EU finance ministers are expected to agree to underwrite war-risk insurance for airlines for a limited period when they discuss the plight of European airlines in the Belgian city of LiΦge today.
On the first day of the two-day meeting, German finance minister Mr Hans Eichel indicated, however, that the ministers would rule out direct state aid to airlines.
An abrupt rise in the cost of war-risk insurance has threatened to ground aircraft throughout Europe next week.
Airlines complain that insurance companies are demanding 15 times the previous premium for war-risk cover and have reduced the maximum award from $1 billion (€1.09 billion) to $50 million.
Lufthansa's chief executive, Mr Jⁿrgen Weber, said governments should take responsibility for damage caused to third parties by a terrorist attack on aircraft.
Britain and Germany have said they will underwrite war-risk insurance for their airlines.
France and Belgium have suggested they are considering a similar move.
Belgian airline Sabena has given unions until tomorrow to approve a business plan that would cut 1,600 jobs and abandon some international routes.
The company, in which the Belgian government has a controlling stake, warned that it could go out of business by the end of this year unless the plan was accepted.
The Labour MEP, Mr Proinsias De Rossa, yesterday called on the Government to help Aer Lingus, saying that EU rules allowed state aid in exceptional circumstances.
"While EU law has to be respected by all parties, the current rules do clearly allow for state aid in exceptional circumstances. The onus is now clearly on the Government to defend Aer Lingus's case vigorously at European level and protect the jobs of the 1,600 workers affected," he said.
In a response to last week's attacks in the US, the finance ministers agreed measures to combat the financing of terrorism. They include tougher action against money laundering, better exchange of information between financial intelligence units and more effective action to freeze terrorist assets.
The ministers acknowledged last week's events threatened to destabilise the global economy but insisted the European outlook was still good, although they admitted growth this year would now be "clearly below 2 per cent".
"The EU economy maintains solid fundamentals. Thanks to the fiscal consolidation already achieved, the EU economy is now in a better shape to deal with the cyclical fluctuations. We restate our commitment to the framework, rules and full implementation of the Stability and Growth Pact," they said.
Thousands of European trade unionists demonstrated in LiΦge before the finance ministers' meeting. They were protesting against the loss of 200,000 jobs in Europe since the beginning of this year and calling on the ministers to abandon what they called neo-liberal, economic policies.
The trade unionists were joined by campaigners for the Tobin tax, a proposed tax on international financial transactions aimed at reducing volatility in financial markets and redistributing wealth to poorer countries. The ministers originally planned to debate the tax at this weekend's meeting but decided instead to discuss options to reduce market volatility.
