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EU to blacklist Belarus airline ahead of economic sanctions, diplomats say

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European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium May 5, 2021. REUTERS/Yves Herman

The European Union is preparing sanctions on Belarus' national airline and around a dozen top Belarusian aviation officials, three diplomats said, a stop-gap measure before economic sanctions following the forced landing of a passenger plane, writes Robin Emmott.

The proposed asset freezes and travel bans are part of a package of new sanctions on Belarus from EU states, which are outraged that a Ryanair flight was pressed to land in Minsk on 23 May to arrest a dissident journalist and his girlfriend.

EU governments, which described the incident as state piracy, say they are looking at targeting sectors that play a central role in the Belarus economy, to inflict real punishment on President Alexander Lukashenko. They could include bond sales, the oil sector and potash, a big Belarusian export.

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Before imposing such economic sanctions, the bloc is expected to agree by June 21 - when EU foreign ministers meet - a smaller sanctions list on individuals and two entities as a quick, intermediary response, the diplomats said.

"All EU states agree with this approach," one diplomat said. A second diplomat said there would be "a clear signal for Lukashenko that his actions were dangerous and unacceptable".

While the sanctions are still under discussion, EU ambassadors as early as Friday could pre-approve banning overflights and landing in EU territory by Belarus airlines, allowing EU ministers to formally sign off on them later in the month.

Britain, no longer part of the EU, has suspended the air permit for Belarus' national carrier, Belavia. The EU is expected to do the same, the diplomats said.

The names are expected to include top Belarus' defence and transport ministry officials, military from the airforce, a top Minsk airport official and a senior civil aviation official, the diplomats said.

Also to be blacklisted and banned from business with the EU is another state-owned enterprise from the aviation sector.

More details were not immediately available. The EU does not comment publicly on ongoing preparations for sanctions.

Lukashenko said last week the journalist pulled off the plane had been plotting a rebellion, and he accused the West of waging a hybrid war against him. Read more

Since cracking down on pro-democracy protests last year, he has withstood three previous rounds of EU sanctions and comparable U.S. measures - mainly blacklists that bar officials from travelling to or doing business in Europe and the United States.

EU foreign ministers said last week that fresh sanctions would include a fourth round of travel bans and asset freezes linked to a disputed presidential election in Belarus last August. The around a dozen names are separate and directly linked to the Ryanair incident.

Aviation/airlines

Commission approves €800 million Italian scheme to compensate airports and ground-handling operators for the damage suffered due to the coronavirus outbreak

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The European Commission has approved, under EU state aid rules, an €800 million Italian scheme to compensate airports and ground-handling operators for the damage suffered due to the coronavirus outbreak and the travel restrictions that Italy and other countries had to implement to limit the spread of the virus.

Executive Vice President Margrethe Vestager in charge of competition policy said: "Airports are among the companies that have been hit particularly hard by the coronavirus outbreak. This €800 million scheme will enable Italy to compensate them for the damage suffered as a direct result of the travel restrictions that Italy and other countries had to implement to limit the spread of the virus. We continue working in close cooperation with member states to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”

The Italian scheme

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Italy notified to the Commission an aid measure to compensate airports and ground-handling operators for the damage suffered during the period between 1 March and 14 July 2020 due to the coronavirus outbreak and the travel restrictions in place.

Under the scheme, the aid will take the form of direct grants. The measure will be open to all airports and ground-handling operators with a valid operating certificate delivered by the Italian civil aviation authority.

A claw-back mechanism will ensure that any public support received by the beneficiaries in excess to the actual damage suffered will have to be paid back to the Italian State.  

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by member states to compensate specific companies or specific sectors for the damages directly caused by exceptional occurrences, such as the coronavirus outbreak.

The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the member states to compensate for the damages linked to the outbreak are justified. 

The Commission found that the Italian measure will compensate damages that are directly linked to the coronavirus outbreak, and that it is proportionate, as the compensation will not exceed what is necessary to make good the damage, in line with Article 107(2)(b) TFEU.

On this basis, the Commission approved the measure under EU state aid rules.

Background

Financial support from EU or national funds granted to health services or other public services to tackle the coronavirus situation falls outside the scope of State aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures that are available to all companies such as for example wage subsidies and suspension of payments of corporate and value added taxes or social contributions do not fall under State aid control and do not require the Commission's approval under EU State aid rules. In all these cases, member states can act immediately.

When State aid rules are applicable, member states can design ample aid measures to support specific companies or sectors suffering from the consequences of the coronavirus outbreak in line with the existing EU State aid framework.

On 13 March 2020, the Commission adopted a Communication on a co-ordinated economic response to the COVID-19 outbreak setting out these possibilities.

In this respect, for example:

  • Member states can compensate specific companies or specific sectors (in the form of schemes) for the damage suffered due and directly caused by exceptional occurrences, such as those caused by the coronavirus outbreak. This is foreseen by Article 107(2)(b)TFEU.
  • State aid rules based on Article 107(3)(c) TFEU enable member states to help companies cope with liquidity shortages and needing urgent rescue aid.
  • This can be complemented by a variety of additional measures, such as under the de minimis Regulation and the General Block Exemption Regulation, which can also be put in place by Member States immediately, without involvement of the Commission.

In case of particularly severe economic situations, such as the one currently faced by all member states due the coronavirus outbreak, EU State aid rules allow member states to grant support to remedy a serious disturbance to their economy. This is foreseen by Article 107(3)(b) TFEU of the Treaty on the Functioning of the European Union.

On 19 March 2020, the Commission adopted a State Aid Temporary Framework based on Article 107(3)(b) TFEU to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April, 8 May, 29 June, 13 October 2020 and 28 January 2021, provides for the following types of aid, which can be granted by member states: (i) Direct grants, equity injections, selective tax advantages and advance payments; (ii) State guarantees for loans taken by companies; (iii) Subsidised public loans to companies, including subordinated loans; (iv) Safeguards for banks that channel State aid to the real economy; (v) Public short-term export credit insurance;(vi) Support for coronavirus related research and development (R&D); (vii) Support for the construction and upscaling of testing facilities; (viii) Support for the production of products relevant to tackle the coronavirus outbreak; (ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees; (xi) Targeted support in the form of equity and/or hybrid capital instruments; (xii) Support for uncovered fixed costs for companies facing a decline in turnover in the context of the coronavirus outbreak.

The Temporary Framework will be in place until the end of December 2021. With a view to ensuring legal certainty, the Commission will assess before this date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.63074 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 Competition Weekly e-News.

More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

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Aviation Strategy for Europe

Single European Sky: Lowering emissions and reducing delays

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MEPs want to modernize the EU's airspace management to make it more efficient and greener, Society.

Updating Single European Sky rules should help the aviation sector become more efficient, ensuring shorter flights through more direct routes and thus lowering greenhouse gas emissions, say MEPs.

The Single European Sky initiative was launched in 1999, in a period marked by a large increase in flights and growing delays that highlighted the need for better coordination.

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MEPs want the rules to be reformed to make EU airspace less fragmented and improve air traffic management. This would  increase safety and efficiency, lower costs and benefit the environment.

Currently, airlines may not fly directly to the landing point. They may want to avoid flying over states with higher charges, avoid military zones or take a longer route to avoid the weather. That can mean longer flights and more emissions. Fragmentation can also cause delays due to less-than-optimal coordination.

MEPs say airspace management rules need to be further developed and adapted to evolving markets, the new digital environment and the European Green Deal. They are pushing for new rules that would help achieve up to a 10% reduction in greenhouse gas emissions, by avoiding longer routes and promoting cleaner technologies.

They also want to make European airspace more competitive and support choosing air-traffic service providers and other air navigation services such as communication and meteorological services through competitive tenders.

Background

Current Single European Sky rules date from 2009. The European Commission proposed a revision in 2013 that was adopted by Parliament in 2014. Following the failure of the Council to reachan  agreement, the Commission proposed an upgrade in line with the European Green Deal in 2020.

On 17 June 2021, Parliament's transport and tourism committee updated their negotiating mandate on the Single European Sky reform and adopted their position on expanding the mandate of the European Union Aviation Safety Agency to act as a performance review body. After the latter position was announced during the July plenary session, MEPs are ready for negotiations with the Council.

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Aviation Strategy for Europe

Commission calls for simple solutions for consumers seeking compensation for cancelled flights

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The European Commission and consumer authorities are calling on airlines to improve their handling of flight cancellations. The Commission and national consumer authorities have called on airlines to improve how they deal with cancellations in the context of the COVID-19 pandemic. 

Airlines operating in the EU are urged to improve their practices with the help of a list of measures drawn up jointly by the Commission and the consumer protection group, CPC network. The initiative is in response to the huge number of consumer complaints received by those trying to exercise their air passenger rights and is based on the results of a survey launched earlier this year to collect data on the handling of complaints by 16 major airlines. The analysis of the answers provided highlighted a range of issues, including some airlines presenting the right to reimbursement in money less prominently than other options such as re-routing or vouchers, and implying that reimbursement is an act of good will, rather than a legal obligation.

Justice Commissioner Didier Reynders said: “We have received a lot of complaints from consumers but we have also worked closely with airlines to understand where there are shortfalls and why. Airlines need to respect the rights of consumers when flights are cancelled. Today we are asking for simple solutions to give consumers certainty after a period of extreme turmoil.” 

The EU Transport Commissioner Adina Vălean, said: “We are currently assessing regulatory options to reinforce passenger protections. We will continue to work with national authorities to have passengers' rights properly communicated, implemented and enforced. Passengers must have a real choice between vouchers and refunds.

"Most airlines surveyed also did not refund passengers within the seven-day time limit provided for by EU law. They must take action to ensure that this delay is respected for all new bookings – whether bought directly or through an intermediary – and to swiftly absorb the backlog of pending reimbursements, by 1 September 2021 at the latest."

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The European consumer organisation (BEUC) said: "It has been almost a year and a half since COVID19 started and many airlines are still in breach of consumer law."

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