Euro-Med meeting in Morocco

The European Union yesterday sought to reassure its southern neighbours that an EU-Mediterranean free trade zone was still planned despite recent internal setbacks.

The 25-member bloc hopes to set up a trade area with its 10 Mediterranean basin neighbours, spanning from Morocco to Syria, by 2010.

But failure to agree on a long-term Budget on the back of French and Dutch voters rejecting a new Constitution has worried some members that the EU will turn inward.

"We have told our (Mediterranean) counterparts that the EU countries will continue with their engagements with outside the EU and take the necessary decisions," EU Economic and Monetary Affairs Commissioner Joaquin Almunia told a news conference.

But Luxembourg Economy Minister Jeannot Krecke, whose country holds the EU's rotating presidency, said the bloc could not guarantee a timetable for the free trade zone although they hoped to achieve it by 2010.

Finance ministers or their deputies from Europe, North Africa and some Middle East countries met in Skhirat on the outskirts of Morocco's capital to prepare for a heads of state summit in November in Spain.

The Euro-Mediterranean partnership - also referred to as the Barcelona Process - aims to promote free trade, economic development, good governance and cultural cooperation among the EU's southern neighbours.

The partnership is one of the few multilateral forums where Israel, Syria, Lebanon and the Palestinian Authority meet. It was set up in 1995.

The EU's efforts to help transform and modernise its southern neighbours has been dogged by poor human rights records, democratic shortcomings, opaque governance and corruption in many of the partner countries, EU officials say.

Mr Almunia added that the southern members must work harder to liberalise their economies, improve their business climate and make their economies more competitive.

"The very weak trade between the Mediterranean countries and the EU shows a lack of use of opportunities that exist," he said, adding that despite its proximity to Europe it had among the lowest levels of foreign direct investment.

The European Union provides financial support of some €2.8 billion each year to its Mediterranean neighbours.