Opinion of the Economic and Social Committee on "Extending the trans-European networks to the islands of Europe"

(2002/C 149/14)

On 31 May 2001 the Economic and Social Committee, acting under Rule 23(3) of its Rules of Procedure, decided to draw up an opinion on "Extending the trans-European networks to the islands of Europe".

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 5 April 2002. The rapporteur was Mr Vassilaras.

At its 390th plenary session (meeting of 25 April 2002), the Economic and Social Committee adopted the following opinion by 81 votes to two with 14 abstentions.

1. Foreword

1.1. The Economic and Social Committee has instructed its Section for Transport, Energy, Infrastructure and the Information Society to draw up an additional own-initiative opinion which will provide a useful study of one of the major problem areas affecting the EU's islands - the absence of a development policy and network links. The Committee's aim is to make the Council and the Commission aware of the need for a new approach in their policy towards islands. In the wake of the Nice Treaty - when adopted - and the Nice Council conclusions, such an approach should endeavour firstly to alleviate the problems of isolation and underdevelopment facing these islands and secondly to ensure fair treatment for their populations with regard to development.

1.2. The Committee considers that the trans-European networks must provide a link with islands and extend as far as them instead of stopping at the continental coastline, and that account must be taken of the following factors:

a) the legal basis provided by Article 158 of the Treaty of Amsterdam (see Appendix 1);

b) declaration No 30 annexed to the final act of Amsterdam (see Appendix 1);

c) the future enlargement of the EU;

d) the Cohesion Fund (which has been reviewed for the period 2000-2006);

e) regional policy (which will be reviewed after 2006);

f) the present situation regarding competition and globalisation;

g) the reports regularly submitted by the Commission;

h) the 2001 White Paper on Transport(1); and

i) the 2001 TEN-T review(2).

1.3. The Committee considers from the outset that the Community will not function properly as a single area unless the following basic principles are respected:

a) the internal market and the rules governing equal treatment must extend to the whole of the Union;

b) development must compensate for permanent geographical handicaps.

2. Introduction

2.1. An important decision for the future of the EU's islands was taken at Nice in December 2000 when the Treaty was revised.

2.2. The conclusions of the Nice Council recognise - and this is a first in the history of EU regional policy - that in view of islands' structural problems, specific measures can be taken by the EU to help them.

2.3. The Committee thinks that these measures must compensate for the geographical and natural handicaps resulting from these inherent structural difficulties.

2.4. This declaration elucidates the grey areas surrounding Article 158 of the Amsterdam Treaty while at the same time being consistent with declaration No 30 under that Treaty concerning island regions and the difficulties they suffer as a result of their structural problems. The least favoured island regions covered by Article 158 of the Treaty of Amsterdam share certain problems, and the Committee has underlined on several occasions in previous opinions(3) that this calls for specific measures, regardless of the islands' size.

2.5. In addition, mention must be made of the amendment to the third paragraph of Article 159, which now reads: "If specific actions prove necessary outside the Funds and without prejudice to the measures decided upon within the framework of other Community policies, such actions may be adopted by the Council acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee and the Committee of the Regions."

2.6. The Committee is therefore involved in these measures and thinks that it is necessary to continue in the same vein by submitting proposals and identifying the measures required to ensure that suitable EU policies are adopted to address the structural problems facing islands.

3. General comments

3.1. Despite considerable efforts in recent years (often with EU support), islands still lag behind in their development and a good number of them are even stagnating. The reason for this is that even objective 1, which lumps them together with their counterparts from the European mainland or the Member States, does not grant them any preferential treatment on account of their specific nature. (An objective 1+ could possibly remedy this.)

3.2. A definition of "European island" has been adopted at the initiative of Eurostat. This definition seems to be gradually gaining hold and states that an island is any territory that

- is permanently surrounded by sea,

- is permanently separated from the mainland without a fixed link (bridge, tunnel, etc.),

- is more than one kilometre from the mainland,

- has a permanent population of at least 50 people,

- does not contain the capital of a Member State.

3.3. European islands cover a total area of 110000 km2 (3,4 % of the EU territory) and have almost 14 million inhabitants (3,4 % of the EU population). Despite their differences in size and population, they share a large number of problems, especially of an economic and social kind, which often differ only in intensity.

3.4. These difficulties include:

- their networks in general, regardless of whether these concern transport (where the high cost is a special problem), energy, telecommunications or water supply;

- the policy to be pursued to prevent a population exodus, especially among young people;

- the development of SMEs and the craft sector and their competitiveness;

- health care and access to preventive medicine as well as emergency care;

- culture and education;

- a fragile environment which is expensive to manage;

- the dominance of one given sector of the economy (often tourism or fishing);

- the seasonal nature of employment in the tourist and agricultural sectors.

3.4.1. Together, these problems create difficult living conditions for islanders to a point where the demographic and social balance of most of these communities is under threat.

3.5. The Committee thinks that a system of networks is necessary for the competitiveness and development of the EU's islands and to bring them into the single market. All the prerequisites must be fulfilled for ensuring that islands and especially the most remote amongst them are fully integrated into the single market and are not split up into an array of local markets on account of the inadequacy and extra cost of transport and communication networks. Transport, energy, telecommunications, water supply and waste disposal are all of capital importance for the development of islands. Their inhabitants are calling for better living conditions, which in turn depend on economic development and employment. EU policy measures must serve this end, regardless of the areas concerned or human potential factors.

3.6. The Committee thinks that it is necessary to adapt the general budget of the EU by revamping the Structural Funds and the Cohesion Fund in order to provide the resources needed to implement EU actions, initiatives and programmes after 2006.

4. Specific comments on EU and Member State policies towards networks

4.1. One point which the Committee would highlight form the start is that islands do not enjoy rail or road links with the rest of the Community and that their inhabitants and businesses depend 100 % on sea and air transport. The major hubs of economic development and the regions on the European mainland benefit more readily from regional policy, and it is here that work and better living conditions are to be found. It is also thanks to regional policy that mainland regions have motorways and high-speed train networks and have been able to build or modernise airports, and it will clearly be easier to develop the different types of networks in mainland than in island regions. No matter how admirable islanders' unanimous wish to work together and share in development may be, their decline will be inevitable as long as new legislation has not been enacted and there is little concern to extend the networks to them.

4.2. Existing legislation and the rules governing competition (Article 88(3)) do not give islands the same opportunities to develop as other regions. The Nice summit conclusions clearly show that Europe's political leaders have taken note of this fact and recognise that specific measures can be taken to help island regions, as provided for under Article 89 of the Treaty establishing the European Community.

4.3. Instead of invoking Community regulations in a bid to prohibit aid from the Member States, such aid could be redesignated as EU aid in order to reduce the disparities of which island regions are victims, thereby giving their populations the satisfaction of enjoying the same conditions as mainland regions, which are easily able to attract infrastructure and share in development.

4.4. The liberalisation of the seas certainly accords with the concept of the common market, but the results achieved in the post-liberalisation era in the field of maritime cabotage are disappointing insofar as the providers of such services - especially if they belong to the private sector - give preference to profitable lines and neglect the less profitable islands, thereby hastening their decline.

5. The public service concept in relation to islands

5.1. Public service and networks

5.1.1. As far as the supply of network services is concerned, the Committee considers that there is no doubt that only public services are able to cater for the needs of islands, for a good many islands are not large enough to be a worthwhile proposition for private stakeholders and do not attract their interest either. Local administrations are also willing to perform all development-related tasks.

5.1.2. Islands are still not attractive enough for the private sector. Careful thought must therefore be given to the public service concept in relation to islands, sine the keener competition in the single market is generating new imbalances. This concerns island transport first and foremost. The liberalisation of transport, the abolition of monopolies and EU-wide tendering are of general benefit to the EU economy and the single market. However, as far as island regions are concerned, the single market is often still an abstract concept.

5.1.3. Current Community legislation explicitly recognises islands as a special case, and makes provision for a variety of mechanisms (public service obligations, public service contracts) in relation to island links. The different tendering systems introduced in islands in recent years - quite apart from involving complex procedures - still do not generate real competition (often there is only one tenderer) or significant price cuts. Practice also shows that tenders fail to take sufficient account of employment criteria and the economic knock-on effects on islands.

5.1.4. "Territorial links" should therefore be provided everywhere. Existing links should be strengthened and the building of new links should be facilitated.

5.1.5. The additional costs associated with island transport vary considerably depending on the goods being transported and how they are transported. Their economic or social impact clearly varies in line with the market value of the product being imported or exported. Any policy of compensation would therefore gain from being adapted to the level of the problems faced.

5.1.6. Even if the EU authorises aid schemes, it does so only for trade within Member States. However, the problem of accessibility to the single market extends beyond the national framework for numerous islands which have sea borders with several Member States (e.g. Corsica has borders with Italy) and even more so for the outermost islands with their intercontinental transport links to the single Community market. Limiting such aid to trade with the national mainland seems in this respect to be discriminatory and contrary to the whole spirit of the Treaty. The recent derogation granted to Bornholm and allowing aid to be granted for transport operations to Copenhagen via Sweden is a move in the right direction and should be applied across-the-board. Community legislation must explicitly allow the provisions applicable to national links regarding public service obligations and public service contacts to be applied to all intra-Community links.

5.1.7. The Committee therefore recommends that the Community rules on State aid for regions be amended in the light of each island's specific case, and that all of the EU's islands be eligible for operating aid (up to a limit set by the real additional cost of transport), which should be paid directly to transport enterprises for the purpose of reducing their additional transport costs with regard to both goods and passengers.

5.1.8. In the case of the Mediterranean islands, this aid should cover trade with all Member States in the Mediterranean area, though it should be limited to the extra cost of transport to and from the national mainland.

5.1.9. In the case of the outermost islands, where intercontinental transport and not EU cabotage is involved, this aid should apply to trade with anywhere in the Community and not simply national mainland ports. This would give these regions direct access, in optimum conditions, to the major centres of production and consumption at the heart of the EU, thereby providing legitimate compensation for the drastic constraints imposed on these islands by their extreme remoteness.

5.1.10. Regardless of the funding required for such a policy, the reform of State aid schemes is therefore vital for solving the problem of the extra transport costs faced by islands.

5.1.11. Islands' transport costs are generally high. A large number of taxes - national, regional and local - make passenger fares and freight tariffs unduly expensive. The Committee calls for the abolition or reduction of dues charged by seaports for their services so as not to penalise transport operations to islands.

5.1.12. The European Union wishes to harmonise all the indirect taxes on transport. Island regions are directly threatened by a number of factors:

a) The Commission's Transport White Paper describes the Commission's plan to apply throughout the Community a system of charges for the use of infrastructure which reflects the real cost of the infrastructure and also takes account of external costs. Unless specific measures are taken, this is likely to have a serious effect on island regions. Firstly, in a large number of islands, the infrastructure is of necessity too extensive for the limited volume of traffic and questions may well be asked about the criteria which the Commission will select to reflect the actual cost situation. And secondly, air transport - on which islands are heavily dependent both for their inhabitants' needs and for tourism - is considered to be highly polluting and will therefore be particularly hard hit by the inclusion of external costs. The framework directive which the Commission plans to put forward in 2002 must therefore take into account island regions' limited options and the economic and social implications for islands of higher transport costs. The directive must explicitly allow islands to enjoy appropriate tariffs for the use of seaport and airport infrastructure.

b) For the same reasons, the plan to introduce fiscal harmonisation for fuels used by sea and air carriers must be examined with extreme caution so as to avoid an increase in the cost of island services. Appropriate mechanisms must be implemented to encourage the use of the most environmentally appropriate arrangements or fuels without aggravating the problems of islands' accessibility by increasing taxation.

c) Equally alarming is the Commission's plan (Part Three, Chapter II. B) to charge VAT on all air transport in the Community. If the decision is taken to charge VAT on Community air transport, all island services must be exempt.

5.1.13. The Committee would finally stress the need for regular and uninterrupted public service provision for islands, especially in the field of transport. This would involve the application - as is already the case in certain Member States - of minimum guaranteed service practices.

5.2. Trans-European transport networks

5.2.1. The inclusion in the TEN-T provisions of ports and airports "situated in island, peripheral or outermost regions, interconnecting such regions by sea and/or connecting them with the central regions of the Community" is a positive factor from the financial point of view, for improvements to port or airport infrastructure can be financed as a result(4). However, this does not mean that island or outermost regions are included in arrangements for short-distance sea transport or, for example, in plans for "motorways of the sea".

5.2.2. At the same time, the revised TEN-T priority projects affect islands as little as their predecessors. In fact, much to the Committee's regret, they do not include any islands at all.

5.2.3. The White Paper on transport talks about developing "motorways of the sea"(5), pointing out that "intra-Community maritime transport and inland waterway transport are two key components of intermodality" and that "certain shipping links should be made part of the trans-European network, just like motorways or railways". These "motorways of the sea", which are designed to bypass existing bottlenecks on road networks (Pyrenees, Alps, etc.), should not overlook islands yet again. In fact, they should provide islands with a real opportunity to open up.

5.2.4. With regard to islands, and especially the most heavily populated islands with extensive trans-European networks comparable to the networks on the mainland in terms of cost and quality, the Committee thinks that the Commission should include shipping links with these islands in the basic trans-European networks and focus on connecting the main road, river and rail routes with the shipping links that serve these islands.

5.3. Energy

5.3.1. Meeting islands' energy needs poses particular problems. This is due to the specific nature of supplies (inadequate, costly and occasionally interrupted, especially in times of crisis), the difficulty of linking up with national or trans-European energy networks, and the high seasonal variations in consumption caused by tourism.

5.3.2. The Committee thinks that the measures to be taken must include:

- the funding of the infrastructure work necessary to open up islands and give them access to energy sources from the mainland or, if need be, to export energy to networks on the mainland;

- the promotion of renewable energy sources via economic and tax incentives and of specific pilot projects in island regions, especially those not linked to the trans-European energy networks;

- in the case of islands which are not connected to the continental grid and will not be in the near future and which produce electricity at a higher cost than on the European mainland, the guarantee that tariffs will continue to be subsidised is vital even when the electricity market is opened up fully to competition. After all, who is going to sell energy on small island markets and what will they charge? This system of subsidies must be supported by a system of public regulation, which covers both domestic and industrial prices and which compensates for the lack of a level playing-field and ensures optimum use of energy resources.

5.4. Waste

5.4.1. Waste treatment poses a serious environmental problem for islands, which is exacerbated by the part played by tourism in the development of island economies. Priority must be given to programmes for the recycling and reuse of solid waste and the recuperation of energy from refuse.

5.4.2. Metal casings, oil or cardboard boxes are never going to be recycled in the near future on most European islands. These bulky, heavy and sometimes dangerous objects have to be exported by sea, the cost of which is additional to the cost of the networks in mainland regions. Who has to pay the extra cost? Residents? Tourists? Or the Community, which lays down inappropriate safety or disposal rules for communities of a few thousand inhabitants?

5.4.3. A system of compensation for shipping waste to the mainland, modelled on the legislation in force in Spain for the Canary and Balearic islands, must be set up as part of a European waste treatment network.

5.5. Water

5.5.1. The question of water reserves and their treatment and quality is directly linked to the development of island-based tourism and the increase in water consumption which this brings. Wherever possible, the links between islands (archipelagos) and from the mainland to islands must receive support, in recognition of the vital basic service they provide, and water charges must be affordable.

5.5.2. Seawater pollution is one of the most serious problems, as it affects the two mainstays of island economies - tourism and fishing. For the sake of the islands' development, specific programmes are required for the storage of water, for environmental checks on discharges in watercourses, for waste management and for seawater desalination, etc.

5.6. Telecommunications

5.6.1. The establishment of telecommunications networks undoubtedly represents a priority objective for all underdeveloped regions and especially islands, even if the benefits of their spread and development may have been overestimated. As the second cohesion report shows, however, research- and technology-based sectors and services and industries offering a high added value continue to target the most dynamic regions where both telecommunications-intensive applications and the people best trained for these applications are to be found. Furthermore, telecommunications do not come up against the problems of physical access which complicate passenger and goods transport.

5.6.2. Be this as it may, the promotion of telecommunications in all areas of island activity must also form an integral part of tomorrow's policies, for telecommunications can strengthen certain sectors of island economies which are of capital importance for them. For instance, they can improve the educational and training services on offer, facilitate access to universities and research centres, satisfy needs in the fields of health care, tourism, advertising, current affairs and information, or diversify local economies thanks to the development of e-commerce and entrepreneurial activity based on electronic resources.

5.6.3. Telecommunications are the focus of widespread attention, but they are not well established on islands, for the markets they serve are the ones also served by the traditional areas of the economy. One of the priority fields of application for islands must be to focus on the promotion of a cultural identity, by improving islanders' knowledge of their cultural heritage and history and thereby enabling them to rediscover their common roots and revive the exchanges which disappeared as a tradition with the onset of the industrial revolution.

5.6.4. New telecommunications technologies must enable islands to set up networks in order to further decentralisation and engage in consolidation exercises. The problem at the moment is not only a technical one but also concerns the availability of know-how, i.e. the knowledge necessary to see through a development linked to a whole host of services. Given the small size of islands, there is only one solution: namely, alliances must be forged in order to provide the new services (media, culture, tourism) with a quality content.

5.6.5. Recent mishaps in the distribution of regional local-loop licences for high-speed digital data transmissions in France(6) also point to another danger. Islands do not interest private operators because their populations are too small to make a profit on an investment and their markets are too limited. Only a public service can provide islands with guaranteed access to high-speed data. This experience shows that the private telecommunications sector will not necessarily be interested in island populations, who are in danger of being bypassed by future technological developments.

6. Proposals

6.1. Specific measures to extend the trans-European networks to the EU's islands

6.1.1. The Committee proposes that support be given to the establishment of transport systems based in particular on high-speed ships which integrate islands into more open markets than systems providing lifelines with national mainlands. "Territorial links" must be provided everywhere. They must be EU-wide and not just national, linking islands to the whole of the single market and not simply to national territory on the mainland.

6.1.2. If the single market is not to remain an abstract concept in islands, compensation for additional transport costs cannot be regarded as discriminatory and likely to distort the operation of the market. Any policy for providing compensation must therefore be adapted to the nature and intensity of the problems encountered. Islands call for positive discrimination criteria to be applied to them.

6.1.3. The Commission itself remarks as follows in its White Paper on European transport policy for 2010: "Generally speaking, experience has shown that limited amounts of aid have not threatened to distort competition or affect trade. Nonetheless, and contrary to practice in the other economic sectors, all aid to transport still has to be notified in advance to the Commission. This general obligation seems disproportionate, especially when the aid is intended to compensate for public service obligations on links with the Community's outlying regions and small islands. The Commission will be proposing an alignment of procedures in this area(7)."

6.1.4. The Committee notes the Commission's willingness to adapt its procedures. It trusts that the terms "limited amounts of aid" and "small islands" will be interpreted as widely as possible in the case of all islands, given their specific features as recognised in the various texts dealing with islands.

6.1.5. The Committee supports the proposal of the Cagliari conference calling on the Commission to promote a Community policy and Community legislation in support of maritime transport which will connect the North Sea to the Mediterranean and the Black Sea by inland waterways and create "motorways of the sea" in the Mediterranean.

6.1.6. The Committee would like all European islands to have access to a specific fund for fixed or mobile infrastructure with regard to transport and every form of public network (energy, telecommunications, water, waste).

6.1.7. It would also like all EU islands to be eligible for operational aid, to be paid directly to enterprises so as to reduce the extra cost of transport for them. This operational aid - which would cover both passenger and goods transport - should provide a level playing-field with regard to real costs.

6.1.8. The Commission wishes to introduce full cost charging principles in transport (road, rail and sea). The Committee would urge that all aspects of insularity be included in the calculation of the price of transport (travelling time, price, frequency, loading/unloading, etc.) (see appended map). It would also like consideration to be given to social parameters, given the importance of transport for employment, etc., on islands.

6.1.9. The Committee proposes that 2005 be declared the European Year of Islands. To mark this occasion, the Commission could assess the measures already taken to help islands and use the reform of the Structural Funds and regional policy to endorse a more ambitious policy.

6.2. Towards an integrated policy for the outermost island regions and islands

6.2.1. As an adjunct to the moves to develop the trans-European networks, the Committee would like to draw the Commission's attention to the need to put in place an integrated policy which will positively discriminate in favour of the outermost island regions and islands. Four measures seem to be capable of fulfilling this general objective, which must act as a framework for sectoral policies:

a) The meaning of Treaty Article 158 should be clarified to reflect the spirit of declaration No 30 annexed to the final act of Amsterdam and the conclusions of the Nice European Council. This article should be strengthened by adding specific references to the principle of territorial cohesion and to the various regions with permanent structural handicaps, such as thinly populated regions or upland regions suffering from the same handicaps. The European Spatial Development Perspective (ESDP) is a modest step in this direction. The first progress report on economic and social cohesion(8) points to "the extent of the Community territory comprising mountain, coastal and maritime areas, islands and archipelagos". The Committee thinks that it is necessary to go further.

b) The reform of regional policy and especially of the Structural Funds after 2006 should make provision for the establishment of a specific financial instrument for non-Objective 1 regions suffering from permanent geographical or demographic handicaps - including, in particular, islands. This financial instrument should - inter alia - co-finance fixed or mobile transport infrastructure and all forms of public networks (energy, telecommunications, water, waste). This reform will have to take account of the consequences of enlargement for the place of islands in regional policy.

c) The proposals in the White Paper on governance(9) should give greater recognition to islands. The Commission should make a systematic effort to adopt an "inter-services" approach or even set up a directorate-general to oversee the policies concerning and affecting islands and integrate their management.

d) Finally, the remote and outermost islands and regions must be regarded as a central plank in the Community's policy towards bordering non-EU regions and an economic and social interface in a Europe looking out on the world and not as a terminating point for internal networks.

6.2.2. The Economic and Social Committee thinks that this integrated approach, reinforced by national mechanisms for the prior consultation of Member States whenever legislation affects islands, would establish a true tripartite partnership between island regions, States and the Commission.

6.2.3. The Committee would like to help strengthen the dialogue with island regions. As the representative of organised civil society in the EU, it is ready to endorse and support any initiative to this effect.

Brussels, 25 April 2002.

The President

of the Economic and Social Committee

Göke Frerichs

(1) White Paper COM(2001) 370, 12.9.2001.

(2) Decision No 1346/2001/EC of the European Parliament and of the Council of 22 May 2001 amending Decision No 1692/96/EC as regards seaports, inland ports and intermodal terminals as well as project No 8 in Annex III OJ L 185, 6.7.2001, p. 1. ESC Opinion: OJ C 214, 10.7.1998, p. 40.

(3) Opinion on Disadvantaged island regions (OJ C 232, 31.8.1987). Opinion on the Guidelines for integrated actions on the island regions of the European Union following the Amsterdam Treaty (Article 158) (OJ C 268, 19.9.2000).

(4) Decision No 1346/2001/EC, 22.5.2001.

(5) White Paper COM(2001) 370 final, 12.9.2001, Part II, A.1, p. 42.

(6) The operators selected by the Telecommunications Regulatory Agency for the DOMs, Corsica and Auvergne (Siris, Completel, Outremer Télécom) turned down their licences.

(7) White Paper COM(2001) 370 final, 12.9.2001, Part III, B. 3, p. 84.

(8) COM(2002) 46 final, p. 14.

(9) COM(2001) 428 final.