Luxembourg, 17/05/2005 (Agence Europe) - The EU finance ministers have not yet all subscribed to the new intermediary official development aid (ODA) objectives, but have moved on to an additional method of aid financing, with a contribution from air passengers. During the informal session of the Ecofin Council in Luxembourg, the ministers also called for a pilot version of the International Financing Facility (IFF) to be implemented, devoted to vaccination. The technical and operational methods of this innovative, voluntary and modest financial project remain to be defined.
“The Commission's proposal was welcomed by a majority, but continues to raise questions in certain countries, which will mean that, by the European Council in June, others efforts of persuasion and feasibility explanation must be undertaken to allow us to reach an agreement”, Jean-Claude Juncker told the press on Saturday. Although there was not a great deal of discussion on the average level of the EU's ODA at 0.56% of its GDP in 2010, the individual level is more irksome for some countries. The new Member States are supposed to devote 0.17% of their GDP to ODA in 2010 to reach 0.33% in 2015, compared to 0.51% in 2010 and 0.70% in 2015 for the EU15 States. The impact that such objectives will have on public finances was evoked by several Member States, mainly those that joined with the last enlargement (Czech Republic, Slovakia, Cyprus and Malta for example) but also Germany. The development ministers must, on 23 and 24 May, endorse the Commission's communications of April this year on financing and the effectiveness of aid, on one hand, and the consistency of EU internal policies, on the other (EUROPE 8925).
Discussions last weekend on the additional financing of development aid allowed things to move forward on two fronts: - the launching of a pilot project on the International Financing Facility (IFF) supported by the United Kingdom and a contribution based on air tickets rather than on kerosene taxation. The last option has not been definitively abandoned, but it is not likely a consensus will be reached in time for it to be resumed in the common position that the EU is to present in September, in New York, during the UN summit on assessing progress accomplished in implementation of the Millennium Development Goals. Such a tax was considered too destabilising for the air transport sector and the tourism industry of certain Member States, and the poor countries themselves. Spain, Portugal, Greece, Cyprus and Malta thus expressed their reservation about the kerosene tax in particular and abut air transport in general, while the Czech Republic, Italy and Austria supported a tax on air fuel. “We agreed to introduce into 25 if not 27 countries of the EU a contribution on air tickets, the arrangements for which will be fixed in coming weeks”, Mr Juncker explained. This contribution on air tickets would initially be set in place voluntarily for passengers who should nonetheless be informed why they are making such a contribution (water, vaccination against AIDS, education). At this stage, the amount has not yet been defined, but it would be modest (by way of one or two euros) although, on the basis of the Commission's working document, Ireland spoke of a 20-euro levy on round trips on
intra-Community flights to justify its opposition to the project (EUROPE 8925). A core of countries may, in a second stage, rapidly set up a compulsory contribution system. “I have the impression there are five or six of us able to do so”, Mr Juncker said. France, Germany, Belgium, Luxembourg, the Netherlands and the United Kingdom may be envisaging such a solution. “We leave Member States a free choice and all Member States agree to envisage the introduction of such a contribution”, Mr Juncker stressed. Slovenia is the only Member State to have evoked taxation on arms production, a solution that the Commission dismissed from viable options in its document because of the difficulty of reaching a global agreement.
Furthermore, ministers decided to launch an IFF pilot project to be devoted to immunisation, but the Commission still has work to do on the modalities regarding this non-binding project. The Commissioner charged with economic and monetary affairs, Joaquin Almunia, hoped that Eurostat would, by the Ecofin meeting in June, be able to give clear indications of the impact on public accounting of IFF “immunisation”, which, according to the United Kingdom, should allow EUR 4 billion to be collected per year to save the lives of 5 million children by 2015. Like Belgium, the Austrian finance minister and vice-president of the EuroGroup, Karl-Heinz Grasser, said that it would also be necessary to “liberalise trade more than we have done so far”. Both countries also voice uncertainty about the period and the means for reimbursement of those holding IFF guarantee bonds.
On the subject of debt relief, opinions still differ to some extent between those who advocate full global and systematic debt relief and those, like France and Germany, who are in favour of relief on a case-by-case approach, the French minister for economy and finance, Thierry Breton, explained to the press. “Some ministers had asked for an additional contribution to be made to the European Development Fund, but EDF resources are already earmarked until end 2006”, Mr Almunia recalled for his part, saying that “it will therefore be necessary to find new resources to finance the operation”. Debt relief is supported in the context of the G7 presidency by the United Kingdom which recalls that there remains little that can be done at bilateral level but that action must be taken on debt within the international institutions.