Fiji's economy will suffer a huge setback if the EU goes ahead with its post-coup sanctions. Photo / Greg Bowker
The European Union is threatening Fiji with the loss of more than $100 million a year in aid as a result of the coup.
The European Commission suspended aid to Fiji for three years after the 2000 coup.
Last week, the EU said it was initiating steps which
might once again result in aid suspension from one of the country's biggest donors.
EU development and aid commissioner Louis Michel said the commission wanted to open consultations under Article 96 of the Cotonou Agreement with other countries in Africa, the Caribbean and the Pacific. The move is the first step required to initiate the suspension of EU co-operation with Fiji.
"I have proposed to the EU member states to take this step because of human rights abuses, breach of democratic principles and lack of respect for the rule of law," Mr Michel said.
"With the welfare of the people of Fiji in mind, we hope the situation can be remedied through consultations and we can avoid suspension of our co-operation."
The EU contributes about $50 million in aid a year to Fiji, the bulk of which has gone into education and infrastructure projects.
It has also contributed about $4 billion during the past 30 years to help sugar production remain competitive. The sugar funding will not be affected.
But world market reforms are set to result in diminishing prices for Fijian sugar exports, projected to drop 36 per cent within three years.
The EU had been about to grant $54 million further a year in sugar-related aid funds to help the economy adapt but it had yet to be signed off. The total value of aid money left at risk is about a $100 million a year.
