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Solution to Swiss-EU funding row "in sight"

Bern is hoping for agreement on its contribution to the EU cohesion fund

(Keystone Archive)

After a compromise on the European Union's budget, Switzerland is also hoping for agreement on its contribution to the cohesion fund for the enlarged EU.

Switzerland, which is not a member of the 25-nation bloc, has offered SFr1 billion ($775 million) over five years, but the terms of the contribution have proved difficult.

EU leaders agreed on a 2007-2013 budget in Brussels on Saturday after marathon negotiations.

Total seven-year spending was set at €862.36 billion (SFr1.37 trillion), which represents 1.045 per cent of the EU's gross national income.

Following this show of accord, the Swiss foreign ministry's Swiss-EU integration office said Bern hoped EU problems surrounding the distribution of Switzerland's contribution to the enlarged area "could now be sorted out in a propitious period of time".

EU diplomats will now tackle the "Swiss problem" before the holiday period.

Many countries had feared that Switzerland's selective "distribution list" would set a precedent when allocating EU funds.

Binding agreement

Switzerland has offered to contribute SFr200 million a year to the EU's cohesion fund over the next five years.

The cohesion fund is aimed at boosting the economies of less prosperous EU member states, especially the ten nations which joined in May 2004.

But negotiations over the terms of the contribution have been difficult. The EU wants a binding agreement, whereas the Swiss only want a memorandum of understanding.

There is also a question mark over which countries should receive the funds. Bern wants the money to go to the ten new – and mostly Eastern European – member states, but Greece, Spain and Portugal also want a share.

Switzerland is obliged to support EU cohesion under a second set of bilateral treaties, which were signed in 2004.

Mutual interest

Agreement on what to do with the "Swiss billion" is all the more important as a political connection has been established in the EU between the cohesion fund and other Swiss dossiers.

The squabble over money was thus seen to obstruct the ratification of the bilateral treaties and the extension of the free movement of people.

The integration office said an agreement is in the interests of both Switzerland and the European Union.

"We're assuming that the EU will do whatever is necessary to enable the enforcement of the treaty in a propitious period of time."

It added that delays, as already seen with the first set of bilateral treaties, would "definitely be undesirable, but the consequences would be less serious".

swissinfo with agencies

In brief

Switzerland has promised to contribute SFr1 billion to the EU's cohesion fund, at a rate of SFr200 million per annum for five years.

The EU wants a binding agreement with the Swiss over their contribution, while Bern only wants a memorandum of understanding.

The Swiss also want their contribution to only go to the ten new EU member states, but Greece, Spain and Portugal want a share of the funds.

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