Proposal for a Council Regulation on financial and technical measures to support the reform of economic and social structures in Mediterranean non-member countries and territories

(95/C 232/05)

(Text with EEA relevance)

COM(95) 204 final - 95/0127(CNS)

(Submitted by the Commission on 7 June 1995)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 235 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas the stability and prosperity of the Mediterranean region require a new phase of relations to be established which foresee the establishment of a free trade area between the European Community and Mediterranean non-member countries and territories as well as the associated applicant countries Cyprus and Malta and a customs union with Turkey;

Whereas the Essen European Council of 9 and 10 December 1994 affirmed that the Mediterranean constitutes a priority area of strategic importance to the European Union and adopted the aim of establishing a Euro-Mediterranean partnership;

Whereas it is necessary to pursue efforts to ensure that the Mediterranean becomes an area of political stability and security founded on respect for democracy, good governance and respect for human rights;

Whereas for the non-member Mediterranean countries and territories the establishment of a free trade area will involve profound structural reform;

Whereas it is therefore necessary to support the efforts that Mediterranean non-member countries and territories will undertake to reform their economic and social structures;

Whereas intensified regional cooperation and in particular the development of economic links and trade flows between Mediterranean non-member countries and territories which are conducive to economic reform and restructuring should be encouraged;

Whereas the bilateral protocols on financial and technical cooperation concluded by the Community with Mediterranean non-member countries provided a useful initial basis for cooperation and now it is necessary to build on the experience which has been acquired and to enter into a new partnership within a unified framework;

Whereas rules for the administration of such partnership have to be determined;

Whereas to this end the present Regulation will apply to the range of measures which came under Council Regulation (EEC) No 1762/92 on the implementation of the protocols on financial and technical cooperation concluded by the Community with Mediterranean non-member countries, Council Regulation (EEC) No 1763/92 concerning financial cooperation in respect of all Mediterranean non-member countries for measures whose scope extended beyond the scope of a single country, Council Regulation (EC) No 1734/94 on financial and technical cooperation with the Occupied Territories and proposal COM(94) 289 final for a Council Regulation in the field of employment creation and support to small and micro-enterprises in the Maghreb countries;

Whereas therefore, the present Regulation replaces the abovementioned Regulations as from 1 January 1997, whilst it is necessary to maintain Regulation (EEC) No 1762/92 in force for the management of financial protocols still applicable at this date and for the commitment of funds remaining under the expired financial protocols;

Whereas in respect of environmental projects the loans granted by the European Investment Bank, hereinafter referred to as 'the Bank`, from its own resources under conditions laid down by it, in accordance with its Statute, may receive an interest-rate subsidy;

Whereas in loan operations involving interest-rate subsidies, the granting of a loan by the Bank from its own resources and the granting of an interest-rate subsidy financed by the budgetary resources of the Community must be linked and are conditional upon each other, whereas the Bank may, in accordance with its Statute, and in particular by a unanimous decision of its Board of Directors in the presence of an unfavourable opinion by the Commission, decide to grant a loan from its own resources, subject to granting of the interest-rate subsidy; whereas, on account of this aspect, it is necessary to ensure that the procedure adopted for granting interest-rate subsidies results in every case in an express decision, whether to grant the subsidy or to refuse it, where appropriate;

Whereas it is necessary to make provision for a Committee consisting of representatives of the Member States to assist the Bank in the tasks attributed to it to implement this Regulation;

Whereas to allow for effective management of the measures foreseen in this Regulation and to facilitate policy dialogue with the beneficiary countries a multiannual approach is required;

Whereas the measures foreseen by the present Regulation go beyond the framework of development cooperation and are destined to apply to countries which cannot be classified as developing countries; therefore this Regulation cannot be adopted other than on the basis of the competences foreseen by Article 235 of the EC Treaty,

HAS ADOPTED THIS REGULATION:

Article 1

1. The Community shall implement measures to support the efforts that Mediterranean non-member countries and territories listed in the Annex (hereinafter referred to as 'Mediterranean partners`) will undertake to reform their economic and social structures.

2. The beneficiaries of support measures may include not only States and regions but also local authorities, regional organizations, public agencies, local or traditional communities, organizations supporting business, private operators, cooperatives, mutual societies, associations, foundations and non-governmental organizations.

Article 2

1. Support measures shall be undertaken in coherence with the objective of achieving long-term stability and prosperity and in particular in the fields of economic transition, achieving socio-economic equilibrium and regional and cross-border cooperation.

2. Support to economic transition and the establishment of a Euro-Mediterranean free-trade area shall include notably:

- private sector development and employment creation, including improvement of the business environment and support to SMEs,

- promotion of European private investment, including industrial cooperation,

- upgrading of economic infrastructure,

- operations in support of structural adjustment programmes.

3. Support to achieving a better socio-economic balance shall include notably:

- the improvement of social services,

- harmonious and integrated rural development,

- reinforced cooperation concerning fisheries,

- environmental cooperation,

- participation of civil society in development,

- integrated development of human resources, notably in education and vocational training, as well as improving the potential for scientific and technological research,

- strengthening democracy and the respect for human rights,

- cultural cooperation,

- through the above measures, cooperation and technical assistance in order to reduce illegal immigration, drugs trafficking and international crime.

4. Regional and cross-border cooperation shall be supported notably by:

- establishing structures and improving infrastructure for regional cooperation between Mediterranean partners,

- establishing the infrastructure necessary for regional trade, including transport, communications and energy, improvement of the regulatory framework and small-scale infrastructure projects in the context of border-crossing facilities: particular attention will be paid to border-crossing facilities on borders between the Mediterranean partners and the Union, to cooperation on the level of large geographic regions as well as to measures complementary to those undertaken in this field within the Union;

- cooperation with the Arab League and its agencies as well as other Pan Arab and regional activities.

5. Good governance shall be promoted by supporting key institutions, including local government, trade unions, media and organizations supporting business and by assisting in the improvement of the capacity of the public administration to develop policies and manage implementation.

6. Measures taken under this Regulation shall take due regard to the promotion of the participation of women. Special importance shall be attached to the creation of jobs for women and young people.

7. The activities financed under this Regulation shall mainly take the form of technical assistance, training, institution building, policy dialogue, information, seminars, studies, investment projects and actions to ensure the visibility of Community projects and programmes. Recourse should be made to decentralized cooperation where this may prove effective. Risk capital operations and interest rate subsidies may be financed notably in collaboration with the European Investment Bank. Costs incurring to the beneficiaries from the preparation, implementation, monitoring, audit and execution of support measures may also be covered.

8. When an esesential element for the continuation of support measures is missing, in particular in cases of violation of democratic principles and human rights, the Council may, on a proposal from the Commission, acting by a qualified majority, decide upon appropriate measures concerning the assistance to a Mediterranean partner.

Article 3

1. Measures to be financed under this Regulation shall be selected taking account, inter alia, of the beneficiaries' priorities, evolving needs and progress towards structural reform as well as on the basis of an assessment of the effectiveness of those measures in achieving the objectives aimed at by Community support, in line with the provisions of Association or Cooperation Agreements where applicable.

2. Indicative programmes covering three-year periods shall be established at national and regional level, taking into account the priorities identified with the Mediterranean partners, including the conclusions of economic dialogue, and shall be updated annually, as necessary. These programmes shall define the principal objectives of and guidelines for Community support in the indicative areas referred to in Article 2 and may include a financial estimate. These programmes may be amended during the period of their application taking into account the experience accumulated in the implementation of this regulation as well as progress in structural reform, macroeconomic stabilization and social progress achieved by the Mediterranean partners.

3. Financing decisions based notably on these indicative programmes shall be adopted in accordance with the procedure provided for in Article 10.

Article 4

1. The Commission shall, together with the Member States and on the basis of the information supplied by them, ensure the effective coordination of the assistance efforts undertaken by the Community and individual Member States. In addition coordination and cooperation with international financial institutions and other donors shall be encouraged.

2. The measures referred to in this Regulation may be granted by the Community, either independently or in the form of cofinancing with the Mediterranean partners themselves or with, on the one hand, public or private bodies of the Member States and the European Investment Bank, or on the other hand, third countries or multilateral bodies.

Article 5

1. Community financing shall notably be in the form of grants or risk capital. Concerning cooperation measures in the field of the environment it may equally take the form of interest rate subsidies for loans granted by the Bank on its own resources.

2. Grants may be used to finance or cofinance activities, projects or programmes which contribute to the realization of the objectives defined in Article 2. The extent to which activities, projects or programmes will be financed by grants shall also depend on their capacity to yield financial return.

3. Financing decisions and any financing agreements and contracts resulting therefrom shall expressly provide, inter alia, for supervision and financial control by the Commission and audits by the Court of Auditors to be carried out on the spot.

Article 6

1. Measures under this Regulation may cover expenditure on imports of goods and services and local expenditure needed to carry out the projects and programmes. Taxes, duties and charges shall be excluded from Community financing.

Contracts for the implementation of Community-funded measures under this Regulation shall enjoy, in the Mediterranean partners concerned, fiscal and customs arrangements no less favourable than those applied by such partners in respect of the most favoured State or most favoured international development organization.

2. Maintenance and operating costs may be coverd for training, communications and research programmes and for other projects; however, for the latter such costs may be covered only in the start-up stage on a declining scale.

3. For investment projects Community financing shall be combined with own resources of the promoter or with financing at market conditions, taking into account the nature of the project. However, Community financing may not exceed 80 % of total investment cost.

Article 7

1. Invitations to tender and contracts shall be open on equal terms to all natural and legal persons of the Member States and of Mediterranean partners.

2. In the case of cofinancing, participants from countries other than the Mediterranean partners concerned in invitations to tender and contracts may be authorized by the Commission, on a case-by-case basis. In these cases participation of undertakings from third countries shall only be acceptable if reciprocity is granted.

Article 8

1. Financing decisions exceeding ECU 2 000 000 other than those relating to interest-rate subsidies on European Investment Bank loans and risk capital shall be adopted in accordance with the procedure laid down in Article 10.

2. Financing decisions on overall allocations shall be adopted in accordance with the procedure laid down in Article 10. The Commission shall inform the Committee referred to in Article 10 of the use made of these overall allocations.

3. Decisions amending decisions adopted in accordance with the procedure provided for in Article 10 shall be taken by the Commission where they do not entail any substantial amendments or additional commitments in excess of 20 % of the original commitment.

4. Financing decisions relating to interest-rate subsidies on Bank loans shall be adopted in accordance with the procedure laid down in Article 11. Financing decisions relating to risk capital shall be adopted in accordance with the procedure laid down in Article 12.

Article 9

Measures referred to in this Regulation which are financed from the general budget of the European Communities shall be appraised, decided upon and administered by the Commission, without prejudice to the management by the Bank of interest-rate subsidies and risk-capital operations under authority conferred on it by the Commission on behalf of the Community pursuant to Article 105 (3) of the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities.

Article 10

1. The Commission shall be assisted by a Committee composed of the representatives of the Member States and chaired by the representative of the Commission (hereinafter referred to as the 'Committee`) to be known as the 'MED Committee`. A representative of the Bank shall take part in the proceedings, without the right to vote.

2. The representative of the Commission shall submit to the Committee a draft of the measures to be taken. The Committee shall deliver its opinion on the draft within a time limit the chairman may lay down according to the urgency of the matter. The opinion shall be delivered by the majority laid down in Article 148 (2) of the EEC Treaty in the case of decisions which the Council is required to adopt on a proposal from the Commission. The votes of the representatives of the Member States within the Committee shall be weighed in the manner set out in that Article. The chairman shall not vote.

3. The Commission shall adopt measures, which shall apply immediately. However, if these measures are not in accordance with the opinion of the Committee, they shall be communicated by the Commission to the Council forthwith. In that event, the Commission shall defer application of the measures which it has decided for a period of six weeks.

The Council, acting by a qualified majority, may take a different decision within the period laid down in the first subparagraph.

4. The Committee may examine any other question relating to the implementation of this Regulation which may be put to it by its chairman, possibly at the request of the representative of a Member State and, in particular, any question relating to general implementation, the administration of the programme, cofinancing and the coordination referred to in Article 4.

5. The Committee shall adopt its rules of procedure by qualified majority.

6. The Commission shall keep the Committee regularly informed and will supply information on the implementation of measures under this Regulation.

7. The European Parliament shall be kept regularly informed of the implementation of this Regulation.

Article 11

1. As regards the projects to be financed by subsidized loans in the field of the environment, the Bank shall draw up the financing proposal in accordance with its Statute. The Bank shall seek the opinion of the Commission, in accordance with Article 21 of the Statute, and of the Committee referred to in Article 13.

2. That Committee shall issue an opinion on the Bank's proposal. The Commission representative shall convey to the Committee the position of his institution on the project concerned, and in particular on its conformity with the objectives of this Regulation and with the general guidelines adopted by the Council. In addition, the Committee shall be informed by the Bank of the non-subsidized loans which the Bank envisages granting from its own resources.

3. On the basis of that consultation, the Bank shall ask the Commission to take a financing decision to grant the interest-rate subsidy for the project concerned.

4. The Commission shall submit to the MED Committee a draft decision authorizing or, if appropriate, refusing the financing of the interest-rate subsidy.

5. The Commission shall forward the decision referred to in paragraph 4 to the Bank, which, where the decision grants the subsidy, may grant the loan.

Article 12

1. The Bank shall submit to the Committee referred to in Article 13, for its opinion, projects concerning risk-capital operations. The Commission representative shall convey to the Committee the position of his institution on the project concerned and in particular on its conformity with the objectives of this Regulation and with the general guidelines adopted by the Council.

2. On the basis of this consultation, the Bank shall forward the project to the Commission.

3. The Commission shall take the financing decision within a period appropriate to the characteristics of the project.

4. The Commission shall forward the decision referred to in paragraph 3 to the Bank, which shall take the appropriate measures.

Article 13

1. A Committee consisting of the representatives of the Member States, hereinafter referred to as the 'Article 13 Committee`, shall be set up at the Bank.

The Committee shall be chaired by the representative of the Member State currently holding the presidency of the Board of Governors of the Bank; its secretariat shall be provided by the Bank. A representative of the Commission shall take part in its proceedings.

2. The rules of procedure of the Committee shall be adopted unanimously by the Council.

3. The Committee shall act by a qualified majority in accordance with Article 148 (2) of the Treaty.

4. Within the Committee, the votes of the representatives of the Member States shall be weighted in accordance with Article 148 (2) of the Treaty.

Article 14

1. The Commission shall, together with the Bank, examine progress achieved in implementing the measures undertaken pursuant to this Regulation and shall submit to the European Parliament and the Council an annual report, no later than 30 April. The report shall contain information on the measures that have been financed during the year, with due regard for confidentiality, and provide an assessment of the results obtained.

2. The Commission and the Bank shall evaluate the projects that concern each of them, in order to determine whether the objectives have been achieved and to establish guidelines for stepping up the effectiveness of future activities. The evaluation reports shall be made available to the Council and the European Parliament.

Article 15

1. Council Regulation (EEC) No 1763/92 and Council Regulation (EC) No 1734/94 are repealed as from 31 December 1996.

2. As from 31 December 1996 Council Regulation (EEC) No 1762/92 shall apply for the management of the protocols still in force at this date and for the commitment of funds remaining under the expired protocols.

Article 16

This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

ANNEX

Partner countries and territories referred to in Article 1

The People's Democratic Republic of Algeria

The Republic of Cyprus

The Arab Republic of Egypt

The State of Israel

The Kingdom of Jordan

The Republic of Lebanon

The Republic of Malta

The Kingdom of Morocco

The Arab Republic of Syria

The Republic of Tunisia

The Republic of Turkey

The Occupied Territories of Gaza and the West Bank of the River Jordan