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Commission approves investment aid for Czech orchards and irrigations; opens in-depth investigations into Czech measures in favour of large agricultural companies

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The European Commission has approved two Czech investment aid support schemes for the restructuring of orchards and irrigation, while opening an in-depth investigation to assess whether investment aid granted to certain large enterprises active in the agricultural sector in the past was in line with EU rules on state aid in the agricultural sector. In parallel, the Commission has opened an in-depth investigation to assess whether past and planned aid to certain large enterprises to support crop and livestock insurance is in line with EU rules on State aid in the agricultural sector.

Investment aid to large enterprises for the restructuring of orchards and irrigation

Czechia notified to the Commission its plans to implement two aid schemes to support undertakings active in the agricultural sector irrespective of their size in investing in the restructuring of orchards and irrigation. The estimated budget of the schemes was €52.4 million and €21m respectively.

The Commission found that the aid that the Czech authorities plan to grant in the future under the two notified schemes is in line with the conditions set out in the 2014 Agricultural State aid Guidelines with respect to all types of beneficiaries. On this basis, the Commission approved the measures under EU state aid rules.

As regards the past, during its assessment of the proposed measures, the Commission found that, in the previous years, some of the beneficiaries of those schemes had been erroneously qualified by the Czech granting authorities as small or medium-sized enterprises (SMEs), while they were in fact large undertakings. The Commission found that those large undertakings had received aid on the basis of existing Czech schemes, which are block exempted under the Agriculture Block Exemption Regulation and are accessible only to SMEs.

The Commission's 2014 Agricultural State aid Guidelines enable member states to grant investment aid in favour of enterprises of all sizes, subject to certain conditions. When investment aid is granted to large enterprises, due its potential distortive effects, certain additional conditions need to be met to ensure that possible competition distortions are minimised. In particular, investment aid to large enterprises must: (i) have a real incentive effect, i.e. the beneficiaries would not carry out the investment in the absence of the public support (namely a ‘counterfactual scenario' describing the situation absent the aid); and (ii) be kept to the minimum necessary based on specific information.

At this stage, the Commission has doubts that the aid already granted by Czechia to the large enterprises complies with those conditions, in particular due to the absence of the submission of a counterfactual scenario to ensure that aid granted to large undertakings in the past was proportionate.

The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation provides all interested parties with an opportunity to comment on the measure. It does not prejudge in any way the outcome of the investigation.

Aid to support crop and livestock insurance premium for large enterprises

Czechia notified the Commission of its plans to grant €25.8m of public support for crop and livestock insurance premium for large enterprises.

The Commission's assessment revealed that such support had already been granted in the past to beneficiaries that had been erroneously qualified by the Czech granting authorities as SMEs, while they were in fact large enterprises.

At this stage, the Commission has doubts that Czech aid for crop and livestock insurance premiums in the past complies with the requirements foreseen by the 2014 Agricultural State aid Guidelines for large enterprises. In this respect, in the absence of the submission of a counterfactual scenario by the beneficiaries that were erroneously qualified as SMEs, it is unlikely that the Czech authorities could ensure that the aid granted to large undertakings had an incentive effect.

Under the scheme notified by Czechia, the beneficiaries will have to apply for the aid only at the stage of the payment of the insurance premium, and not before signing the insurance contract. The Commission has therefore doubts at this stage that the measure has a real incentive effect, in other words that the beneficiaries would not conclude insurance contracts in the absence of the public support. Also in the case of past and planned aid to support crop and livestock insurance premium for large enterprises, the Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation provides all interested parties with an opportunity to comment on the measure. It does not prejudge in any way the outcome of the investigation.

Background

In view of the often reduced financing possibilities of farmers, the Commission's 2014 Guidelines for State aid in the agricultural and forestry sectors and in rural areas allow Member States to support investments and insurance premiums for undertakings. However, the measures should meet a number of conditions, notably:

  • The ‘incentive effect' principle: the aid application must be submitted before the start of the aided activity;
  • the requirement for large enterprises of proving the ‘incentive effect' through a ‘counterfactual scenario': they need to submit documentary evidence showing what would have happened in a situation in which the aid had not been granted;
  • the aid must respect be proportionate, and;
  • specific conditions related to eligible activities, eligible costs and aid intensity.

Small and medium-sized enterprises (SMEs) are defined in Annex I to Commission Regulation (EU) 702/2014. The same Regulation explains that the development of SMEs may be limited by market failures. SMEs typically have difficulty in obtaining capital or loans, given the risk-averse nature of certain financial markets and the limited collateral that they may be able to offer. Their limited resources may also restrict their access to information, notably as regards new technology and potential markets. As the Union Courts have consistently confirmed, the definition of an SME has to be interpreted strictly.

The non-confidential version of the decisions will be made available under case numbers SA.50787, SA.50837, and SA. SA.51501 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

 

Czech Republic

Czech police hunt two men wanted over Salisbury novichok poisonings

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Police in the Czech Republic are hunting two men whose passports match the names of the two suspects in the Salisbury poisonings.

Alexander Petrov and Ruslan Boshirov (pictured) are wanted in the UK over the novichok attack on former Russian spy Sergei Skripal and his daughter Yulia in 2018.

Czech police said on Saturday (17 April) that they are searching for two men carrying various passports, including Russian ones under the names Petrov, 41, and Boshirov, 43.

Sergei and Yulia Skripal were attacked with novichok and found slumped on a bench in Salisbury in March
Sergei and Yulia Skripal were attacked with a nerve agent in 2018

It comes as Czech Prime Minister Andrej Babis said 18 Russian diplomats are being expelled over allegations that Russian intelligence services were involved in an explosion at a Czech ammunition depot in 2014.

The explosion happened on 16 October at a depot in the town of Vrbetice where 50 tonnes of ammunition was being stored. Two men died as a result. Advertisement

Mr Babis said: "There is well-grounded suspicion about the involvement of officers of the Russian intelligence service GRU... in the explosion of ammunitions depot in the Vrbetice area."

Czech foreign minister Jan Hamacek said 18 Russian embassy staff identified as secret service personnel would be ordered to leave the country within 48 hours.

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A diplomatic source cited by Russian news agency Interfax suggested the expulsions could prompt Russia to shut the Czech Republic's embassy in Moscow.

Petrov and Boshirov denied being Russian operatives or being involved in the Skripals' poisoning in March 2018.

They told Russia Today they were only in Salisbury as tourists to visit the cathedral and nearby Stonehenge.

Police published a detailed photographic account of the men's movements while in the UK.

An Interpol "red notice" and a European warrant have been issued for their arrest should they try to leave Russia.

Czech Police said in a statement that they are looking for "two persons" who "used at least two identities... in connection with the investigations of the circumstances of serious crime".

They said they were in the Czech Republic from 11 to 16 October 2014, "first in Prague, then in the Moravian-Silesian Region and the Zlin Region".

As well as Petrov and Boshirov, they also used Moldovan and Tajikistan passports under the names Nicolai Popa and Ruslan Tabarov, they added.

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Czech Republic opens a diplomatic representation in Jerusalem

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The Czech Republic has opened a diplomatic representation in Jerusalem. It is a branch of the country’s Israel embassy, writes Yossi Lempkowicz.

The opening took place last week during a ceremony attended by Czech Prime Minister Andrej Babis and Israeli Foreign Minister Gabi Ashkenazi.

“We, the Czech Republic, are opening here in Jerusalem on Washington Street our diplomatic representation,” said Babis.

While Babis noted that his country’s official embassy remains headquartered in Tel Aviv, the development serves as an indication of the Eastern European country’s tacit acceptance of Jerusalem as Israel’s capital.

“We will have a full-fledged diplomatic mission here in Jerusalem,” he said. “It will deal with a lot, ranging from politics and economic cooperation to the consular agenda and other topics. It will have its permanent staff and work under the lead of our embassy in Tel Aviv.”

Babis added that “it represents another milestone in our cooperation and gives evidence that we see the importance of this great city.”

In 2018, Czech President Milos Zeman announced a three-step plan to relocate the country’s embassy to Jerusalem. Zeman, who has limited powers as president, faced opposition from Babis, who cited European Union policy against opening embassies in Jerusalem.

Ashkenazi said the opening of the Czech diplomatic branch in Jerusalem ‘’shows additional proof of the depth and the scope of the friendship we share with the Czech people, and the Czech Republic and government.”

He also said he appreciates the Czech government for “leading the change in Europe towards the city of Jerusalem as a whole and towards the connection with the State of Israel.”

Another Eastern European country, Kosovo, is set to open its embassy in Jerusalem and thus will become the third country after the United States and Guatemala to make the move.

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Czech Republic to sue Poland over Turów coal mine

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Local groups and NGOs today welcomed the Czech government’s decision to file a lawsuit at the European Court of Justice against the Polish government for the illegal operation of the Turów lignite coal mine, which has been dug right up to the Czech and German borders, damaging local water supplies for nearby communities. This is the first such legal case for the Czech Republic and the first in EU’s history where one member state sues another for environmental reasons, writes Europe Beyond Coal Communications Office Alistair Clewer.

Milan Starec, a Czech citizen from Liberec region (Uhelná village): “The decision by our government to file a lawsuit against Poland comes as a relief for us who live next to the mine. In 2020 alone, the groundwater level in the area fell by eight meters, which is double what PGE said would happen by 2044. Our worries have been replaced with fear. It is crucial that our government demands a cessation of illegal mining as PGE still refuses to accept its responsibility, while asking for permission to destroy our water resources and neighborhood for another 23 years.” 

Kerstin Doerenbruch, Greenpeace Berlin: “Germany is also stepping up in the case against Turów, with regional representatives and citizens in Saxony bringing their own complaint before the European Commission in January. We now call on the German government to step up and protect people’s homes and the Neiße river by joining the Czech lawsuit against Poland.” 

Anna Meres, Climate and Energy Campaigner, Greenpeace Poland: “Poland has acted recklessly and unlawfully by issuing a permit for the further expansion, so it is no surprise that this case has been brought to the European Court of Justice. Poland’s increasingly irrational support for coal expansion is not only harming health, water supplies, and worsening the climate crisis: it’s isolating us from our friends and neighbours, and robbing our workers and communities of better, more sustainable jobs. 78 percent of Poles want to abandon coal by 2030, it’s time to listen to them, to stop burdening border communities, and to plan a better future for all.”

Zala Primc, Europe Beyond Coal Campaigner: “People in surrounding countries are paying the price for Poland’s push to mine coal for decades to come with their health and water security. We call on the European Commission, which is responsible for ensuring that EU laws are implemented, to start an infringement procedure against the Polish government, and to become a party to the Turów case in front of the EU Court of Justice.

  1. The European Commission’s recently released a reasoned opinion which stated that multiple violations of EU law. The negotiations between the two countries came to a standstill, as Poland rejected the Czech Republic’s conditions for a settlement. The Turow mine, which is owned by Polish state-owned utility PGE, has been operating illegally, after the Polish government extended its licence by six years in April 2020, despite failing to carry out a correct public consultation or an environmental impact assessment, which are required by EU law. PGE even applied for a prolongation of the mining concession from 2026 until 2044, which would include an expansion of the mine, while negotiations with the Czech government and the affected Liberec Region were still happening, but none of the Czech parties was informed. A decision is expected in April 2021.
  2. A German expert study also exposed impacts the Turów mine has on the German side of the border: the pollution it causes at the Lusatian Neisse River, lowering of the groundwater and the subsidence that could damage houses around the city of Zittau.  The study also estimates that water shortages could mean it will take 144 years to fill the open pit once it has been closed – much longer than claimed by PGE (https://bit.ly/3uoPO7s). English summary: https://bit.ly/2GTebWO.
  3. The German expert study prompted the Lord Mayor of Zittau Thomas Zenker, Daniel Gerber, Member of Saxon Parliament, and other citizens of Saxony to also file a complaint with the European Commission in January (https://bit.ly/2NLLQVY). In February, the case was also dealt with by the Saxon Parliament, whose members called on the German government to accede to the Czech lawsuit if it was brought before the EU Court of Justice (https://bit.ly/3slypLp).  
  4. Numerous efforts have been made so far to rouse the European Commission into action: interventions by Members of the European Parliament (https://bit.ly/2G6FH2H), a call for action by the mayor of the German city Zittau ([https://bit.ly/3selwTe), petitions by Czechs and affected citizens (https://bit.ly/2ZCnErN), a study highlighting the negative impacts the mine is having on the Czech side (https://bit.ly/2NSEgbR), a formal complaint by the Czech city Liberec (https://bit.ly/2NLM27E) and a resolution by the European Greens (https://bit.ly/3qDisQ9). The International Commission for the Protection of the Odra River from Pollution (ICPO), which consists of Polish, German and Czech delegates, has also become involved in the Turów case, classifying the mine as a “supra-regionally significant problem” that requires coordinated action between the three countries (https://bit.ly/3btUd0n).

Europe Beyond Coal is an alliance of civil society groups working to catalyze the closures of coal mines and power plants, prevent the building of any new coal projects and hasten the just transition to clean, renewable energy and energy efficiency. Our groups are devoting their time, energy and resources to this independent campaign to make Europe coal free by 2030 or sooner. www.beyond-coal.eu 

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