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The European Union on Thursday outlawed racism, xenophobia and the "denial of genocide," but the text did not mention anti-Semitism or the Holocaust by name.
The new legislation is applicable to all 27 members states.
With an eye on Europe's Nazi past, EU Justice and Home Affairs Commissioner Franco Frattini said Europe had a moral responsibility "to reaffirm... values of tolerance, of refusal of any kind of violence."
EU agrees on rules to combat racism
"There are no safe havens in Europe for racist violence, for anti-Semitism, for people concretely inciting xenophobic hatred," he said.
Even as they applauded the move, EU officials were quick to point out that the text approved in Luxembourg by the EU Council meeting of justice and home affairs ministers was a dilution of the original 2001 proposal.
European officials said, however, that Thursday's deal, which still needs to be vetted by national parliaments, was a major achievement.
"It is going to have implications for member states' legislation," said German Justice Minister Brigitte Zypries, who chaired the talks. "It is an important political signal for the EU."
Frattini said the new rules were aimed at sending a strong message on Europe's commitment to fighting racism, xenophobia and anti-Semitism, which have been on the rise across the continent in recent years.
The European Jewish Congress supported the symbolic importance of Thursday's decision, even as it attacked the exclusion of anti-Semitism from the document.
"As anti-Semitic attacks are again on the rise in Europe, the EJC would have hoped that this initiative would have at least included some overt reference to anti-Semitism," said EJC political consultant Ilan Moss.
"Anti-Semitism is the oldest form of racism in Europe, and is nowhere near from disappearing. Europe has a special historic responsibility to combat anti-Semitism, and it is a shame that the final version of the Framework Decision did not include this," Moss said.
But a spokesman for the council told The Jerusalem Post that anti-Semitism was implied under the reference to religion. He added that although the word Holocaust did not appear in the text under the section that dealt with the denial of genocide, the legislation was clearly intended to apply to it given that it was a crime under the Tribunal of Nuremberg, which is referenced in the text.
According to the legislation, known as a "Framework Decision," it is now illegal to publicly incite to violence and hatred against persons or members of groups defined by race, color, religion, descent, or national or ethnic origin. This prohibition includes the distribution of tracts, pictures and other materials.
It also criminalizes "denying or grossly trivializing crimes of genocide, crimes against humanity and war crimes" as defined in the Statute of the International Criminal Court (Articles 6, 7 and 8) and under the Tribunal of Nuremberg.
In the proposal, member states are asked to insure that such activity is punishable by imprisonment of one to three years. But it adds that the states can choose to punish only that conduct which disturbs public order or is threatening, abusive or insulting.
It also says that as the result of the new law, member states should not have to alter their free speech principles.
The council said it would review the legislation in two years to see if additional legal instruments are needed to insure that racism, xenophobia and the denial of genocide are effectively combated.
A spokesman for the EU Council said the language was deliberately broad and refrained from specifically naming historical events to which the genocide denial prohibition would apply, or from labeling certain symbols as inciteful. He said the EU feared that if the language was more specific a number of countries would have been concerned about the issue of free speech and would not have passed the law.
The law was first initiated in 2001, but it failed to pass the council in 2003 and 2005. It was revived in 2007 by Germany, which holds the rotating EU presidency for the first half of this year.
Earlier in the day it appeared as if the legislation might once more fail because a number of Baltic states were upset the text did not mention major Stalinist atrocities and crimes committed by totalitarian regimes.
As part of a compromise deal reached with those states, the council issued a statement saying it deplored such crimes.
Zypries said the EU would also organize a public debate on the issue of other massacres or hate crimes, notably those committed during Communist times, which are not included in the new rules.
Despite the relief EU officials felt at having passed the legislation, anti-racist groups and other critics have slammed it, saying it will do little to boost existing national anti-racism rules, many of which already go further than the new EU measures.
They claim vague terms in the proposal and weak jail terms will do little to help members take a firm stand against anti-Semitism and other racist incitement.
It addition, they said they were concerned the text allowed EU nations to opt out of enforcement if such rules do not exist under their national laws.
Many EU nations already ban denial of the Holocaust, including Germany, France, Spain, Austria and Belgium; however others such as Denmark allow the publishing of hate literature under their freedom of expression legislation.
AP contributed to this report.