Preliminary draft amending budget n° 7 to the general budget 2008 - Statement of expenditure by section - Section III - Commission
Date: 2008-09-15
Institutions: Directorate-General for Budget, European Commission
Subjects: EU aid, European Commission, amending budget, budgetary expenditure, fund (EU), general budget (EU), preliminary draft EC budget

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15.9.2008 
COM(2008) 556 final 

PRELIMINARY DRAFT AMENDING BUDGET N° 7 
TO THE GENERAL BUDGET 2008 

STATEMENT OF EXPENDITURE BY SECTION 
Section III - Commission 

(presented by the Commission) 

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PRELIMINARY DRAFT AMENDING BUDGET N° 7 
TO THE GENERAL BUDGET 2008 

STATEMENT OF EXPENDITURE BY SECTION 
Section III - Commission 

Having regard to: 

– 

– 

– 

the  Treaty  establishing  the  European  Community,  and  in  particular  Article 272 
thereof, 

the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in  particular 
Article 177 thereof, 

the  Council  Regulation  (EC,  Euratom)  No  1605/2002  of  25  June  2002  on  the 
Financial Regulation applicable to the general budget of the European Communities1, 
as amended by Council Regulation (EC) No 1525/20072, and in particular Article 37 
thereof, 

The European Commission hereby presents to the budgetary authority the Preliminary Draft 
Amending Budget No 7 to the 2008 budget. 

1 
2 

OJ L 248, 16.9.2002, p. 1. 
OJ L 343, 27.12.2007, p. 9. 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

Introduction .................................................................................................................. 4 

Mobilisation of the EU Solidarity Fund....................................................................... 4 

France: Hurricane "Dean" August 2007 ...................................................................... 4 

Financing...................................................................................................................... 6 

SUMMARY TABLE BY HEADING OF THE FINANCIAL FRAMEWORK ....................... 7 

CHANGES TO THE STATEMENT OF EXPENDITURE BY SECTION 

The changes to the statement of expenditure by section are forwarded separately via the SEI-
BUD system. An English version of the changes to the statement of expenditure by section is 
attached for information as a budgetary annex. 

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1. 

INTRODUCTION 

Preliminary  Draft  Amending  Budget  (PDAB)  No 7  for  the  year  2008  covers  the  following 
elements: 

–  Mobilisation  of  the  EU  Solidarity  Fund  for  an  amount  of  EUR 12.78 million  in 
commitment  and  payment  appropriations  relating  to  the  effects  of  hurricane  "Dean"  in 
Guadeloupe and Martinique in August 2007. 

–  A corresponding reduction in payment appropriations of EUR 12.78 million from the line 

13 04 02 Cohesion Fund. 

2. 

MOBILISATION OF THE EU SOLIDARITY FUND 

2.1. 

France: Hurricane "Dean" August 2007 

In  August  2007  the  French  overseas  departments  of  Martinique  and  Guadeloupe,  two 
neighbouring  islands  of  the  French  Antilles,  were  affected  by  the  hurricane  "Dean"  causing 
severe  damage  to  infrastructures  and  different  sectors  of  the  economy.  Due  to  the  high 
damage and serious effects caused by the storm, France submitted an application for financial 
assistance from the EU Solidarity Fund. 

The  Commission  services  have  carried  out  a  thorough  examination  of  the  application  in 
accordance with Council Regulation (EC) No 2012/20023 and in particular with Articles 2, 3 
and 4 thereof. The most important elements of the assessments can be summarised as follows: 

(1) 

(2) 

(3) 

The  application  was  presented  to  the  Commission  on  26  October  2007  within  the 
deadline  of  10  weeks  after  the  first  damage  was  recorded  on  17  August  2007. 
Additional  information  from  the  French  authorities  was  received  at  the  Commission 
on 8 January 2008. 

The  disaster  is  of  natural  origin.  The  French  authorities  estimated  the  total  direct 
damage  at  EUR 511.2 million.  This  amount  represents  0.03%  of  France's  GNI  and 
16 % of the normal threshold for mobilising the Solidarity Fund applicable to France 
of  EUR 3.267  billion  (i.e.  EUR 3 billion  in  2002  prices).  Total  direct  damage  is  the 
basis for the calculation of the amount of financial assistance. The financial assistance 
may  only  be  used  for  essential  emergency  operations  as  defined  in  Article  3  of  the 
Regulation. 

As  total  damage  remains  below  the  normal  threshold  the  application  is  based  on  the 
so-called  “extraordinary  regional  disaster”  criterion  laid  down  in  Article  2(2),  final 
subparagraph  of  Regulation  (EC)  No 2012/2002  setting  out  the  conditions  for 
mobilising  the  Solidarity  Fund  “under  exceptional  circumstances”.  Under  this 
criterion, a region can exceptionally benefit from assistance from the Fund where that 
region has been affected by an extraordinary disaster, mainly a natural one, affecting 
the  major  part  of  its  population,  with  serious  and  lasting  repercussions  on  living 

3 

Council  Regulation  (EC)  N°  2012/2002  of  11  November  2002  establishing  the  European  Union 
Solidarity Fund, OJ L 311 of 14.11.2002, p.3. 

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(4) 

(5) 

(6) 

(7) 

(8) 

conditions  and  the  economic  stability  of  the  region.  The  Regulation  calls  for  special 
focus on remote and isolated regions such as the insular and outermost regions defined 
in  Article  299(2)  of  the  Treaty.  Martinique  and  Guadeloupe  fall  within  the  latter 
category. 

As set  out in the  Annual Report on the Solidarity Fund 2002-20034 the Commission 
considers that, in order for the specific criteria for regional disasters to be meaningful 
in the national context, a distinction needs to be drawn between serious regional events 
and  those  that  are  merely  local.  In  accordance  with  the  principle  of  subsidiarity  the 
latter  are  the  responsibility  of  the  national  authorities,  while  the  former  can  be 
considered for support under the Solidarity Fund. 

The French authorities justify their application with the special situation of Martinique 
and Guadeloupe as outermost regions of the Union. Evidence is presented to show that 
because  of  the  islands'  isolated  location  and  their  already  critical  socio-economic 
situation  before  the  hurricane  the  impact  and  lasting  repercussions  of  the  damage 
caused by the hurricane are much more serious than would otherwise be the case. 

The  application  relates  to  the  whole  of  Martinique  (34  municipalities  with  a  total 
population of 381 000 inhabitants) and the more seriously affected part of Guadeloupe 
(23 municipalities with a population of 298 000 inhabitants, representing two thirds of 
Guadeloupe's total population). For these 57 municipalities the state of emergency had 
to be declared and the hurricane affected - to varying degrees -the total population in 
that zone, i.e. almost 680 000 people. 

The French authorities reported serious damage in the agricultural and fisheries sector 
amounting  to  some  EUR 186 million  with,  in  particular,  the  almost  complete 
destruction of the banana sector which is the single most important economic sector of 
the  islands.  More  damage  amounting  to  some  EUR 178 million  was  reported  to 
infrastructures  and  public  buildings  as  well  as  damage  to  homes  and  enterprises  of 
nearly EUR 110 million. 

The  evidence  presented  by  the  French  authorities  to  demonstrate  serious  and  lasting 
repercussions on living conditions and the economic stability of the region is primarily 
based on the expected long term effects on two key sectors on which a large part of the 
active  population  depend:  the  quasi  complete  destruction  of  the  banana  industry 
(cultivation,  transportation,  processing)  and  the  consequences  for  tourism.  These 
effects  add  to  the  precarious  economic  and  employment  situation  already  present 
before the storm. Moreover, the high number of almost 17 000 destroyed or damaged 
houses,  damaged  infrastructures  (water,  electricity,  telephone)  and  the  financial 
difficulties  of  the  municipalities  inflicted  by  the  storm  leading  to  reduced  public 
services  as  well  as  the  inflationary  effects  of  the  storm  are  presented  as  additional 
factors aggravating living conditions in the area. 

(9) 

The  cost  of  essential  emergency  operations eligible  under  Article  3(2)  of  Regulation 
(EC) No 2012/2002 has been estimated by the French authorities at EUR 119.9 million 
and has been broken down by type of operation. 

4 

Annual  report  2002-2003  and  Report  on  the  experience  gained  after  one  year  of  applying  the  new 
instrument, COM(2004) 397 final of 26.5.2004 

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(10)  France  has  indicated  that  it  intends  to  use  financing  from  POSEI  and  the  ERDF  for 

purposes related to the disaster. 

(11)  The French authorities confirmed that the eligible operations referred to under point 9 

above are not covered by insurance. 

In conclusion, for the reasons set out above, it is proposed to accept the application made by 
France relating to the hurricane "Dean" as an “extraordinary regional disaster” and to propose 
the mobilisation of the Solidarity Fund. 

2.2. 

Financing 

The  total  annual  budget  available  for  the  Solidarity  Fund  is  EUR 1 billion.  In  2008, 
EUR 260 411 197  has  already  been  mobilised 
leaving 
EUR 739 588 803 available. 

for  earlier  applications, 

As solidarity was the central justification for the creation of the Fund, the Commission takes 
the view that aid from the Fund should be progressive. That means that, according to previous 
practice,  the  portion  of  the  damage  exceeding  the  threshold  (0.6%  of  the  GNI  or  EUR 
3 billion  in  2002  prices,  whichever  is  the  lower  amount)  should  give  rise  to  higher  aid 
intensity  than  damage  up  to  the  threshold.  The  rate  applied  in  the  past  for  defining  the 
allocations  for  major  disasters  is  2.5%  of  total  direct  damage  under  the  threshold  for 
mobilizing  the  Fund  and  6%  above.  For  extraordinary  regional  disasters  the  rate  is  2.5%  of 
total direct damage. The methodology for calculating Solidarity Fund aid was set out in the 
2002-2003  Annual  Report  on  the  Solidarity  Fund  and  accepted  by  the  Council  and  the 
European Parliament. 

It  is  proposed  to  apply  the  same  percentages  in  this  case  and  to  grant  the  following  aid 
amounts: 

Direct 
damage 

Threshold 

Amount based 
on 2.5% 

Amount based 
on 6% 

Total amount of 
aid proposed 

(EUR) 

511 200 000 

3 266 629 000 

12 780 000 

0 

12 780 000 

12 780 000

France/Guadeloupe 
and Martinique, 
hurricane Dean 
Total 

This amount of compensation will leave at least 25 % of the European Union Solidarity Fund 
available  for  allocation  during  the  last  quarter  of  the  year,  as  required  by  Article  4(2)  of 
Regulation (EC) 2012/2002. 

Taking  into  account  the  identification  of  excess  appropriations  in  line  13 04 02  Cohesion 
Fund there will be no need for fresh payment appropriations for financing the EU Solidarity 
Fund payments for France (Martinique/Guadeloupe). An amount of EUR 12.78 million would 
thus  be  allocated  from  budget  line  13 04 02  to  budget  line  13 06 01  to  cover  the 
corresponding needs related to the mobilisation of the EU Solidarity Fund. This redeployment 
is possible because payments under the Cohesion Fund for the period 2007-2013 are to a large 
extent related to major projects. However, major projects need to be approved separately in 
subsequent Commission decisions before any interim payments can be made. As many major 
projects  are  not  expected  to  be  submitted  and  approved  this  year,  no  significant  interim 
payments are expected in 2008. 

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Financial framework 
Heading/subheading 

2008 Financial framework 

Budget 2008 (incl. AB 1-4/2008 and PDAB 5-
6/2008) 

PDAB 7/2008 

Budget 2008 + AB 1-4/2008 and PDAB 5-
7/2008 

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CA 

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SUMMARY TABLE BY HEADING OF THE FINANCIAL FRAMEWORK 

and 

10 386 000 000

11 086 000 000

9 768 739 600

11 086 000 000

9 768 739 600 

1. SUSTAINABLE GROWTH 
1a.  Competitiveness 
employment 
1b. Cohesion for growth and employment 

growth 

for 

Total 
Margin5 
AND 
NATURAL 

PRESERVATION 

2. 
MANAGEMENT 
RESOURCES 
Of  which  market  related  expenditure  and 
direct payments 

OF 

Total 
Margin 
FREEDOM, 

CITIZENSHIP, 

3. 
SECURITY AND JUSTICE 
3a. Freedom, Security and Justice 
3b. Citizenship 

4. EU AS A GLOBAL PLAYER7 

5. ADMINISTRATION8 

6. COMPENSATION 

Total 
Margin6   

Margin 

Margin 

Margin 
TOTAL 
Margin   

47 267 000 000
57 653 000 000

46 217 000 000

59 193 000 000

747 000 000
615 000 000
1 362 000 000

7 002 000 000

7 380 000 000

207 000 000

132 797 000 000

129 681 000 000

47 255 948 720
58 341 948 720

-188 948 720  

40 551 565 026
50 320 304 626

- 12 780 000
- 12 780 000

47 255 948 720
58 341 948 720

-188 948 720  

40 538 785 026 
50 307 524 626 

41 400 082 042

40 889 550 500

55 564 715 538

3 628 284 462  

53 241 270 053

7 30 274 000
875 254 197
1 605 528 197

16 883 000  

7 311 218 000
-70 000 000
7 279 525 455
177 474 545
206 636 292
363 708
130 309 572 202
3 564 056 995

533 196 000
968 664 203
1 501 860 203

8 112 728 400

7 280 085 455

206 636 292

120 662 885 029
9 560 670 956

41 400 082 042

40 889 550 500 

55 564 715 538

3 628 284 462  

53 241 270 053 

730 274 000
888 034 197
1 618 308 197

16 883 000  

7 311 218 000
-70 000 000
7 279 525 455
177 474 545
206 636 292
363 708
130 322 352 202
3 564 056 995

533 196 000 
981 444 203 
1 514 640 203 

8 112 728 400 

7 280 085 455 

206 636 292 

120 662 885 029 
9 573 450 956 

12 780 000
12 780 000

12 780 000
12 780 000

12 780 000

0

5 

6 
7 

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EN 

The  European  Globalisation  adjustment  Fund  (EGF)  is  not  included  in  the  calculation  of  the  margin  under  Heading  1a.  The  Flexibility  Instrument  has  been  mobilised  for  an  amount  of 
EUR 200 million. 
The European Union Solidarity Fund (EUSF) amount is entered over and above the relevant headings as foreseen by the IIA of 17 May 2006 (OJ C 139 of 14.6.2006) 
The  2008  margin  for  heading  4  does  not  take  into  account  the  appropriations  related  to  the  Emergency  Aid  Reserve.  The  Flexibility  Instrument  has  been  mobilised  for  an  amount  of 
EUR 70 million. 
For  calculating  the  margin  under  the  ceiling  for  heading  5,  account  is  taken  of  the  footnote  (1)  of  the  financial  framework  2007-2013  for  an  amount  of  EUR 77 million  for  the  staff 
contributions to the pensions scheme. 

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