A JUST TRANSITION? THE BARRIERS TO CENTRAL AND EASTERN EUROPE MAKING THE LEAP FROM COAL

SPECIAL REPORT | JUNE 2021 https://eurac.tv/9T8z

With the support of A JUST TRANSITION? THE BARRIERS TO CENTRAL AND EASTERN EUROPE MAKING THE LEAP FROM COAL

As the EU Green Week kicks off in , EURACTIV takes a closer look at an essential step towards a net zero SPECIAL REPORT emission Europe – the transition away from coal. https://eurac.tv/9T8z Armed with the new €17.5 billion-strong Just Transition Fund, the European Commission has pledged to support coal-reliant regions to stop burning this carbon-intensive, air-polluting fossil fuel while preserving livelihoods and pensions.

However, this is easier said than done. As poorer Central and Eastern European countries rush to submit their plans to the EU executive to access the funds, long-standing is- sues crystallise, such as social acceptance, lacking national know-how, and the perception of an ever-distant Brussels.

Add to this the differences state-owned enterprises and pri- vate companies face in decarbonising their power genera- tion, and the simple step out of coal becomes infinitely more complex.

Read EURACTIV’s special report to find out more about how EU countries and institutions are progressing with their pledge to quit coal and implement a just transition. Contents

National politics threatens just transition fund for coal- reliant regions 4

Commission must boost presence in regions to promote just coal transition 7

State vs private: Europe’s mismatched transition out of coal 9

Public engagement still lacking in coal regions’ transition, NGOs warn 11

Lack of coal phase-out commitments in Eastern Europe jeopardises just transition 13 4 SPECIAL REPORT | CENTRAL AND EASTERN EUROPE MAKING THE LEAP FROM COAL | EURACTIV National politics threatens just transition fund for coal-reliant regions

By Kira Taylor and Vlagyiszlav Makszimov | EURACTIV.com

South-east Europe’s largest open-air coal mine Maritsa Iztok in South . [Shutterstock/Nikolay Dimitrov - ecobo]

omestic politics, bureaucratic communities behind is growing. The ’s €17.5 billion turf wars, and prosperous Already, there is a huge disparity Just Transition Fund aims to tackle that Dregions resistant to quitting across Europe when it comes to the divide and create a socially fair shift coal remain a serious obstacle to readiness and ability to shift to a towards a greener economy. As EU meaningful progress on designing sustainable economy. Green Deal chief, Frans Timmermans, just transition plans, despite put it: “The transition will happen in a the involvement of European Many richer Western countries fair way or it will not happen, because Commission-funded consultants, and already have a significant amount people will then not accept it.” pressing deadlines. of renewable energy capacity, while those in central and eastern Europe But the money will not simply be As Europe looks to increase its are still heavily reliant on coal, both handed down from Brussels. In fact, climate ambition and tackle climate for power and jobs. there are many hoops that regions change, the risk of leaving certain wanting to access the money need to

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Continued from Page 4 jump through. in 2018 and, while there has been the support of the World Bank to “very sensitive progress”, there is no prepare transition plans for eight Funding for fossil fuels was axed solution in sight that would satisfy additional industrial regions with from the Fund in December 2020 and both the companies and workers high emissions, but the European regions need to produce territorial involved. Commission is sceptical about the just transition plans to show a clear move. path to net zero emissions. These She said that finding a solution must be approved by the European is further complicated by the fact LACKING DATA AND Commission. that Stara Zagora is one of the most MINISTERIAL TURF WARS However, despite the Commission economically advanced regions in forking out for consultancies to help Bulgaria, with salaries second only Another barrier to drawing draft the plans, age-old problems that to the country’s capital, Sofia. This up clear plans to transition away encircle regional development look means that the available EU support from coal — and thus receiving EU set to impact the just transition fund may not be enough to entice the support — is missing economic and too. region to ditch coal fast enough. environmental analysis.

That means low absorption rates The difficult conversations around “One of the biggest problems in for the money, plans remaining at moving away from coal are further Bulgaria is that we don’t have validated the status quo, and a lack of public slowed down by domestic politics. data, whether for environment or transparency. Grozeva said that no one wanted to energy,” Stefanov said. talk about shutting down the mines BULGARIA: RESISTING in the run-up to the general elections “All the institutions, all the sectors REGIONS AND CAMPAIGN in April. use their own data, and this is very PROMISES speculative,” he added, bringing the As the campaign started “all of example of trade union inflating the One of the main obstacles to the these parties [started saying], ‘nobody number of workers relying on fossil implementation of the funds remains will close the complex, nobody will fuels by including jobs that are only the regions themselves, where close the power plants, etc,” Grozeva tangentially related. workers fear losing their salaries. told EURACTIV. “The discussion started probably two days after the Moreover, the implementation “The perception here in Stara elections again, and we will see.” of the just transition money, initially Zagora is that nobody knows what under the remit of the energy will happen actually,” said Rumyana The pandemic also changed the ministry was later moved to regional Grozeva, the executive director of narrative around coal and the “topic development, against the former’s Bulgaria’s biggest coal-reliant region’s exploded”, said Georgi Stefanov from will. development agency, home to roughly WWF Bulgaria. 85% of the country’s reservoirs. “It was a bit of a small battle for The fundamental issue, the green the Ministry of Energy, not to allow “Of course, people are not happy campaigner said, is that Stara Zagora this power to be removed from their about this because it’s their job, their should get the largest allocation of EU responsibilities to other ministries, life, their families,” she said. support, but the region “doesn’t want but then it was decided,” Stefanov it.” said. Stara Zagora hosts an open pit lignite mine and three big coal-fired To solve the problem, the TROUBLE FOR power plants, which form Maritsa Bulgarian government started to look East Energy Complex. at shifting just transition funds to Poland has a story of its own. other heavy-industry regions. Because the country is yet to sign up According to Grozeva, the to climate neutrality by 2050, it is discussions about how to transition EURACTIV understands that the likely that it will only receive half of away from coal only began in earnest Bulgarian authorities have requested what it is entitled to. In other words, it

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is missing out on €2 billion. the possibility to address via Just Transition Fund the negative effects The situation across the country of the ongoing transformation also varies wildly. Some regions have been for the Turow surrounding area,” said part of the Coal Regions in Transition Małgorzata Babska, spokeswoman of scheme, set up by the European Union PGE Group. in 2017, to develop collaboration and share best practices. The Commission’s warning raises questions about whether that same However, others have not. One rule will be applied to all regions, a particular region in the southwest of particular problem for Poland, which Poland, where the disputed Turów has struck a deal with unions to phase coal mine lies, is likely to miss out on out hard coal mining by 2049. funds altogether. “The Commission expects to Better known for the ongoing see in the Territorial Just Transition dispute between the Plans clear evidence of a transition and Poland on the mine’s impact on process and its impact at the level of the Czech water supply, the mine and the concerned territory in the near adjoining power plant could also cost future by 2030 or before,” a European the region its just transition money. Commission spokesperson told EURACTIV. That is because the government intends to keep it open and running “Irrespective of the timing of on climate-polluting coal until 2044, phasing out of coal, opening new long past the 2030 phase-out date for mines in a TJTP region is not in the coal in OECD countries set out in the line with the objectives of the Just Paris Agreement. Transition Fund,” they added.

“The Commission did not qualify the Bogatynia subregion (Poland) for JTF support, as this area is not in the process towards a climate- neutral economy due to the possible prolongation of lignite extraction beyond 2030 and the opening of a new lignite-fired power unit in the Turów power plant,” read a document from the European Parliament.

“We hope that no region and local community will be left behind and the Commission will confirm SPECIAL REPORT | CENTRAL AND EASTERN EUROPE MAKING THE LEAP FROM COAL | EURACTIV 7 Commission must boost presence in regions to promote just coal transition

By Kira Taylor and Vlagyiszlav Makszimov | EURACTIV.com

The headquarters of the Oltenia Energy Complex. , Targu Jiu. January, 12, 2020 [Shutterstock/Bogdan Vacarciuc]

he European Commission A case in point are current issues should ensure its decisions surrounding the Romanian state- Just this week, CE Oltenia Tremain in line with its climate owned energy company Complexul announced another €180 million targets and monitor regional social Energetic Oltenia (CE Oltenia), which in losses for 2020, while its income acceptance of the bloc’s transition is responsible for 90% of the country’s shrank by 32%, Romania-insider.com away from coal, stakeholders in coal-fired electricity. reported. Central and Eastern Europe say. The European Commission’s The company, which currently Brussels is often the victim of its upcoming decision on a state aid issue produces about a fifth of the country’s distance from the regions it governs, with company finances could make or electricity, has seen its role in the but decisions by the European break the region’s transition. energy mix decreasing. Now it is executive on the just transition away seeking to restructure with the help from coal need to be informed by CE Oltenia operates all lignite of a €1.3 billion state-backed cash people on the ground and give a clear mines in the country and has injection, or face bankruptcy. message on the policy, stakeholders experienced financial woes over the told EURACTIV. latter half of the 2010s as EU carbon However, the plan first needs to be prices soared. green-lit by the European Commission,

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Continued from Page 7 with environmental groups warning Dumitru Fornea from the European that and that, and now we have to deal that giving the go-ahead would lock Economic and Social Committee, a with this,’” he added. the country into coal beyond the 2030 328 member EU advisory body. phase-out target set out in the Paris TRANSLATING ‘BRUSSELS- Agreement. He said that the region does not SPEAK’ have reason to be optimistic and “The Commission’s decision on the that, although CE Oltenia may be The problem of negotiation fatigue Oltenia state aid case will be pivotal, economically viable, it cannot pay for and social unrest is not singular to since it will be a choice between the the rising costs of the EU’s emissions Romania. absurd practice of using taxpayer trading scheme. Meanwhile, the money to keep bailing out fossil-based money paid in order to keep polluting Rumyana Grozeva, executive utilities, and a just, green transition,” leaves the region never to be seen director of the Stara Zagora regional Mahi Sideridou, managing director again. economic development agency, said of Europe Beyond Coal said in a politicians and trade unions are still statement. “The European Commission, in blaming the European Commission compensation, proposes the just for establishing the bloc’s carbon Beyond potentially perpetuating transition fund, which is totally trading market, launched 16 years fossil fuel dependence, the decision on insufficient for the quantity of ago. CE Oltenia’s restructuring is holding money which is necessary to pass up the preparations for accessing successfully this [transition] process,” However, Grozeva, whose tasks the just transition fund in Gorj, the Fornea warned. include communicating messages region where most of its operations from the European Commission to are based. He added that general development local actors also pointed out that projects will be insufficient and that Brussels-speak is often difficult to If the European Commission’s the Romanian government will have translate. competition branch approves to come up with a social package for the current restructuring plan, it the miners. “There are some cases when it’s for would undermine their own work me difficult to understand what the in the regional policy and energy “If they will just work with the Commission is saying in its memos, departments, who are providing concept of general projects for the etc,” she said, and agreed that the ongoing support to authorities in Gorj region, they will not answer to the European executive should be more County, according to analysis by the social concern. If you don’t answer present on the ground. NGO Climate Action Network. to the social concern you have social unrest,” he told EURACTIV. However, that’s not to say that MILES TO GO TO CLEAN the Commission would be warmly ENERGY He also warned that the welcomed in all places. Commission and the European Even in the likely event that the Parliament have to take the issue “But in case the Commission European Commission rejects the of social acceptance seriously. “We makes efforts to be more locally restructuring plan, the region faces are in a vicious circle of a lack of represented, then the national an uphill battle to transition to more trust, nobody believes in any of the governments will say, ‘OK, but we are sustainable energy production. projections,” Fornea said. national governments and we don’t want the Commission to be so close “From a social point of view, “Already the national and so involved,’” she added. it’s not easy and this [CE Oltenia] governments, when you discuss [this discussion didn’t even start yet from process] with them, you hear them my point of view, we don’t know what say that ‘yeah, again these people will happen,” warned trade unionist from Brussels told us to do that and SPECIAL REPORT | CENTRAL AND EASTERN EUROPE MAKING THE LEAP FROM COAL | EURACTIV 9 State vs private: Europe’s mismatched transition out of coal

By Kira Taylor and Vlagyiszlav Makszimov | EURACTIV.com

Fully market-driven ventures are far more vulnerable to the ever-increasing price of emitting carbon, so have more reason to ditch coal and move towards cleaner energy production. [Shutterstock/E-V]

here is a growing disparity towards cleaner energy production. the losing assets to the public pools in the progress central and and concentrate wind, solar, even Teastern Europe’s regions have ‘BAD BANK’ OF POLAND nuclear,” Riccardo Nigro, campaign made to transition away from coal, coordinator for coal combustion and often influenced by how willing For instance, the region of Eastern mines at the European Environmental the state is to rescue increasingly Greater Poland, which hosts private Bureau, told EURACTIV. unviable companies. Some regions energy company Zepak, is much are beginning to close polluting mines further ahead in the energy transition Instead of phasing out climate- while others plan to keep them open than regions like Lower Silesia, where damaging, expensive coal, the for decades. state-owned PGE operates. government plans to buy these assets from state-owned companies and put In Poland and Bulgaria, there is a Zepak has agreed to phase out coal them into a so-called ‘bad bank’ of stark contrast between regions with by 2030 while PGE plans to extract investments. private energy enterprises and those coal up to 2049. with state-owned companies. Fully However, the prolongation of coal market-driven ventures are far more “PGE is playing for time because, is likely to mean regions will miss vulnerable to the ever-increasing price at the end of the day, they hope that out on just transition funds, as is of emitting carbon and therefore have the state will take on their losing fossil the case of Lower Silesia, the region more reason to ditch coal and move departments. They hope to leave all surrounding the Turów mine, which

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the government wants to keep open “We found that local authorities, Now, the Commission has launched until 2044. but also the other stakeholders, an investigation in April, expressing were open to negotiate. It’s like ‘Let’s “doubts that the restructuring plan Meanwhile, Zepak has been talk about the just transition in the and the aid to support it” satisfy EU involved in the just transition from southwest and don’t touch southeast’. competition rules. the beginning. That’s the story in Bulgaria,” explained Georgi Stefanov, who works for WWF Environmental activists say According to the founder of in Bulgaria. that, more importantly, the current the Green Future Institute, Agata plan would lock Romania into coal- Kuźmińska, it is good for the region “Our Poland story is in Stara dependency for years. that there is a private energy company. Zagora,” he added, saying no one wants to stir fears of economic decline “If the competition arm of the “They don’t [say] we will dig the and open the Pandora’s Box of coal Commission is serious about a new coal forever and things like that transition. state aid regime that is aligned with – which is what is happening, for the European Green Deal, as claimed example, in the governmental energy RESTRUCTURING IN since 2020, … this case presents an companies,” she explained. ROMANIA invaluable opportunity to require a decarbonised restructuring of the She warned, however, of concerns Romania, which has one of the company as a condition for the state that Zepak’s influence may divert higher allocations from the EU’s Just aid,” the NGO Climate Action Network too much of the money to the main Transition Fund, is a different picture Europe said. city of Konin, leaving less for the altogether. Its energy producers are surrounding area. mostly state-owned and it has a more “Romania is among the poorest balanced energy mix than Bulgaria EU member states and it still allocates STATE VS PRIVATE IN and Poland, with natural gas as its a small portion of its resources to BULGARIA biggest energy supplier. fighting climate change. In the long run, this will become expensive: the A similar divide has emerged In the Hunedoara region, mining costs of decarbonising the economy in Bulgaria, where there is a clear firms are already in decline and there will increase tenfold in a decade,” distinction between the southwest is little left to close. Alexandru Mustață from Bankwatch, and southeast region. a network of groups monitoring However, one coal plant in the public finances, told EURACTIV. The areas of Pernik and Bobov Dol Gorj region may complicate things. in the southwest host privately-owned CE Oltenia – the state-owned lignite- coal power plants, which are willing based energy company that provides to decarbonise. The region, close to 90% of Romanian coal power – has Bulgaria’s capital Sofia, has been in an launched a huge restructuring effort economic decline for decades, so it is to save its power plant, with the help more prepared to start the transition. of a €1.3 billion taxpayer-backed cash injection. Stara Zagora in the southeast is a very different story. All three of The plant is mired in debt, and just its lignite pit mines and one of the this week it announced another €180 three coal-fired power plants in the million in losses for 2020. It took out region are fully state-owned, and the a loan in 2019 and, a year later, the National Electricity Company (NEK) European Commission approved €251 has a stake in another one. million of state aid. SPECIAL REPORT | CENTRAL AND EASTERN EUROPE MAKING THE LEAP FROM COAL | EURACTIV 11 Public engagement still lacking in coal regions’ transition, NGOs warn

By Kira Taylor and Vlagyiszlav Makszimov | EURACTIV.com

A Greenpeace protest calling to phase out coal in front of thermal power plant in the town of Pernik, Bulgaria [VASSIL DONEV / EPA-EFE]t

espite being a requirement, forking out a pretty penny in structural its spring assessment. public consultation remains support for consultants, tasked with Dinadequate as Central and aiding authorities to conduct social Another “big problem in Bulgaria Eastern European (CEE) regions draw and economic impact analyses of the is the lack of accessible and official up the plans to unlock the €17.5 billion transition out of burning climate- information about the work of just transition fund, civil society has polluting coal. consultants, as well as about the input warned. from the industry,” the NGO claimed. Even though there are online People in regions dependent consultations in Bulgaria, with The situation in Romania was on coal – which are most in need letters of invitation sent out to not much better, with documents of the fund – were often sidelined municipalities, business associations, being sent without enough time for in consultations leading up to the NGOs and academic organisations, meaningful engagement in advance of submission of the just transition plans “this is not enough to generate the deadline, especially in Jiu Valley – to the European Commission, activists meaningful engagement in the one of the coal mining regions in the told EURACTIV. process – people living in the regions country. where the plans are being developed The allegations are all the more are poorly informed,” green public The consultants are there to help worrying because the EU executive is finance watchdog Bankwatch wrote in the authorities produce the so-called

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Continued from Page 11 territorial just transition plans, but unions,” Georgi Stefanov from WWF they are not in charge of actually Bulgaria told EURACTIV. delivering the documents, Alexandru Mustață, just transition coordinator “Although they don’t like our idea for the region at Bankwatch, told of greening the energy sector, they EURACTIV. understood more or less we are those who are really giving them the truth, Meanwhile, the ministry of energy, the information, much before the which owns the energy complex in others in Bulgaria,” he said. the most coal-reliant region of Gorj, is completely absent from the process, “The problem is that nobody talks Mustață said. with the people who are directly and non-directly involved in the The lack of consultation has workings of the mining complex,” clear consequences for the social said Rumyana Grozeva, executive acceptance of the process. director at the regional economic development agency of Bulgaria’s Romanian trade unionist Dumitru biggest coal-producing region, Stara Fornea said the initial strategy for the Zagora. Jiu Valley, drafted by a consulting firm, “unfortunately was not very “There are no honest well debated with the miners”, who conversations to explain what will dismissed the plan at first. happen,” she added, pointing out more information about the plans As a result, “the miners initially would calm the workers and show have rejected the possibility to them that the process is “under work on this strategy together control.” with the NGOs from Greenpeace or Bankwatch, but now they are more Criticism of transparency does open.” not stop at the just transition plans: Concerns have also been raised about a lack of public consultation LACK OF INFORMATION around EU countries’ recovery plans FORMS UNLIKELY as member states rush to access the ALLIANCES €672.5 billion pot of EU money.

Circumstances, however, have It is a particular concern as the been bringing trade unions and European Commission looks to bring green NGOs closer together, even if everyone on board with the transition their agendas may be somewhat at into a green and circular economy. odds, with unions keen to preserve Discussing with people on the ground the livelihoods of their members and the transition’s impact and ways to NGOs pushing for a fast transition alleviate it will be key, but this has yet away from carbon-intensive coal, to happen in many regions in CEE. which would entail job losses.

“Because of the just transition topic, I became very close with trade SPECIAL REPORT | CENTRAL AND EASTERN EUROPE MAKING THE LEAP FROM COAL | EURACTIV 13

STAKEHOLDER OPINION

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network. Lack of coal phase-out commitments in Eastern Europe jeopardises just transition

By Alexandru Mustață

The coal-fired power station near Opatovice nad Labem, East Bohemia, Czech Republic [FILIP SINGER / EPA-EFE]

nambitious coal phase- transition coordinator at the central and outline a vision of a future without out policies in central and eastern European Bankwatch network. coal and other polluting industries, Ueastern Europe threaten showing how they will use European the just transition in the region In order to access the €17.5 billion money to build a decarbonised and the European Commission Just Transition Fund, decision-makers economy. They should also provide should only accept plans that use from carbon-intensive regions across details on subjects for which regional the just transition fund to develop the EU and especially in Central and authorities have little, if any, power, and diversify local economies for Eastern Europe (CEE) are rushing to such as explaining from where a greener future, writes Alexandru finalise their Territorial Just Transition greenhouse gas emission reductions Mustață. Plans. will come.

Alexandru Mustață is the just The documents are expected to Even progressive regions will find

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Continued from Page 13 this task challenging, as usually situation. Much discussion is taking Although coal regions are not the only document to rely on for place these days about the lawsuit the only potential beneficiaries, the guidance is the National Energy between the Czech Republic and Fund was set up with them in mind and Climate Plan (NECP). NECPs Poland, the former trying to stop the in the first place, as this fossil fuel were designed during the past two latter’s Turów coal mine. must be eliminated quickly from years and are supposed to show the energy systems in order to meet what measures countries will take Recently, Poland tried to solve climate commitments, followed in order to reach their 2030 climate the issue by promising to spend over closely by fossil gas. targets. €40 million on reducing the mine’s impact on local groundwater. But If Romania and the Czech But most of these plans are not the project is much costlier: the Republic’s phase-out dates are not ambitious enough – and many in region will also lose access to the ambitious enough, Poland doesn’t CEE do not foresee a coal phase-out Just Transition Fund as it fails to even have one – apart from an date. prove a path to transition. agreement with miners to shut down the mines in 2049, in clear Unexpected news came last The Commission highlighted contradiction with the 2050 climate week from Romania, where the that other sources of financing neutrality goal. country’s Recovery and Resilience remain available – little consolation Plan promised a coal phase-out by for a country that fought to get It is high time for the few 2032. A reason for celebration for the lion’s share, approximately €2 governments in the EU which climate campaigners, for sure, who billion, from the Just Transition haven’t yet decided on a phase- were however still quick to point out Fund. out date to design a strategy for a that the phase-out can and should gradual yet swift closure of coal happen much earlier – well before The plaintiff in the Turów case mines and power plants. 2030. doesn’t stand much better: the industry-dominated Czech coal The Just Transition Fund, In a country of 20 million, there commission reached a similar together with the other, much larger are 16,000 workers employed in conclusion like the one it was European funding instruments like the coal sector, which generates modelled after, in , the Cohesion Policy or the Resilience approximately 20% of the country’s suggesting 2038 for a phase-out and Recovery Facility, represent a power – so both solutions for the date. great opportunity to replace the energy sector and for employment jobs that will be lost in a sustainable could be found earlier than a decade. But even the pro-fossils manner. However, neither are explained in government realised that relying on the document. coal for another 17 years is wishful The European Commission, too, thinking, so it asked the body to has a key role to play: it must only For coal regions, the vague come up with an earlier date. accept those plans that contribute mention of a phase-out doesn’t to the redevelopment and help with designing their territorial A Transformation Platform was diversification of the local economy. plans, as it doesn’t specify when set up to design the just transition each individual power plant will plans in the Czech Republic, made shut down. It also comes at a up of 39 members from various late stage in the process, as most fields. But those outside this countries are due to submit their platform, especially people in first version of the plans to the coal regions, had few chances to European Commission in June. influence the plan – and many still don’t understand what the Fund can Other countries in the region do. are not in a significantly different THE DUTCH BID FOR EMA

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