A 'Manifesto' for the European Islands

On 31 May 2005, an Insuleur Delegation presented to the European Commission and the European Parliament the "Manifesto of the Island Chambers of Commerce and Industry of the European Union". Once again, but with higher formal profile, the Insuleur Network's request had a precise aim: to obtain effective recognition of the environmental factors hindering the full development of the Island Regions and ensure that this recognition is followed up by concrete political and legislative commitment, so as to ensure a level playing field for island-based businesses. This policy document of the Island Chamber Network formally called for a review of the Cohesion Policy and for support to the development of island-based businesses through the introduction of specific, permanent measures.

The presentation of the Manifesto was the strong wish of the Association's Executive Board, all of whose members took part together with President Romano Mambrini in the Brussels meetings, at a crucial and sensitive time for the future of the weaker European Regions: the adoption by the European Parliament of the proposal drafted by the European Commission on a General Regulation governing Structural Funds (for the period 2007-2013) scheduled for 8 June. Moreover, this event took place the day after the sudden setback in the process of ratification of the European Constitutional Treaty, after the "No" emerging from the French ballot.

The results of the French vote and the anxious wait for the outcome of the Dutch vote influenced the debate organised by Insuleur on the reform of European Regional Policy, in particular, on the Proposal for a Regulation governing Structural Funds drafted by the European Commission. The debate saw the participation of two Ministers (Greek Aristotelis Pavlidis and Irish Eamon O'Cuiv), MEP Kostantinos Hatzidakis, and the representatives of, respectively, the Economic and Social Committee (Henry Malosse), the Directorate General for Regional Policy (Anastassios Bougas) and the Conference of Peripheral Maritime Regions (Didier-Hache).

Are the events of these last difficult months the harbingers of a crisis of the European Union and its integration process? Or, on the other hand, could the current changes be interpreted as a wind of change sweeping across an order that was first established 50 years ago and is no longer viable? Are we facing a Europe trapped in its past or a Europe aware of its future and of the reforms that are needed to ensure effective economic and social cohesion?

Perhaps, in view of the most significant events of recent years - stated President Romano Mambrini - such as Enlargement to the 10 new Member States and the Constitutional process under way, "we need to consider with greater attention the principle of solidarity and its current meaning, in order to seize the exceptional opportunity for the EU Member States of finally becoming the United States of the Old Continent.

On the day dedicated to the islands' grievances, President Mambrini declared that "the Islands of Europe are not asking to remain under Objective 1 or Objective 2. It is necessary and urgent to establish an Island Objective, a set of rules and measures able to establish a level playing field for our Regions, enabling them to compete on the markets and stimulating the growth of SMEs, also through a review of the provisions on State Aid".

Henry Malosse, despite the "No" to the Constitutional Treaty expressed by France, confirmed his enthusiasm for the new Constitution, which "for the first time introduced a positive concept of territorial cohesion. The French rejection, however, is a cause of great uncertainty. If backed by similar positions of other Member States it might halt in its tracks the renewal process that has already been set in motion, with obvious disadvantages for all European citizens, since the European Commission itself often forgets that economic choices can affect the lives of millions of people".

We should on the contrary target full implementation by the European Commission of the Charter of Fundamental Rights of the European Union, which sets out the whole range of civil, political, economic and social rights of European citizens, with special regards to the citizens of the islands. "We wish to be the guardians of the Constitution, that takes into account the diversities and the rights of all European Union citizens - added Malosse - We must not forget the main aim of the Union: ensuring greater participation by citizens in European policies, rather than just guaranteeing the creation of a free market.

With this aim in mind, the EESC (European Economic and Social Committee) has drafted an Opinion on "Better integration of regions suffering from permanent natural and structural handicaps", calling the attention of decision-makers to the need for solidarity towards the regions suffering from permanent geographical and structural handicaps. More in detail, the Opinion - similarly to the assertions made in the Insuleur Manifesto - also in consideration of the explicit reference to Regions suffering from permanent structural handicaps made in Article III-220 of the Constitutional Treaty (modelled on Article 158 of the Amsterdam Treaty), called for the adoption of specific measures, including tax relief, for Island areas, in order to minimise their economic vulnerability and establish a "level playing field" with the rest of the EU.

Anastassios Bougas, Head of Unit at DG REGIO and spokesman for the European Commission's position on the claims of Island Regions, confirmed that the European Commission gave the utmost consideration to and appreciated the documents drafted by Insuleur and by the EESC on the subject. However, he added that in the present situation, the European Commission could not as yet implement the novelties introduced by the Constitution but had to abide by the Treaty in force. He also stated that despite this limitation, there was a clear will to take into account the difficulties faced by Islands. The European Commission's proposal, in this regard, was to formulate a framework on permanent eligibility for all the areas suffering from natural disadvantages, in order to enable them to obtain access to Structural Funds.

"Indeed, the Proposal for a General Regulation governing Structural Funds foresees a 5% quota, which, albeit minimal, nevertheless amounts to a recognition of island specificities", explained Bougas. "At all events, there is still some margin for fine tuning the measures foreseen for those islands that have compound handicaps, such as for instance, low population density or are distant from the mainland. On this will probably hinge the derogation concerning state aid to ensure territorial continuity. In the coming weeks, the major financial decisions of the European Union for the period 2007-2013 will be discussed; at that time, there will be some margin for manoeuvre also as regards Cohesion Policy for the welfare of Islands".

"However, we should not forget - added Anastassios Bougas - that if on the one hand the Committee of the Regions and the EESC support the cause of Island areas, on the other hand, at the last European Council, only four Ministers mentioned the condition of Islands. If the aim is to promote Regional Policy reform, Member States must also play their part in supporting their least favoured regions".

Konstantinos Hatzidakis, rapporteur to the European Parliament for Structural Funds, mentioned the presentation of amendments to the Regulation prior to the vote of 8 June: "There is a compromise text that underscores the lag in development of Regions with permanent geographical handicaps and Member States are asked to draft a national plan. Member States with island territories will also be able to indicate possible different solutions. The Chambers of Commerce and Insuleur should lobby their national governments strongly to obtain greater attention to this problem".

Objective 2 proposes for Regions with disadvantages due to insularity a greater co-funding rate compared to that foreseen for Regions with no island territories. On the other hand, as regards the problem of sea borders, the proposal made - according to Hatzidakis - is the one that affords the greatest flexibility in terms of territorial cooperation, since it provides for a reduction in State Aid for the Regions that do not come under Objective 1 but under the Convergence Objective.

Again, a transitional mechanism is foreseen for Regions affected by the statistical effect (i.e. those which have been moved from Objective 1 to the Convergence Objective due to purely statistical factors linked to EU Enlargement) in the event that they suffer from permanent disadvantages deriving, inter alia, from the presence of island territories. This transitional arrangement covers specific actions, already covered by Objective 1, which may also include basic infrastructure projects (ports, transport, energy).

Among the other proposals submitted to the European Parliament, Hatzidakis mentioned those put forward by MEP Claudio Fava who, as an Islander himself (he comes from Sicily), is an impassioned advocate of the island cause and argues that "special attention is needed towards the Island Regions of the Mediterranean, since they are mostly former Objective 1 Regions and are affected by substantial social difficulties and high unemployment rates, which are not matched by adequate welfare measures".

Hatzidakis expressed his wish that "we may build on these proposals, but we should not deceive ourselves, because the final outcome will perforce be a compromise solution between the funds requested by the European Commission under the Regional Policy budget, i.e. the allocation of 0.41% of the GDP, and the Luxembourg Presidency proposal which ranges between 0.37% and 0.38% of the GDP".

Didier Hache, Executive Secretary of the CPMR Islands Commission, replied that "Since Member States have their hands tied due to rules on State Aid, any innovation must perforce come from the European Commission and European legislation. Among other things, there is a lack of dialogue between the Commission's DGs. DG Competition made proposals that are totally unsatisfactory for islands, and risk causing further distortion in competition. For instance, a true absurdity, a development project in the Defense quarter in Paris would receive the same funding rate as is granted to a project in the interior of Corsica. This implies further distortion of competition, with one important difference: Islands do not have large companies, and their population is just 1.5% of the European total. We must fight urgently, but the outcome of the French referendum does not help, and this is why we should seek alliances with other Island Countries, such as Malta and Cyprus".

Irish Minister Eamon O'Cuin reminded the Meeting of the important role played by the Structural Funds in fostering Ireland's development, though achieving those results had required an overhaul of the national administrative structure itself. He stated that Islands bear additional costs and are affected by specific disadvantages. However, we should privilege a global political vision of the disadvantages affecting the different Regions. This is why the Irish Minister is responsible for the islands but also for rural areas, in order to consider all aspects from a complementary perspective. Islands do not grow at the same rate as other Regions, and to face up to this different growth rate, we need to consider all policies in a complementary fashion. Only once we have managed to ensure competitive growth of Islands vis-à-vis other Regions will we be able to talk about effective growth of the European Union.

Aristotelis Pavlidis, Greek Minister for the Islands of the Aegean Sea, after thanking the Insuleur delegation for organising the day's seminar, called the attention of all participants to an aspect which does not always receive adequate consideration, when he stated that European recognition of the condition of Islands is to date only theoretical, and all governments involved should be held liable for the lack of targeted actions.

The current Commissioner for Regional Policy, Danuta Hubner, had acknowledged that islands deserve special consideration, but this was not enough, stressed Pavlidis, who added that it was necessary to intervene in an incisive, documented manner, to demonstrate the need for specific, targeted actions. To this end, the findings of various studies commissioned by the European Union itself could be used to show the lack of a competitive market in the Island Regions and the fact that recourse to State Aid would not in fact risk distorting competition; on the contrary, it could well help avoid a process of deindustrialization which is already on the march.

Minister Pavlidis called on the Presidents of Chambers of Commerce attending the seminar to contact the representatives of their respective countries in the European Commission and bring to their attention the pleas of Island Regions and the findings of the European studies drawn up on this issue to date.

The discussion that took place at the end of scheduled speeches highlighted shared concern on the outcome of the French vote, a signal of widespread discontent that could weaken the European integration process. Participants also agreed on the need for prompt political action to support reforms able to foster the development of Island economies. The challenge of effective economic integration of the populations of the European Islands risks meeting considerable resistance, but this battle - as agreed by all participants and, most vocally, by President Mambrini - is well worth fighting. [Tiziana Tocco]

This article was published in the 3/2005 issue of "Sardegna Economica",
a bi-monthly magazine for Cagliari Chamber of Commerce.