COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT on the development of a Euro-Mediterranean transport network in agreement with Mr Patten

TABLE OF CONTENTS

1. Introduction

2. Aims of the communication

I. The economic and political dimension of the Euro-Mediterranean transport network

A. An economic imperative

B. A political priority to be implemented

II. Creation of the Euro-Mediterranean transport network

A. Planning the network and identifying the priority infrastructure projects

B. Funding the network

C. Incorporating common transport policy objectives

Conclusion

ANNEX 1

ANNEX 2

1. INTRODUCTION

While the European Union is preparing for an enlargement which will take in ten new Member States, the European Commission has started extensive consultations on the future of the trans-European transport network. This process, which was launched in the framework of the High-Level Group chaired by Karel Van Miert, [1] will culminate towards the end of 2003 with a proposal for a revision of the Community guidelines for the development of the network in the enlarged European Union. [2] As a second stage, the Commission will present a comprehensive communication proposing lines of action to link the main routes of the trans-European network to the Union's neighbouring countries, in particular those of the Mediterranean basin.

[1] The main task assigned to the Van Miert Group - which is due to complete its work by mid-2003 - was to compile a list of the priority projects on the main transport corridors of importance for international haulage services in the enlarged Union. Interconnection of the networks in the future Member States with the rest of Europe (East-West dimension) and of the networks in the new Member States with each (North-South dimension) is one of the central points on which the Group has been working.

[2] Decision No 1692/96/EC of the European Parliament and of the Council of 23 July 1996.

The political desire to develop a special relationship of cooperation with the countries of the Mediterranean basin is not new, but the specific issue of extending the trans-European network to these countries is very new. The pan-European Conference in Crete (1994) and Helsinki (1997) launched and contributed to discussion of the network's external links to the countries of central and eastern European, but there has been no discussion of links with the Mediterranean countries.

At the Copenhagen European Council on 12 and 13 December 2002, it was stressed that there is a need for greater development of cross-border and regional cooperation with neighbouring countries, especially those of the southern Mediterranean, and among these countries themselves "in order to develop the regions' potential to the full, inter alia by enhancing transport infrastructure, including appropriate instruments". On this basis, the Commission launched the idea of a new framework for links between the EU and its eastern and southern neighbours based on the concept of neighbourhood. [3] This framework attaches importance to the development of transport and energy infrastructure between the Union and neighbouring countries. With regard to energy, the Commission recently put forward proposals to strengthen cooperation ties and interconnections with neighbouring countries. [4]

[3] COM (2003)104 final, Wider Europe - Neighbourhood: A new framework for relations with our eastern and southern neighbours.

[4] COM (2003)262 final, 13.05.2003, Communication from the Commission on energy policy and neighbouring countries.

In 1995, the Barcelona Declaration attached emphasis to connecting the Mediterranean transport networks and the trans-European network and the development of south-south links. The fifth Conference of Euro-Mediterranean Foreign Ministers in Valencia on 22 and 23 April 2003 and the action plan which it adopted reaffirmed the priority of developing transport networks and infrastructures in the Mediterranean, in particular interconnections.

It should be noted that two of the ten prospective Member States of the European Union (Cyprus and Malta) are Mediterranean Partners within the meaning of the Barcelona Declaration, and that Turkey - also a Mediterranean Partner - is a candidate country. Following the strengthening of political, economic and social ties between the two shores of the Mediterranean through the widening and deepening of the Euro-Mediterranean Partnership, it is now essential to develop a Euro-Mediterranean transport network, with both south-south links (between the Mediterranean Partners themselves) and north-south links (with the trans-European transport network).

The recent informal meeting of Euro-Mediterranean Foreign Ministers in Crete (26-27 May) again stressed the need to develop transport infrastructure in the Mediterranean Partner countries, and the sixth Conference of Foreign Ministers of the Euro-Mediterranean Partnership (Barcelona VI) is due to be held in Naples at the end of the year (2-3 December). Against this background, the Greek and Italian Presidencies of the Union are providing an opportunity to give special consideration to the Euro-Mediterranean transport network in order to contribute to discussion of the external dimension of the trans-European network.

2. AIMS OF THE COMMUNICATION

The concept of the Euro-Mediterranean transport network has so far not progressed beyond declarations of intent.

This Communication is intended to develop the concept by defining more coherently the challenges and features of the network and considering the constraints which development entails, including concerns about safety, security and funding.

Building on this, the Commission plans to give a major boost to the development of the network and alert the players concerned, both public and private, to the need for active support and greater cooperation in this field.

To this end, the Communication will initially outline the economic and political dimension of the Euro-Mediterranean transport network (I), and then go on to analyse the essential requirements and objectives for its creation (II).

* *

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I. The economic and political dimension of the Euro-Mediterranean transport network

A. An economic imperative

A few key figures [5] illustrate the importance of the transport sector for the Mediterranean Partners and for Euro-Mediterranean links (see Annex 2: key figures for Mediterranean transport):

[5] Source: Eurostat, series Statistics in Brief, Theme 7, 10/2002, Transport by air in the MED countries, 1998-2000 and 9/2002, Maritime transport in the MED countries, 2000. These publications are based on the Med-Trans project data. All of the data are available in Eurostat's New Cronos database.

1. Trade

Nearly 500 million tonnes of goods passed through the Mediterranean Partners' ports in 2000, an increase of 12.8% compared with 1998. Goods traffic was well in excess of 11 million tonnes in each of the main 15 ports (e.g. Béthouia (Algeria): 36.4 million tonnes; Izmit (Turkey): 31.4 millions tonnes; Alexandria (Egypt): 28.4 million tonnes). With about 150 million tonnes of traffic, Turkish ports account for almost one third of the Mediterranean Partners' maritime trade, followed by Algeria (100 million), Egypt (55 million) and Morocco (53 million). These volumes are close to those in some EU countries, such as Denmark, Finland and Portugal, which had figures of 97 million, 81 million and 56 million tonnes respectively in 2000.

The European Union is also by far the most important maritime partner for a large number of Mediterranean Partners, in particular the Maghreb, and maritime transport accounts for most of the trade between the two shores of the Mediterranean. In 2000, the EU exported or imported virtually 146 million tonnes of goods by sea to or from the Mediterranean Partners, i.e. nearly 74% (by tonnage) of all trade.

2. The development of tourism

With 54 main airports (those with more than 100 000 passengers a year), the Mediterranean Partners handled a total of more than 100 million passenger arrivals and departures in 2000, a rise of 14% since 1998. Much of the business in these countries is dependent on tourism. With almost 15 million passengers in 2000, Istanbul/Ataturk airport (Turkey) was by far the busiest airport of the EU candidate countries, and airports such as Cairo or Tel Aviv handle more passengers each year than the main candidate countries.

For air travel, the EU is by far the most important partner for most of the Mediterranean Partners. Even where it ranks second after the Near and Middle East, the EU accounts for nearly a quarter of all air passenger traffic.

While expansion of the cruise industry and ferry traffic is important for the islands and for some Mediterranean countries, most tourists visiting the Mediterranean Partners travel by air. Tourist numbers to the Mediterranean Partners grew by an annual average of 8.3% during the period 1998-2000, from about 28.7 million in 1998 to over 33.6 million in 2000. Peaking at about 80% in the case of Malta and Cyprus, the EU accounted for well over 40% of tourists in 2000 in five of the other Mediterranean Partners (Tunisia, Morocco, Egypt, Israel, Turkey).

The carriage of passengers by sea is mainly confined to Egypt, the Maghreb and Turkey, though the cruise industry is expanding in the Mediterranean basin and is important for countries such as Cyprus and Malta, as well as for other tourist destinations.

Since the events of 11 September 2001, tourism in the Mediterranean countries, especially Egypt, Israel, Jordan, Syria and Turkey, has declined sharply. This is a matter of particular concern as tourism accounts for a large share of the GDP of most of these countries and brings in a considerable amount of foreign currency.

3. The need to rebalance transport flows

Most of the main international flows across the Union are concentrated on the North Sea ports. This polarisation concentrates flows on a few north-south corridors and increases the problems of congestion in the Union's main transit countries while failing to serve certain isolated remote areas in southern Europe. To achieve sustainable development of transport and encourage an improved territorial distribution of flows, it will be necessary to develop new hubs in the south of the Union to attract maritime traffic with a high growth potential via the Suez Canal from Asia. From this angle, the development of Motorways of the Sea must be a matter of priority. The White Paper on European transport policy [6] stresses the importance of Motorways of the Sea to relieve congestion on the roads and help restore balance between transport flows and modes.

[6] COM (2001) 370, 12.09.2001, European transport policy for 2010: time to decide.

B. A political priority to be implemented

The need to link the European Union to the Mediterranean Partner countries by means of efficient networks and a high-performance transport system is not a totally new priority. [7] However, it has taken on greater urgency in view of the imminent prospect of enlargement, the development of the Euro-Mediterranean partnership, and discussions within the EU on the future of the trans-European transport network.

[7] See Barcelona Declaration; Communications from the Commission: Reinvigorating the Barcelona Process, COM (2000) 497 final, and Enhancing Euro-Mediterranean cooperation on transport and energy, COM (2001) 126 final.

The Mediterranean partners need to be able to benefit from an enlarged European Union, while the Union needs a stable and prosperous area [8] on its southern and eastern fringes. Modern, efficient transport networks are essential for the proper functioning of the Euro-Mediterranean free trade area which is due to be created by 2010, and are a powerful factor in regional and subregional integration between the Mediterranean Partners.

[8] The establishment of a shared area of prosperity is the final objective of the economic and financial part of the Barcelona Process.

The Mediterranean region's investment needs in this sector are very substantial and are likely to increase considerably over the next few decades due to demographic changes, greater mobility and the demand for transport which will result from increasing Euro-Mediterranean trade and economic and social development.

Furthermore, new needs and constraints have come to the fore in recent years which directly affect the Mediterranean transport sector. These concern the development of tourism, safety and security concerns linked to the risks involved in shipping oil and gas, international terrorism, and the growing importance of the Mediterranean as a transit area, in particular owing to increased traffic from Asia.

As far as recent developments are concerned, there have also been international trade negotiations to further open up the transport markets. All the advanced economies operate with a multitude of reliable and competitive transport networks which encourage international trade links and provide the foundations for economic growth. In the framework of the multilateral WTO negotiations (GATS), the European Union is actively fighting for adequate access for transport operators to the market and for a satisfactory supply and choice of operators for transport service users. The EU also encourages its trade partners to commit themselves to opening up their transport markets in the regional and bilateral context. Networks can also demand market access commitments which go beyond the basic traffic rights for the main transport modes (e.g. the opening up of groundhandling services at airports, the opening up of container terminals in ports to competition). The EU will continue to apply pressure within the WTO to open up transport markets and to encourage the Mediterranean Partners to take part in these negotiations.

The transport network on the southern and eastern shores of the Mediterranean is vulnerable because of insufficient interconnection (in particular inland), the lack of traffic management facilities, the still incomplete opening up of transport markets, and the weakness of subregional cooperation. This is a major obstacle to investment in the region and to regional economic and social development and threatens the proper functioning of the future free trade area with the European Union. Boosting subregional cooperation would obviously enable greater use to be made of complementarity and would help to integrate the markets, thereby making it easier to establish and operate a Euro-Mediterranean transport network.

The different situations in each of the Mediterranean Partners and the self-contained nature of the markets in the region are a major obstacle to the development of the Euro-Mediterranean network. The creation of such a network would significantly boost south-south integration, which is essential to create an enlarged market with the potential to attract direct investment. Right now, despite strong growth in south-south trade between the Mediterranean partners in recent years, this trade accounts for only about 5% of their total trade. [9] Subregional cooperation in such a critical area as transport, in particular at the Maghreb and Mashrek level, would clearly enable greater use to be made of complementarity within these subregions, economies of scale to be made and the partitions between markets to be removed in order to achieve a critical size for investment. Subregional integration also has the advantage of enabling countries to be treated differently in the framework of the regional part of the MEDA programme.

[9] Source: the abovementioned FEMISE report.

A number of subregional cooperation bodies (and processes) already exist [10] - notably the Transport Ministers Group of the Western Mediterranean, the Arab Maghreb Union, and the Agadir Process - on the basis of which specific cooperation in the field of transport could be developed or is in the process of being developed. The Commission intends to encourage and support these basic initiatives for the comprehensive economic development of the region both politically and financially.

[10] Set up in 1989, the AMU is a general subregional cooperation framework. The European Commission calls for it to be strengthened and for the setting up, under its aegis, of concrete cooperation arrangements, in particular in the fields of transport and energy (see the speech given by President Prodi to the Algerian National Assembly and Senate on 31 March 2003).

II. Creation of the Euro-Mediterranean transport network

Economic and political data clearly underscore the priority which must be given to developing the Euro-Mediterranean transport network. To make this network a reality, it is necessary to plan the network and to identify the priority infrastructure projects (II.A), to make the necessary funding available (II.B), and to incorporate common transport policy objectives into the plan (II.C).

A. Planning the network and identifying the priority infrastructure projects

The main importance of such action, conducted within the framework of the Euro-Mediterranean Transport Forum, [11] would be to promote a comprehensive and coherent approach to the network and to facilitate the mobilisation of capital from public and private donors for projects identified as priorities.

[11] The Euro-Mediterranean Transport Forum was set up in 1998 and is the reference forum for the development of regional cooperation in the transport sector. Organised and chaired by the European Commission, it is made up of senior transport officials from the Member States of the European Union and the Mediterranean Partners.

The process of planning the network and identifying priority projects was recently launched in the framework of the MEDA programme (see Annex 1). An initial outline of the network will be presented around the middle of 2004. [12] Network identification is due to be completed in 2006. To give the network the necessary political legitimacy, the list of priority projects must be approved in due course by the Transport Ministers of all the Euro-Mediterranean Partners. A Euro-Mediterranean Conference of Transport Ministers, like that recently held under the Greek Presidency in the energy sector (Athens, 21 May 2003), must therefore be envisaged in the framework of one of the forthcoming Presidencies of the Union. The Commission will apply the conclusions drawn from this exercise to its review of the guidelines for the trans-European transport network, [13] which is aimed at improving links with the networks of the Mediterranean Partners, and of the financial instruments at its disposal, in particular the MEDA programme and the INTERREG interregional cooperation programmes involving the Mediterranean partners. [14]

[12] Two feasibility studies (one for the Maghreb, the other for the Mashrek) on large-scale regional infrastructure projects agreed with the Mediterranean Partners will be launched in 2003 in the framework of this exercise..

[13] See the above Decision 1692/96/EC of 23 July 1996.

[14] INTERED A programmes 2000-2006 Spain/Morocco, III B MEDOC and ARCHIMED

*A well-proven methodology: an analysis based on corridors

Given the budgetary constraints, the Euro-Mediterranean transport network must be focused on the financial resources which are available for genuine priority infrastructure projects. It s therefore essential to adopt a coherent approach to the planning of the network based on corridors to enable priorities to be set in the right order.

The European Union has proven experience in this respect in the framework of the trans-European network. Whilst bearing the specific political, economic and budgetary situation of the Mediterranean Partners in mind, this methodology could be applied to the Mediterranean region. Like the exercise recently carried out for the Balkans [15] and before that for the candidate countries (TINA [16] study, on which the Van Miert Group will base its proposals for the trans-European transport network in the enlarged Union), the aim should be to carry out a survey of the state of the transport infrastructure network in the Mediterranean and, after identifying a number of corridors, to select certain transport infrastructure projects which the Euro-Mediterranean partners agree are of major regional importance.

[15] See "Transport and energy infrastructure in south-eastern Europe", a Commission strategy document approved by the Regional Conference for South-Eastern Europe held in Bucharest on 25-26 October 2001. A Transport Infrastructure Regional Study (TIRS) was also carried out and completed in June 2002 by the French Development Agency under the aegis of the European Commission, the EIB and the European Conference of Transport Ministers (ECTM). The TIRS study will be supplemented and extended in 2003 by the Regional Balkans Infrastructure Study (REBIS).

[16] TINA: Transport Infrastructure Network Assessment.

As in existing general studies [17] and feasibility studies concerned with particular projects, projects would therefore be identified and put in order of importance after an analysis based on corridors. This method proved its value in the central and eastern European countries following the Crete and Helsinki Conferences. This analysis would add to work already planned in the framework of the pan-European transport areas (PETRA), which were designed at those Conferences.

[17] CORRIMED, INFRAMED, REDWEG (studies cofinanced by the European Commission in 1997).

Development of the following multimodal corridors [18] is likely to promote regional integration and coherence between the networks of the Mediterranean Partners and the trans-European network:

[18] See the abovementioned CORRIMED study.

-The trans-Mahgreb multimodal corridor, which has a railway component (the trans-Mahgreb train) and a motorway component (the AMU motorway). This links the main towns in Morocco, Algeria and Tunisia, and has potential for maritime and air links to the main economic centres on the northern shore of the Mediterranean basin (the Latin Arc);

-The double corridor of the eastern Mediterranean, which lies on the natural trade route between the European Union, the Balkans and the countries of the eastern Mediterranean. It is made up of the road and rail routes which serve the region's main ports and airports. The corridor starts in Bulgaria, crosses Turkey and then divides into two branches, one along the coast to Syria, Libya, Israel and Egypt, and the other through the Syrian and Jordanian plateaux.

In view of the importance of the environmental aspects, the Commission will keep a close watch to ensure that the Community legislation in force on environmental protection [19] is duly applied in this context.

[19] Directive 2001/42/EC of the European Parliament and of the Council of 27 June 2001 on the assessment of the effects of certain plans and programmes on the environment; Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora; Council 79/409/EEC on the conservation of wild birds

*A network reflecting the specific characteristics of the Mediterranean basin: multimodal with maritime and air links predominating

Most of the foreign trade between the EU and the Mediterranean partners is by sea and air (see Annex 2).

When planning the network, importance will therefore be attached to shipping and air transport services, given their key role in a transport system which will encompass an enclosed sea, and to the inland links which are essential for the development of south-south trade. Multimodal platforms (links between ports and airports and the hinterland) will therefore be very important.

Short-sea shipping is particularly important in the Mediterranean given the distances involved and that, in some cases, practicable inland links are non-existent. The Mediterranean Partners have some 58 major ports, which handle more than a million tonnes of goods a year.

Short-sea shipping was recently the subject of a specific informal EU Transport Council meeting held in Gijón on 31 May and 1 June 2002. At the meeting, Ministers noted that there was a political desire to cooperate on the creation of Motorways of the Sea in the framework of the trans-European transport network, as well as at regional and cross-border level, by connecting the corridors and shorelines of the Member States and their immediate neighbours. To this end, the Ministers stressed the need for the intermodality of short-sea shipping, in particular the interconnection and interoperability of the maritime and inland transport networks (inland including roads, railways and inland waterways).

The Mediterranean basin is clearly a priority area for the development of such Motorways of the Sea, which would be a key part of the Euro-Mediterranean transport network. In the framework of the review of the Community guidelines for the trans-European network launched by the Van Miert Group, priority could conceivably be given to several Motorways of the Sea in the Mediterranean linking Malta and Cyprus to the rest of the European Union and to the southern and eastern shores of the Mediterranean. A motorway of the sea linking northern Greece to south-eastern Turkey and the Middle East and serving the Balkans region and Cyprus could also be considered.

Along with the need for national action by the Mediterranean Partners to promote short-sea shipping, the EU has a role to play, in particular through the MEDA programme, in boosting its development in the Mediterranean Partner countries. It should also be stressed that companies in the Mediterranean Partner countries will be able to participate in pilot projects under the future Marco Polo programme. [20]

[20] COM(2002)54, under discussion in Parliament and the Council. The future Marco Polo programme is intended to encourage intermodal initiatives, in particular those involving short-sea shipping.

To promote the establishment of Motorways of the Sea in the Mediterranean basin, consideration could also be given to organising joint calls for tenders between the Member States and the Mediterranean Partners, funded by the Community, for the development of new maritime links between the Union and its neighbours in the southern and eastern Mediterranean. In this context, it seems necessary to promote the use of ships which are specially adapted for short-sea shipping and are equipped to provide connections with land-based networks. The expertise of European and other shipbuilders would be useful in achieving this objective.

In the air transport sector, one important aim should be to increase airport capacity, in particular at secondary airports, to develop the point-to-point air travel which is essential for tourism, and to integrate air traffic management systems in the light of the progress made in creating a single European sky. Some Mediterranean Partners are already members of Eurocontrol or have a bilateral cooperation agreement, which could boost cooperation on interoperability. These coordination efforts could also be strengthened by means of a strategy for the liberalisation of air transport services at regional level, possibly based on a request from these countries for the conclusion of an open sky agreement with the Union.

With regard to rail transport, even though links between the Mediterranean Partners are virtually non-existent, particular attention should be paid to developing these links within the region to facilitate south-south trade and intermodality, and to reduce CO2 emissions. Such projects could be introduced in the Maghreb and, possibly, if peace is achieved in the Middle East, in the Mashrek region.

B. Funding the network

Investment in the Mediterranean Partner countries has recently been characterised by stagnation and insufficient flows of private investment (nearly 4.5 billion euros over the period 1995-2000). [21] This has an adverse impact on the funding of transport infrastructure, whether in terms of upgrading or the construction of new infrastructure. It is clear in this respect that the opening up of transport markets and, more generally, reforms geared towards making transport links easier are likely to have a positive impact on private investment. At the same time, public funding, including funding available at EU level, especially EIB funding, will continue to play an important role in the field of infrastructure in view of the level of the investments to be made. We must therefore consider how best to mobilise and combine these sources of funding. The Commission has made recommendations EU level on this essential area with a view to verification of the current arrangements for funding the trans-European transport network and promotion of the use of public-private partnerships (PPPs). [22]

[21] See FEMISE Report on the development of the structure of trade and investment between the EU and the Mediterranean Partners, March 2002.

[22] See COM(2003)132 final, 23.04.2003: Communication from the Commission - Developing the trans-European transport network: Innovative funding solutions - Interoperability of electronic toll collection systems.

These efforts are of some importance in the Euro-Mediterranean framework, in particular as regards the criteria which are considered essential partnerships between the public and private sector to be successful. These criteria include the need to have:

i) a clearly defined project representing a priority endorsed at the highest political level;

ii) a fair spread of risks between the private and public sectors, especially political and exchange risks in the case of the Mediterranean Partners;

iii) greater transparency on the part of government authorities as regards their financial and political obligations;

iv) a clearly defined mandate to carry out the project, which requires stable terms for implementing the project and a stable environment over the long term;

v) the need for a transparent legal framework and appropriate charging policies. [23]

[23] In its Communication COM(2003)132 final, the Commission proposes the introduction of legal and financial management structures based on the model of a European company. These structures, which could be created specifically for each transnational project, will contribute to transparency and coordination, and would allow for the simplification of administrative formalities, reduce general costs and achieve economies of scale.

A public-private partnership is a suitable way of funding roads, motorways, airports and ports. For the rail sector and certain complex major projects, these arrangements will only attract a limited share of private capital, but are of interest all the same. They allow for better cost and risk management by requiring greater transparency on the part of the contracting public authorities. Since a PPP nearly always requires a massive injection of public money in the form of subsidies or guarantees, this contribution needs to be guaranteed and optimised. This applies to public funding from the Mediterranean Partners, international public funding, and public funding available in the framework of the EU, in particular the MEDA funds, and loans from the European Investment Bank, which are likely, at different levels, to act as a catalyst for the contribution of private funds.

Against this background, the European Commission and the European Investment Bank have established close cooperative links in order to ensure synergy between their respective actions. This cooperation was recently extended further with the creation of the new Facility for Euro-Mediterranean Investment and Partnership (FEMIP) within the EIB. This Facility, which was adopted by the Barcelona European Council in March 2002 and approved by the Euro-Mediterranean Ministerial Conference in Valencia, was officially launched on 18 October 2002 and will lead to a gradual increase in EIB funding for the Mediterranean countries of 1.4 to 2 billion euros by 2006. Benefiting from the EIB's long experience in the Mediterranean. [24] The new Facility is designed to give priority to private sector investments and to regional projects which emerge from south-south cooperation, in particular interconnection projects in the transport sector. The Commission is a member of the Facility's Committee for Coordination and Economic Dialogue, while the EIB is closely involved in the work of the Euro-Mediterranean Transport Forum. These mechanisms should make it possible to ensure the best possible combination of support from the Commission (MEDA) and the Bank (loans/Facility). It is in particular essential that loans granted by the EIB take full account of the priorities established in the framework of the network. With regard to MEDA funds, each country concerned must give the adequate priority to transport in the multiannual bilateral programming established together with the Commission.

[24] Since 1992, the EIB has invested just over 10 billion euros in the Mediterranean Partners, including more than 6 billion in the field of economic development infrastructures, especially transport and energy.

This kind of cooperation with the Member States, and with other lenders operating in the region (in particular the World Bank and the regional development banks), is also desirable, as can be seen from recent experience with the candidate countries and the Balkans region.

Beyond ad hoc cooperation arrangements, the need for greater coordination of the funds available at the Euro-Mediterranean level raises the question of whether it would be advisable to establish an appropriate structure with responsibility for examining the technical and financial maturity of the major infrastructure projects, their financial arrangements and network promotion. The existence of such an operator, as mentioned by the Commission in the framework of the trans-European transport network, [25] could provide a major stimulus for the creation of the network.

[25] COM(2003)132 final.

Furthermore, as part of the follow up to its recent Communication Wider Europe - Neighbourhood: A new framework for relations with our eastern and southern neighbours, [26] and in conformity with the conclusions of the Council on an enlarged Europe, [27] the Commission will present a Communication on a new proximity instrument which will focus on cross-border issues and encourage regional and subregional cooperation as well as sustainable development. This new instrument could contribute to he promotion of infrastructure networks, in particular for transport and energy. Such an approach would be particularly relevant for the countries on the southern shore of the Mediterranean.

[26] COM(2003)104 final, 11 March 2003.

[27] See Council conclusions of 16 June 2003.

Lastly, even if projects are economically viable, private investors are often faced with the problem of covering risks, including non-commercial risks. The thinking recently started by the Commission [28] on the granting of Community loan guarantees to cover such risks for major infrastructure projects in the trans-European transport network and could prompt a similar discussion as regards the Euro-Mediterranean level.

[28] COM (2003) 132 final

C. Incorporating common transport policy objectives

The physical creation of a Euro-Mediterranean transport network cannot be an end in itself and the network will only be really justified if it incorporates a number of essential common transport policy objectives.

*Maritime safety: avoiding another "Erika" or "Prestige" incident in the Mediterranean at all costs

As regards the shipping of oil in the Mediterranean, it is useful to point out that seaborne trade in petroleum products and derivatives between the EU and the twelve Mediterranean Partners (imports/exports) amounted to about 63 million tonnes in 2001. [29] If, more generally, all petroleum products and derivatives which pass in transit through the Euro-Mediterranean region are included, the figure rises to 395 million tonnes which are carried by some 800 oil tankers [30] that constantly ply the Mediterranean. This is very dense traffic in an area which is particularly sensitive from the environmental viewpoint. The recent sinking of the Prestige off the coast of Galicia, coming less than three years after the sinking of the Erika, raises the spectre of a similar disaster occurring in the Mediterranean, the impact of which would be even more disastrous.

[29] Eurostat. Medstat Programme.

[30] Study carried out by BEICIP in the framework of the MEDA Project on support for ad hoc groups of the Euro-Mediterranean Energy Forum.

The European Commission reacted immediately to this latest marine pollution accident by proposing the swift application of the "Erika packages", a number of additional initiatives concerned more especially with the problems raised by the shipping of highly polluting products such as fuel oil, and closer co-ordination within the International Maritime Organisation. [31] It is essential that these proposals be extended to cover the Euro-Mediterranean area in order to learn all the possible lessons from the recent disasters. This will necessitate the approximation, and due course the harmonisation, of the laws of the Mediterranean Partners with Community rules and international legislation.

[31] COM(2002)681 final, 3.12.2002: Communication from the Commission to the European Parliament and to the Council on improving safety at sea in the wake of the Prestige accident.

At the bilateral level, efforts must be taken to ensure that maritime safety is discussed in greater depth in the framework of the Euro-Mediterranean Association Agreements. The setting up of subcommittees on matters relating to transport, energy and the environment within each of the Association Councils should contribute to this process.

At the regional level, the reference body is the Euro-Mediterranean Transport Forum. In this framework, the EU and the Mediterranean partners discuss and jointly adopt the principles of and arrangements for cooperation in the field of maritime safety in line with the Erika packages and "Prestige" measures. [32] This process, which was launched two years ago, will culminate at the end of 2003 in a new regional project in the framework of the MEDA Programme.

[32] See COM(2002)681 final. These proposals concern banning the shipping of heavy fuel oil by single-hull oil tankers, the introduction of criminal penalties for those responsible for pollution accidents resulting from gross negligence, the establishment of a Community system of approval for certificates of competency for seafarers issued outside the EU, strengthening the system of reporting by port pilots, and enhanced protective measures for coastal waters, in particular territorial waters and the exclusive economic area.

The regional project now being prepared will focus on the main measures contained in the Erika I and II packages, supplemented by the Commission's recent proposals: the proper exercise of powers by the flag State, monitoring the performance of classification societies, the monitoring and surveillance of traffic (a Mediterranean VTMIS, port State inspections), protection of the environment, training for maritime authorities and seafarers, and the safety/security of vessels and port installations in the Mediterranean region. Such a project should be coordinated with the main players in the sector at international and regional level (IMO, REMPEC [33]), and with the other activities developed in the framework of cooperation in the justice, immigration and customs sectors. In the medium term the Mediterranean Partners wishing to do so could conceivably also become associate members of the European Maritime Safety Agency which has recently been established by the Commission. In particular, the Agency could help these countries to train inspectors in the field of maritime safety.

[33] Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea, based in Malta.

In addition, the question of coordination and the exchange of information between the Mediterranean Memorandum on Port Controls [34] and the Paris Memorandum should also be tackled in future in the framework of the Euro-Mediterranean Transport Forum.

[34] The Mediterranean MoU was signed in 1997 by all the Mediterranean Partners. Its secretariat is based at Casablanca. The accession of Malta and Cyprus to the EU will provide a strong link between the Mediterranean MoU and the Paris Memorandum with the prospect of a safer and cleaner Mediterranean.

Lastly, as recently emphasised in the Ministerial Declaration of the Euro-Mediterranean Energy Forum adopted by the Euro-Mediterranean Energy Ministers meeting in Athens on 21 May 2003, in view of the particular sensitivity and vulnerability of the Mediterranean for this type of transportation, it is important to consider the advisability of reducing the seaborne trade in oil through the Mediterranean by developing oil pipelines, provided they can be shown to be technically, economically and environmentally feasible. In this context, it is also recommended promoting the use of double-hull tankers for the shipping of oil and petroleum products.

*Air transport: promoting a Euro-Mediterranean airspace

The problem of the division of European and Mediterranean airspace into sectors and the use of different operational methods and rules in these sectors is given additional prominence by the geographical proximity of the EU and the Mediterranean Partners to each other and the density of passenger traffic between the them, in particular due to tourism and the mobility of immigrant populations. As in the maritime transport sector, convergence between the laws of the Mediterranean Partners in the air transport sector and the Community rules is therefore essential.

The introduction of stringent air safety legislation is an essential step in this process. It is important to emphasise that the European Union has established a European Aviation Safety Agency. As in the maritime sector, the Mediterranean partners wishing to do so could conceivably participate in the Aviation Safety Agency.

With regard to the rules on market access, some Mediterranean Partners have informed the Commission that they wish to conclude an "open sky" agreement with the Union aimed at the mutual opening up of markets. Morocco first expressed its interest in such agreements in 1998. Recently, Libya expressed its interest in such an agreement. Since the "Open sky" judgements of the Court of Justice of the European Communities of 5 November 2002, the situation has become clearer, and it has been recognised that the Community has competence to conclude such agreements with third parties. In November 2002, the Commission adopted a Communication in which it draws conclusions from the Court's judgment in respect of the Union's international relations. On 26 February 2003, the Communication was supplemented by a proposal for measures to create a legal framework for all bilateral relations between the European Union and the rest of the world in the field of air transport. [35] The Commission is therefore likely to ask the Council of Ministers of the Union for a negotiating brief on the conclusion of agreements with the Mediterranean Partners on reciprocal access to the market in air transport services. The Commission in principle supports this prospect and has already started exploratory talks on the subject with Morocco. However, although a bilateral approach is still possible at the present time, the Commission would in time prefer to give priority to a regional, or subregional, approach to guarantee the coherence of commitments in this area and to promote a genuine Euro-Mediterranean airspace.

[35] Communication from the Commission on the consequences of the Court judgments of 5 November 2002 for European air transport policy COM/2002/649/final; Communication from the Commission on relations between the Community and third countries in the field of air transport COM/2003/094/final; Declaration by the Commission on relations between the Community, its Member States and third countries in the field of air transport, OJ C 69, 22.03.2003, p. 3.

With regard to air traffic management, the European Union recently started work on the creation of a Single European Sky. The aim is to achieve an integrated, joint form of management of airspace based on a harmonised regulatory framework which should apply from the end of 2004. It is clear that the Single European Sky must be created in tandem with the Mediterranean Partners.

*Security of shipping and aviation: working on common, legally binding rules to combat international terrorism more effectively

The safety of shipping and aviation has always been of concern to the Union. However, this subject has taken on renewed importance since 11 September 2001 which showed the scale of the terrorist threat. Any aircraft or ship can be deliberately used as a weapon or a vector for a weapon of mass destruction. In the light of the events of 11 September, it was therefore decided to formulate a security policy for the Union based on Community legal instruments and cooperation mechanisms.

In the aviation sector, the European Union recently adopted a Regulation on aviation security which lays down minimum standards to be observed, establishes national security programmes and introduces inspections which are monitored by the Commission. [36] The Mediterranean Partners should align themselves on these measures and develop inspections of the same kind in cooperation with the Commission.

[36] Regulation (EC) No 2320/2002 of the European Parliament and of the Council of 16 December 2002 establishing common rules in the field of civil aviation security (OJ L 355, 30.12.2002, p.1).

In the maritime sector, the Commission recently adopted a Communication and a proposal for a Regulation to require EU-wide application of the highest security standards for maritime transport, such as those of the International Maritime Organisation, to the shipping of goods and to relevant port installations. The proposed Regulation goes beyond the IMO measures, [37] and the Commission will shortly present a proposal for a Directive laying down additional measures to be applied in EU ports.

[37] See COM(2003). The Regulation in particular extends the application of these measures to passenger vessels operating on national routes, requires the designation of a national authority responsible for the security of ships and port installations, and provides for a process of inspection, supervised by the Commission, as regards the application of these measures. Furthermore, the provisions on security assessments, the establishment of security plans, and the designation of security personnel for companies and ships will be extended to other ships operating on domestic routes.

In both the shipping and aviation sectors, it is essential that the Mediterranean Partners help strengthen international security by incorporating equivalent rules into their national laws and introducing efficient means of enforcement. At the same time, the Commission, in cooperation with the competent international organisations, will have to ensure that essential security requirements are complied with in third countries, in particular the neighbouring countries of the Mediterranean basin. Thanks to its experience, the European Union will be able to assist in this process, in particular through the national action plans provided for in the framework of the Communication Wider Europe: Neighbourhood and by encouraging the exchange of information, and providing support in terms of training and technical assistance for the Mediterranean Partners. With the support of the Agencies for maritime safety and aviation safety, it could assist in setting up a Euro-Mediterranean institute for Safety and Security which could be sited in one of the Mediterranean Partner countries.

*Galileo: the European satellite navigation system could be used to make the Mediterranean safer and better protected

The European satellite navigation system is a large-scale industrial project which could make a direct, specific contribution towards increasing the safety and security of shipping and aviation in the Euro-Mediterranean area. Galileo has certain applications which are concerned with the safety of ships, aircraft and passengers and the security of ports and airports, and with the monitoring of goods and tankers.

Galileo entered the developmental phase at the beginning of 2001. The programme will be fully operational in 2008. However, the Mediterranean Partners and their businesses should be encouraged to become involved in the Galileo project now, and the attention of users in these countries should be drawn to the applications which the system offers.

On the subject of mobilising businesses in the Mediterranean Partner countries, it is important to note that the Galileo joint undertaking is open to the participation of third countries, including public and private entities, subject to a capital stakeholding. [38]

[38] See Article 5 of Regulation No 876/2002 setting up the GALILEO Joint Undertaking. See also the second indent of Article 1(3)(b) of the Statutes setting up the Galilio Joint Undertaking (Annex to Regulation 876/2002) according to which ''any underaking" may become a member of the joint undertaking.

Euro-Mediterranean cooperation in this area must also cover international cooperation (frequency allocation), training, the demonstration of future applications, and the interoperability of the system (customs, rescue operations, etc.). Such cooperation began nearly two years ago in the framework of the Euro-Mediterranean Transport Forum and the Forum's Working Party on satellite navigation (see Annex 1). Cooperation will culminate at the end of 2003 in a new regional MEDA project and the establishment, within this framework, of a Training and Demonstration Centre in one or other of the Mediterranean Partner countries.

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Conclusion

As in the past, the Mediterranean has the potential for being a crossroads of transport and trade. The political and economic stakeholders in the Euro-Mediterranean area should therefore be invited to make every effort to establish a Euro-Mediterranean transport network: this will be a powerful driver for integration and stability between the two shores of the Mediterranean.

To this end, Euro-Mediterranean cooperation should focus on the following:

Infrastructure:

*Encouragement and support for subregional cooperation in the field of transport, with an appropriate approach and the provision of technical assistance, in particular under the MEDA programme, and the INTERREG programmes involving the Mediterranean Partners.

*Planning of the network and identification of priority regional infrastructure projects, and agreement by Euro-Mediterranean transport ministers on the list of projects identified as priorities.

*Securing ease of funding for the network by promoting the exchange of information and the transfer of know-how in the field of public-private partnerships and charging.

*Better coordination of the financial resources available, in particular by possibly setting up an appropriate structure to examine the technical and financial maturity of major infrastructure projects and their financial package and to promote the network.

*An in-depth study, in cooperation with lenders operating in the region, of the problem of how to cover the political risks associated with major infrastructure projects, as identified in the context of the Euro-Mediterranean transport network.

Increasing safety and security:

*Promotion, at bilateral and regional level, of the harmonisation of the laws of the Mediterranean Partners with Community rules and international maritime safety legislation.

*Encouragement and support for the harmonisation of the laws of the Mediterranean Partners with Community rules on air transport services, in particular regarding safety, market access (conclusion of "open sky" agreement(s)), and the management of air space (single sky). This harmonisation and legislative convergence process will have to be pursued in the framework of the national action plans provided for in the Communication Wider Europe: Neighbourhood: A new framework for relations with our eastern and southern neighbours.

*Promotion of the Mediterranean Partners' adoption of international rules on maritime and air safety and their establishment of effective enforcement mechanisms.

*Depending on financial availability under the MEDA programme and the contributions expected from the Euro-Mediterranean partners, the setting up of a Euro-Mediterranean Institute for Safety and Security in one of the Mediterranean Partner countries.

*Encouraging the Mediterranean Partners and their businesses to become involved in the Galileo project by allowing participation in the joint undertaking, and drawing the attention of users in these countries to the applications available with the system by establishing, under the MEDA programme and with the help of the Mediterranean Partners concerned, a GALILEO Training and Demonstration Centre in one or other of the Mediterranean Partner countries.

*Promoting the participation of the Mediterranean Partners in the thematic priorities of the 6th Research, Technological Development and Demonstration Framework Programme, especially the priorities 'Aeronautics and Space' and 'Sustainable Surface Development', in order to contribute to improving the safety and security of the Euro-Mediterranean transport network.

List of annexes:

ANNEX 1 : List of MEDA activities and projects being developed or implemented in the field of transport.

ANNEX 2: Key figures for transport in the Mediterranean

ANNEX 1

List of MEDA activities and projects being developed or implemented in the field of transport.

*In the framework of the Euro-Mediterranean Forum, working parties have been set up which met throughout 2001 and the first half of 2002. The three working parties correspond to the priorities adopted by the second Forum (Brussels, November 2000): "Network and infrastructure", "Maritime transport", and "Satellite navigation".

The working party on network and infrastructure is concerned with matters which form part of the Euromed Transport project (see below), which includes a major infrastructure component. It is co-chaired by the European Commission and the EIB and discusses issues related to the development of the Euro-Mediterranean transport network and infrastructure funding.

The working parties on maritime transport and satellite navigation contribute to the process of identifying two new regional projects in the framework of the MEDA programme, one on maritime safety (SAFEMED) and the other on the applications of Egnos and Galileo in the Mediterranean region (Euromed GNSS project). The broad lines of these future projects were approved by the third Euromed Transport Forum (Brussels, July 2002).

The third Euro-Mediterranean Transport Forum agreed to extend the activity of these three working parties and approved the creation of a new working party on air transport.

*Package of four regional MEDA projects on training in maritime safety which were launched during the second of the 2001. These projects were introduced by the International Maritime Organisation and consist of training activities on various aspects of maritime safety (ISM code, STCW Convention, flag State policy, port reception facilities).

*The Euromed Transport Project which was launched in January 2003 and has been awarded MEDA funding of 20 million euros over four years. Its aim is to improve the operation and effectiveness of the Mediterranean transport system by focusing on two essential and complementary features: support for reform of the transport sector in the Mediterranean Partner countries, and the promotion of a regional transport infrastructure network.

The 'Infrastructures' part of the project, which is directly related to the development of the Euro-Mediterranean transport network, mainly comprises:

1) the definition of an operational concept for the Mediterranean transport infrastructure network;

2) an exercise in planning this network, similar to what has been done for the EU candidate countries (TINA) and the Balkans (strategy document "Transport and energy infrastructures in south-eastern Europe");

3) the funding of pre-feasibility studies for a number of projects which have been identified as priorities;

4)institutional support for the preparation and implementation of infrastructure projects, and for the management of the infrastructures concerned.

*MED-Trans project: the MED-Trans project is part of the MEDSTAT programme, the first MEDA programme of regional cooperation on statistics. During the period 1997-2003, this project has led to the setting up of a network of national statistics institutes and transport authorities, which have worked together to provide relevant statistical data for the development of transport in the Euro-Mediterranean region, in particular maritime and air transport. The data collected during this period have been disseminated by Eurostat. The project will continue after 2003 in the context of the MEDSTAT II programme in order to continue the process of building up statistics institutes and to extend the field of activity to include road transport and performance and service quality indicators.

*Three research projects on transport in the Mediterranean (INCO-MED) were also launched in 2003, in the framework of the 5th RDFP. The aim of these three projects is to help establish a method and criteria for the definition of a regional transport infrastructure network in the Mediterranean. They will supplement the abovementioned Euromed project.

*Lastly, several bilateral MEDA projects in the transport sector are being planned, in particular in Morocco (structural adjustment programme in the transport sector) and Tunisia (port reform project). In the case of Morocco, there is also the Mediterranean Ring project, a section of which is being funded under the MEDA programme (about 90 million euros, tendering in progress).

ANNEX 2

*Key figures for transport in the Mediterranean

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