Solidarity Fund

9.43.00am BST (GMT +0100) Tue 31st Jul 2007

After I wrote about the EU's Solidarity Fund last week in relation to the flooding I have been asked for more information on it. The European Union Solidarity Fund was set up in 2002 so that the EU can respond in a rapid, efficient and flexible manner to come to the aid of any Member State in the event of a major natural disaster. The Fund has an annual budget of one billion euro. Below is a summary of the Council Regulation - (EC) No 2012/2002 of 11 November 2002 - that establishing the European Union Solidarity Fund

SUMMARY

Title XVII introduced by the Treaty of Amsterdam confirms the goal of economic and social cohesion. The European Union action in this field aims at helping regions whose development is lagging behind to catch up with the rest of the Community by means of multi-annual action programmes of structural adjustment. In exceptional cases, the Community is authorised to take immediate specific measures over and above the usual structural instruments to respond to the urgent needs of the population of a Member State or a candidate country. The Community also reserves the right to apply Article 308 of the Treaty where it considers that no other existing legal provision permits it to act with a view to achieving Community objectives.

The floods in Germany, Austria, the Czech Republic and France in the summer of 2002 caused serious human and material damage. For several weeks, they called a halt to the economy of the affected regions. The Community reacted immediately . On 28 August 2002, it proposed, among others to make use of the flexibility of the general provisions of the Structural Funds, the rural development and the pre-accession financial instruments ( ISPA and Sapard ) in order to respond to the urgent needs of the people affected. Furthermore, it launched the idea of creating a European Union Solidarity Fund (EUSF) as the most appropriate instrument in such situations.

The European Union Solidarity Fund

To enable itself to respond in a rapid, efficient and flexible manner to urgent situations, the Community has established a Solidarity Fund. This will intervene mainly in cases of major natural disasters with serious repercussions on living conditions, the natural environment or the economy in one or more regions of a Member State or a country applying for accession.

A natural disaster is considered as 'major' if:

in the case of a State, it results in damage estimated either at over EUR 3 billion (2002 prices), or at more than 0,6% of its gross national income;

by way of exception, the Fund may be mobilised for extraordinary regional disasters resulting in damage inferior to this threshold, affecting the major part of its population, with serious and lasting repercussions on living conditions and the economic stability of the region. In this context, particular attention is paid to remote and isolated regions, for example the outermost and island regions.

In these specific cases, the annual amount available is limited to no more than 7.5% of the annual amount allocated to the Solidarity Fund (i.e. 75 M).

Assistance from the Fund takes the form of a single and global grant, with no necessary co-financing, complementing the public efforts of the beneficiary State. Intended to finance measures alleviating non-insurable damage in principle, the urgent actions eligible for the Fund are the following:

Immediate restoration to working order of infrastructure and plant in the fields of energy, drinking water, waste water, telecommunications, transport, health and education.

Providing temporary accommodation and funding rescue services to meet the immediate needs of the population concerned.

Immediate securing of preventive infrastructures and measures of immediate protection of the cultural heritage.

Immediate cleaning up of disaster-stricken areas, including natural zones.

No later than ten weeks after the first damage caused by the disaster, the State affected should submit an application to the Commission for assistance from the Fund. It should provide all possible information on the damage caused by the disaster and its impact on the population and the economy. It must estimate the cost of the foreseen assistance and indicate any other sources of national, Community and/or international funding.

Beneficiary Member States must seek all possible reimbursement from third parties.

A single and global grant

On the basis of this information, the Commission will decide if the EUSF may be mobilised and, if that is the case, to accord a grant to be paid immediately and in a single instalment. If the final estimation of the damage is substantially lower than the first forecasts on the basis of which the State demanded the grant, the Commission will ask for the reimbursement of the difference.

The beneficiary State is responsible for the implementation of the grant and, where applicable, for the co-ordination with other Community funds in order to ensure their complementarity. Double financing of the actions undertaken by the EUSF by the Structural Funds, the Cohesion Fund , the European Agricultural Guidance and Guarantee Fund ( EAGGF ), ISPA and Sapard is, however, not possible.

The grant must be used within one year of the date on which it has been disbursed. The beneficiary State must reimburse any part of the grant remaining unused. Six months after the expiry of this period, it is to present a report on the financial execution to the Commission. This document should detail the expenditure eligible for the Solidarity Fund as well as all other funding received, including insurance settlements and compensation from third parties.

On 1 October each year, at least one-quarter of the annual amount allocated to the Solidarity Fund should remain available in order to cover needs arising at the end of the year. In exceptional cases and if the remaining financial resources of the Fund prove insufficient, the Commission may decide to use part of the amount foreseen for the following year.

Final Provisions

The Member States and the candidate countries affected by the serious floods of August 2002 may request assistance from the Fund.

Before 1 July each year, the Commission is to present a report on the activity of the Solidarity Fund.

The Council is to review this regulation on the basis of a proposal from the Commission by 31 December 2006 at the latest.