Union aid to Serbia triggers budget battle

Date: 12/10/00

By Simon Taylor

PLANS to provide Serbia with swift financial aid in the wake of former President Slobodan Milosevic's downfall are sparking a new budget battle between EU governments and the European Parliament.

External Relations Commissioner Chris Patten has asked member states for €240 million in emergency funding from Union coffers to demonstrate the EU's support for new Yugoslavian President Vojislav Kostunica.

Union foreign ministers agreed in principle this week to provide extra cash quickly, although they called for more information on the country's precise needs before deciding on an exact figure. They are, however, certain to allocate more than the €40 million which governments set aside for Serbia when they were unsure when or if Yugoslavians would oust Milosevic and end the country's status as an international pariah.

Whatever the final sum, EU governments believe the extra funding could be found from the 2001 budget for external relations, using money which has not yet been allocated to specific projects. But MEPs on the Parliament's powerful budget committee argue that €200 million should be taken from a special emergency reserve. This, they say, would use up all the spare cash in the budget and governments should therefore provide additional resources to ensure funding for Mediterranean aid schemes under the MEDA programme is not cut.

"We want the Council of Ministers to find extra money for MEDA," said Terry Wynn, UK Socialist chairman of the budget committee. "If there is no more money for existing programmes because of Serbia, what are we supposed to do?"

But national finance ministry officials are resisting the assembly's demands. "This is a typical example of the Parliament trying to spend as much money as possible while the Council is trying to keep a lid on spending," said one.

European Commission officials are visiting Belgrade this week to assess the damage caused by last spring's NATO airstrikes and determine Serbia's financial needs. The team will also work with World Bank experts to draw up an accurate picture of the problems on the ground but the results of this exercise will not be known for several weeks, at the earliest.

MEPs will meet finance experts from EU governments and the Commission to try to break the deadlock next Wednesday (18 October), just five days before the Parliament formally debates the 2001 budget at its plenary session in Strasbourg.

In a separate move, the Commission has called on member states to extend a recently-agreed package of trade concessions for the Balkan states to Serbia to boost the country's economy. The package, which was approved by member states at the end of last month, will scrap barriers to trade in almost all industrial and agricultural products.

Officials say that if Union governments support the move, the deal should be expanded to include Serbia from the start of next year. The benefits would also be extended to the Yugoslavian Republic of Montenegro, which has until now only been able to export certain aluminium products to the Union duty-free because it does not have an independent customs service.

Plans to provide Serbia with swift financial aid in the wake of former President Slobodan Milosevic's downfall are sparking a new budget battle between EU governments and the European Parliament.