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Brussels, 16 March 2001

The European Commission Background Note on the General Affairs Council on 19 March

Key items are

  • Preparation of the Stockholm European Council

  • European Security and Defence Policy

  • Western Balkans

  • Middle East

Preparations for the Stockholm European Council

    Lisbon follow-up

The ministers have an opportunity to discuss all main items on the Stockholm agenda. The Presidency has drawn up a synthesis document (ref. 7171/01 LIMITE POLGEN 3) that provides a brief overview of the preparatory work carried out by the Commission and the Council since Nice.

The principal contributions from the Commission can be found from a special web site ( and they are

  • "Realising the European Union's potential: consolidating and extending the Lisbon strategy"; a report on the progress achieved

  • Communication on an Internal Market Strategy for Services

  • Interim report on improving and simplifying the regulatory environment

  • A report on eEurope 2002: impacts and priorities

  • A report on the progress to build the European research area

  • Scoreboard on the implementation of the European Social Agenda

  • A joint Council and Commission report "The contribution of public finances to growth and employment: improving quality and sustainability"

The discussion with the President of Russia

is intended to focus on economic and trade relations between the EU and Russia. Time will not allow for an extensive discussion on a wider variety of topics. The meeting itself is expected to last for approximately an hour followed by lunch. Preparations for the meeting continue. It is probable that the discussion will mainly cover economic co-operation and investment conditions in general.

In this context other possible issues include

  • Russia and WTO

  • EU-Russia trade disputes

  • Additional credits from the International Financial Institutions

      Russia and WTO

      The Working Party on the accession of the Russian Federation was established on 16 June 1993. The Working Party last met in December 2000. Bilateral market access negotiations on goods and services have commenced. In the Working Party topics under discussion include: agriculture, the customs system (and customs union and other trade arrangements with CIS States), excise taxation and national treatment, import licensing, industrial subsidies, national treatment, SPS and TBT, TRIMs, TRIPS and services. The next meeting of the Working Party is scheduled to take place in the first half of this year.

      The Commission supports Russia's WTO accession and is helping them to prepare. Russia must, however, improve its market access offers and adopt WTO-compatible rules. Commissioner Pascal Lamy will go to Moscow at the end of March in order to assess the situation.

      EU-Russia trade disputes

      A number of issues remain where the Commission sees a breach of obligations under PCA or sectoral agreements. These include

      • EU exports of alcoholic beverages

      • Export duties and restrictions for metal scrap

      • Export duties on other products

      • Discrimination of EU airlines on Siberian overflights

      • New customs regulations

      It is likely that these issues will be discussed more in-depth during Commissioner Lamy's visit to Moscow than in the meeting with President Putin in Stockholm.

      Additional credits from the IFI's

      This has been discussed recently in different venues including the ECOFIN Council on 12th March. The question to be addressed is whether it would be possible to channel additional financing to Russia from International Financial Institutions. This could include lending from the European Investment Bank (EIB) for specific, environmental projects. As far as the Union is concerned, this discussion is part of the preparation in the run-up to the Ministerial Conference on Northern Dimension, to be organised in Luxembourg on 10th April.

External relations

Are likely to be discussed during a joint dinner for Heads of State and Government and Foreign Ministers on Friday 23rd. Possible topics include

  • Western Balkans

  • Middle East

  • Korea

European Security and Defence Policy

The purpose of the discussion is to draw the attention of the Member States to the call for contributions recently issued by the Swedish Ministries of Foreign Affairs and Justice with regard to the definition of concrete targets for an EU police rapid reaction capacity. This specific call is, in the view of the Swedish Presidency, the preparatory step to the holding of a Police Conference on May 10th. The Conference is to be held at the level of the national Heads of Police.

    Open questions

    • Are all Member States ready to produce numbers of available police forces. On present predictions their contributions will not reach the minimum target of 1,000 deployable police forces.

    • Should operations be autonomous or under UN/OSCE

    • Should the Council secretariat be strengthened on police planning

The Commission's contribution in support of police operations focuses on local capacity-building technical assistance in countries dealing with crisis or emerging from crisis. This contribution is provided under external aid programmes. It could be envisaged that in crisis situations the Rapid Reaction Mechanism would also be used for this type of activity. Against the background of increasing demands by some MS of common funding (Community or CFSP) to cover costs of deployment (e.g. common equipment for police forces), it should be noted that, neither the RRM, nor other budgetary instruments as currently constituted, allow the Commission to fund the deployment of police forces in executive missions.

If Council were to decide on common funding for EU police deployment in the future, this would probably require substantial amendment to existing budgetary instruments.

The Commission is participating actively in developing concrete targets in the four areas identified by the Feira European Council : police, rule of law, civilian administration and civil protection.

  • In relation to the police, the Commission's contribution will be mostly focused on local capacity-building in countries dealing with crisis or emerging from crisis. In recent years the Commission has adopted a number of programmes to support police training and infrastructure in various countries : Guatemala, El Salvador, South Africa and (since December 2000) Algeria. The Commission is also considering the possibility of future commitments to the police in Albania following on from the existing MAPE operation. Furthermore, the Commission has been actively involved, together with the Presidency and the Policy Unit, in drafting generic scenarios for possible EU-led police missions.

  • In relation to the rule of law, Community co-operation instruments already provide for programmes to strengthen the administration of justice in many partner countries. In this area, as in that of civilian administration, the difficulty of building up an EU response capacity in crisis situations often relates to the lack of readily available personnel in the Member States. It is somewhat difficult in this area to establish numeric targets for deployable capacity, so the Commission is examining what other targets might be developed.

  • Past experience has shown, for example in the area of human rights monitoring, that the development of common training modules is one of the best means of building up capacity at EU level. The Commission is therefore prepared to earmark funding for the development of training modules for personnel to be deployed in peace keeping missions. Such modules should be developed together with Member States and should be compatible with UN and OSCE modules, for example the new OSCE REACT system. This need not necessarily imply the establishment of new structures at the level of the Union, but should be built on strengthened co-operation between Member States and especially through synergies between existing training programmes and institutes.

  • In relation to civilian administration, the Commission will also examine the twinning model being used with the applicant countries in order to see whether lessons can be drawn in building up resources for deployment in crisis/post-crisis situations.

  • In relation to civil protection, the Commission's proposal on the establishment of a Community co-ordination mechanism is on the table of the Council and should be adopted by the end of the Swedish Presidency.

  • With regard to its internal organisation, the Commission is in the process of developing a Crisis Management Cell in order to co-ordinate Commission action in complex crisis situations requiring the deployment of a wide range of instruments, and to provide a focal point for the Situation Centre being developed in the Council. This would also mean that the Commission's PSC representative would be in a position to provide input to the Union's crisis management response across all areas of community competence. The Commission's crisis management cell should be operational by mid-year.

  • Finally, the Regulation establishing a Rapid Reaction Mechanism has been adopted by the General Affairs Council on 26 February. The Commission intends to use the mechanism both to conduct once-off actions arising out of a crisis situation, and to « kick-start » projects or programmes which will require longer-term follow-up through other assistance instrument. The RRM will fund among other operations election monitoring action, institution building, media support, border management, the provision of police training and equipment, civil emergency assistance, together with actions in the field of reconstruction, pacification, and mediation. The total endowment within the budget for 2001 amounts to € 20 million and for 2002 to € 25 million in the financial perspectives.

Western Balkans

A number of things will be discussed. These include

Bosnia and Herzegovina

In the general elections (11th November 2000) non-nationalists received a majority for the first time since Dayton (1995). After about four months, governments have now been constituted at state level (under Bozidar Matic), in the Federation (FBiH - under Alija Behmen) and in Republika Srpska (RS - under Mladen Ivanic). All three governments declare themselves to be reformist and willing to take "ownership" of the reform programme (although doubts remain about SDS influence on RS government). With these governments (which in FBiH and at state level are based on a disparate and shaky "Alliance for Change"), BiH may have "turned a corner". Nevertheless, obstacles to success, including a determined nationalist opposition remain.

The intensity of nationalist opposition is indicated by the current stand-off between OHR/IC and the Croat nationalist HDZ. Objecting to changes in election rules before the November elections, HDZ (which gained an overwhelming majority of the Croat vote) refused to co-operate in government formation. A "Croat National Council" on 3 March 2001 proclaimed an "Inter-Cantonal Council", a form of Croat self-administration. With the support of the entire international community, HR Petritsch judged this (and the demand for full cantonisation of BiH or the creation of third Croat entity) to be incompatible with Dayton; he removed Ante Jelavic from his position as member of the BiH presidency. Further moves against HDZ extremists including a visa ban - are under consideration, but channels of communication with HDZ moderates and the Bosnian Croat population remain open.


The situation has calmed a little. NATO, with EU support has brokered a cease-fire on 12 March between armed Albanian groups and the FRY security forces before negotiations proper start. NATO has agreed to the gradual return of FRY forces, conditional on withdrawal of heavy armour, to the less sensitive parts of the 5 kilometre buffer-zone along the Kosovo boundary (ground security zone).

This was extremely difficult for the Albanians groups to swallow who have placed a caveat in the cease-fire agreement. Lightly armed VJ troops returned to Sector C (the sensitive border with FYROM) on 14 March. The next deadline is 19 March, by which preparations for start of negotiations should begin. There is still disagreement as to where and with whom.

EC had already given almost €1m in humanitarian assistance and assistance under the Energy for Democracy and Schools for Democracy programmes to the region. On 15 February the Commission announced a further € 900 000 for 24 projects, identified with local mayors (school reconstruction and furnishing, water supply networks, garbage trucks and containers) under the Schools and Towns for Democracy programmes. We're also examining what can be done under 2001 funds for Serbia - not a specific programme for region, but disproportionate coverage under priority areas already identified with FRY/Serbian governments.


There is real alarm over the turn of events in recent days. Foreign Minister Kerim will be received on Monday at 9 am by FM Lindh, HR/SG Solana and Commissioner Patten and is likely to meet Ministers over coffee.

Tension between FYROM security forces and armed Albanian groups remains high. The attacks on 14 March in and around Tetovo have alarmed everyone. Some inhabitants in a number of small villages along the border have fled their homes but there have been no large scale population movements. KFOR has taken action to clear the Kosovo side of Tanusevci, the village which the extremists first occupied. Things now appear to have improved with joint operation on 13 March to clear the village of Tanusevci on both sides of the border to allow the inhabitants to return.

The FYROM government has been active in the UN Security Council, NATO and the EU (Foreign Minister Kerim addressed the Political and Security Committee of the Council) securing support for its handling of the crisis. On the whole it has carried the largest ethnic Albanian political party with its policy. The EU has commended FYROM's restraint so far and encouraged its continuation. The Commission has flagged up its assistance to promoting inter-ethnic reconciliation between the majority Slav and minority Albanians, notably through support (€5m) to the politically important Albanian language university in Tetovo. We are also talking to Skopje about helping to improve border management.

Events in FYROM and Presevo may well overshadow discussion. The Commission expects the Council to approve conclusions on this question. The Commission wants to

  • set out our stall on critical engagement with Bosnia to give impetus to genuine reform;

  • the EU to reaffirm a clear position on political conditionality for its relations with and assistance to the FRY

  • to emphasise the Commission's contribution to stabilising Presevo and the FYROM border

Middle East

The Presidency and Commission will report on the recent (12th and 13th March) visit of the troika to Middle East.

The Commission decided on Tuesday 13th March to allow the convertion of up to € 60 million from a special cash facility to possible direct budgetary aid to the Palestinian Authority. The facility was set up last December to provide reimbursable loans to the Authority to help it to continue to function in situations where Israel did not transfer revenue due to the Authority.

Payments will not start unless the Palestinian Authority meets the conditions attached to the assistance. These include reductions in core items of expenditure and monitoring by the International Monetary Fund (IMF).

The Commission decision to is part of an overall EU attempt to address the current problems of the Palestinian Authority and to assist the parties to de-escalate. The effort consists of

  • Urging the Palestinian Authority, with the help of the IMF and the Commission, to adopt an austerity budget which reflects the current change in its financial circumstances

  • Calling on the international community to organise financial assistance in the form of budgetary support to make up the inevitable shortfall in revenue in that austerity budget

  • Urging Israel to transfer payments to the Authority and lift its economic closure policy.

Since December the situation on the ground has worsened, as has the economic and budgetary situation of the Palestinian Authority, due the closure of the Palestinian territories by Israel. Since the beginning of the crisis in October 2000, Palestinian economic activity has decreased by 50%, poverty rate has increased from 21% to 32% and unemployment affects 38% of the population. In addition, the closure policy and the financial crisis have severely eroded the ability of the Palestinian Authority to function as an institution.

Under these circumstances, the special cash facility is no longer the most appropriate way of meeting the needs of the Palestinian Authority.

The decision is in line with the conclusions of the General Affairs Council meeting of 26 February, which stressed the need for the EU to play an important role in a concerted international effort aiming at avoiding economic and institutional collapse in the Palestinian territories. It is intended to organise a meeting of potential donors, probably in early April in order to take forward a co-ordinated international effort to provide financial support to the Palestinian Authority.

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