WRITTEN QUESTION E-2076/01

by Bart Staes (Verts/ALE) to the Commission

(13 July 2001)

Subject: Revised standpoint of the Belgian Federation on national compensation payments

In its answer to Question E-1323/01(1) the Commission welcomes the decision by the Belgian authorities to end the link between military procurement and compensation payments for firms in Flanders and Wallonia. The Belgian Federation took that decision on 15 December 2000. However, in the face of outside pressure the Belgian Government has recently revised its standpoint. As a result, national compensation payments - regrettable enough in themselves - will once again form part of the political decision-making process in connection with military procurement. Given that it welcomed the original decision, it would seem logical for the Commission to deplore this revised standpoint.

Does the Commission welcome the revised standpoint of the Belgian Government concerning national compensation payments in connection with military procurement? If so, how can the Commission reconcile this view with the welcome it gave to the original Belgian decision to end the link between national compensation payments and military procurement?

(1) See p. 35.

Joint answer to Written Questions E-2075/01 and E-2076/01 given by Mr Patten on behalf of the Commission

(4 September 2001)

Like the Honourable Member, the Commission is anxious to guarantee transparency and to enforce competition in the public procurement of arms as in other sectors; it would therefore like to add the following comments to its answer to the Honourable Member's Written Question E-1323/01.

The communication of 1997 would have enabled the goal of transparency and respect of competition in the arms sector to be achieved, had the proposals been adopted by the Member States. However, the discussions on this communication within Polarm (Working Party on a European Arms Policy) ended in failure at the end of 1999 after two years of talks, as the Member States were not ready to commit themselves to any of the Commission's proposals to create a European market for arms.

Article 296(1)(b) of the EC Treaty only derogates from the application of EC law if the security interests of the Member States are at stake. This exception to EC law must be interpreted strictly, and does not amount to a general derogation for arms contracts from EC legislation on public procurement.

However, the Commission would stress that this Article is still important for certain strategic and highly sensitive military equipment where the manufacture, purchase or sale of such equipment could in fact undermine the security of a Member State. But, if all military equipment were removed from the 1958 list to which Article 296(1)(b) applies, it would amount to emptying the provision of its meaning and to de facto deleting paragraph 1(b). Furthermore, Article 296(2) stipulates that changes to the 1958 list are made by the Council acting unanimously on a proposal from the Commission. It seems unlikely that all Member States would agree to delete Article 296(1)(b) by deleting all military equipment from the 1958 list. Such a proposal from the Commission would therefore stand little chance of success and would not be in accordance with the positions it set out in its communication of 1997 in which it recognises among other things the special nature of the sector.

The Commission is not therefore proposing that Article 296(1)(b) be deleted; instead it intends to encourage the creation of specific instruments for armaments and to create the conditions for a single European market in these products, rendering recourse to Article 296 redundant. The Commission's opposition to economic compensation for public procurement of arms reflects its belief that these practices are out of place in a competitive market economy. Such practices will only disappear with the introduction of a comprehensive European arms policy.