- The nature of this study
- The concept of 'trans-European network' and its development
- The role of the Community in networks policy
- The question of the trans-European network
- Initial hypotheses
- The trans-European networks within the framework of the Treaty
- Guidelines and harmonization
- The role of financing in general
- The use of funds expressly allocated to the trans-European networks
- Coordination
- Legal aspects of private sector involvement
II. THE OBJECTIVES AND DEFINITION OF PROJECTS
- The Copenhagen European Council and the launch of the trans- European networks
- Growth, competitiveness and employment: the macroeconomic framework
- The role of the trans-European networks
- Principles of policy and architecture for the trans-European networks
- The history of the guidelines: the Christophersen Group
- The history of the guidelines: the codecision procedure
Annex:List of priority projects approved at the Essen European Council, December 1994
III. THE PROJECTS: COSTS AND BENEFITS
- The necessary investments
- Benefits and financial situation: high-speed rail projects
- Benefits and financial situation: conventional rail projects
- Benefits and financial situation: combined transport projects
- Benefits and financial situation: road projects
- Benefits and financial situation: other projects and mixed projects
Table III/I:Investment and Community funding for priority projects
Table III/II:Other important projects
- Sources of public funding
- Member State funding
- Note concerning the following paragraphs
- The central area: Germany, France, the Benelux countries
- The Baltic area: Denmark, Sweden, Finland
- The Atlantic area: the UK and Ireland
- The Iberian area: Spain and Portugal
- The Alpine area: Austria and Italy
- Greece
Table IV/I:Global investment in transport infrastructures in the Member States
Table IV/2:Breakdown by transport infrastructure mode in the Member States (1993)
- Overview of Community resources
- Direct resources from the Community budget
- The rejected supplement
- The European Regional Development Fund (ERDF)
- The Cohesion Fund
- The general role of the European Investment Bank (EIB)
- The EIB and the trans-European networks
- The European Investment Fund (EIF)
Table V/I:Cohesion Fund financing for priority projects
Table V/2:EIB financing
- Historical background to private participation
- Private participation in certain Member State
- The economic aspects of private participation
- The private sector as a source of funding
- The private sector as infrastructure entrepreneur
- The promotion and preparation stage
- The construction stage
- The management stage
- Other points relating to the BOT arrangements from the viewpoint of the private sector
- The BOT arrangements from the commissioning body's viewpoint
- The BOT arrangements from the user's viewpoint
- The question of profitability
- A proposal concerning tied-up capital
- The risk aspect
CRITICAL NOTE ON SOURCES AND LITERATURE
This working document, which forms part of the 1996 research programme of the European Parliament's Directorate-General for Research and has been drawn up by that DG, was commissioned by the Committee on Transport and Tourism. It is a revised version of an earlier working document of the same title, published in 1994.
In the two years since the first document was drawn up, the decision on the Community guidelines for the development of the trans-European networks has finally been adopted, not without difficulty (1), and the financial regulation for the trans-European networks has also been adopted (2).
The basic legislative framework has therefore now been defined. However, the financial measures being taken by the Member States to comply with the convergence criteria for the third stage of monetary union have intensified the problem of the funding of the networks, which was already considerable by reason of the large sums called for. This means that particularly careful attention must now be paid to the transport networks, as being an especially delicate question.
The main subject of the present document is the financing of the networks; the attempt will nonetheless also be made to evaluate the overall situation as regards the priority projects.
Before examining the specific theme of the transport network funding, it will be useful to provide some information on the historical development of the networks.
The 1990s saw the start of the European Union's involvement in infrastructure policy, first of all as an objective pursued through other activities and then as a responsibility conferred directly upon it with the entry into force of the Maastricht Treaty. This innovation was far more radical than has generally been suggested by politicians, researchers or journalists. Historically, the role of public works in the Member States has far exceeded their specific function and the effects they have had on the economy and employment: they also function as a symbol of the tangible reality of power, which is of crucial importance even in the modern age. The fact that responsibility for this sector has been conferred on the Union means that the prospects for the political legitimization of the Union have been enhanced.
It is true that the Union has always intervened in the field of infrastructure through the financing it has provided from Community funds, but its new responsibilities mean that it now plays a major role in the decision-making process at all levels of government in the Member States in respect of public works, and such responsibilities should therefore be considered as an important component of the Community's substantive powers.
Community infrastructure policy was conceived in such a way as to avoid a lack of overall coordination limiting the effectiveness of actions. This objective is to be pursued by means of the trans-European networks, which constitute an integrated approach to the communications systems of the EU Member States and, in a wider perspective, of the continent as a whole. The term communications systems is used advisedly, since trans-European networks involve all systems involving flows, energy transmission, telecommunications and transport, the latter being the specific subject of this document.
The market dimension and the process of political integration in Europe mean that an integrated approach is necessary. History shows us, in fact, that each politico-economic system uses a communications system which serves its requirements. In Europe, for example, the transport network has been designed to serve the internal needs of states, with highly dense transport links within national boundaries and traffic with other states tending to be channelled through border crossing- points, the number of which is relatively limited compared with national routes and which are more constrained than the latter by geographical factors.
The structure of national transport networks, then, means that European traffic passes through connected national subsystems rather than through a proper European system operating as a function of the single market, while the increase in international trade has led to an increase in bottlenecks at frontier crossing-points, thereby highlighting the limitations of this situation.
It is precisely in the transport sector, where the shortcomings of the communications system are most evident, that the concept of trans-European networks is being developed as an instrument for market integration and economic and social cohesion, since a more integrated transport system can help ensure that the peripheral, remote or less-developed regions can be fully integrated into European economic life. The aim of this policy is not to redesign the European transport system in such a way as to organize it into a uniform whole, but instead to achieve interconnecting national subsystems which, for obvious reasons related to economics and the internal operability of the system, remain the 'carrying axles' of traffic.
A more modern concept of transport links together the interconnection and interoperability of various modes of transport. While it is not intended here to go into the specific details of combined and intermodal transport, which have been dealt with in the Commission Green Paper and in many resolutions of the European Parliament, it is clear that both the geographical and modal integration of transport serve to enhance their mutual advantages.
Historically speaking, the concept of trans-European network, which was first set out by the UN Economic Commission for Europe, was endorsed at Community level in the 1989 Commission communication entitled 'Towards trans-European networks', following which the European Council, meeting in Strasbourg in December 1989, instructed the Commission to draw up a programme of work for the four areas of trans-European networks which were under discussion at the time, namely, transport, telecommunications, energy and training.
The Commission's work was to culminate the following year, in December 1990, in a communication entitled 'Towards Trans-European Networks - for a Community Action Programme', but financial problems and the complexity of the decision-making process meant that it was not followed up. However, the trans-European network concept was endorsed in the wording of the Maastricht Treaty, of which it forms an important policy, although the application of this policy to training was lost during the transition to the 'constitutional' level, probably because the concept of network is now associated primarily with infrastructure.
Another typical aspect of these networks is that they are trans-European and not merely trans-Community. This specific description is the result of European geography and the political events that have occurred on the continent in the last few years. From a geographical point of view, north-south Community links, in particular between Germany and Italy, have necessarily involved transit through non-Community countries (Switzerland and Austria), with problems arising both from the mountainous nature of the terrain and from the specific traffic policy of those countries. In the field of energy transmission and telecommunications, there is also a need to link up with third countries.
An additional factor is that relations with the EFTA countries, already well-established, have been stepped up since the inception of the European Economic Area, while the changes that have occurred in eastern Europe since 1989 are opening up new prospects for trade with the countries in that part of the continent, to whose development the European Community is deeply committed.
As an infrastructure policy, trans-European networks can also be used for economic purposes, for example as a means of boosting employment through job-creating projects. However, infrastructure policy requires massive investment, which, in a period of recession and limited public finances, means resorting to private funding, which can only be raised if the returns are suitably high. Achieving a return on private investment means increasing the cost of building or, alternatively, of operating infrastructures, which has the effect of increasing the cost of transport and creating obstacles to mobility.
One of the innovatory features of trans-European networks is the different relationship established between Community assistance and projects. In the case of assistance granted from the Structural Funds, projects are initiated by the Member States and the public or private bodies eligible for funding, and the Community assesses whether they are consistent with its objectives and whether they comply with other legal and economic requirements; in the case of the trans-European networks, however, the Community lays downs the guidelines and approves the execution plans. The Community's position in each case is therefore substantially different: when it comes to the provision of aid from the Structural Funds, it is one of three parties involved in the decision-making process aimed at defining the project, and its task is limited to granting the Community aid and to carrying out the necessary checks before and after the provision of such aid; in the case of the trans-European networks, the project is the fruit of a decision-making process within the Community institutions. Accordingly, while respecting the principle of subsidiarity which, as we shall see later, is applied particularly strictly to networks policy, the Community has a larger role to play here than in other policies. Its role is that of planning and of establishing guidelines (the term used in the Treaty); this also includes identifying projects of common interest and puts the Community in a position which, if not exactly that of a state, which also oversees the construction of infrastructure, is nevertheless more than that of a mere financing body.
This particular position confers on the Community greater political responsibility for the final result of its action, which requires a more global approach. As far as implementation is concerned, the project of common interest must be such as to facilitate the drawing up of execution plans and must therefore have a high degree of feasibility; as far as financing is concerned, the mobilization of the necessary public and private funding is to take place at Community level.
The policy creating the trans-European networks (3) is one of the most significant of the reforms introduced by Maastricht, and one of the areas in which Community strategy has been aimed at growth and development (4). However, the networks have, since the first attempts actually to set them up, encountered serious obstacles. Some of these are clearly of a political nature and concern the equilibrium between the Council and Parliament in the decision-making process and the choice of specific projects. There is another crucial aspect, namely the allocation of financial resources for the work to be carried out - that is, the problem of financing, which is the subject with which this working document is concerned.
At the heart of this specific difficulty affecting networks policy is the fact that it coincides in time with the pursuit of the convergence of the economic and financial policies of the Member States in the run-up to monetary union.
This has meant the imposition of financial policies based on the containment of spending and the public debt, which can only with difficulty be reconciled with the funding of expensive projects. The Community itself is not in a position to take over the burden of creating the trans-European networks, firstly because its own accounts are tied to a stringent budgetary discipline, and secondly because expenditure of this nature would mark a visible divergence from the convergence criteria which the Member States are being asked to meet (5). In addition, such expenditure would have financial repercussions on the Member States themselves, as they would have to increase their contributions to the Community.
In this context, the networks will require funding from private sources if they are not to create a burden of debt for the Member States or the Community. This is the first aspect of the problem. A number of questions have to be cleared up, of which the first is the level of profitability at which the private sector is interested in investing in infrastructure. This immediately raises a second and related question, namely whether the infrastructures in question are likely to be profitable to the degree required by the private sector.
The answer to the first question should be the same for all three forms of trans-European network. However, in the case of the second question the answer will vary according to the nature of the network and, probably, the value added included in the charges for use of the infrastructures of individual networks. The question of profitability leads to that of charging for use (a practice by no means universal in the transport sector).
This raises a number of problems of a different order. One has to ask what implications the costs arising from transport infrastructure use will have on the cost of the transport itself; and, in more global economic terms, what impact transport costs have on the inflation rate and, therefore, on the economy in general.
The trans-European transport networks thus raise problems of greater complexity than is the case with the other types of network. This is precisely because the existing situation is more favourable to the user (to a greater or lesser extent for the different transport modes), whereas the other networks concern sectors in which infrastructure costs have traditionally been more internalized, and the potential impact of private funding of the networks is therefore minimal or non-existent.
The most suitable solution for the problem of financing the transport networks is, then, to resort to a 'mix' of public and private funding. This would minimize the inflationary effects of public spending on infrastructure creation, as well as those arising from user charges for the infrastructures, due account being taken of the time required to amortize the public debt generated by the project, as well as the duration of the franchise for the project itself.
This would certainly be the best possible solution from the economic viewpoint. It may, however, not be practicable in financial terms, thanks to the constraints of convergence and national budgetary restrictions. This brings us back to our first two questions, concerning the involvement of private capital.
If the terms of the problem of financing the trans-European networks are defined as suggested above, solutions may be sought on two fronts. On the one hand, public funds may be transferred (from sectors where private enterprise is more likely to invest) to the transport networks; on the other, private funds may be channelled into those same networks, creating the conditions for making them profitable.
One means of allocating public funds may be realized within the trans-European networks themselves: if the private sector is left with the entire responsibility for the telecommunications and energy networks, which are profitable in themselves, then public funding can be targeted exclusively on the transport networks. Alternatively, private funding could be mobilized to the full by permitting the private sector to administer transport infrastructures free of all public controls, on the assumption that such a system would create the conditions for its own profitability.
These are, of course, two extreme theoretical solutions. The first would, in any case, not release enough resources from the public coffers to meet the enormous costs of creating transport infrastructures. The second would still call for public intervention to protect the private investors from the creation of other infrastructures in competition with those administered by them: an important element of the profitability required from an investment is liquidity, but infrastructural investment is by definition of low liquidity, and therefore calls for higher profit levels, and, therefore, high user charges, which would have the effect of driving potential users to utilize other infrastructures or modes.
In practice, the funding of the transport networks will have to be a joint effort of both public and private sectors; complementary to this, public policy will have to take due account of the profit requirements of investment. This means that the Community, and, in more general terms, any public administration involved in the creation and management of the transport networks, will have to deal with the associated problems from a perspective which is different from the traditional approach of public administrations to public works policy. New forms of financing will have to be devised so as to involve both public and private funds in one single infrastructure in the most effective way possible.
This means that the public authorities concerned will have to adopt a global concept of the financial function, going beyond the notion of the 'treasury' and capable of using all the state-of-the-art instruments of financial engineering. This means creating suitable organizational structures with the capacity to manage a form of financial know-how which has not traditionally been part of the apparatus of 'capability' required of an administrative body.
This point will be further developed later on in this document.
Title XII of the Treaty on European Union makes provision for trans-European networks.
Article 129b sets out in legal terms the considerations outlined in the introduction concerning the role and nature of the trans-European networks, which are defined as 'transport, telecommunications and energy infrastructures' aimed at establishing the internal market and achieving economic and social cohesion. The European Community is to contribute to the establishment and development of such networks by promoting 'the interconnection and interoperability of national networks as well as access to such networks'.
The words highlighted in bold are important concepts for the notion of trans-European networks: they set out the scope within which the networks shall operate, they enshrine the principle of subsidiarity (the word 'contribute' implies that action shall taken be mainly by the Member States) and, lastly, they define the objectives (interconnection, interoperability and access) which establish the functional relationship between an infrastructure and the national networks, thereby justifying Community intervention irrespective of the structural importance of the project.
These aspects of conception, scope and objectives are of primarily political importance; of more specifically legal import is the principle of subsidiarity, which is governed, in general terms, by Article 3b of the TEU and the four limits it sets on Community action, namely:
- competence: the Community, unlike the Member States, should not intervene in areas where it is not specifically empowered to do so by virtue of the Treaty; it does not, therefore, possess the general competence that characterizes a state;
- complementarity: Community intervention is additional to that of the Member States, rather than replacing it, and only applies where Member State action is insufficient;
- the scale of intervention: an intervention is considered justified where its size and effects have a Community dimension;
- proportionality between the action and the objectives of the Treaty.
These limits should be considered from the perspective of the functions attributed by the Treaty in the area of trans-European networks: the Community, under the first indent of Article 129c of the Treaty, is responsible for the functions of orientation and harmonization, and participates in the function of financing. The second indent of the same article reserves the coordination of national policies to the Member States.
It should be noted, in particular, that the task of orientation allotted to the Community implies the recognition that the development of large-scale infrastructures is an objective which can be more fully achieved if it is defined at Community level; the principle of subsidiarity is thus subject to the criterion of scale.
The limiting effects of the principle of subsidiarity are clearly visible, in relation to the orientation function, in the requirement that guidelines and projects of common interest must be approved by the Member State whose territory is concerned (6). This amounts to a substantive right of veto, which means that Community decisions do not automatically prevail over the choices of the national authorities; in some national systems and in some cases, however, what is involved may be a transfer of the decision-making power from regional to central government. This may occur where certain projects which, under the national law of a Member State, are a matter for regional government are incorporated into a trans-European network: in such cases, the EU is to adopt its own guidelines, which must then be approved on a territorial basis by the Member State concerned - generally by the central government, unless national law provides for the participation of regional governments in deciding national positions on Community matters. This aspect, although not falling entirely within the brief of the present document, is mentioned here as evidence that the application of the principle of subsidiarity can have unexpected effects at the level of national law.
The principle of subsidiarity has two effects on the financing of the trans-European networks: one tends to extend the Community's role while the other acts as a brake on it. The first (extending) effect relates to the projects themselves, which may be of a dimension such that they can only be financed (here the criterion of scale comes into play with respect to subsidiarity) thanks to their effect in terms of interconnection, interoperability and access on the entire trans-European network viewed as such (using the criterion of proportion). An example here might be an urban bypass which becomes of Community significance by being connected to European-scale motorways and facilitating access to them. The second (limiting) effect concerns complementarity in respect of the Member State intervention permitted under Article 129c (third indent), as already discussed in detail. It will here be sufficient to point out that the principle of complementarity as applied to funding does not give the Member State concerned the power to veto the project: this power is already exercised by the Member States in relation to the definition of guidelines and operational projects, under Article 129d (second paragraph). It does, however, make Member States responsible for allocating national funding to projects forming part of the trans-European networks, and makes it clear that without such national funding no Community contribution will be forthcoming for such projects.
The Community has no part to play in the coordination aspect: its role is confined to that of a 'related' authority, which, in effect, simply has to be informed. It is clear that there was no desire to allow the Community any possibility of intervening in national policies where express provision is not made to that end in the Treaty; it may therefore be said that this exclusion is a result, not of the principle of subsidiarity, but of that of the specific nature of the Community's powers.
In conclusion, the policy for the trans-European networks should be viewed, in the overall context of Community policies, as a horizontal policy - i.e. a means of integrating diverse policies to achieve ends of a general character, namely cohesion and the internal market. By virtue of this policy, the Community has, for the first time, acquired competences affecting the sphere of territorial planning. In view of the intimate relationship of this area to the exercise of sovereignty, according to the traditional conception of the nation-state, the Community's powers in the matter are subject to the maximum degree of limitation, entailing, on the legislative level, strict application of the principle of subsidiarity.
Article 129c of the Treaty gives the Community the function of orientation and harmonization in the area of the trans-European networks. The first task consists of the definition of the objectives, priorities and broad lines of the measures envisaged. These are all contained in one act, the establishment of guidelines which are also to identify projects of common interest. The task of laying down guidelines therefore consists of two separate stages in the process of deciding on public policies: the definition of strategy and the planning of operations.
The Treaty does not specify the substance of the guidelines, thereby giving the Union the broadest possible measure of freedom as regards its strategy for achieving the aims laid down in Article 129b of the Treaty. The Commission's decision on Community guidelines for the development of the trans-European networks (7) sets out the objectives, priorities and broad lines of action for the various modes of transport, including the choices already made in respect of some modes of transport in the outline plans (8).
Under the guidelines, projects of common interest constitute the real planning stage and consist of identifying the infrastructure or specific operation which, coordinated with others, will make up the network. The terms 'infrastructure' or 'operation' have been used as a specific project can also take the form of adapting existing infrastructure to enable it to be incorporated into the network.
One of the fundamental provisions relating to the projects is their 'potential economic viability',which the Community's activities must take into account (final subparagraph of Article 129c(1) of the Treaty). This provision enshrines the principle of granting contributions from the Structural Funds; it applies not only to the financing function but also to the Community's responsibilities for laying down guidelines, as can be seen from both the clear reference to the Community's activities and from the fact that the whole concept of networks policy implies that guidelines have a planning function, which in turn presupposes an appraisal of economic potential quite apart from financing
The second paragraph of Article 129d of the Treaty states: 'Guidelines and projects of common interest which relate to the territory of a Member State shall require the approval of the Member State concerned.'
This provision, which lends itself to clear interpretation, is the most obvious example of the application of the principle of subsidiarity to trans-European networks policy, as mentioned in section 5 of this chapter, and represents the clearest possible limitation of the Community's responsibility in the matter of laying down guidelines.
The Community's responsibility for establishing guidelines is deliberately linked to its responsibility for standardization as provided for in the second indent of Article 129c, which gives the Union the power to adopt any measures which may prove necessary to ensure the interoperability of the networks, in particular in the field of technical standardization. This effectively amounts to a specification of the general power to harmonize legislation provided for in Article 100 of the Treaty. It is rendered necessary by the nature of the trans-European networks, which are instrumental in the establishment of the internal market, and in respect of which it would be difficult to apply Article 100 directly, in that this concerns the free movement of goods, services and persons in relation to the establishment of a common market and certainly does not concern the technical specifications of public works.
As far as the responsibility for establishing guidelines is concerned, provision is made for the codecision procedure, while responsibility for standardization is governed by the provisions of Article 189c.
The initial definition of the guidelines for the trans-European networks (9) was adopted only after considerable vicissitudes. This points up the existence of a high degree of competition, not only between Parliament and the Council, but also between the former and the Member States. The latter, following the Copenhagen European Council of June 1993 (in other words prior to the Treaty of Maastricht), asked the Commission to set up a group of personal representatives of the heads of state and government, generally known as the Christophersen Group from the name of the Commissioner chairing it.
This group indicated a number of priority projects in the field of infrastructure, which were adopted by the Corfu and Essen European Councils (both in 1994). The notion of a priority project is not based on any legislative text. Rather, it has been imposed on the political debate on policies and has heavily conditioned it: it has swiftly become clear that funding for the networks will be concentrated on - if not completely absorbed by - the priority projects within the indicative guidelines (10).
If the aim is to provide the priority projects, on an ex-post basis and with full awareness of the interpretative force involved, with a legal basis, the present writer's view is that this could be furnished by the second paragraph of Article 129d of the Treaty, which gives any Member State the power to approve guidelines and projects of common interest relating to its territory. From this perspective, priority projects would entail the exercise of that power, but in a form agreed with the other Member States and prior to the adoption of the actual guidelines.
The Community's responsibility for financing is governed in the Treaty by the third indent of Article 129c(1), which sets out certain requirements for eligibility for Community financing:
- projects must be of common interest and identified in the framework of the guidelines provided for in the field of trans-European networks;
- such projects must be financed by the Member States;
- the Community may support the financial efforts by the Member States.
The first requirement means that projects which are not provided for in the guideline instruments mentioned in the previous section are not eligible for financing. This represents an innovation in the Community financing system in that, unlike the practice followed hitherto in respect of the Structural Funds, involving the appraisal of projects drawn up independently by applicant bodies, the Union alone is responsible for the definition of the project in the field of trans-European networks and the national authority draws up the project and oversees its implementation. Eligibility is therefore determined by the choice of the project and not its implementing arrangements, and this has the effect of separating the evaluation of conformity with Community policies from the guideline function, which can therefore focus on the implementing arrangements and, above all, the project's compatibility with the environment.
The second and third requirements raise a question of interpretation: can the European Community take measures to finance a project in the absence of any financing from the Member State? The problem arises solely in the case of infrastructure funded by private investment, since it appears indisputable that when we speak of a Member State we mean not only the national state but also its components: regional and local authorities or even non-territorial bodies which construct or operate infrastructure.
As far as the financing of private projects is concerned, the question has not been fully examined in law, inter alia because it has not actually arisen to date. The expert who has dealt with this question (11) rules out the possibility of the European Community providing funding for projects, including those laid down in the guidelines, in respect of which a private individual has not first applied for state funding. If we consider the actual provisions of the Treaty it is hard to disagree with this view and, given that the third indent of Article 129c expressly refers to the Cohesion Fund for the trans-European transport networks, it should be pointed out that Article 3 of the Council Regulation establishing that Fund stipulates that state financing is a condition for assistance from it. However, the fact that this is provided for in the regulation and not in the Treaty introduces greater flexibility with regard to transport networks should the Community financing of private projects become a pressing issue in the future. It should be pointed out that it is not a pressing issue at the moment, as trans-European infrastructures generally meet the requirement of state financing; the only major private project, indeed, has been the Channel Tunnel, and this in any case has received funding from the EIB.
The funds in question are governed by a specific Regulation (12), which is inspired by the principle of subsidiarity and is aimed at strengthening the participation of private capital in the financing of the trans-European networks and developing partnership between public and private sectors (13). This concerns all the networks, in implementation of the relevant provisions of the Treaty of Maastricht, it lays down the specific forms and arrangements for Community intervention on the basis of the funds concerned.
In this connection, it seems desirable to explain the differences between the respective purposes of the Community funds with which we are concerned in this section and the (more important) structural Funds and Cohesion Fund, which are also sources of financing for the networks but are not subject to the regulation in question. It is precisely these differences of purpose which justify the 'stretching' of criteria which can be considered to exist in the financing of the trans-European networks: The purpose of the Structural Funds and the Cohesion Fund is regional, social or agricultural development, according to the cases concerned (our main interest here is in the first), and the financing of the networks is an instrument to that end; by contrast, the purpose of the funds referred to in the title of this section is the establishment of the networks, with development being conceived as an indirect effect.
The 1995 regulation is also intended to deal with a number of problems emerging both from a careful reading of the Treaty rules and from certain circumstances. What is involved here is, in particular, a broad interpretation of the concept of state funding, to which Community funding is seen as complementary: funding from bodies comparable to public bodies is considered to be equivalent to state funding. By this means, recourse to private capital to fund infrastructures - a strategy which, as seen in the previous section, is excluded in the Treaty text - represents a step forward, based on the pragmatic consideration that it is unlikely that an infrastructure would not receive some degree of funding from some body falling within the broadly-defined category of 'public funding' employed in the Regulation, which covers funding not only by central government and regional and local authorities but also by bodies operating in an administrative or legal context rendering them comparable to public bodies, in particular public or private enterprises which administer public services or services of general interest (14).
The Community contribution may take the following forms (15)
a) cofinancing of feasibility and preparatory studies and of technical support measures up to a maximum of 50% of the total cost of a study (other than in exceptional cases);
b) interest subsidies on loans for a maximum period not normally exceeding five years;
c) contribution to loan guarantee premiums;
d) direct subsidies.
The above forms of contribution (a to d) may be taken together to maximize their impact, but may be used only on a selective basis, taking account of the specific characteristics of the networks concerned: in other words, they may only be used for projects which are of particular importance for the pursuit of the objectives laid down in Article 129b of the Treaty and specified in the guidelines (what is involved here is the first selection criterion for projects considered eligible for Community aid).
Before examining the mechanisms by which Community support is granted, it should be made clear that support may be given, on a differentiated basis (16), to both studies and projects (17); this is of particular importance for the financing of the studies for environmental impact assessment, as required in applications for project funding. The distinction between types of request means that it is possible to obtain initial funding for feasibility studies, including environmental impact assessment (18), with this first request being followed by separate funding for the project itself.
The conditions for eligibility for funding are: the existence of financial obstacles (19) to the project; and its being in conformity with Community law and policies (20), with particular reference to environment policy, competition policy and policy on public contracts. The first condition is a consequence of the principle of subsidiarity, while the second derives from the general principles of legality (for the legal aspect) and coherence (as regards policies).
The selection criteria (21), apart from the obvious general criterion of the pursuit of the Community's objectives in the field of the trans-European networks, concern the networks' potential economic dynamism, that is, their capacity to generate positive economic effects over a reasonable period of time (22), and their insufficient profitability, on the basis of the evaluation made at the time of the request for funding. The effect of these criteria is to give priority to projects which, despite their economic utility, are less likely to attract private funding (23). This, of course, does not mean that private participation is in itself a proof of profitability ruling out the need for Community finance; the point is, rather, that the aim of Community funding is to reduce costs and therefore enhance profitability, with the precise objective of encouraging private participation in the project. Other criteria are:
- the maturity of the project, i.e. it should have reached a stage where its execution may be expected to take place within a reasonable time;
- the stimulating effect of Community intervention on public and private financing, i.e. the marginal utility of Community aid;
- the solidity of the financial backing for the project: this is the corollary of the preceding criterion, and relates to the synergies achieved by the various funding sources;
- the direct and indirect socio-economic repercussions, particularly on employment;
- the environmental impact (24): the present writer considers that this criterion should entail not only the environmental impact assessment provided for in the Community directives concerning public works, which is already a prerequisite for eligibility, but also a global comparative assessment in relation to other competing projects;
The Community contribution may not exceed the minimal level considered to be necessary for the project to be launched, or 10% of total investment costs (account is not taken of the distinction, as referred to above, between studies and projects).The sole restriction is that there may be no duplication of funding from the Community budget (25).
The regulation also governs: coordination (26) (carried out by the Commission) of the projects financed under it with other projects funded from the Community budget or by other EC financial instruments, EIB loans included; monitoring and assessment (27) (carried out by the Commission and the Member States) to verify the effective use of Community funds; and financial control (28), aimed at ensuring that the funds have been properly used and preventing and punishing fraud.
Article 129c(2) of the Treaty confers responsibility for coordination not on the Community but on the Member States, which are to coordinate the policies pursued at national level which may have a significant impact on trans-European networks. Such coordination is to be carried out in liaison with the Commission, which may take initiatives to promote such coordination.
The text of the provision presents problems of interpretation. It stipulates that 'the Member States shall .... coordinate among themselves ...' . As the aim is to coordinate national policies in accordance with Community networks policy, each state must coordinate its own policies (infrastructure, regional planning and financing policies above all) with Community policy, and as this effectively amounts to a form of 'vertical' coordination, it is hard to see why the phrase ' among themselves' should have been included, as this would seem to imply 'horizontal' coordination among national policies.
The specific aims of this working document require an outline of the legal forms through which the private sector can become involved in trans-European network projects.
Traditionally, those public authorities which have not felt it necessary to carry out an infrastructure project directly have resorted to a public works contract, i.e. a contract under private law which, under the legal systems of some states, takes on a public dimension when used by a public authority and is partly governed by Community directives, inter alia with a view to ensuring that all Community undertakings have access to the lucrative public works market without discrimination on the basis of nationality.
The contract can be defined as one of 'do ut facias', on the basis of which a party to the contract, the commissioning body, entrusts a contractor with the task of carrying out a project or service for an agreed price (usually with safeguard clauses against cost increases for which the contractor is not responsible). The contract relieves the public authorities of the technical task of carrying out a project for which they are often unsuited in terms of their structures and professional skills, and protects them to a certain extent from cost increases. This presupposes, however, that the public authority must bear the full costs at the end of the project or, more often, at the end of various stages of the work.
As the creation of trans-European networks coincides with a period of scarce public resources, the public works contract does not appear to be a suitable instrument, since it does not resolve the fundamental problem of financing. The most suitable instruments for involving private capital in a way that does not have repercussions, or has less repercussions, for public finances are those which entrust infrastructure management, at least on a temporary basis, to the private sector.
Financial engineering has, on a case-by-case basis, devised various formulas for the participation of private capital, of which all, or nearly all, may be considered variants of the arrangement known in the English-speaking world as BOT (Build, Operate, Transfer), i.e. a contractual relationship on the basis of which an undertaking carries out a project using its own capital or, at any rate, capital directly raised on the financial markets, manages it for a period of time agreed in advance as being sufficient for recouping the capital outlay and yielding a profit, and finally transfers it to the commissioning public authority.
This formula corresponds broadly to that of concession, an aspect of administrative law which is common in the legal systems of the countries of continental Europe. This gives the concessionaire the right to manage a public asset for a given period of time, generally very long, at the end of which the asset reverts fully to the public authority. The original idea of concession was not necessarily linked to the execution of a project or to works carried out on a public asset, but it has often been used in conjunction with a commission (29). In such cases the management period is aimed at allowing the concessionaire, who has sustained the costs of the project, to cover his costs and make a profit, which will depend on the extent to which the infrastructure is actually used.
In the English-speaking world there are several variations on the BOT theme, including: BOOT (Build, Own, Operate, Transfer), whereby the constructor owns the infrastructure during the management period and the final transfer to the state therefore includes ownership which, under the normal arrangement, reverts to the commissioning body upon the completion of the project; and BOO (Build, Own, Operate), which does not provide for transfer to the state, with the infrastructure hence remaining privately owned and managed. A further variant, substantially identical to BOO, is DBFO (Design, Build, Finance, Operate), a designation which appears to emphasize elements not specified in the BOT acronym, rather than concealing a real difference.
The trans-European networks constitute an infrastructures policy involving various communications systems, aimed at facilitating trade in the single market in a pan-European context and promoting economic and social cohesion. This policy can be used for the purposes of job creation, both at the construction stage and subsequently, in the context of managing the networks, although this employment aspect of the policy does not influence the specification of the networks as such, which remains anchored to the primary objectives.
The policy for trans-European networks was launched by the Copenhagen European Council of June 1993, which focused on the problems of growth, competitiveness and unemployment and decided on short- and medium-term measures.
The proposed short-term measures included the promotion of both private and public investment. With respect to the latter, Member States were called upon to make provision in their budgets for financing infrastructures, while at Community level the European Council underlined the importance of fully exploiting the new provisions in the Maastricht Treaty relating to the promotion of trans-European networks of the highest quality, in the context of promoting economic and industrial growth, cohesion and the effective functioning of the internal market and encouraging European industry to make full use of modern information technology (30).
On the basis of the above premises and the Commission's medium-term plan for economic revival entitled ' Entering the 21st century', the European Council called on the Commission to present a White Paper on 'Growth, Competitiveness and Employment' for consideration at the following European Council (Brussels, December 1993), as well as draft guidelines for sustainable, non-inflationary and environment-friendly growth. It also called for the plans relating to trans-European networks to be completed by early 1994. For the first time, therefore, this policy is linked with employment policy in a Community document.
The White Paper (31) submitted by the Commission to the Brussels European Council in December 1993 includes the creation of the trans-European networks in the objectives set out in its title, and raises the question of the financing required by an ambitious infrastructures policy contributing in the medium-term to a healthy economy in which interest rates can be reduced, as a result of monetary stabilization, to a level that triggers the necessary investment for the modernization of the economy and the development of infrastructures. In order for this monetary stabilization to be achieved, public deficits will first need to be reduced, thereby leading to an increase in public saving. The White Paper therefore advocates that Member States make a concerted effort to curb operating expenditure in such a way as to restrict public spending without curtailing investment or jeopardizing employment policy.
The major effort required is in line with the approach to financial policy introduced by Article 104c and Protocol No 5 to the Treaty, but is incompatible with the short time-scales which the White Paper lays down, in the wake of successive resolutions by the Community institutions, for the creation of infrastructures, for which massive short-term investment is necessary. At the same time, the public resources available for transport infrastructure are by now extremely limited, as is highlighted in the Commission's fifteenth report on spending on and use of rail, road and inland waterway transport infrastructures (32).
The White Paper proposes recourse to private-sector funding as a solution. This could be done by the traditional method of issuing state bonds; however, the financial impact could be such as to jeopardize the containment of the public deficit in the context of the objectives of economic policy and, therefore, the imperatives of the Treaty itself.
It follows that new means of involving private capital must be explored.
Despite the contradictory financial aspects described above, the Commission sees the trans-European networks as a trigger for the recovery of the European economy. The networks have a fourfold role, namely:
- ensuring more efficient, safer travel at lower cost;
- achieving effective planning in Europe;
- bridge-building towards Eastern Europe;
- contributing to technological development.
The first role involves the concept of sustainable mobility, i.e. a transport system which, by minimizing congestion, not only allows the means of transport to operate faster, hence reducing costs facilitating trade and thus contributing to a more integrated and competitive single market, but also reduces waste and is consequently more environment-friendly.
The latter improvement, which is a fundamental aspect of planning in that it involves safeguarding natural resources, is linked in certain ways to the second role, i.e. achieving economic and social cohesion, which is one of the tasks conferred on the trans-European networks by Article 129b of the Treaty on European Union. A more efficient communications system will help overcome the isolation of the peripheral regions and contribute to the development of the less-favoured areas, with a spin-off for the Community's GDP.
The third role consists of encouraging growth through trade with the countries of Eastern Europe: this will not only benefit undertakings but will also boost the development of the Eastern European countries, which is one of the European Union's major goals in a perspective that is not purely economic.
The 'fourth role' of the trans-European networks - their contribution to the encouragement of technological development - refers primarily to the telecommunications and energy networks, whose infrastructures have a substantial technological content. However, the transport networks also have a contribution to make in this connection, as several of them are based on advanced technology, while for others major technical problems have to be resolved in relation either to civil engineering (as in the case of the Brenner tunnel) or to state-of-the-art technologies permitting interoperability among transport modes. The technological areas of interest to the trans-European networks are various, ranging from information technology (planning and reservation for combined transport) to environmental and transport engineering and new materials. In these sectors, it is important for Europe to close the existing gap between it and its direct competitors, the US and Japan.
At the beginning of this chapter reference was made to the potential job-creating role of the infrastructures, both in the construction phase and at a more advanced stage by reason of their contribution to economic growth.
Job creation through public works happens directly through the actual employment of workers on the sites. It also occurs indirectly, thanks to the knock-on effects on other sectors of the economy (which furnish machines and construction materials) and to the more general economic effects arising from increased private consumption made possible by higher wage and investment levels. Once the infrastructure is actually being used, job creation is both direct (i.e. related to the management of the project) and indirect (i.e. arising from the project's favourable impact on the circulation of goods and persons, and, therefore, on overall economic growth).
The final report of the Christophersen Group (33) takes the position that the substantial investment required for the 34 projects proposed (ECU 100 bn over fifteen years) will have only a small direct impact on economic factors (equivalent to 0.1% of total growth), creating between 100 000 and 200 000 jobs, and a somewhat larger indirect effect (0.3% of GDP and 400 000 jobs). More significant, if not in quantitative terms, will be the effects of the transport infrastructures at the utilization stage, especially on regional development; the report argues that improved access to the central poles of activity of the Union will help boost competitiveness of the regions concerned and the undertakings located there (34).
The Commission's most recent estimates (35), based on the examination of the fourteen priority projects (36), paint a different picture: the construction of the networks should create 700 000 jobs per year over the ten-year period 1998-2007; and in the long term, thanks to an accumulated increase in GDP of ECU 560 bn by 2030, corresponding to a rise in socio-economic profitability of 11%, the number of jobs created in the EU economy should be between 130 000 and 230 000. The corresponding data for the entire network are estimated at 3 200 000 jobs per year (for its construction as a whole over the period 1998-2007) and between 594 000 and 1 030 000 jobs in the long term.
The Commission's forecasts go even further: it predicts that, on the basis of an agreement with the workers concerned to convert the productivity gains into jobs rather than wage increases, a long-term increase in employment could be brought about (570 000 units for the fourteen priority projects and 4 700 000 units for the entire network).
Reference has already been made to the principle of sustainable mobility, which underlies the common transport policy, and to that of interoperability, which is a corollary of the former and refers, in particular, to the integration of transport modes, that is, the possibility of persons or goods using more than one means of transport over a single journey, with the least possible difficulty in transferring and the minimum of waiting time at the interface site.
The trans-European network described in the preceding section will have a key role in turning these principles into reality; this aspect is that most closely connected to the function of the network as such.
Interoperability benefits the user, the transporter and the community. Users benefit from a higher quality of transport, with less stress (for both persons and animals), improved safety (37) and reduced journey times. These benefits operate on the economic and psychological levels and that of physical integrity. The transporter gains in terms of reduced journey times and more efficient use of the transport means themselves, thus benefiting in economic terms; in addition, higher safety standards, while primarily an immaterial factor, also have a positive effect on companies' balance-sheets by reducing insurance premiums. Finally, the community gains on the economic level from having more efficient transport systems, with less waste of energy and, therefore, improved levels of environmental protection and greater well-being resulting from improved safety.
It should be stressed that any mode of transport can be the ideal solution for a particular route or distance, and that the secret of an efficient transport system lies in using the right mixture of modes, with each mode applied to the routes that best bring out its potential at the lowest cost (38).
The instruments for achieving interoperability include combined transport, intermodal transport and interconnections. The first notion, which is sometimes conceived separately , refers to the set of links permitting physical interoperability, that is, the transfer of goods from one vehicle to another, including vehicles belonging to different modes: the commonest example here is the container. Intermodal transport is a system of infrastructures, services and procedures permitting the integrated management of the persons and goods transported and of the vehicles used: an elementary example is the synchronization of the arrival of a train with the departure of a ferry, but today intermodal transport also uses computer and telematic resources to offer high levels of integration. Interconnection is the most specifically infrastructural aspect of interoperability, and consists of the linking up of public works with services corresponding to the various modes: for instance, the connection of a port with the rail network. A more modern concept of integration would also include the intermodal systems referred to above.
The trans-European network is the sum total of the infrastructures which permit interoperability between modes and which must, therefore, conform to common specifications or guidelines defining the architecture of the network (39).
The philosophy of the trans-European networks may be dated back to the Copenhagen European Council, but the guidelines began to take shape in October 1993, with the adoption of three orientation plans (40) for the following trans-European networks: combined transport, roads and navigable waterways. The three operational plans took up guidelines already drawn up by the UN Economic Commission for Europe, thus involving a concept of integration embracing not only the Community but Europe as a whole; this perspective is, moreover a necessary consequence of traffic realities and is permitted under Title XII of the Treaty (41).
The White Paper on growth, competitiveness and employment, taking account of these guidelines, indicated 26 priority transport infrastructure projects to be launched over the following five years, at a cost of ECU 81.9 bn.
The Brussels European Council, in the context of adoption of the White Paper, called on the Commission to undertake preliminary studies for the creation of the trans-European networks. The Community accordingly asked its Vice-President Mr Henning Christophersen to chair a working group (42), to consist of Member State representatives with EIB participation. This group adopted a 34-page interim report (43) containing proposals to be submitted to the Corfu European Council, relating to 34 projects, eleven of them being marked as 'priority', together with a study of the problems involved in establishing the networks. The Corfu European Council of June 1994 adopted the interim report and extended the mandate of the group, to enable it to submit the final report to the Essen European Council.
The group was confronted with problems as regards the ranking of the different proposals, in the absence of full information - a circumstance pointing, moreover, to the inchoate state of some of the projects. It therefore took a bottom-up approach, modelled on similar processes in company decision-making. This method is centred on 'workshops' on individual programmes, and has made it possible to obtain greater understanding of specific obstacles. The Commission will also apply this approach to the next stage, that of financing (44), at which it will be necessary to identify the problems and devise practical solutions. The workshops include all the interested partners and the EIB, whose main concern is the detailed examination of the financial aspects. The results of this approach have been utilized in a decision-making process aimed at achieving as broad a consensus as possible, in line with the consolidated practice of the Community bodies constituted on a national basis.
Following the group's work (45) and taking account of the accession in the meantime of Austria, Sweden and Finland, the number of projects referred to in the report is now 35. They fall into two categories: priority projects, i.e. those already begun or scheduled to begin by 1996 (14); and other important projects (21). The latter are further subdivided into: projects to be accelerated to allow them to begin within two years (9); and projects to be examined at a later date (12). In addition to the projects, the report includes five high-technology systems (46), for which the Commission is to submit operational proposals further to those provided for in the context of the networks, and seven projects for extending the network to third countries (47).
With respect to the value of the priority projects, the Christophersen Group has stated in its report, as adopted by the European Council, that in the context of the selection criteria adopted by the Group, especially with regard to state of advancement and value-added prospects, it is not necessary to expect all the priority projects now at an advanced stage and accepted to correspond exactly to the general objectives or to the decisions set out in the guidelines. The Group goes on to stress that the lists contain all the important projects which could be launched in the near future if a targeted action is adopted (48).
This affirmation is indicative of the main criterion underlying the work of the Group: the aim is to promote infrastructures on which work can be commenced rapidly, with a view to stimulating growth via the activity of construction. This is to the detriment of the objectives of the system set out in Article 129b of the Treaty, and also entails dissociating the priority projects from those for satellite and telematic monitoring of the system, which have smaller economic implications at the construction stage.
The priority projects were finally adopted at the Essen European Council of December 1994 (49).
The decision of the Essen European Council, like the work of the Christophersen Group preparatory to it, does not fall within the scope of the codecision procedure under the Treaty, and has been criticized in Parliament as being a stratagem aimed at forcing the elected institution to accept a fait accompli presented by the governments. The fait accompli also has legal implications: the funds from the Community budget expressly allocated to the trans-European networks may only go to projects included in the guidelines, and, therefore, should Parliament reject the Commission proposal comprising those projects they would no longer be eligible for Community financing via the funds in question.
The decisions of the European Council have thus had a major effect on the debate on the guidelines, and have distracted attention from the important innovation implied by the creation of an architecture for the integration of the various infrastructures in such a way as to permit interoperability between modes. This is the background to the Commission proposal on Community guidelines for the development of the trans-European network (50), submitted on 7 April 1994. According to this proposal, the network may be defined as a set of infrastructures, services and management systems, whose smooth operation should permit the achievement of the following objectives:
- sustainable and safe mobility of persons and goods in line with the Community's environmental and social objectives;
- guaranteed interoperability and optimal use of existing capacities;
- coverage of the entire territory of the Union, including, in particular, the necessary links for the island, peripheral and remote regions, as well as the potential opening-up of the network towards other European countries and the Mediterranean basin countries;
- provision of users with infrastructures and services on the basis of acceptable economic conditions (51).
The trans-European network, which is to be created by 2010, will be divided into sub-networks for each mode or group of modal or intermodal infrastructures: roads, railways, inland waterways, airports, combined transport, naval traffic information and control, and air traffic control. Seaports are, where not forming part of one of the specific networks, considered to be interconnection infrastructures.
The Community is to carry out actions aimed at achieving the objectives, on the basis of priorities (52) defined in the guidelines. The definition of ' projects of common interest' is interesting: such a project is one that is aimed at achieving the objectives of the guidelines, forms part of the trans-European network (in particular, within the Community's priority action areas), and has economic potential.
Two annexes set out the plan of the networks and the links and specifications. Also included is the list of infrastructures, setting out the priority projects indicated by the Christophersen Group (which were only at the discussion stage when the proposal was drawn up). One may here refer to the criticisms made by Parliament's rapporteur, Mr W. Piecyk, who considered the approach followed (insertion into the guidelines) to be far from coherent (53), given that the projects are in some cases clearly specified but in others merely indicated on maps annexed to the Commission proposal. This lack of coherence is but one aspect of what is criticized as being a general characteristic of the proposals for projects of common interest (Annex II to the guidelines): as the rapporteur stresses, do not correspond to the spirit or the objectives of the guidelines for the development of a trans-European network. The Union should draw up the guidelines for the definition of the major transport corridors and routes; this implies fixing priorities for certain projects, especially so as to eliminate bottlenecks and construct the missing links. At all events, no links of national interest should be indicated; this has nonetheless been done systematically in Annex II, section 2 (54).
Parliament adopted the Commission proposal at first reading, amending it in various respects. Of most interest for present purposes is Parliament's introduction of a new Annex III specifying the priority projects to be realized by 2001. This annex was one of the most controversial points throughout the codecision procedure.
Annex III, which had been included by the Commission in its amended proposal (55), was removed by the Council in its common position, on the grounds that under Article 129c of the Treaty the codecision procedure should be applied only to projects of common interest defined in Annexes I and II, while priority for their realization would be defined, on the administrative level, on the basis of the criteria established by the financial Regulation for the trans-European networks (56). For its part, Parliament stressed - repeating its earlier position at the second reading - the political importance of the priority status of the projects of common interest already indicated in the other annexes being already made clear in the guidelines.
This divergence concerning the status of the priority projects in relation to the legislative procedure (codecision) or the subsequent execution phase of the guidelines is, in the present writer's opinion, symptomatic of a deeper institutional conflict over the roles of Parliament and the Council concerning the trans-European networks policy, as foreshadowed by the Essen decisions.
The dispute was resolved through the conciliation procedure: an Annex III was introduced which, in accordance with Article 19 of the guidelines, sets out, on an indicative basis, the projects defined by Annexes I and II and the other provisions of the decision which the Essen European Council considered to be of particular importance. (57) This text is a compromise between the positions of the three institutions concerned by the conciliation. Parliament wanted a list of the projects of common interest considered suitable for Community funding; the Council and Commission did not want to eliminate the possibility of funding for the other projects set out in Annexes I and II. The Council, in particular, proposed listing the fourteen priority projects in a separate declaration. The text adopted includes a list of priority projects within the guidelines, in line with Parliament's demands; nonetheless, the qualification to the effect that the list is on an indicative basis (Article 19) rules out exclusivity of funding (58).
1. North-south high-speed rail link/combined transport: Nuremberg-Erfurt-Halle/Leipzig-Berlin-Brenner/Verona axis-Munich
2. High-speed rail link (Paris)-Brussels-Cologne-Amsterdam-London, subdivided as follows:
Belgium: from Brussels to the frontiers with France, Germany and the Netherlands (via Liège in the section to the Belgian-German frontier)
UK: London - access to the Channel Tunnel
Netherlands: Belgian-Netherlands frontier-Rotterdam-Amsterdam
Germany: (Aquisgrana) G 27 Cologne-Rhine/Main
3. South high-speed rail link: Madrid-Montpellier (via Barcelona and Perpignan) and -Dax (via Vitoria)
4. East high-speed rail link: Paris-Metz-Strasbourg-Appenweiler (Karlsruhe), with connections: Metz-Saarbrücken-Mannheim and Metz-Luxembourg
5. Conventional rail link/combined transport. Betuwe line from Rotterdam to the Netherlands-German frontier, towards the Rhine/Ruhr
6. High-speed rail link/combined transport: Lyon-Turin-Milan-Venice-Trieste
7. Greek motorways: Rio-Antirio, Patras-Athens-Thessaloniki-Promahon (Greek-Bulgarian frontier) and Via Egnatia; Igoumenitsa-Thessaloniki-Alexandropoulis-Ormenio (Greek-Bulgarian frontier)-Kipi (Greek-Turkish frontier)
8. Motorway: Lisbon-Valladolid
9. Conventional rail link: Cork-Dublin-Belfast-Larne-Stranraer
10. Malpensa airport (Milan)
11. Fixed rail/road link between Denmark and Sweden (fixed Øresund link), including road, rail and air access
12. Nordic triangle (road/rail) (59)
13. Road link: Ireland/UK/Benelux
14. West Coast main rail line (60)
The total cost of the fourteen priority projects, including the ERMS (61), is estimated to be ECU 99 918 m (ECU 38 057 m for 1995-1999) (62). To these figures may be added the investments - forecast to be ECU 10 000 m by 1999 (63) - for the traffic management projects for the various modes, which, despite not being included in the guidelines and priority projects, are of fundamental importance for the general objectives of the trans-European networks. The other major projects call for investment to the tune of ECU 49 000 to 52 000 m (64). The total investment required is between ECU 159 000 and 162 000 m up to 2010. Finally, the total cost of extending the network to third countries, insofar as reliable figures exist, will be ECU 12 296 m (65).
For projects within the Union, investment will be supplied by the Member States, the private sector and the Community (via the ERDF and the Cohesion Fund, the relevant budget headings and the EIB and EIF credit instruments). For extensions to third countries, funding will come from the interested countries (including the relevant EU Member States), the Community development funds for the countries of central and eastern Europe (especially PHARE) and the EIB; other international financial institutions, in particular the EBRD, will also contribute. Private capital is also expected to be involved.
It should be stressed, however, that each individual project must be approached as a separate financial challenge. There are projects of a profitable nature which attract private capital (e.g. Betuwe), others which pose no difficulties (e.g. Malpensa), and still others for which major or minor obstacles exist.
One may, therefore, identify two types of problems: those specific to individual projects, and those of a general nature, consisting essentially in the determination of the instruments needed to obtain private-sector funding for the trans-European networks. These aspects, especially the general ones, had already been examined by the Christophersen Group; however, at the project implementation stage it was felt necessary to follow them up in close relationship with the Member States and the private sector. September 1996 accordingly saw the creation of the High-Level Public-Private Partnership Group, with the aim of drawing up a report for the European Council to be held in Amsterdam in June 1997.
This group includes, apart from its chairman, Commissioner Kinnock, after whom it is generally known (66), the personal representatives of the transport ministers and twelve figures from the private sector - from the EIB and EIF, private banks, construction firms, management enterprises and the equipment industry. Mr Henning Christophersen is a member, ensuring continuity with the group chaired by himself. The work of the Kinnock Group is organized on the basis of a number of subgroups, at the moment five: of these, two are concerned with monitoring the financial aspects of the eastern and southern high-speed rail projects respectively - as priority projects posing specific problems - and three with horizontal aspects ( public-private partnership in the rail sector; legal and administrative questions; and economic and financial questions), the aim being to overcome the obstacles to private-sector participation. A bottom-up approach is, then, taken, as in the case of the Christophersen Group (67). This working method has been necessary since the implementation phase of the projects already under way.
Table 1 of the present chapter offers a detailed picture of Community intervention for the various priority projects. A number of general considerations should be stressed in this context. Firstly, Community funding - i.e. financing from the Community budget - is dependent on the Treaty and on the limits assigned by the financial perspectives. While political imperatives imply the need to act on all the projects, there are some for which Community intervention is of greater marginal utility, by reason of the insufficiency of the other funding sources or as a means to stimulating private investment.
This entails the need for a greater Community input, which in turn calls for the modification of the financial perspectives. This would provide a stimulus for a number of high-speed rail projects, including - in the context of encouragement of private participation - the 'PBKAL' project (No 2), concerning which a specific subgroup has been set up within the Kinnock Group, and the Greek motorways project (No 7) (68).
There remains the problem of funding for the other non-priority projects, both those adopted by the Essen European Council and those set out in the Guidelines, which also concern the Member States. Some of these are at an advanced stage of preparation, while for others it would be useful to promote public-private partnership via Community funding (69).
High-speed trains are a rail technology to which the EU attaches particular importance. The long-term plan is to create a Union-wide high-speed rail network. Accordingly, in addition to the five priority projects referred to in this section (those consisting exclusively of high-speed rail links) and
in section 4 below (combined transport), a number of technical harmonization measures have been adopted, as well as a specific measure for traffic management, which forms an integral part of the priority projects.
The PBKAL high-speed rail link (Programme 2) concerns the route Paris-Brussels-Cologne-Amsterdam-London, and, therefore, involves a substantial number of Member States. By 2010 there is expected to be a heavy concentration of traffic on the lines linking Brussels to Paris and London, a large part of which will have its origin or final destination in Germany or the Netherlands. This will entail a figure of 20 m passengers per annum for each of the two lines converging on Brussels, and another 10 m for each of the lines between Brussels and Amsterdam and Aquisgrana. The effect of the project would be to reduce the journey time.
This project raises problems of financing, which could be resolved by a supplementary Community contribution in the order of ECU 430 m for the Belgium-Netherlands-UK sections.
The southern high-speed rail link (Programme 3) consists of two lines, linking Madrid to Perpignan (via Barcelona) and Dax (via Vitoria and Bilbao), whose purpose is to bring the entire Iberian peninsula closer to the central regions of the Union. This is a passenger transport project, with goods transport also included on certain sections, aimed at linking Iberia to the French high-speed rail network via the Basque country, passing near the Portuguese frontier. This project too will have the effect of speeding up international connections to the benefit of the peninsula, as well as shifting some areas of goods traffic from road to rail.
This project will be financed from the Cohesion Fund. Particular attention should be paid to the funding aspects of its Atlantic section.
The eastern high-speed rail link (Programme 4) will link Paris to Germany via Metz and Strasbourg, continuing to Karlsruhe, thus speeding up traffic between France, southern Germany and the countries of central and eastern Europe. This project has a specific crossborder role, and should, when fully operational, transport 15 m passengers, including 2m between the two countries directly concerned and another 1m between those countries, Luxembourg and Switzerland wich be linked to the high-speed line using existing rail lines).
Financial problems arise largely in respect of the French section; a supplementary aid of ECU 230 m could speed up completion of the German part.
The conventional rail link in Ireland (Programme 9) is of (mainly economic) interest to the two countries directly involved, namely Ireland and the UK (specifically, Northern Ireland). The project will have a particularly positive impact on rail transport in the province, improving capacity and quality. It is financed by the Cohesion Fund and the ERDF.
The West coast main line (Programme 14) is the British rail line constituting the northern continuation of the Channel tunnel. It will have a significant environment-friendly impact on goods traffic between Ireland, the UK, the Benelux countries and France.
Funding this project will require aid of at least ECU 100 m.
The high-speed rail/combined transport Berlin-Verona link (Programme 1) is of great importance for trade between the Nordic countries, the Benelux countries, Germany and Italy, especially since half of Germany's shipments of exports by rail go to Italy. The completion of the Brenner line, which is supported by Austria, will permit the absorption of 80% of the expected level of goods transport between Germany and Italy in both directions, thus leading to a drastic reduction in road traffic with beneficial effects on the environment, a subject of great sensitivity to Austrians living near the existing road links. This project will have a positive impact on transport in Europe, even outside the Germany-Italy link, and will contribute to the competitiveness of European industry as a whole.
The studies for the construction of the main tunnel will require additional aid. More financial support should also speed up the Berlin-Nuremberg section.
BETUWE (Programme 5) is a combined transport/conventional rail link for goods traffic, which will connect the port of Rotterdam with the Rhine/Ruhr industrial region. Its traffic basin will include not only the countries directly concerned (Germany and the Netherlands), but also Austria and Italy, which are interested in links with what is Europe's biggest port. This project is particularly important, since it will give a stimulus to combined transport, impacting on the goods traffic between Germany and the Netherlands, which as things stand goes mainly by road (52.7 m tonnes in 1995). 16 m people will benefit from the consequent environmental improvement. Private-sector participation will apply.
The high-speed rail/combined transport link between France and Italy (Programme 6), linking Lyon to Trieste via Turin and Milan, concerns both passenger traffic (the high-speed train) and goods traffic (combined transport). It will connect the French network to the Balkan countries, passing through the most prosperous regions of Italy. This project should be considered in the context of an overall vision encompassing the PBKAL and high-speed rail (south) projects: the aim is to link up the Iberian peninsula, the UK, the Benelux countries and the countries directly concerned, and Eastern Europe. The combined-transport aspects of the policy should permit it to have a beneficial environmental impact. Traffic is predicted to rise by 75% for passengers and 50% for goods.
The Lyon-Turin section will require supplementary funding for the studies and certain operations relating to the main tunnel, which will constitute the project's crossborder element.
The Greek motorway project (Programme 7), which comprises a number of sections serving an area from the Mediterranean ports to the frontiers with Bulgaria and Turkey, will facilitate maritime and land transport links with the countries of south-east Europe its main interest is economic.
The private sector will be involved in the project. Additional aid will be needed to subsidize the interest payments on a loan of ECU 600 m.
The Lisbon-Valladolid motorway (Programme 8) is also of essentially economic importance, given Spain's role as Portugal's biggest trading partner. The project is also of significance for France and Germany, whose high-value exports to Portugal are at present transported mainly by road. Additional financial support would encourage private-sector input.
The Dublin European Council of December 1996 welcomed the proposal by the two Member States concerned for modifying the project in a multimodal direction, to incorporate a rail link and port and airport structures. This would permit a decisive improvement in the links between the Iberian peninsula and the central areas of the Union (71).
The road link between Ireland, the UK and the Benelux countries (Programme 13), while situated mainly in the UK, will also make an important contribution to Ireland's links with the rest of the Community. It will also have a beneficial impact on trade between the UK and the Benelux countries.
The Irish section will be supported by the Cohesion Fund.
The Malpensa airport project (Programme 10) will have positive repercussions, not only for northern Italy but also for movement of goods and persons in general between the Community and rest of the world: the project will allow the Milan airport system to handle over 20 m passengers. No financial problems are involved.
The Øresund project (Programme 11) consists of a road/rail link between Denmark and Sweden which will remove the need for ferry transfers and will reduce journey times. It is of basically economic interest, and concerns not only the countries directly interested but also traffic between Sweden and the central regions of the Community.
The consortium responsible has asked for a contribution of approximately ECU 250 m.
The Nordic triangle project (Programme 12) consists of road/rail links between the three Nordic capitals, plus port and airport infrastructures. The links will, obviously, relate to the Øresund. This project will be important not only for the three countries directly interested but also for all those mentioned above in relation to the Øresund and, in view of the port proposals, for relations with the entire Baltic area and with Russia.
A higher Community contribution could stimulate private-sector participation in Finland and Sweden, thus accelerating the project (the maritime infrastructures included).
|
Investment |
Aid for TENs(T) |
Funding regime |
||||||||||||
| PRIORITY PROJECTS | Total cost | Estimate 95-99 | Indicated Member State contributions | Decision 95 | Requests 96 | 96 | 97 | Extra requirements | 98 | Extra requirements | 99 | Extra requirements | Present financial perspectives 1995-99 | Requirements for meeting deficit 1997-99 |
| HST/combined transport
Berlin-Verona |
21925 | 3200 | 450 | 34.43 | 69 | 27 | 29 | 30 | 40 | 50 | 47 | 80 | 177 | 160 |
| HST PBKAL | 15754 | 7450 | 500 | 43.00 | 71 | 45 | 74 | 150 | 74 | 140 | 84 | 140 | 320 | 430 |
| HST South | 12870 | 1700 | 150 | 5.95 | 8 | 6 | 7 | 11 | 10 | 15 | 15 | 45 | 25 | |
| HST East | 5100 | 3630 | 110 | 22.00 | 95 | 27 | 33 | 30 | 45 | 70 | 48 | 130 | 175 | 230 |
| Betuwe | 4117 | 1800 | 50 | 7.00 | 23 | 10 | 10 | 14 | 20 | 17 | 70 | 58 | 90 | |
| HST/combined transport
Lyon-Turin |
13230 | 4896 | 41 | 16.18 | 60 | 27 | 30 | 30 | 40 | 50 | 50 | 80 | 163 | 160 |
| Greek motorways | 6360 | 4510 | 290 | 6.00 | 29 | 8 | 8 | 30 | 11 | 15 | 12 | 15 | 45 | 60 |
| Motorway
Lisbon-Valladolid |
970 | 866 | 93 | 0.00 | 4 | 4 | 3 | 10 | 4 | 10 | 4 | 10 | 15 | 30 |
| Rail link/combined transport - Ireland | 230 | 145 | 62 | 0.00 | 0 | 0 | 0 | 0 | 0 | 0 | ||||
| Malpensa airport | 1047 | 750 | 1880 | 1.80 | 4 | 1 | 2 | 3 | 2 | 6 | 5 | 6 | 12 | 15 |
| Öresund | 3647 | 3070 | 473 | 15.00 | 80 | 15 | 27 | 30 | 28 | 40 | 20 | 30 | 105 | 100 |
| Nordic triangle | 8780 | 3150 | 600 | 12.05 | 77 | 20 | 20 | 26 | 20 | 33 | 30 | 111 | 50 | |
| Road corridor
Ireland-UK-Benelux |
3340 | 1620 | 0 | 2.00 | 0 | 2 | 3 | 4 | 4 | 15 | ||||
| Main West Coast line | 2160 | 890 | 0 | 8.60 | 23 | 7 | 7 | 10 | 10 | 20 | 12 | 30 | 45 | 60 |
| Controls/supervision
HST network |
380 | 380 | 10 | 7.50 | 23 | 11 | 15 | 15 | 15 | 64 | ||||
| TOTAL | 99918 | 38057 | 3017 | 181.51 | 566 | 210 | 268 | 323 | 324 | 451 | 366 | 636 | 1350 | 1410 |
1. Combined transport (various projects in
Belgium, Germany, Spain, France and Italy) 3000
2. Spata airport (Athens) 2000
3. Berlin airport 4100
4. Maurienne motorway (F) 1000
5. Marateca-Elvas motorway (P) 396
6. High-speed rail links in Denmark 1800
7. Trans-Apennine motorway (Bologna-Florence) 3158
8. High-speed rail/combined transport link. 'Danube Axis' - Munich/Nuremberg-Vienna 4700
9. Nice-Cuneo motorway (F, I) 1900
10. Fixed link - Fehrman (DK) 4500
11. Bari-Brindisi-Otranto motorway (I) 290
12. Rhine-Rhone canal (FR) 2500
13. Seine-Escaut canal (FR) 1350
14. Elbe-Oder canal (D) 650
15. Systematization of the Danube between Straubing and Vilshofen (D) 700
16. High-speed rail link: Randstad-German frontier (NL) 1560
17. Road corridor:
Valencia-Zaragoza-Somport (ES) 1229
18. High-speed rail link Milan-Rome-Naples (I) 8300
19. Transrapid MLT (73) Berlin-Hamburg 4700
20. High-speed rail link Luxembourg-Brussels (74) a) 85
b) 500
21. Road corridor Naples-Reggio Calabria (75) a) 1450
b) 3050
In the first paragraph of the preceding chapter the necessary level of investment was shown to be some ECU 160 000 m by 2010, of which ECU 100 000 m should be targeted on the priority projects (these will require expenditure of ECU 38 000 m up to 1999).
Given these high estimates, an effort of financial creativity will be required at a time of economic belt-tightening in all the Member States, in the context of their endeavours to balance their budgets in the run-up to monetary Union. The Community budget has also been subject to the constraints of financial discipline for some years now. The means of dealing with the financial problem posed by the networks have been set out since the beginning, in the Delors White Paper on growth, competitiveness and employment (76), which furnished the general principles for the administration of the projects in the context of the aim of achieving the best financial conditions available on the market, namely: financial equilibrium, compatibility with public finances and subsidiarity. The White Paper, which advocated a bottom-up, project-oriented approach, was, in fact, aimed quite clearly at achieving greater private-sector participation. Subsequently, the Christophersen Group drew attention to the obstacles in the path of private-sector involvement in many of the projects, above all in the case of the transport networks (77). It follows that a large proportion of the costs of the transport infrastructures will continue to be met from the public coffers; analysis should, therefore, concentrate in the first place on the public dimension.
The primary, basic source of public investment continues to be constituted by the budgets of the Member States and their public sectors; rail is of overriding importance here, in view of the major weight of this sector in the priority projects. With respect to these investments, Community intervention is of a subsidiary character, in accordance with both Article 3b of the Treaty and the principle of additionality which has always governed structural policy. The Community intervenes via the budget allocations of the ERDF and the Cohesion Fund, in those cases where the infrastructures concerned meet the territorial criteria of those financial instruments, and via the funds earmarked for the budget headings specifically created for the trans-European networks.
Another form of Community intervention, which could be considered comparable to private-sector participation, is constituted by EIB and EIF loans.
As the Commission points out in the introduction to its document (78), the collection of data on investment in transport infrastructures is still faced with considerable problems and a high degree of fragmentation. Because of this, the present paragraph and those that follow have been based on the investment data supplied by the national accounts departments, rather than on those relating to public finance, which would not have guaranteed sufficient comparability. This does not appear to create problems, since in most of the Member States it is the public sector that makes the main contribution to infrastructural investment, with private investment generally operating in an accompanying role.
Table 1 in this chapter (79) shows that there was a progressive increase in investment in transport infrastructures from 1985 to 1992, with a particularly significant rise between 1990 and 1991; since 1993, however, the tendency has been downward. The relevant figures are. 1985: ECU 46 336 m; 1990: ECU 60 878 m; 1991: ECU 68 432 m; 1992: ECU 69 624 m (the highest figure recorded); and 1993: ECU 67 878 m. Transport infrastructure investment in 1993 may be estimated to correspond to 1.2% of the GDP of the fifteen Member States.
The reasons for this downward trend are various: revised theoretical views concerning the role of infrastructures in economic growth; more cautious allocation of resources in the industrialized Member States; and the convergence of national budgetary policies provided for in the Treaty of Maastricht, which was probably the immediate cause of the sudden reversal of the investment trend in 1993.
The revised view of the development role of transport infrastructures is linked to the environment-oriented conceptions of the economy which have given birth to the notion of sustainable development, and, consequently and with particular reference to transport, to that of durable or sustainable mobility, according to which the rise in traffic arising from new infrastructures should be assessed taking due account of the environmental costs (which were previously not included in the equation); the motor role of such projects is accordingly diminished.
The tendency to more prudent allocation of public funds is the result of a reduction in resources, leading to an improved definition of spending priorities on the basis of cost-benefit ratios, with the application to public policies of instruments of analysis formerly used typically by the private sector. In this context, the increase in the production costs of public works in the transport sector has led to them being subordinated to other forms of direct intervention, with the involvement of private capital being sought for infrastructure projects in all cases where they are of sufficient financial viability to permit the replacement (even if partial) of public funding.
These considerations, however, are, in the present writer's opinion, background phenomena in relation to the immediate cause, namely the convergence of national budget policies introduced by the Treaty on European Union. The effect of this on the investments we are concerned with is compounded by the prospect of an extension in time of the financial stability requirements of the Stability Pact. It follows that the Member State governments are obliged to examine large-scale projects cautiously, since their realization represents a financial commitment on their part over several years; at the same time, they cannot afford to let the projects drop, whether for reasons of image or on grounds of sound resource management.
In this context, the option of involving the private sector in the construction and management of infrastructures may appear as both obligatory and desirable for public finance. It is, however, not always practicable, since the level of profitability involved is not always such as be competitive with alternative forms of investments, and may therefore not be advisable. The tolls and tariffs which are required if private capital is to be remunerated, while representing a means of internalizing infrastructure costs in line with a widely-advocated economic model of transport, nonetheless imply higher transport costs, with knock-on effects on inflation and final prices. This would be in contradiction with the objective of stability as defined by the Union's economic policy, and would also reduce the competitive capacity of the EU economy on the international markets.
Rail transport, which is, with a few exceptions, part of the public sector, similarly does not have high self-financing capacity: the railway systems are in a markedly vulnerable financial situation, as the Commission has recently pointed out (80). At the end of 1994 the rail companies in the Community had a total deficit of ECU 108 878 m, equivalent to 54% of their total capital or 1.7% of Community GDP (81). In these circumstances, the financing of rail infrastructures by the companies must be linked either to their recapitalization or to the assumption by the Member States of responsibility for the railways' existing deficit, as proposed by the Commission (82). In either case, the costs would ultimately be borne by the public purse.
Table 2 in this chapter offers a breakdown (in ECU) of investment in Member State transport infrastructure by mode, for 1993 at current prices. At Community level road investment is obviously dominant, accounting for 65.07% of the total - an emphasis which contradicts the general orientations of Community transport policy and which raises doubts as to the revitalization of the railways, a measure part of whose raison d'être is related to achieving a more environment-friendly transport system. Rail accounts for 24.4% of total investment.
In the following paragraphs an attempt is made to provide an overall view of the investment situation in the various Member States, on the basis of the ECIS report (83), an invaluable text which has been utilized here alongside other Community documents, especially that on the financing of the priority projects.
The approach used in this study has been to consider the various national situations in relation to the priority projects which are of interest to each Member State. Since the projects in most cases concern more than one country, the Member States have been grouped into areas, determined purely on the basis of the 'user constituencies' of the various priority projects. The delineation of these areas has helped to point up (even though this was not the main intention) the way in which the system of priority projects revolves