More than £100 million of EU funds earmarked for Luas may be lost to Ireland if there are further significant delays in the project, the EU Regional Affairs Commissioner, Ms Monika Wulf-Mathies, warned in Dublin yesterday.
The EU is currently committed to paying up to £114 million of the £229 million cost of the proposed light rail system for Dublin. Such funding would normally be redistributed to other national projects if the targeted project did not go ahead.
But the Commissioner warned that there would not be time to ratify alternative projects if the Luas decision was postponed beyond "early 1998".
The Commissioner also suggested that Ireland's refusal to consider water charges might have an effect on EU funding of water treatment plants, a major element in EU infrastructural spending in Ireland. The Commission and most member-states regard water charges as an important environmental conservation measure.
Ms Wulf-Mathies was warned by the president of the Irish Congress of Trade Unions, Mr Peter Cassells, that such a move would be seen as "politically suicidal".
Speaking in Dublin to the social partners before she met Ministers, the Commissioner said that continued Luas indecision "could endanger the possibility of reallocating funds". She made it clear that time constraints in the EU budget process meant that the underground option was now not able to qualify for EU money.
Nor was putting the whole project off until the post-2000 period an option. While money had been allocated in the current structural funds round, "I can't give blank cheques for the future," she said.
Ms Wulf-Mathies met the Ministers for Finance, Mr McCreevy, Public Enterprise, Ms O'Rourke, Environment, Mr Dempsey, and Tourism, Dr McDaid, to discuss both current structural funds projects and the reforms proposed under Agenda 2000.
She later told journalists that Ms O'Rourke now understood clearly what had to be done about Luas and the Offaly peat-fired power station project.
Asked if the expert report on the Luas underground option would be too late for the Government to still get funding for the above-ground option, Ms Wulf-Mathies replied that "any delays after April would be disastrous".
Sources close to the Minister say they are well aware that any decision to go with the underground option will require immediate alternatives for use of the EU cash, which they are confident will not be lost to Ireland.
The Commissioner also explored with Ministers the possibility of filling the spending gap likely to be caused by the reduction in structural funding after 2000 with public-private partnerships in major infrastructural projects such as roads. Commission sources confirmed that Ms Wulf-Mathies is expected to make a case for phasing the reduction in structural funds spending to countries which lose their underdeveloped status between 2000 and 2005. The period is longer than some member-states want and will come as some reassurance to Ireland.
Following her meeting with Dr McDaid, the Commissioner announced a new £3 million project, three-quarters from the EU, to fund pilot projects to combine tourism with environmental sustainability. The idea is to show how to manage large tourist numbers without spoiling the sites they visit.
Earlier Mr Cassells urged the Commissioner, in her review of the second half of spending under the current round of structural funds, to emphasise social exclusion and training in line with the conclusions of the Luxembourg employment summit.
The director-general of IBEC, Mr John Dunne, strongly backed Ms Wulf-Mathies's concerns over Luas. "We really need to come to a conclusion on Luas," he said, "and also complete the Dublin port tunnel." Despite Ireland's success the country still faced serious "competitive deficiencies", most notably in transport and environmental infrastructure.
