WRITTEN QUESTION E-0108/00

by Cristiana Muscardini (UEN) to the Commission

(26 January 2000)

Subject: Crisis in the financial system and the Euro-Asian Development Bridge

It is no secret that the entire international financial system is in a state of crisis, since the financial bubble has expanded to more than US$ 160 thousand billion and is probably about to burst. In the countries affected by speculation the adverse effects are obvious: a fall in production and the suspension of any innovative investment have brought about a rise in unemployment and the spread of poverty, with highly volatile social consequences. Furthermore, the Commission doubtless knows about the project called the Euro-Asian Development bridge, consisting of the creation of large-scale infrastructure, which is apparently being discussed by China, Russia, India, Iraq, Turkey and most other Asian countries, joined recently by Japan, who are drawing up measures for taking part in the project's implementation. Since the project's success depends on the use of advanced technologies and American and European machine tools, it seems obvious that the project cannot be executed without the active participation of Europe.

Can the Commission say:

1. whether it has had the opportunity to assess the project;

2. if so, whether it does not consider that Europe's participation would have a stabilising effect on the real economy and employment in the Union countries;

3. whether it does not also consider that a project of this kind would help to reverse the current tendency to focus exclusively on the financial aspects of the economy, with all the attendant risks, the symptoms of which have been apparent in the last two years, and to promote a return to the real economy;

4. what might be the reasons militating against Europe's participation in the execution of the project;

5. what steps it intends to take to involve Europe in this major international debate?

Answer given by Mr Patten on behalf of the Commission

(25 February 2000)

Current opinion on the financial crisis in Asia and its impact on the real economy and the societies of the countries concerned is that the worst is over and that growth has recommenced in some of the countries

worst affected. There is general agreement that the spectre of world recession following the crisis and its repercussions on the rest of the world has faded. The Community's position has been expressed on numerous occasions: it stresses the need to keep the markets open and fight the temptation of protectionism (the EU-Asia (ASEM)(1) trade deficit was EUR 87 000 million in 1998, double that of 1997), the importance of international aid and of bilateral as well as multilateral Community aid (including via the ASEM trust fund), and the need to continue with reform of the financial system in countries affected by the crisis and measures to deal with its social consequences.

The Commission has had the opportunity to assess specific proposals relating to the major Eurasian landbridge project, notably in regard to transport. The Commission carried out an in-depth study which concluded that given the very long distances involved, for the foreseeable future maritime transport was more economical in linking Europe and the Far East than road, rail or canal transport, even if the Trans-Siberian remains the only real alternative (less attractive in current conditions than maritime transport). Under no circumstances should the Community participate financially in any transport objective relating to trade between Europe and the Far East. In regard to the building or rebuilding of infrastructures, it has been recommended that no Community financial commitment be undertaken to achieve transport objectives relating to Europe-Caucasus-Central Asia trade before a full financial and market study on the potential viability of the project is made. Any Community-financed measures to improve transit reliability, security and time-scales, on the other hand, must aim at bringing recipient countries into line with the acquis communautaire.

In line with the general recommendations approved by the Commission, a project entitled Traceca has been launched. It concerns technical assistance for the creation of a west-east transport corridor, going from Europe, through the Black Sea, Caucasus and the Caspian Sea to Central Asia (22 projects for a total of EUR 30 million and 7 investment projects for infrastructure rehabilitation for a total of EUR 25 million have already been launched). Traceca supports the development of regional cooperation between the recipient countries and facilitates their integration into international economic trade. Synergy between it and the Trans European Network projects will be ensured. Traceca has also been a catalyst in leading such international financial institutions as the European Bank for Reconstruction and Development (EBRD) and the World Bank to finance ports, roads and rail infrastructure on the Traceca route.

(1) ASEM: Asia Europe Meeting. Asian partners: China, Japan, Korea, Brunei, Singapore, Malaysia, Indonesia, Thailand, Philippines, Vietnam.