Santer seeks cash lifeline to save TENs

Date: 14/03/1996

By Tim Jones

IF Europe's leaders genuinely want to bind their countries together with a web of high-speed rail lines and state-of-the-art bridges and tunnels, they are going to have to pay up.

This is the message European Commission President Jacques Santer will give to EU's heads of government when they gather in Turin on 29 March to launch the Intergovernmental Conference.

Fifteen months after officials drew up a high-priority list of 14 Trans-European Network (TENs) projects and allocated 1.8 billion ecu from the EU budget to help start them off, several of the projects are suffering from shortfalls in investment and continued administrative delays.

A report drawn up by DGVII, the Directorate-General for transport, suggests 1.7 billion ecu is needed to ensure that the projects are completed on time.

Officials have identified major funding gaps on five of the large-scale projects. The 16-billion-ecu scheme to link Paris, Brussels, Köln, Amsterdam and London (PBKAL) by high-speed rail and the 4.4-billion-ecu 'TGV Est' project for Paris, Metz, Strasbourg and Appenweier are together short of 660 million ecu.

The other projects needing extra funds are the high-speed rail projects linking Berlin to Verona and the Øresund road and rail link between Copenhagen and Malmö, which is 120 million ecu over budget.

The detailed break-down of the funding gaps in key projects to be unveiled by Transport Commissioner Neil Kinnock next week will coincide with the proposal from Santer to redirect spending from the Union's agricultural budget into TENs.

The Commission has been working on this proposal since January, but when Santer first aired it at a meeting of EU finance ministers this week, it was summarily rejected by six of them, led by the Netherlands and including Germany, France and the UK.

But, instead of disheartening Santer, the experience reinforced his determination to act. He now intends to present a formal proposal for reallocating spending to the 20 March Commission meeting and then take it to the Turin summit.

“It is clearly now a highly political issue that requires a lot of prodding for the governments concerned,” said a Commission official.

The Commission is determined to continue the fight to turn its dream of creating a network of transport links across the EU into a reality.

The amounts potentially available from the farm budget are substantial. A huge reduction in the amount of beef, grain and dairy produce bought into intervention or sold abroad with subsidy meant farm spending in 1995 was 2.4 billion ecu below the amount allocated, while this year's budget is already 700 million ecu underspent.

Although the idea of transferring this money into transport at no apparent cost to member states has its attractions, Santer's opponents argue any unspent cash should be returned to their treasuries via reduced budgetary contributons in the future.

But the Commission is becoming increasingly impatient, claiming that the 1.8-billion-ecu budget line is far from enough, given the 40 billion ecu required in the coming four years to pay for the projects.

This budget line is intended to finance up to 50&percent; of the essential economic, financial and environmental feasibility studies required to get a project off the ground.

The fund can also be used to take some of the sting out of early project financing by subsidising interest payments and funding loan guarantees.

In a separate proposal to the Commission next week, Kinnock will call for this financing programme to be put on a multi-annual basis, to avoid the disputes that characterised the first pay-outs under the budget line last year.

While the amounts allocated to certain projects over the five-year life of the programme would be merely indicative, they would offer an element of certainty to private investors thinking about sinking money into a project.

At Turin, governments will decide whether the Union's contribution has reached its peak.