[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 12.11.2008

COM(2008) 722 final

REPORT FROM THE COMMISSION

European Union Solidarity Fund Annual report 2007

TABLE OF CONTENTS

1. Introduction 3

2. New applications received in 2007 3

3. Financing 8

4. Monitoring 8

5. Closures 10

6. Conclusions 10

Annex 1: European Union Solidarity Fund applications received or completed in 2007 12

Annex 2: Criteria to mobilise the EU Solidarity Fund 13

Annex 3: Determination of the amount of aid 14

Annex 4: Thresholds for major disasters applicable in 2007 15

1. Introduction

The European Union Solidarity Fund was set up on 15 November 2002[1]. Article 12 of the Solidarity Fund Regulation provides that a report on the activity of the Fund in the previous year be presented to the European Parliament and to the Council. The present report presents the activities of the Fund in 2007 covering, as in previous reports, three areas: the treatment of new applications received in the course of 2007, monitoring of the ongoing implementation of grants, and the assessment of implementation reports with a view to preparing these for closure.

2. New applications received in 2007

In 2007 the Commission received 19 new applications for Solidarity Fund assistance. Annex 1 gives a detailed overview of all cases. These were assessed in the light of the criteria set out in the Regulation and of the information that applicant States were able to provide.

Germany

In January 2007 a major storm ("Kyrill") hit Germany causing severe damage in a number of regions. The German authorities applied for financial assistance from the Solidarity Fund on 29 March 2007. Additional information was received on 12 July 2007.

The storm qualified as a major disaster as the direct damages of EUR 4 687 million exceeded the applicable threshold of EUR 3 267 million (i.e. EUR 3 billion in 2002 prices). Significant damage was caused in infrastructure, forestry, businesses and private households. In the most affected regions a state of emergency was declared. Eleven people lost their lives as a direct consequence of the storm. Road and train networks were blocked by felled trees and power cables, which lead to a complete shut-down of the railway traffic in the whole of Germany and required extensive cleaning-up operations.

The Commission decided on 11 September 2007 to propose to the budget authority to mobilise the Solidarity Fund and to grant financial aid amounting to EUR 166.9 million. Following the budget procedure, the grant was paid to Germany on 27 December 2007.

Spain (EL Hierro)

Between 26 and 28 January 2007, the island of El Hierro, the smallest of the seven islands constituting the Canaries archipelago, was hit by a severe storm accompanied by heavy rainfall which caused damage to public infrastructures. On 29 March 2007 Spain submitted an application for financial assistance.

The disaster caused damage of some EUR 17.858 million, representing 0.55% of the normal threshold for mobilising the Fund (EUR 3 267 million). The application was therefore examined under the criteria for “extraordinary regional disaster”. The regulation calls for particular focus on remote and isolated regions; the island of El Hierro falls within this category.

The Commission considered that, in order for the specific criteria for regional disasters to be meaningful in the national context a distinction needs to be drawn between serious regional events and those that are merely local. In accordance with the principle of subsidiarity the latter are the responsibility of the national authorities, while the former can be considered for support under the Solidarity Fund. A disaster representing no more than 0.55% of the normal threshold for mobilising the Fund was not considered to be falling within this rationale of the Fund, not even under exceptional circumstances or if a remote or isolated region was concerned.

The affected region was defined by the Spanish authorities as the island of El Hierro with a population of some 10 500 inhabitants which represent 0.5% of the total population of the Canary Islands. While Regulation 2012/2002 does not set out a minimum size in terms of population or territory for the affected region to be eligible the Commission considered that these should be relevant in the economic context of the country concerned. In the present case the disaster has locally caused severe damage but remained limited to a small territory with a limited number of people.

While the application left no doubt that the heavy rainfall locally caused serious damage, there was no sufficient evidence for serious and lasting repercussions on living conditions and the economic stability of the region (i.e. the Canary Islands). To be meaningful, the concept of regional economic stability could not be applied to entities that are too small to have an impact on the whole region. It had to be assessed in the wider regional context, i.e. the Spanish region of the Canary Islands. There was no evidence, that the economic stability of the Canary Islands was in any way affected. The Commission decided in early 2008 not to mobilise the Fund and informed the Spanish authorities accordingly.

France (La Réunion)

At the end of February 2007 the French island of La Réunion was affected by the tropical cyclone "Gamède" causing severe damage to infrastructures and different sectors of the economy. France submitted an application for financial assistance on 4 May 2007. Updated information on damage figures was received on 29 June, 12 and 17 July 2007. As the total direct damage of EUR 211.6 million remained below the normal threshold for a "major disaster", representing 6.5% of the applicable threshold of EUR 3 267 million, the application was examined under the criteria for extraordinary regional disasters.

The French authorities justified the application with the special situation of La Réunion which is the most distant and at the same time the most populated ultra-peripheral region of the Union. Evidence was presented to show that because of La Réunion's isolated location and its already critical socio-economic situation the impact and lasting repercussions of the damage caused by the cyclone were much more serious than would otherwise be the case. The disaster caused serious damage to infrastructures, in particular to roads, water supply and telecommunications, as well as in agriculture and fisheries, and it affected - to varying degrees - the entire population of La Réunion. In 21 of the island's 24 communes a state of emergency had to be declared. The evidence presented to demonstrate serious and lasting repercussions on living conditions and the economic stability of the region was mostly based on the problems arising from the damage caused to major roads, in particular the destruction of a bridge on the single most important road connecting the two economic poles in the north and the south of the island. This expected to negatively affect employment and economic growth including the closure of a number of SMEs. Moreover, the storm led to important income losses in fisheries, in the agricultural sector and in tourism.

The Commission decided on 11 September 2007 to propose to mobilise the Solidarity Fund and to grant financial aid amounting to EUR 5.29 million. Following the budget procedure the grant was paid to France on 28 December 2007.

Spain (Castilla-La Mancha)

On 22 and 23 May 2007, parts of the region of Castilla-La Mancha were hit by severe floods which caused damage to public infrastructures, private homes, businesses and agriculture. Spain submitted an application for financial assistance on 18 July 2007. The Spanish authorities estimated the direct damage at EUR 66.172 million, which represented only 2% of the applicable threshold for mobilising the Fund for major disasters (EUR 3 267 million). As total damage remained below the normal threshold for mobilising the Fund the application was examined under the criteria for “extraordinary regional disaster”.

The Commission considered that, in order for the specific criteria for regional disasters to be meaningful in the national context a distinction needs to be drawn between serious regional events and those that are merely local. A disaster representing 2% of the normal threshold for mobilising the Fund was not considered to be falling within the rationale of the Fund.

One of the conditions for the exceptional mobilisation of the Fund is that the major part of the population in the region to which the application relates must be affected. The application related to floods in the two provinces of Ciudad Real with a population of 489 200 inhabitants and Toledo (576 200 inhabitants) within the autonomous region of Castilla-La Mancha which has a total population of 1 839 900 (figures from 2004). Within these provinces the floods have affected a number of municipalities, with a total population of 71 397. The population in these municipalities represent only a very small part of the population of the provinces to which they belong. While Regulation 2012/2002 does not set out a minimum size in terms of population or territory for the affected region to be eligible the Commission considered that these should be relevant in the economic context of the country concerned. In the present case the disaster had locally caused severe damage but remained limited to a small territory with a relatively small number of people.

The flooding caused damage to the road and water infrastructure, as well as to municipal facilities, educational, health care and sports facilities, street lighting, numerous homes, agriculture, and part of the industrial and services base. While the application left no doubt that the flood and heavy rainfall locally caused damage to infrastructures and agriculture, it presented no convincing evidence for serious and lasting repercussions on living conditions and the economic stability of the region. Although the application was limited to the areas most affected, only 1989 requests for compensation for damage to homes had been received (out of a total population in the affected areas of 71397). In addition, the Commission considered that the concept of regional economic stability had to be assessed in the wider regional context. On this basis, the Commission concluded that the application did not meet the requirements in relation to "serious and lasting repercussion on living conditions and the economic stability of the region". The Commission decided on 23 January 2008 not to mobilise the Fund and informed the Spanish authorities accordingly.

United Kingdom

In June and July 2007, following successive waves of unusually intensive rainfall, different parts of the United Kingdom were affected by major floods causing severe damage. Subsequently, on 20 August 2007, the UK authorities submitted an application for financial assistance from the Solidarity Fund. Additional information requested by the Commission services necessary to complete the assessment was received on 26 October 2007.

Total direct damage caused by the flooding amounts to over EUR 4.6 billion. As this amount exceeds the threshold of EUR 3.267 billion applicable to the UK for triggering the Solidarity Fund (i.e. EUR 3 billion in 2002 prices) the disaster qualified as a “major natural disaster” and fell thus within the main field of application of Solidarity Fund.

The Commission decided on 10 December 2007 to propose to the budget authority to mobilise the Solidarity Fund and to grant financial aid amounting to EUR 162.388 million.

Cyprus

Following forest fires in Cyprus on 29 June 2007, the Cypriot authorities submitted an application for assistance on 4 September 2007. The damage was estimated by the Cypriot authorities at € 38.2 million, representing 48% of the normal threshold for mobilising the Fund applicable to Cyprus (EUR 79.895 million). The application was therefore assessed under the criteria for “extraordinary regional disaster”.

The area burnt affected mainly forest areas in the National Forest Park and was claimed to be larger than the accumulated area destroyed by all fires on Cyprus during the last 7 years. However, the effect on the population was extremely limited. The Cypriot authorities identified three neighbouring villages with a total population of 1703 as affected region (i.e. 0.2% of the population of Cyprus). Within these villages, 58% of households had been affected. The Commission considered that the size of population/territory of the affected region should be relevant in the economic context of the country concerned. A disaster affecting only an extremely small number of people (around 988 inhabitants) did not appear to be falling within the rationale of the Solidarity Fund.

In addition, there was no clear evidence of "serious and lasting repercussions on living conditions". According to the Cypriot authorities the fire caused rather limited damage to basic infrastructure (transport, water and electricity), which was restored in the following weeks. Residential damages was limited to EUR 601920 (on average EUR 353 per person in the affected villages) and represented only some 1.5% of total damage. Accordingly, the Commission considered that the application did not meet all requirements for an “extraordinary regional disaster”. The Commission decided on 23 January 2008 not to mobilise the Fund and informed the Cypriot authorities accordingly.

Italy

On 27 September 2007 the Italian authorities presented a set of Solidarity Fund applications, relating to nine different regions of Italy. However, as the ten week deadline for presenting Solidarity Fund applications after the date of the first damage was not respected in any of the nine applications, the Italian authorities were notified by letter of 29 October 2007 that their applications were not admissible.

Spain (Canary island fires)

In July/August 2007, the three islands of Gran Canaria, Tenerife and La Gomera were hit by forest fires. The Spanish authorities on 3 October 2007 submitted an application for financial assistance. The direct damage was estimated at EUR 144.2 million. As this amount represents 4.4% of the normal threshold for mobilising the Fund, the application was based on the “extraordinary regional disaster” criterion.

The affected region consisted of the three islands of Gran Canaria, Tenerife and La Gomera, with a total population of 1 681 946 persons. As a result of the fires, 35 000 hectares of land were damaged and it was necessary to evacuate 12 000 persons (0.7% of the affected population). The disaster seriously damaged road and water infrastructures, housing, agriculture, livestock, business and the natural environment. Although the Commission considered it likely that the population in close proximity to the fires had suffered in one way or another from the disaster, no evidence was presented to show that the major part of the total population living on the three islands of Gran Canaria, Tenerife and La Gomera has been affected.

As regards the requirement of serious and lasting repercussions on living conditions and economic stability of the region, the application stated in general terms that there are lasting effects on the natural environment, infrastructure and resources, which will affect the population's living conditions in the damaged area. However, no convincing evidence was presented to support this statement. As regards serious and lasting repercussions on economic stability of the affected region, the Spanish authorities indicated in the application that these cannot be assessed in the short term and no further evidence was provided.

Accordingly, the Commission considered that the application did not meet all requirements in the Regulation for an “extraordinary regional disaster”. The Commission decided in early 2008 not to mobilise the Fund and informed the Spanish authorities accordingly.

France (Martinique)

In August 2007 the French overseas departments of Martinique and Guadeloupe, two islands of the French Antilles, were affected by the hurricane "Dean" causing severe damage to infrastructures and different sectors of the economy. France submitted an application for financial assistance from the EU Solidarity Fund on 26 October 2007. Additional information from the French authorities was received at the Commission on 8 January 2008. At the end of 2007 the application was still being assessed and a Commission decision on the mobilisation of the Fund had not yet been taken.

Greece

In August 2007 a fairly extensive part of Greece was affected by forest fires. The fires were most intense and most widespread in the regions of Western Greece, the Peloponnese, Continental Greece and Attica. The disaster caused major damage to different sectors of the economy, in particular to agriculture, and destroyed infrastructures in the fields of transport, telecommunications, energy distribution, water and waste water and natural disaster prevention. The disaster also caused important damage to the natural environment, cultural monuments, schools, hospitals and fire-fighting services. Substantive costs have been incurred for providing temporary accommodation and funding rescue services to meet the immediate needs of the population concerned. 65 people died in the Peloponnese, in Western Greece and in Evvoia as a result of the fires.

The Greek authorities asked for Solidarity Fund assistance on 30 October 2007 and completed the application on 24 January 2008. At the end of 2007 the application was still being assessed and a Commission decision on the mobilisation of the Fund had not yet been taken.

Slovenia

In mid September 2007 a greater part of Slovenia was affected by heavy rain and storm leading to severe floods and landslides. The Slovenian authorities submitted an application for Solidarity Fund assistance on 19 November 2007.

The disaster caused significant damage to infrastructure (transport, electricity, water). More than 350 km of national roads and more than 1 600 km of municipal and forest roads were damaged, as were more than 17 km of water infrastructure, more than 10 km of the electricity grid, 48 water reservoirs and 147 bridges. In addition, the disaster caused significant damage to public and private buildings, business, agriculture and monuments of cultural heritage.

At the end of 2007 the application was still being assessed and a Commission decision on the mobilisation of the Fund had not yet been taken.

3. FINANCING

The two cases from 2006 for which the budget procedure had not yet been completed before the end of the year (floods in Hungary and Greece) were dealt with in one single amending budget. Preliminary Draft Amending Budget No 2/2007[2] was approved by the Budgetary Authority on 7 June 2007. The payments could be made after adoption of the grant decision and after the implementation agreement was signed.

In 2007 the Fund was mobilised for two new cases (storm "Kyrill" in Germany; cyclone "Gamède" in France/La Réunion). The amounts of aid in each case were determined on the basis of the standard method previously developed by the Commission and explained in detail in the 2002/2003 annual report (see also Annex 3 of the present report). Amending Budget No 6/2007[3] was approved by the Budgetary Authority on 24 October 2007. The payments could be made after adoption of the grant decision and after the implementation agreement was signed. The amounts of aid in 2007 were the following:

Beneficiary | Disaster | Category | Amount of aid (EUR) |

Hungary | Flooding | major | 15°063°587 |

Greece | Flooding | regional | 9°306°527 |

Germany | Storm | major | 166°905°985 |

France/La Réunion | Tropical cyclone | regional/ ultraperipheral | 5°290°000 |

Total | 196°566°099 |

For applications from the United Kingdom (Floods), Greece (Forest Fires), Slovenia (Floods) and France/Martinique (Hurricane DEAN) received in 2007 the budget procedures could not be completed before the end of the year. For these applications the Commission presented Preliminary Draft Amending Budgets No 1/2008[4] and No 3/2008[5] which were approved by the Budgetary Authority on 9 April 2008 and 5 June 2008 respectively and Preliminary Draft Amending Budget No 7/2008[6]; the annual report of next year will report on these.

4. MONITORING

On 23 January 2007, the Commission carried out a monitoring visit to Austria, in order to be informed of the system put in place by the Austrian authorities for the implementation of the Solidarity Fund grant made following the severe floods in Vorarlberg and Tyrol in August 2005, to be updated on the progress in implementing the grant and to discuss specific questions by the Austrian authorities.

As on previous occasions the visit was highly welcomed by the authorities concerned. From the Commission point of view, the visit allowed to get assurance as to the implementation system put in place and good progress made. On the basis of the information received it was felt that the implementation is progressing well and that appropriate steps had been made to ensure respect for monitoring and control obligations.

5. CLOSURES

Article 8(2) of Regulation 2012/2002 states that no later than six months after the expiry of the one-year period from the date of disbursement of the grant, the beneficiary State shall present a report on the financial execution of the grant (hereinafter: an “implementation report”)with a statement justifying the expenditure (hereinafter: a “validity statement”). At the end of this procedure, the Commission shall wind up the assistance from the Fund.

As regards the closure of assistance of the Maltese case (2003 flooding) for which the implementation report was received in on 10 May 2006 and completed on 28 June 2007, the Commission noted that the full amount of the EUSF grant (i.e. EUR 961 220) has been spent by the Maltese authorities. The Commission wound up the assistance on 3 July 2007.

In 2007, the Commission received final implementation reports for grants made in 2005 and 2006 from Slovakia (storm in 2004), Sweden, Estonia, Latvia and Lithuania (all relating to a storm in 2005). At the end of the period covered by this annual report the assessment of these implementation reports was still ongoing.

6. CONCLUSIONS

The Commission received a total of 19 new applications in 2007, the highest number of applications in one year since the Fund was set up. Only four of these applications related to a major natural disaster. The other 15 applications were presented under the regional disaster criteria, whereby nine of these applications had to be declared not admissible as they were presented outside the 10 week application period laid down in the Regulation.

The new applications received in 2007 once again confirmed the general trend by which the majority of applications for Solidarity Fund assistance are not presented for major disasters which represent the main scope of the Fund, but under the exceptional criteria for regional disasters. These criteria - which according to the Regulation are to be examined by the Commission “with the utmost rigour” - continue to be relatively difficult to meet. The rate of unsuccessful applications for the regional (exceptional) criteria, at almost two-thirds, continues to be high. For major disaster applications for which only a single quantitative criterion applies, the positive assessments have so far a rate of 100%.

In 2007, Member States and the Commission have once again invested considerable time and effort in, respectively, preparing and assessing applications for smaller regional disasters that regularly lead to rejections. One of the major changes in the Commission's proposal of 6 April 2005 for a new Solidarity Fund Regulation is therefore to resort only to quantitative thresholds for the level of damage required to trigger utilization of the Fund, which would improve the transparency of the Fund. This would help to avoid considerable efforts of preparing applications which are subsequently rejected because the exceptional criteria are very difficult to meet. With the new Solidarity Fund regulation, the national authorities would have a clearer idea of when the Fund is likely to be able to support them in recovering from a disaster.

In 2007, the Commission undertook a series of attempts to convince Member States and in particular the incoming German and Portuguese Council presidencies to re-launch the debate on the Commission's proposal for a new Solidarity Fund Regulation, which had been largely supported in the European Parliament. However, by the end of 2007 no progress was made in the Council.

Annex 1 European Union Solidarity Fund applications received in 2007

Country | GNI 2005 | 0.6% of GNI | Major disaster threshold 2007 |

AT | ÖSTERREICH | 242 610 | 1 455.660 | 1 455.660 |

BE | BELGIQUE-BELGIË | 301 089 | 1 806.535 | 1 806.535 |

BG | BALGARIJA | 21 700 | 130.200 | 130.200 |

CY | KYPROS | 13 316 | 79.895 | 79.895 |

CZ | ČESKA REPUBLIKA | 95 308 | 571.847 | 571.847 |

DE | DEUTSCHLAND | 2 248 160 | 13 488.960 | 3 266.629* |

DK | DANMARK | 208 981 | 1 253.883 | 1 253.883 |

EE | EESTI | 10 528 | 63.168 | 63.168 |

EL | ELLADA | 177 750 | 1 066.497 | 1 066.497 |

ES | ESPAÑA | 893 165 | 5 358.990 | 3 266.629* |

FI | SUOMI/FINLAND | 157 346 | 944.076 | 944.076 |

FR | FRANCE | 1 718 822 | 10 312.933 | 3 266.629* |

HR | HRVATSKA | 30 947** | 185.681 | 1.114 |

HU | MAGYARORSZÁG | 83 689 | 502.134 | 502.134 |

IE | IRELAND | 137 719 | 826.316 | 826.316 |

IT | ITALIA | 1 412 607 | 8 475.641 | 3 266.629 |

LT | LIETUVA | 20 296 | 121.774 | 121.774 |

LU | LUXEMBOURG (G-D) | 24 018 | 144.106 | 144.106 |

LV | LATVIJA | 12 655 | 75.932 | 75.932 |

MT | MALTA | 4 395 | 26.369 | 26.369 |

NL | NEDERLAND | 510 183 | 3 061.098 | 3 061.098* |

PL | POLSKA | 235 325 | 1 411.952 | 1 411.952 |

PT | PORTUGAL | 145 347 | 872.080 | 872.080 |

RO | ROMÂNIA | 77 011 | 462.068 | 462.068 |

SE | SVERIGE | 286 933 | 1 721.600 | 1 721.600 |

SI | SLOVENIJA | 27 379 | 164.272 | 164.272 |

SK | SLOVENSKÁ REPUBLIKA | 37 141 | 222.843 | 222.843 |

TR | TÜRKIYE | 290 025 | 1 740.151 | 10.441 |

UK | UNITED KINGDOM | 1 830 312 | 10 981.869 | 3 266.629* |

* ~ EUR 3 billion in 2002 prices

** GDP (GNI not available)

[1] Council Regulation (EC) N° 2012/2002 of 11 November 2002 establishing the European Union Solidarity Fund, OJ L 311/3 of 14.11.2002, in the following referred to as “the Regulation”.

[2] COM(2007)148 final of 28.3.2007

[3] COM(2007)527 final of 13.09.2007

[4] COM(2008)15 final of 18.01.2008

[5] COM(2008)201final of 14.04.2008

[6] COM(2008)556 final of 15.09.2008