Associated Press | August 3, 2007
South Pacific, European Union aid funds wrangle ends
PORT VILA, Vanuatu: A funds wrangle between the European Union and 14 South Pacific nations ended Friday after the EU assured regional trade ministers it never intended to cut development aid funding in a dispute over an economic partnership deal, officials said.
South Pacific trade ministers had warned Thursday that they would end talks with the European Commission if development aid remained "conditional" on them signing an economic partnership agreement, or EPA, by year end.
However, the European Commission said Friday, that the total amount of financial support that had been earmarked "will not be reduced in any way as a result of the outcome of the EPA process."
Aid funding of €76 million (US$104 million) over six years has been earmarked for Europe’s development aid projects in the South Pacific in the coming year - with a possible 25 percent top up.
The region could also win extra money that aims to compensate 70 poor African, Caribbean and Pacific nations - many of the former European colonies - for losing 30 years of preferential access as Europe opens up to more goods from other parts of the world.
The EU has said these countries need to diversify their exports away from their reliance on food crops such as sugar, rice and bananas as world prices for these fall.
Pacific ministers said that in an earlier message to them, the EC said that if a goods-only economic agreement between the EU and the South Pacific nations is signed, aid funding would be cut by more than a quarter.
The ministers also said the EC warned that if no deal is signed, the funds would be reduced by 48 percent.
However, on Friday the EC said it wanted "to correct the serious misrepresentations which have been made of the EU’s position on the (conditional) link" between its aid funding to the region and the partnership deal.
"If no Pacific-EU EPA is agreed ... such assistance will obviously be reassigned to other jointly agreed objectives for the Pacific within the regional (aid) program," it said.
At the end of their meeting in the Vanuatu capital, Port Vila, Friday the ministers strongly rejected claims that they had taken the European comments out of context, while welcoming confirmation that the agreed full amount of EU aid funding would be spent in the region.
Samoa’s Deputy Prime Minister, Misa Telefoni, said the ministers "have had some schooling and know how to read English. It is untrue that the Pacific misinterpreted the meaning (of the EC warning)."