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EU leaders seek answers to oil, food crisis
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On the eve of the EU summit, hundreds of farmers and truck and taxi drivers blocked some roads in and around Brussels to protest rising fuel prices, saying their livelihoods were being threatened and demanding EU governments step in with subsidies.

Just two weeks ago, a protest by European fishermen around the EU headquarters in Brussels turned violent.

Similar protests have broken out in several EU member states, prompting governments to consider emergency measures.

In the past month, the European Commission has presented two separate documents outlining responses to rising oil and food prices, which would be discussed by EU leaders at their summit.

The commission said the EU should be prepared for the oil and food prices to stay high in a relatively long period, insisting on the medium- and long-term reactions rather than to rush in aid.

According to a draft communique from the summit, EU leaders are expected to "express concern in regard to the continued surge in oil prices and their social and economic consequences."

They would warn that "measures that can be considered to alleviate the impact of higher oil prices on the poorer sections of the population should remain short-term and targeted."

Similarly, measures to alleviate the impact of recent food price developments on low income households should also be "short-term and targeted to ensure that price signals are not distorted and avoid broad-based second round effects on wages and prices", according to the draft communique.

"Distortionary fiscal and other policy interventions should be avoided as they prevent the necessary adjustment by economic agents," according to the document, which is expected to spark a heated debate among EU leaders.

France, which takes over the EU's six-month rotating presidency from July 1, has been pressing the EU to suspend its value-added tax (VAT) on fuels in order to counter rising oil prices.

However, France's proposal is unlikely to win support at the summit since EU officials have warned short-term tax measures could distort market demand.

The EU is also reluctant to allow state aid for fishermen, who led the recent protests over fuel prices.

Faced with growing pressure from EU governments, European Fisheries Commissioner Joe Borg proposed on Wednesday to lift ceilings on state aid for the sector and allow member states to provide emergency aid to fishermen who did not go to sea for up to three months, on condition that it was part of a plan for restructuring the industry.

The commission has long argued that the current difficulties the fishing industry resulted from fleet overcapacity and fuel-inefficient equipment and practices, calling for restructuring of the sector as a long-term solution.

(Xinhua News Agency June 19, 2008)

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