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Oil: no immediate solution for a lasting problem

©

Latest update : 2008-06-05

Fishermen clashed with police in Brussels on Wednesday in a European-wide attempt to press the EU for help to alleviate the sting of soaring fuel costs. Both Brussels and member countries struggle to deliver an answer.

French truckers gathered early Thursday morning to start a go-slow outside Rungis - the bulk market 20 kilometers outside Paris where restaurants get their fresh supplies - an example of one of the dozens of demonstrations throughout Europe to protest rising oil prices.

 

Fishermen, farmers, and ambulance and taxi drivers are just a few of the professions hit hardest by rising oil prices. In France, the price of fuel used to power fishing boats has risen 30% since January. In the EU, inflation in May was 3.6%, up 0.3 points since April.

Fishermen from France, Italy, Spain and Portugal met up outside the EU main building in Brussels on Wednesday. The protest eventually turned violent as protesters clashed with police and more than 70 people were arrested.

 

"We are here because every time we ask our own government ... they tell us it's Brussels' fault,” a French fisherman Alain Rico told Reuters Television. “And so we have come to Brussels."

 

 


To a European problem, a European answer?

 

But Brussels doesn’t have much to say. At least in the short term.

 

At a meeting of EU finance ministers in Frankfurt on Monday, several leads were explored but none stood out. Their discussions will provide the basis for negotiations at the upcoming June summit .

 

The biggest limitation is the EU's restriction on the amount of aid a state can give to one sector to avoid dumping practices inside the EU.

 

Italy has suggested that higher taxes be levied on oil companies. Austria supports the idea of a tax on speculative commodity trading.

 

There was broad agreement that measures should be focused on helping low-income families cope with the crisis. But France’s proposal that value-added tax on fuel be suspended when oil prices are too high was not well received.

Italy has  

The measure, advocated by French President Nicolas Sarkozy, contradicts the so-called 'Manchester Agreement,’ under which EU Finance ministers agree to coordinate responses to rising oil prices and avoid introducing fiscal measures that could have a distorting effect on the market.

 

"It appears very likely that oil prices will stay at their current levels,” Andrej Bajuk, Slovenian finance minister and chairman of the meeting, said. “Short-term tax measures will not alleviate the problems arising from high oil prices and food prices, and we all agree on that.”

 

 

No end in sight

 

 

In France, the truckers at Rungis planned to slow traffic down to 50 kilometers per hour on the A6 - the Paris-Lyon highway at rush hour - in an attempt to pressure Transport Minister Dominique Busserau. Busserau was set to unveil a series of measures destined to help alleviate the immediate crunch on truckers.

 

In Denmark, truckers are circulating petitions  to reverse a diesel tax hike set to take effect on July 1. In Spain, their colleagues are threatening to strike and taxi drivers are also planning protests.

 

In Portugal, where fishermen called off a strike to allow for negotiations, Agriculture Minister Jaime Silva proposed a  loan of 40 million euros over five years. In addition, he proposed to cut in half the 4% port tax for fishermen and create a working group to establish new rules for the sector.

 

In the absence of a strong statement from Brussels, governments from France, Italy, Spain and Portugal seem willing to coordinate their efforts. All are severely hit due to the importance of their fishing industries, and are set to meet in Madrid this week to work on a common proposal.

Date created : 2008-06-05

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