Cyprus, along with five new member states is lobbying to reduce the fines likely to be imposed by Brussels for allowing speculative sugar hoarding in the run-up to EU membership, but a final decision may be delayed until the summer.
EU officials appear to favour a decision to postpone a decision on the level of the fines until the summer, giving time to Cyprus and other new member states to defend their positions. The original deadline is supposed to come into effect end of April 2005.
Cyprus, Malta, Lithuania, Slovakia, Poland and Slovenia face substantial fines for allowing their traders to fill warehouses with thousands of tons of sugar at depressed prices, with the objective to sell them back into the EU once they joined the block in May 2004.
Sugar offered the most profit as EU prices are more than three times higher than the world market.
Now, nearly a year later and after several delays, the European Commission is about to issue its final data and fines for each country. The worst offenders are the smaller states that do not produce sugar themselves – Estonia, Cyprus and Malta.
Between EUR 5-10 mln may have to be paid to the EU over the sugar fiasco unless the government finds a way to dump an enormous quantity from the local market.
The importers are accused of importing well above the usual amounts of sugar just before the island joined the EU, knowing that the price would rise after accession. Before May 1 last year sugar prices in Cyprus were subsidised.
Before enlargement, the EU issued a directive advising that imports should be kept near the previous years’ levels and asked governments to submit their import data for the years 2000-2003.
Commerce Minister George Lillikas handed over the government’s arguments on the issue, on the advice of the Attorney-general’s Office.
Lillikas told officials in Brussels that the stockpiles of Cyprus are fewer than 40.000 tons of the total 70.000 tons imported into the country. In general terms, Cyprus refuses to accept the right of the Commission to impose a fine, with Lillikas insisting that the 30.000 tons stock average estimated for Cyprus for 2004 was based on the average prevailing in 2001-2003, which he claims is not representative of the true levels of the island’s needs, due to low tourist arrivals during that period.
The importers, who say they were misinformed about the directive, are liable for the fine and must pay up by May 31. If they refuse, the fine falls to the government, which can claim it back from the importers. The government says they were not misinformed.
On May 13, 2004 the price of sugar was 28 cents a kilo; on May 27 it shot up to 53 cents, and by July 1 reached an unprecedented 68 cents. Currently prices have stabilised at about 58 cents.
