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". Mr President, ladies and gentlemen, this is the last time during this legislature that I will address Parliament on the state of the Union. It is a solemn occasion in the work of our institutions, when, traditionally, we take stock of the situation and cast an eye together over the work the Commission plans to do in the coming year. I am sad to say that, this year, our hearts and minds are greatly troubled by the tragic events that have dominated the news in recent days. I am referring to the series of acts of violence that have sown terror and grief in Iraq and Turkey. The programme I am presenting to you today is intended to complete the achievement of the strategic objectives that this Commission set itself for its term of office. In view of the fact that next year will be a special year, it consists of only 73 new proposals; this may seem a lot but it is far fewer than in previous years. The proposals cover the political priorities that were discussed in depth in our structured dialogue with Parliament and the Council between March and June. The main priority is to give shape to the future of the enlarged Union. It is based on two cornerstone objectives: ensuring the success of accession and preparing the political ground for the new Financial Perspective. As regards stability, we will need to develop a neighbourhood policy to create a ring of friends around the new borders of Europe. We must also complete the Tampere agenda by 1 May 2004 to complete the area of freedom, security and justice. With regard to the third priority – growth – we need to speed up our progress towards the Lisbon objectives. From an operational point of view, the programme incorporates the objectives contained in the new interinstitutional agreement with a view to streamlining legislative activity. For example, we have brought our proposals into line with the Union’s annual and multiannual programming and we undertake to apply the integrated impact assessment process to all the most important initiatives. As regards stability and security, at the Thessaloniki Summit, we presented a series of proposals on justice and home affairs and laid the foundations for a new neighbourhood policy. The proposals presented on economic matters concentrated on the Lisbon strategy, on completion of the single market, on research and on trans-European networks. At this point, we should not forget the recently-adopted legislative framework for the chemical sector. It has to be said, however, that the workload has been extremely heavy this year and the Commission has not been able to complete all the tasks it set itself. For this reason, the programme for 2004 includes some uncompleted initiatives. I would like to express the appreciation of the whole College for the excellent cooperation of the European Parliament in the planning exercise. The structured dialogue has proved to be an excellent instrument but there is always room for improvement and that is necessary. Bearing in mind the deadlines that will affect both of our institutions next year, the Commission will work closely together with Parliament to improve our relationship. In particular, we propose replacing the current methods of dialogue with an exchange of views between the Conference of Presidents and Vice-President de Palacio in April; using the written procedure for the mid-term evaluation for the programme and, lastly, deferring the presentation of the programme for 2005 – which will be the responsibility of the next Commission – until the December 2004 part-session, which will allow us to coordinate our work. Lastly, we have conducted an initial evaluation of the internal reforms that have modernised our financial and personnel management. The serious irregularities in past management of the Union’s statistical office, Eurostat, have given us much food for thought and led us to re-examine the situation, which has resulted in our proposing a plan of action that I would now like to outline to you. I am sorry this speech is so long, but this is an important section. On 25 September 2003, I gave my views on the Eurostat affair to a meeting of the Conference of Presidents. I gave my assessment of the facts, as revealed by the investigations conducted by OLAF and the extensive work done by the Commission departments. I did, however, accept that breakdowns in our communication system – between OLAF and the rest of the Commission, and between the Director-General of Eurostat and his Commissioner – had meant that the Commission was unable to take all the necessary precautionary measures earlier. I therefore promised to present you with an action plan to remedy them. After that meeting, the internal auditor produced the final report and presented it to Cocobu. It does not contain anything new which might alter my analysis. In short, it is quite clear that the most serious events took place before 1999, that the reorganisation exercise started in 2000 and that Eurostat, Financial Control and other sources involved OLAF very swiftly on the main aspects of this affair. In any case, the Commission was only in a position to act as of May 2003 because of a number of communication breakdowns at various levels, which I have identified. We took decisive action; we could have moved more quickly, and that is why we are presenting to you an action plan. The plan is based on the fundamental principles of the reform, and the key points include the functional independence of OLAF, the new Financial Regulation, which came into force in January 2003, the new Staff Regulations, the provisions concerning rights and obligations and the codes of conduct. All these reforms have been introduced gradually. As I stated on 25 September, it would be unfair to judge the reform, with its successes and its inadequacies, as if everything had been completely operational as early as 2000. Rather, the period 2000-2003 must be seen as a transitional period. However, this same Eurostat case is an illustration of just how necessary it was, particularly as regards matters such as mobility for sensitive posts, segregation of operational duties and control duties and the establishment of an internal auditor. It is therefore a question of building on what has been achieved by the reforms, which are already bearing fruit. We need to consolidate them, giving the political actors the means of shouldering their political responsibilities. I would also remind you that we have taken some tough measures this summer concerning Eurostat itself: the Director-General has been replaced; the Operational Director posts have been advertised both inside and outside the institution; a new Resources Director has been transferred; the organisation chart has been overhauled, etc.; lastly, a high degree of mobility has been applied to Unit Head posts. In the same vein, I felt it was necessary, as a first step, to amend the code of conduct governing relations between the Commissioners and their departments, which dates from 1999. Although the general principles which formed the basis of the code in 1999 should be maintained, in particular the principle of non-interference in management, more emphasis should be placed on the Commissioners' political responsibility, which covers not only their own actions but also those of their departments. The revised code of conduct will therefore include a whole series of provisions improving the flow of information to Commissioners to ensure that they are in a position to exercise this responsibility properly, so that they can supervise their departments' work and give them general instructions, including instructions relating to financial management. The code will also lay down a specific procedure for formally referring matters to the Commissioner, so that the Director-General can immediately draw the Commissioner's attention to any fact or development that might involve the Commissioner’s political responsibility or that of the College as a whole. Secondly, I would also like to respond to another question thrown up by the Eurostat affair. It actually seems that certain signals and pieces of information emerged in various parts of our institution concerning this affair well before May 2003. Taken in isolation, these signals were not such as to alert us to the gravity of the situation. Had they been centralised and analysed as a whole, we would not have had to wait for the first substantive information from OLAF before taking precautionary measures. I have therefore decided to introduce a new system for collecting and cross-checking all information relating to allegations of fraud, irregularities or wrongdoing, for analysing this information and for informing either the Commission or the Commissioner responsible, as appropriate, so that they can take any administrative, financial or other measures necessary, in particular to protect the financial interests of the Union. I have decided to take responsibility for the political supervision of this system myself, with the help of Mr Neil Kinnock and Mrs Michaele Schreyer. The preparatory work will be carried out at administrative level by a group of officials of the rank of Director-General, coordinated by the Secretary-General. This system will enable us, in particular, to provide better follow-up to information received from OLAF, IDOC and the IAS. Clearly, the idea is not to carry out additional investigations or to usurp the role of the policy-makers or administrators, who will continue to be responsible for keeping a close watch on management and responding appropriately to the information and investigation reports they receive. It will serve primarily as a watchdog and early warning system. At this moment, your and my thoughts are with those mourning in Italy, to whom we extend the sympathy of all the people of Europe at the death of the 19 young men on a peace mission. Our thoughts are also with those mourning in Turkey and the Jewish communities, and with all those suffering throughout the world as a result of terrorist attacks. I know I can speak for the whole of the Commission when I express my deepest sympathy for all the women, men and children who have been affected by these tragedies. Thirdly I have decided to improve the information channels between the central services and the operational departments, strengthening links, improving certain practices and following up some of the suggestions made in the internal auditor's report. These are essentially technical measures, but I believe they are very important for improving the flow of information and strengthening the systems of checks and balances. I described these measures to Cocobu earlier today. To conclude this reflection on the Eurostat affair, I will now come to OLAF. Everyone acknowledges that the present situation is, in a number of respects, unsatisfactory. OLAF is a Commission department, but it conducts its investigations in total independence. It is in complete charge of the decisions it takes in the course of its operational activities. That is also as we intended. Nevertheless, the current legal framework remains vague on whether or not it must pass on information to the institutions or persons concerned by an investigation. This has proved damaging in the Eurostat case. I want to dispel all doubts with this analysis of OLAF: its Director-General, Mr Brunner, enjoys my full confidence. I am analysing the way the institution is organised, not criticising the work of the Director-General, who took the right action in this case. The Commission is in the awkward situation of having to take political and legal responsibility for OLAF's work without actually having the means to exercise that responsibility, and it is also legally responsible for OLAF in any court actions that may be brought against it, for example claims for damages by individuals who feel their rights have been infringed. I had proposed to Parliament, in connection with the plans for a European Public Prosecutor, that OLAF be given full independence within a clear political framework. That is still my objective. Further work on making OLAF an entirely external body must remain on our agenda. However, in order to resolve the current operational problems swiftly, I would like to propose immediate steps which will entail amendments to the OLAF Regulation, the aim being to have them adopted by the present Parliament. We have to do something to give our successors a legal framework in which they can work with peace of mind. The need to strengthen the regulatory framework has also been expressed by the OLAF Supervisory Committee and in the work in progress in Cocobu, in particular in Mr Bösch's report. The Commission is taking this into account. I would now like to lay before you the main aspects of the improvements we are planning. Firstly, strengthening OLAF's operational independence by refocusing its activities as appropriate, particularly with a view to enlargement. There might be a case here for reassigning to Commission departments certain horizontal tasks that are unrelated to investigations. Secondly, allowing OLAF to concentrate on its priorities. To this end, we must lay down and enshrine in the Regulation a principle whereby action is taken as appropriate and discretion is exercised. This will allow OLAF to pass on to the appropriate authorities the task of following up cases which are of minor significance or lie outside its priority activities and will also make for speedier and more effective investigations. I would specify here that the decision on whether or not to open investigations must always remain with OLAF. Thirdly, clearer rules on the flow of information between OLAF and the institutions and bodies concerned. We shall also have to look into how this information is handled by the institutions involved. We need to strike a better balance between safeguarding the effectiveness of investigations and protecting the Union's financial interests with precautionary measures. Light will also have to be shed on the question of ultimate responsibility for decisions taken. Fourthly, amendments to the Regulation will also cover safeguards for the rights of the defence, an issue of fundamental importance. Fifthly, at the same time, we need to take a fresh look at the governance of OLAF both in terms of beefing up the role and make-up of its Supervisory Committee and in terms of setting up an interinstitutional Administrative Board. To sum up, I am proposing to increase the effectiveness of OLAF — as it faces a growing workload in an enlarged Union — by increasing its staff resources, refocusing its tasks on its investigative function and amending the Regulation, and to make OLAF more accountable. Mr President, here, then, are the basic lines of the action plan I am proposing to launch in response to the questions raised by the Eurostat affair. A communication will be adopted by the end of the year. As for the internal measures within the Commission, I expect to have them adopted as of December. Moreover, I hope that our contacts with Parliament will be advanced enough for us to table a legislative proposal on OLAF that has a reasonable chance of being adopted by Parliament and which takes us forward towards the idea of the European Prosecutor, which we all continue to support. Mr President, I began my address by stressing the major challenges that lie before us in 2004. To these I should, of course, add the Intergovernmental Conference. Of the many issues on the table, I wish to focus today on just one, the composition of the Commission. It is claimed in many quarters that a Commission with 25 or more members would be unworkable, but I want to tell you now that, next year, we will be putting that idea to the test because, for a period of six months, we will be welcoming colleagues from the new Member States and the Commission will be composed of 30 members. Of course, this will be a transitional situation in which no new portfolios will be created and it will last only until the end of this Commission's term of office: from 1 November 2004 onwards we will have 25 Commissioners. I am convinced that, whether it has 25 or 30 members, the Commission will be able to function extremely well. In the first place, the Treaty of Nice already guarantees the coherence of an enlarged Commission, and the President of the forthcoming Commission will have increased powers to organise, direct and monitor its work. In the second place, I do not agree that the Commission's tasks break down to a dozen or so portfolios. We must not forget that Commissioners also serve as the face of Europe with regard to public opinion in their countries of origin, and this will be even more important for the citizens of the new Member States. Lastly, the effectiveness of the Commission depends not on the number of its members but on the way in which its resources are used. The reforms we have introduced over the last few years have already brought positive results here. Thus, collective responsibility and the consistency of the Commission's work remain central to my concerns, therefore. An enlarged Commission undoubtedly presents a number of challenges, but the idea of a two-tier Commission, in which half the Commissioners would have a secondary role, does not provide the answer. Ladies and gentlemen, I have spoken of short-term commitments, but my Commission is already looking further ahead. Early this year, we launched a wide-ranging debate on the new Financial Perspective. In 2007, the Union could comprise 28 Member States and around half a billion citizens, and it will have a new constitutional framework. Clearly, therefore, discussions must start right now if all the instruments are to be operational by the end of 2006. Past experience has shown us that there is no time to spare. In preparing for the future, politics should call the shots because, before we begin working out the accounts we have to decide what we want the overall framework for the Union's policies to be. We must keep our eyes fixed on our objectives: peace, sustainable development, solidarity and freedom. In practical terms, this means that we must work along the following lines: a road map for the Lisbon and Gothenburg agenda; solidarity between countries and regions to help those who are lagging behind; European citizenship in an area that has developed from a marketplace into a political area; the external dimension of our model and our policy choices, starting with the neighbouring countries with which we must build a ring of friends. It is important that this legislature – the legislature that has brought the enlargement process to its conclusion – should be involved in establishing the policy lines for the enlarged Union. Ladies and gentlemen, the problems we experience every day show us that, despite these difficult moments, the Union is in good health, notwithstanding the Eurosceptics and the unexpected critics. The situation is not easy because we are in a period of transition that is both delicate and complex, but a larger and stronger Union is within our reach. In conclusion, Mr President, 2004 will be a year of challenges, renewal and undertakings. The European elections will provide an invaluable opportunity to gauge the extent to which citizens are participating in our venture. Against such a backdrop, the Commission is aware that it acts as a point of reference providing the system with continuity, stability and dynamism. We are committed to striving together with Parliament, the Council and all the other Union institutions to make a success of our appointment with history. Together, we can build a greater, more independent, stronger Union. We have come through two difficult years for the economy but the latest indicators suggest that we are leaving this negative period behind. There are widespread expectations that economic activity will pick up over the second half of this year and then speed up in 2004. The worst seems to be over: business and consumer confidence is rising and optimism is, at last, starting to grow among European operators. Economies are also recovering in other regions of the world outside the Union. In the United States, monetary and fiscal stimuli and an increase in productivity are keeping growth rates high. However, there are some concerns about the deficit, which could grow further next year as a result of the tax cuts and the cost of the conflict in Iraq. In Japan, the prospects, at last, look good and the trend in the other Asian economies remains positive, with growth forecast at 6.7% for next year. There are also positive signs coming from the countries about to join the Union. In response to the general recovery in Europe and the prospect of enlargement, growth in these countries is expected to reach 3.8% next year. This is another sign that the political decisions taken to support the unification of the continent were right. The recovery is still fragile, however, as I said, and we need to speed up implementation of the Lisbon agenda and continue our structural reforms. The European Initiative for Growth, on which the Commission has been working since the start of the year, has now taken shape. It provides for public and private investment to spark growth and employment. Bolstered by the support it received at the October European Council, our initial proposal has become a genuine road map with clearly-defined actions and deadlines for the elimination of the financial and, above all, regulatory and administrative obstacles that discourage investment. The Initiative also includes the quick-start list, which consists of a series of projects that are or will soon be ready for launching. We have worked closely with the European Investment Bank and identified 56 projects in the fields of transport networks, energy, telecommunications and research. When drawing up the list, we applied a number of very clear criteria. Firstly, they are projects at an advanced stage of development that can be launched immediately. Secondly, all these projects have a significant cross-border impact. Finally, we have selected projects that can have a multiplier effect on investment, particularly private investment, but which will have little environmental impact. We have also undertaken to promote highly innovative projects in the field of research and development. As regards funding, total investment – public and private – will come to approximately EUR 10 billion a year between now and 2010. Private-sector involvement will vary from project to project. However, as an overall guideline, we expect 60% of the capital needed to fund the projects to come from the public sector and 40% from private investors. This means that about EUR 6 billion a year will come from the Union and national budgets. That is the equivalent of approximately 0.05% of the Union’s GDP, and you will agree that is a very cheap price to pay to give the European economy a beneficial kick-start, a price that is perfectly compatible with the Stability and Growth Pact. What are the stages of this Initiative of ours? The first stage is the December European Council, which will need to approve it. Then the Member States will need to reform their administrations and regulations, which are often the real obstacle preventing these projects from being implemented. In particular, that will make it easier to involve the private sector. I therefore call on the Member States to coordinate their national and regional spending plans with the European Initiative to maximise the impact of the investments. The legislative and work programme for the coming year coincides, ladies and gentlemen, with the major changes for the European Union. I will just remind you of the key dates for the institutions: on 1 May, 10 new Member States will officially join the Union, the elections will take place in June and the current Commission’s term of office will end on 31 October 2004."@en1
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