WRITTEN QUESTION E-1470/99

by Jan Mulder (ELDR) to the Commission

(1 September 1999)

Subject: Programme of food aid for the Russian Federation pursuant to Regulation 2802/98

In Regulation 2802/98(1) the Council decided on 17 December 1998 on a programme of food aid for the Russian Federation worth EUR 400 million. The European Union and the Russian Federation agreed that the food would be sold by the Russian authorities at local market prices and that the sales proceeds were intended for a fund for social measures.

1. What quantities of products have been supplied to the Russian Federation so far?

2. What quantities of products have been sold by the Russian authorities and at what prices?

3. What sums have so far been paid into the fund for social measures?

4. Can the Commission confirm the reports in the Dutch media that large quantities of products supplied under the programme of food aid to the Russian Federation have not been sold at local market prices and that the sales proceeds have not been paid into the find for social measures? If so, what sanctions does the Commission intend to apply?

5. How does the Commission think it can guarantee watertight monitoring of implementation of the food aid programme and administration of the fund?

6. Why has the Commission not yet reported to Parliament on implementation of the programme, as promised by the Commission in the legislative procedure concerning Regulation 2802/98 and in the transfer of appropriations to the 1999 financial year (SEC(1999) 0122)? When does the Commission intend to inform Parliament?

(1) OJ L 349, 24.12.1998, p. 12.

Joint answer to Written Questions E-1470/99 and E-1626/99 given by Mr Patten on behalf of the Commission

(17 November 1999)

On the general issue of alleged financial corruption in Russia, the Commission's views remain as set out in the statement made in the Parliament on 16 September 1999. The discussions in the G7 on this issue by the end of September were consistent with the Commission's views.

1. 1,7 million tonnes of food products have been delivered or are in course of delivery to the Russian Federation as follows:

>TABLE>

2. In accordance with the memorandum of understanding (MoU) between the Commission and the Russian Federation, the beneficiary regions have 75 days from arrival at the destination or 120 days after arrival at the port whichever is the earlier in which to lodge money on the special account for products delivered and sold at prices agreed under the price protocol. A protocol was concluded in May 1999 and revised in September 1999 to take account of commodity price movements throughout the Russian Federation. According to the latest available figures a total of 1 195 million roubles have been deposited on the special account. This reflects the value of products sold except for the arrears mentioned under point 4. The prices at which commodities are sold are as follows:

>TABLE>

The differentiated prices for boxed beef represent the cut specification.

3. According to the MoU, the bulk of the proceeds (up to 80 %) is used to clear pension fund arrears. This has already taken place for an amount of 961 million roubles. From the total amount deposited up to now on the special account, 290 million roubles is available for the funding of social projects. A number of recent submissions by the Russian ministry for labour and social policy are now in the process of being assessed.

4. According to the reports received by the Commission, there is no substance to the allegations in the Dutch media. Product sales prices have been negotiated to ensure that the market cannot be manipulated. Although there is provision for free distribution of the food products, in certain circumstances, this facility has not yet been used. All products have to be sold at the agreed price and funds deposited on the special account. According to the latest available figures, arrears to the special account were approximately 18 % of the total so far lodged, and under the terms of the agreement, the Russian administration is obliged to guarantee payment from federal funding for those regions which fail to meet their commitment.

5. Monitoring of the programme in Russia is being carried out by Euro Monitoring Group, contracted by the Commission under competitive tender. This company has ten strategically-located regional bases, which report their findings daily to the Euro Monitoring Group headquarters in Moscow. All survey reports are analysed by a team of experts and all information is posted to a website accessed only by authorised users. A team of 400 surveyors performs quantitative and visual quality controls on arrival at the Russian border, seal the product before dispatch to its final destination, check the seals on arrival at destination and undertake further quantity surveys. Any anomalies are noted and reported to Moscow for appropriate action. The Commission considers this control mechanism to be sufficient guarantee thatthe product reaches the beneficiary regions. After delivery to the first receiver the cost of further monitoring would be prohibitive.

6. A comprehensive progress report(1), covering programme implementation to 31 May 1999 was submitted to the Council, Parliament and Court of auditors on 5 July 1999. A monthly report for September 1999(2) has been prepared and submitted to the Council, Parliament and Court of auditors on 15 October 1999. A further comprehensive report is in preparation for diffusion end of October.

(1) SEC(1999) 1070.

(2) SEC(1999) 1651.