BERLIN, Germany, March 14, 2003 (ENS) - European Union proposals to broaden the scope of loans under the Euratom nuclear power treaty and increase its ceiling from four to six billion euros were dealt a blow this week after German MPs voted overwhelmingly in favor of vetoing the plan at forthcoming Council of Ministers meetings. The vote in the Bundestag was supported by the Social Democratic Party in alliance with the Greens.

The move to raise the loan maximum amount for the financing of nuclear power stations comes at a time when the future of the 1957 treaty is being thrown open at the EU level. Both the convention currently discussing a new constitution for the European Union and the European Parliament are discussing options for reform next week. Environmental groups are campaigning for Euratom's abolition.

In a statement on the vote, the Bundestag said that all Euratom credits granted or requested since 1994 concern nuclear power plants in Eastern Europe. "The safety effect of these nuclear projects is doubtful and promotes the development of the atomic energy to Europe. This increases the nuclear risk instead of causing the safety situation to improve."

In addition, the prevailing MPs argued, the suggestions of the commission would distort the competition on the European current market. Even if the loans go to support Eastern European countries for the disassembly of their atomic reactors, which in principle is welcome, the Euratom line of credit is not the correct instrument, they said. Instead a Decommissioning Fund administered by the Eastern Europe bank exists for support of this work.

Germany's veto could mean that the European Commission's proposals on expanding the loan mechanism will have to be ditched completely, as unanimity in the Council of Ministers' vote is likely to be required for the plan to be passed. Council legal experts are expected to clarify the voting protocol in the next few weeks amid recent confusion over it.

Meanwhile, a meeting of the Council working group on the loan expansion proposals has been cancelled in the wake of Germany's decision. A delay in the EU decision making process - together with forthcoming discussions on the treaty's future - are likely to slow down progress of a separate and highly controversial nuclear package outlined in January by energy commissioner Loyola de Palacio. This is likely to have the Euratom treaty as its basis.

Germany's move has been welcomed by Friends of the Earth, who had attacked the proposal to extend the loan, claiming it was simply being used to support new nuclear capacity in eastern European countries. Ten countries, including five in eastern Europe, will become members of the European Union next year. Friends of the Earth is now looking to other EU states to follow in Germany's footsteps and vote against the Commission's loan proposals.