Community budget through a more generous calculation of the budget rebate (made famous when granted to the UK).