The head of the Labour delegation in the European Parliament, Dr Alfred Sant, has asked whether the time has come for the European Commission to permit small states which are on the EU borders to be given special State Aid. This aid would be given to companies in the country so that by means of this investment, the differences between rich European economics and other economics which cannot keep up with them, can start to be overcome.
Dr. Sant said that State Aid, if it is applied equally with everyone, does not permit equally successful results for those small peripheral countries in the EU. During a discussion with the Commissioner for Competition Margrethe Verstager, Dr Sant said that the Commission should analyze the real effects which the rules for State Aid are actually having. This should include the State Aid given to airlines of countries which are on the periphery of the EU.
Dr Sant asked whether it was possible for an audit of the State Aid rules in these peripheral zones, so that the economic convergence between European regions can be improved. He said there was a need to compensate for the disadvantages and extra expenses which small economies have in regions where economic and social development has lagged behind.
Dr Sant said that in many cases, state intervention does not leave the desired effect or has a minor impact on the European Common Market. As the Greek crisis has shown, the imbalance which is created between member states which have different economies, can lead to a lot of problems. State Aid, when applied in the same way in each country and with the same rules, can contribute to even greater differences in their respective economies. What works for large companies, might not make sense or might leave a negative impact on peripheral regions which have the same currency as metropolitan centres many kilometres away.
Dr Sant said that the economic divergence between European partners has grown so much that it has become a crucial problem for Europe. Those parts of Europe which are falling behind do not have enough tools to help stimulate new economic activity in their territory. They do not manage to attract new investment. And as things stand, they cannot directly help, by means of State Aid, local entrepreneurs to create new projects and jobs.
“For example, a state which has a strong defence industry has many ways of hiding State Aid for research and development within this industry in the national interest. However, small countries which are not in the business of defence, do not have this possibility,” Dr Sant said.
In her reply to Dr Sant, Commissioner Vestager said that one of the most important issues is when a member state can so much more on its own, within the framework of these rules. “This can be done on two conditions: one of them is transparency. The Government has to tell its citizens what it is doing, and how the money collected from their taxes is being spent. Secondly, governments need to evaluate the schemes which can work and can bring about the same result. In this way, everyone has a chance to succeed,” Commissioner Vestager said.