European countries disagree on joint response to oil crisis

Oct 21, 2004 02:00 AM

Eurogroup ministers have failed to agree on a common plan to tackle the currently high oil prices.
However, the French finance minister Nicolas Sarkozy has decided to act unilaterally by announcing a rebate of the state's additional tax revenues generated by rising oil prices to the industries suffering most from the oil price surge, such as truckers.

Before the Eurogroup meeting, Sarkozy had urged his colleagues to prioritise the issue, suggesting various actions to be taken. These included reinforced initiatives to control oil consumption and reduce the EU's dependence.
In a letter addressed to the EU's finance ministers, he also emphasised the need "to improve market transparency in order to limit uncontrolled speculation" by publishing figures on European oil stocks. Moreover, Sarkozy suggested asking the Commission to propose solutions to offset the current strain on certain industry sectors and to limit the economic consequences of rising fuel prices.

The difficulty is that eurozone ministers disagree on how to jointly tackle the surge in prices. Although all ministers have expressed their concerns about the high oil prices, they have criticised France for pushing ahead on its own without waiting for a common EU policy response.
Dutch finance minister Gerrit Zalm pointed to the decision taken by the Council in June to agree on a common response before taking action unilaterally. Zalm said that individual countries have the "autonomy to help certain groups from a social point of view", but that there was no agreement on what limitations should be put in terms of the instruments to be used for helping those groups.

Finance Commissioner Joaquin Almunia has announced he will present a study on alternative EU responses to the oil price surge to the next EcoFin Council on 16 November 2004. In a separate development, the Commission on 20 October 2004 decided to withdraw its proposal to reform the EU's management of oil stocks after it was blocked in Parliament and Council. However, the Commission has made it clear that it is considering tabling a new proposal.
"I remain convinced that we need this tool and particularly the improvement of the current management system of oil stocks at European level," said Energy Commissioner Loyola de Palacio.

Source: EurActiv
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