- The European Commission has approved of the French government's aid schemes and subsidies for its overseas territories, including the Indian Ocean islands of Réunion and Mayotte. For the 2007-2013 period, Paris may pour euro 1.8 billion into its dependencies.
The Competition Commissioner of the European Union (EU), Neelie Kroes, today announced that the Commission has approved ten aid schemes for the French overseas departments under the EC Treaty's state aid rules. Being part of the EU, subsidies and state aids within the common market are generally forbidden, with exceptions made for structurally weak regions.
The French overseas territories - which in addition to Réunion and Mayotte also include Guyana, Martinique, Guadeloupe and other islands - have traditionally been dependent on subsidies from the metropolis, which now need approval from Brussels. Ten aid schemes were previously approved by the EC under its regional aid guidelines for 2000-2006.
The decision announced by Mr Kroes today in practical terms means that the same ten aid schemes had received fresh approval for the 2007-2013 period under the new "guidelines for regional for aid on the most disadvantaged regions" of the EU.
While there have not been added any new aid schemes and subsidy possibilities, the new deal between France and the EC opens up for a significant increase in the amount the overseas departments may receive. Paris is allowed to sponsor businesses in its overseas departments, including Réunion, with a total of euro 1.8 billion during the seven-year period.
Réunion will thus receive French government aid at an increased scale compared to the previous period. Aid for relatively prosperous Réunion is however limited compared to the French territories in the Caribbean. According to the EC, total aid notified is equivalent to around 6.5 percent of the total GDP of the French overseas departments.
Mr Kroes noted that, "as outermost regions recognised by the EC Treaty the French overseas departments face specific handicaps." The handicaps are mostly defined as remoteness to markets, insularity and small size. According to the EC, the French overseas departments receive the same proportional aid as the Spanish and Portuguese outermost regions; the Canary Islands, Azores and Madeira.
The Paris Minister of the Overseas Department Michèle Alliot-Marie today told the press she was "pleased" with the decision from Brussels, calling it "an important result for the economy of the overseas department following one year of negotiations with the Commission."
Ms Alliot-Marie held that the new economic framework for financial aid for Réunion and other overseas departments was set to improve competitiveness in the territories. The Minister further held that this should provide for economic growth and increased prosperity for citizens and firms.
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