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Economic, Social and Territorial Cohesion

Posted by Richard Saturday, June 19, 2004

Article III-116 refers

You might wonder what such an arcane subject is doing in a "Treaty establishing a constitution for Europe" – and well you might. The answer is simple: pork-barrel politics.

The Article, in the way of things EU, starts off with high-flown phrases, stating:

"In order to promote its overall harmonious development, the Union shall develop and pursue its action leading to the strengthening of its economic, social and territorial cohesion. In particular, the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions."

And so it goes on, but the clue as to what the fuss was all about that brought it to the summit lies Article III-56 (2) (c) and an amendment to it. The sub-paragraph is reproduced below, with the amendment in bold.

2. The following shall be compatible with the internal market:

"(c) aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, insofar as such aid is required in order to compensate for the economic disadvantages caused by that division. Five years after the entry into force of the Treaty establishing a Constitution for Europe, the Council, acting on a proposal from the Commission, may adopt a European decision repealing the present point."

Get it?

With the accession of the former Communist countries, East Germany was looking at a marked reduction in state aid earmarked for reconstruction. Since this is where Schröder gets the electoral support which brought him into power – and keeps him there – the chancellor is dead keen to ensure the money keeps flowing.

Direct support, however, is not permitted under EU law, as "illegal state aid", so Schröder has finagled a provision in the constitution to make it legal. That is an example of the "Alice in Wonderland" world of the EU. When is illegal state aid not illegal? – When Germany stamps it foot.

The French have also got their pound of flesh, getting similar exemptions for their overseas departments, to add to already favoured Spanish islands, while the Germans have also got additional exemptions on transport issues, allowing them to support subsidies in East Germany.

But, clearly, blood has been flowing behind the scenes. Some countries wanted the German concessions struck out, but all they have achieved is a tentative time limit. In five years time, the Council may remove their exemptions. Don't hold your breath.