Center for Environmental Public Advocacy
CEE Bankwatch Network
Friends of the Earth Slovakia
October 25, 2002 -Fearing that EU funds may be used for questionable projects, the Center for Environmental Public Advocacy/CEE Bankwatch Network and Friends of the Earth Slovakia (NGOs) have appealed to EU member countries to consider their concerns before approving the provisional closure of the Competition chapter in pre-accession negotiations with Slovakia.

In a letter to the permanent representatives to the EU, the NGOs ask the representatives to consider suggestions included in the NGOs’ “Position Paper on the Chapter Competition Policy ” (1), and point out that although their position paper was sent to both the European Commission and Slovak government representatives, neither side’s response touched on the merits of the paper’s suggestions.

“We called on the European Commission to ensure that the Slovak Government immediately cancels legislative provisions which sharply contradict current EU rules on competition and which seriously distort the business environment in Slovakia” stated FoE-Slovakia project coordinator Roman Havlicek, adding that the EC should “ensure transparent state aid complying with the public interest”.

The NGOs emphasised that foreign investors in Slovakia (Volkswagen Slovakia is one example) receive more incentives than just tax relief. Other bonuses include the right to land expropriation, direct financial subsidies for the construction of roads and water and sewage systems, electricity supply and the expansion of railway stations – all of which is not classified as state aid. According to the NGOs, these subsidies should be subject to the State Aid Act since they represent a significant amount of public funds. If the EC ignores these facts, they add, such forms of state aid will only continue.

Another problem with pre-accession aid which the NGOs ask the EU representatives to consider is that many subsidised projects are concentrated in the most developed regions, while the rest of the country, which continues to suffer from high unemployment, is neglected. Ignoring these regions will reduce the amount of public funds available to aid the most needy and might generate pressure on increased assistance from the EU’s pre-accession funds and, after accession, structural funds. Havlicek: “If the Commission continues to tolerate the current practices circumventing state aid rules, it may well end up paying the bill with EU taxpayers’ money.” For this reason, “conforming state aid in Slovakia with EU standards is not only a matter of public interest in Slovakia, but for the EU member countries as well,” he concluded.

Roman Havlicek, FoE-Slovakia project coordinator
tel.: +421 48 419 3324

(1) “Position Paper on the Chapter Competition Policy”: to download it go to: openletter.rtf