The Commission outlined the results of its reflections following the last PHLG and Advisors meetings. It believes that it is vital to now move to the adoption of a legally binding agreement signed by the participating countries of the SE Europe Regional Electricity Market and the European Community. This will give legal security to participants to implement the rules agreed and, equally importantly, will give security to investors and international donors to finance sustainable projects. The Commission with the Stability Pact therefore proposed the revision of the old MOU to take account of the new gas and electricity Directives- that have been adopted- by the end of this year, and, using this as a model, the negotiation of a formal agreement end 2003/beginning 2004. The Italian Presidency underlined its support for this approach and pledged to assist the adoption of a negotiating mandate for the Commission on this basis as rapidly as possible.

The Commission presented its new draft Memorandum of Understanding that would replace that signed on November 15th 2002. The new MoU reproduces the new EU legislation and sets up in an advisory capacity the Regional Regulators Committee, thus mirroring developments in the EU. The Commission noted that as the new MOU would replace the old MOU it is important that all existing obligations in the MOU (anti-corruption policy, accounting standards, competition policy, role of the Commission etc) be included also in the new one. The Commission will verify the new text to ensure that this is so.

Italy, Greece and Austria maintained their view that at least in the Memorandum (a political document), individual Member states should sign, but as for the legally binding document, this course of action would be impossible. This view was also supported by a number of other participant countries that underlined the importance of ensuring that it is clear that the EU Member States participating in the SE Europe Regional Energy Market are formally bound to respect its rules. The Commission and the States concerned would seek bilaterally to resolve this issue.

The Commission also noted that by entering into the Athens Process by signing the new MoU and the eventual legal agreement a Country would not endanger any prospect of integration into the EU. The reason for this is that the new MoU sets minimum standards to be met, and can be surpassed. By entering the EU, the adoption of the acquis communautaire would automatically satisfy the requirements of the MoU. By signing, the integration into the EU can only be accelerated, not held up.

The members of the PHLG welcomed in principle the new MOU and undertook to consult internally and report back to the Commission within a month on their first reactions to the MoU.

The Commission noted that the internationally recognized names and/or status of signatories would be inserted into the new MOU and eventual legally binding agreement.