# CE2004088EN.01019501.xml

| 8.4.2004 | EN | Official Journal of the European Union | CE 88/195 |
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8.4.2004

EN

Official Journal of the European Union

CE 88/195

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(2004/C 88 E/0200)

WRITTEN QUESTION E-0583/04

by Nirj Deva (PPE-DE) to the Commission

(26 February 2004)

Subject:   EU aid money to Zimbabwe

Subject:

In view of findings made in the Court of Auditors Annual Report for the financial year 2002, more precisely the part entitled ‘Report on the activities of the 6th, 7th and 8th European Development Funds’, Chapter V — A special case: The decision taken by the General Affairs Council and the monetary situation in Zimbabwe', (1), I would like to ask what the Commission is going to do about the waste of EDF resources (reduction of the value of the EDF resources by 89 % as noted by the Court of Auditors in Paragraph 68(a)) and the misuse of these resourcesby those members of the Mugaberegime who are listed in the ‘Council Regulation (EC) No 310/2002 (2) concerning certain restrictive measures in respect of Zimbabwe’ (Article 2 and Annex 1) but are nevertheless able to obtain foreign currency at the fixed exchange rate of Zimbabwean ZWD 55/USD 1 at a time when their fellow countrymen have been obliged to pay Zimbabwean ZWD 1 500/USD 1?

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Will the Commission, in light of this scandalous misuse of EU money, stop these kinds of facilities for foreign exchange with countries who insist on keeping fixed exchange rates, or will the Commission allow this to happen in the future?

Could the Commission please elaborate why ‘after the Commission delegation had drawn attention to this development, it was instructed to continue to apply the fixed exchange rate when it replenished the accounts used to finance projects and programmes financed by the Community'(see Court of Auditors Annual Report 2002, Chapter V, Paragraph 63) despite the fact that “the Commission incurred a very heavy loss during 2002 at any point when it paid funds into project accounts held in Zimbabwean dollars” (see Court of Auditors Annual Report 2002, Chapter V, Paragraph 64)?

Answer given by Mr Nielson on behalf of the Commission

(6 April 2004)

(6 April 2004)

The Commission does not accept the Court of Auditors’ analysis of the situation for the following reasons:

| — | the use of the parallel exchange rate for official transactions by the banks of Zimbabwe was illegal (see the Commission's reply to paragraph 62 of the Court's report); in fact, the Reserve Bank has on several occasions threatened to prosecute banks trading on the black market. This is why the Delegation was instructed to use the official rate for the replenishment of project accounts, pending the outcome of discussions with the Government and the banks; |
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the use of the parallel exchange rate for official transactions by the banks of Zimbabwe was illegal (see the Commission's reply to paragraph 62 of the Court's report); in fact, the Reserve Bank has on several occasions threatened to prosecute banks trading on the black market. This is why the Delegation was instructed to use the official rate for the replenishment of project accounts, pending the outcome of discussions with the Government and the banks;

| — | the Commission was bound, in 2002, in relation to aid from the European Development Funds, by the procedures set out in the Lomé Conventions, which gave clear powers to the National Authorising Officer (NAO) in relation to the management of the funds, and the rules agreed for their implementation. As the official exchange rate is a matter of national sovereignty, the only possibility of applying a different rate is to negotiate with the NAO and the country's banks. This is what the Commission did when the official rate became unrealistic; |
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the Commission was bound, in 2002, in relation to aid from the European Development Funds, by the procedures set out in the Lomé Conventions, which gave clear powers to the National Authorising Officer (NAO) in relation to the management of the funds, and the rules agreed for their implementation. As the official exchange rate is a matter of national sovereignty, the only possibility of applying a different rate is to negotiate with the NAO and the country's banks. This is what the Commission did when the official rate became unrealistic;

| — | in particular, the Commission considers that the figure of 89 % ‘reduced value’, which the Court applies to payments totalling EUR 4,5 million (less than 5 % of total Community aid to Zimbabwe in 2002), reflects neither the real situation nor the circumstances the Commission faced, if the payments were to remain legal and regular; |
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in particular, the Commission considers that the figure of 89 % ‘reduced value’, which the Court applies to payments totalling EUR 4,5 million (less than 5 % of total Community aid to Zimbabwe in 2002), reflects neither the real situation nor the circumstances the Commission faced, if the payments were to remain legal and regular;

| — | In addition to the negotiation of a ‘blend’ rate to offset the effects of the difference between the official exchange rate and the ‘parallel’ market rate, the Commission and the Delegation took the following important measures:






  — | reducing payments in local currency to a minimum; |
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In addition to the negotiation of a ‘blend’ rate to offset the effects of the difference between the official exchange rate and the ‘parallel’ market rate, the Commission and the Delegation took the following important measures:

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reducing payments in local currency to a minimum;

| — | making euro payments outside the country wherever possible (for instance, by focussing the health programme almost exclusively on drugs procurement); |
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making euro payments outside the country wherever possible (for instance, by focussing the health programme almost exclusively on drugs procurement);

| — | ensuring that the imprest accounts of local project work programmes have euro components. |
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ensuring that the imprest accounts of local project work programmes have euro components.

Total Community aid to Zimbabwe in 2002 came to EUR 94 million, of which only EUR 8 million was spent inside the country. Food aid, agricultural inputs, and medical supplies, for instance, were bought from neighbouring countries.

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(1)  OJ C 286 of 28.11.2003, pp. 355 et seq.

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(2)  OJ L 50, 21.2.2002, p. 4.

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