Former Prime Minister Alfred Sant said that state aid itself is not, and cannot be in fact, subject to a level playing field for small peripheral countries within the European Union. During an exchange of views with EC Commissioner for Competition, Dr. Sant asked whether the time has come for the Commission to audit the real impact of current state aid rules as modernised, including post state airlines, in small peripheral EU countries. Dr Sant asked whether it was possible to carry out an audit of how state aid rules are functioning on the ground in these peripheral regions, given the need to promote economic convergence between regions of the Union, and the need to counter diseconomies of scale and other disadvantages in regions where economic and social development has lagged.
Dr Sant said that in many cases, state interventions would have minimal to no impact on the single European market. As the Greek crisis has shown, imbalances resulting from a divergence of economic performance between widely positioned partners in the Union can create upheaval. State aid applied across the board according to equivalent rules may be contributing further to economic divergences. What works well to regulate big conglomerates, can become meaningless or counterproductive in peripheral areas connected to distant metropoli through a single currency.
Dr Sant said that economic divergences between European partners has been growing to the extent that it is now a crucial problem for Europe. Those parts of Europe which are trailing, lack enough instruments that would help them stimulate new activity in their territories. They fail to attract outside investment to their side. And they cannot back directly, through state intervention, their local entrepreneurial “champions”, such as they are, in new efforts to create projects and jobs.
‘For instance, a state with a booming defence industry has many ways by which to camouflage research and development state aids as part of this industry and of the national security interest.Meanwhile, smallstatesandthose which are not in the defence business lack this possibility,’ said Dr Sant.
Reacting to Dr Sant’s intervention, Commissioner Vestager said that one of the important issues is that member states can do much more by themselves, within the same set of rules. ‘This can be done on two conditions:One is transparency. They have to tell their citizens what they are doing, how they spend tax payers' money. Secondly, governments must evaluate what schemes can actually be decided to work and to deliver to the same result. And in doing that I think we can have a much more level playing field,’ said Ms Vestager.