Row brews over Euro transport

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BY THE end of this year the new high-speed train links from Brussels and Paris to the Channel Tunnel should be fully operational. But they are only a tiny part of an infrastructure development scheme that all EU countries would like to see built, yet are reluctant to finance.

Growing tension between those who cannot pay and those who will not, risks degenerating into a full-blown row at the Corfu summit that begins tomorrow.

The groundwork for a publicly and privately funded Trans-European transport network was set out in the Maastricht treaty. But despite the priority given to projects in the EU Commission's blueprint to revive growth, competitiveness and employment, implementation has moved slowly, hampered in part by the refusal of some finance ministers, notably Britain's Kenneth Clarke, to authorise any new funding instruments - the so-called Brussels bonds.

The outgoing EU president, Jacques Delors, warned earlier this week that the plans were crucial to Europe's economic recovery, and compared them to the 19th-century construction of railways. He argued that such projects could not be expected to produce profits right away. To defuse potential rows, he has stressed that, although the money must be found, the form of financing is not important.

The Commission's special working group has identified 35 projects: 11 are already underway or could begin within two years; a further 11 could be accelerated to begin in two years' time; 13 are still only at the conceptual stage. The estimated cost of the key projects, which should be completed by the end of the decade, is pounds 45bn.

Some of this money has been set aside in existing budget lines that, for the most part, can only be used by the poorer member states, to bring their living standards nearer to the EU average.

While this principle is commonly agreed, countries such as Britain and Germany, who already bankroll the bulk of the rest of the Union, are reluctant to dig much deeper into their pockets. They have made it clear that when the subject comes up for discussion in Corfu, they will have little more to give. The European Investment Bank - the existing EU bank for infrastucture developments - is helping by temporarily financing construction costs and soft, fixed-rate and longer-term loans, but there is still a substantial gap that governments and the private sector will have to bridge.

The northern states fear that any kind of bond issue risks dragging down the credit-rating of countries such as Britain and Germany, making it more expensive for domestic governments to borrow on the capital markets.

It will take all the skills of the Greek chairman to ensure the issue does not become explosive. He will try to to steer participants towards more creative financing methods so that debate is not beached on the bond issue, which John Major, for one, has said he will reject. The Commission would accept a serious commitment to move warily forward as a success.

The majority of the projects already envisaged deal with the development of high-speed trains such as a TGV/combined transport train linking Berlin with the Brenner pass though Verona, Munich and Nuremberg; developing the TGV from Paris to London with links to Belgium, the Netherlands and Germany; a TGV linking Madrid and Perpignan through Barcelona and another linking Paris to Strasbourg through Metz, Rotterdam to the Ruhr valley in Germany and Lyon with Turin. Improving the existing train and ferry route between Cork and Stranraer via Cork, Dublin, Belfast and Larne, and new motorways linking Patras in Greece with the Bulgarian frontier and Lisbon with Valladolid have also been proposed.

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