FRENCH PRESIDENT Nicolas Sarkozy yesterday called for EU leaders to discuss ways of addressing the unprecedented oil price shock when they gather in Slovenia later this month.
"The situation on the oil market is very worrying," Mr Sarkozy said at a joint news conference with German chancellor Angela Merkel at a Franco-German summit in the southern German city of Straubing.
His comments came after tens of thousands of Spanish truckers blocked roads and the French border, sparking similar action in Portugal and France, while unions across Europe prepared fresh action over the rising price of petrol and diesel, sparking fears of a summer of co-ordinated protests.
In Ireland, more than 65 fishing vessels from a number of Irish ports protested yesterday in Galway and in Cork.
Mr Sarkozy, who has come under pressure from French fishermen and truck drivers, has said the European Union should consider capping sales taxes on fuel products if oil prices rise further.
He also suggested using revenues from value added tax on oil products to create a fund to help those most affected.
Mr Sarkozy said he had presented his proposals on how to react to the oil price rise to Dr Merkel and hoped EU leaders would discuss possible responses at their next meeting.
"We will talk in depth about these questions. Because I think the European and global economy are facing a shock with a brutal strength that has not been seen before," he said, speaking through a translator.
"I have presented my proposal on taxes. The governments of all countries now have to think about this," he said. "The reason we created Europe was because we wanted to react together. That's why I explained my view. Everyone will be giving their view and we will be trying to find a solution."
But Mr Sarkozy faces opposition to his proposals. EU commissioner for economic and monetary affairs Joaquin Almunia said yesterday that "any subsidies or tax cuts would simply divert even more money to oil-exporting countries".
A meeting of EU finance ministers last week asked the European Commission to look at the problem of increased prices but agreed that tax policies should not be tampered with to deal with the increases.
Taoiseach Brian Cowen last week also ruled out cuts in VAT, telling Fine Gael leader Enda Kenny in the Dáil that lowering the VAT rate from 13.5 per cent to 12.5 per cent would cost about €400 million a year and "the likelihood is that any reduction in the VAT rate would be absorbed by retailers and wholesalers and not passed on to consumers". France will assume the EU presidency on July 1st.
- (Reuters, Guardian service)