Explanatory Memorandum to COM(2005)435-1 - Signing by the EC of the Energy Community Treaty - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2005)435-1 - Signing by the EC of the Energy Community Treaty. |
|---|---|
| source | COM(2005)435  |
| date | 14-09-2005 |
In the Communication of 26 May 2003 from the Commission to the Council and the European Parliament on the Development of Energy Policy for the Enlarged European Union, its neighbours and Partner Countries, the Commission called for the creation of a real integrated energy market, free of any barriers, in the wider European area, including South-East Europe, promoting equivalent competitive conditions and high environmental standards.
In November 2002, at the Ministerial Meeting of the Athens Forum process, under the sponsorship the European Commission, the member countries of the South-East Europe electricity market signed a Memorandum of Understanding committing them to implement parallel rules to the Community provisions creating an internal electricity market in the area. In December 2003, the signing of a second Memorandum of Understanding, to which the European Community was a party, provided for the extension of the Athens Process to gas markets and confirmed the first Memorandum.
The Commission proposed in November 2002 a common strategy paper with the international donors active in South East Europe. The common strategy paper called for the creation of a regulatory framework enabling efficient financial assistance to the region. This common strategy has become the base for continued engagement by the international financial institutions.
The Republic of Bulgaria, Romania, the Republic of Turkey and the Republic of Croatia are Candidate Countries for accession to the European Union, and the former Yugoslav Republic of Macedonia has also applied for membership. The Copenhagen European Council in December 2002 confirmed the European perspective of the Republic of Albania, Bosnia and Herzegovina, and Serbia and Montenegro, as potential candidates to the accession of the European Union, and underlined the determination to support their efforts to move closer to the European Union.
In accordance with the Council Decision of 17 May 2004, the European Commission has negotiated a Treaty establishing an Energy Community with the Republic of Albania, the Republic of Bulgaria, Bosnia and Herzegovina, the Republic of Croatia, the former Yugoslav Republic of Macedonia, the Republic of Montenegro, Romania, the Republic of Serbia, the Republic of Turkey, and the United Nations Interim Administration Mission in Kosovo (pursuant to the United Nations Security Council Resolution 1244). The Treaty will strongly contribute to the achievement of the above objectives.
The Treaty will give a legally binding framework to the existing ongoing cooperation under the 2002 and 2003 Athens Memorandum of Understanding between the European Community and the countries of the region. The general substance of the Treaty was approved in December 2004 by all the parties to the Athens process, including the five Member States of the European Union involved. The Commission may propose a joint Declaration with the Council indicating that these Member States will have their interests protected
The Treaty creates an internal energy market between the European Community and the non-EU countries of the region, including mutual assistance and possibly a common external energy trade policy, a factor necessary for an internal market. It enables the setting up of a regulatory framework permitting the efficient operation of energy markets in the region, including for the EU countries of the region. It provides for the implementation of the relevant acquis communautaire on energy, environment, competition and renewables for the non-EU countries of the region. The Treaty and the Athens Process behind it provide for some regional level co-ordination in order to overcome entrenched state level political problems, including on issues of regulatory co-operation, investments, statistics and physical market co-ordination.
Through the creation of an area without internal frontiers for gas and electricity, the Treaty aims at promoting high levels of gas and electricity provision to all citizens based on public service obligations, and achieving economic and social progress and a high level of employment as well as a balanced and sustainable development.
Issues relating to employment and social impacts, including working conditions, and social dialogue, are being actively discussed and separate political commitments on these issues are to be sought in a complementary Memorandum of Understanding aiming at securing this social dimension which is an integral part of the internal market. Participation of the social partners, and other relevant stakeholders, in the development of this social dimension will be crucial.
Above all, the Treaty will be the first multilateral treaty ever signed in this region, and is integrating a specific and highly symbolic economic sector. It will attract investment by creating a stable regulatory and market framework, and enable the economic development and social stability of the region. In addition, it will enhance the European Union’s security of supply by providing incentives to connect the Balkans to Caspian, North African and Middle East gas reserves, and end the network isolation of Greece.
In cooperation with international donors, the Treaty will enhance the coordination of financial aid to the region. The World Bank has, in this regard, announced the creation of an investment fund of $1.75 billion for the electricity and gas sectors of the region. The grant of the funds will be made conditional on compliance with the Treaty. The World Bank fund may be enhanced as the World Bank speculates that total investments necessary to achieve an EU level market are in the order of $20 billion. The EBRD has also included the Energy Community Treaty Process in its lending policies and has made several loans based on its overall ambitions. The aim is to minimise conditionality conflict amongst the financial donors.
The European Community will benefit from a veto right on all decisions to be adopted by the Energy Community. The impact on the European Community budget is very limited, as the budget of the Energy Community Treaty shall only cover the operational expenses of the Energy Community necessary for the functioning of its institutions.
The Commission is requested to approve
1. the Decisions for Signature and Conclusion; and
2. to approve the draft Joint Declaration from the Commission and Council