PROTOCOL 2 on financial cooperation between the Socialist Federal Republic of Yugoslavia and the European Economic Community

Article 1

The Community shall participate, within the framework of financial cooperation, in the financing of projects designed to contribute to the economic development of Yugoslavia and of mutual interest to the Socialist Federal Republic of Yugoslavia and the Community.

Article 2

1. For the purposes specified in Article 1, and for a period of five years from the date of implementation of the financial cooperation, an aggregate amount of 200 million European units of account (EUA) may be committed in the form of loans from the European Investment Bank, hereinafter called "the Bank", granted from its own resources.

2. The amount fixed in paragraph 1 of this Article shall be used to part-finance specific capital projects submitted to the Bank by banks or organizations of associated labour having their seat in Yugoslavia.

3. Projects shall be examined for eligibility and loans granted in accordance with the detailed rules, conditions and procedures laid down by the Bank's Statute.

Article 3

1. The amounts to be committed each year pursuant to Article 2 (1) shall be distributed as evenly as possible throughout the period of application of this Protocol. During the initial period of application, however, a proportionately higher amount may, within reasonable limits, be committed.

2. Any funds not committed by the end of the period referred to in Article 2 (1) may be used, until exhausted. In that event the funds shall be used under the same conditions as provided for in this Protocol.

Article 4

Loans granted by the Bank shall be subject to terms as to duration established on the basis of the economic and financial characteristics of projects ; the interest rate shall be that applied by the Bank at the time of signature of each loan contract.

Article 5

Aid contributed by the Bank for the execution of projects may take the form of co-financing in which, in particular, Yugoslav banks and the credit bodies and institutions of Member States or of third States, or international finance organizations, would take part.

Article 6

Organizations of associated labour established in accordance with Yugoslav law, whether or not including the participation of foreign investors in the form of a joint venture, shall have access on equal terms to the financing earmarked for financial cooperation.

Article 7

The execution, management and maintenance of projects financed within the framework of financial cooperation between the Socialist Federal Republic of Yugoslavia and the European Economic Community shall be the responsibility of the beneficiaries referred to in Article 2 (2).

The Bank shall ensure that its financial aid is expended in accordance with the agreed allocations and under optimum economic conditions.

Article 8

1. Participation in tendering procedures and other procedures for the award of contracts shall be in accordance with the Bank's normal practice.

2. Yugoslavia shall apply to contracts awarded for the execution of projects financed within the framework of financial cooperation fiscal and customs arrangements at least as favourable as those applied in respect of other international organizations.

Article 9

Yugoslavia shall take the necessary measures to ensure that interest and all other payments due to the Bank in respect of loans granted in the context of financial cooperation are exempted from any taxes or levies imposed by the federal authorities, the republics, the autonomous provinces or the communal authorities.

Article 10

Where a loan is accorded to a beneficiary referred to in Article 2 (2), the provision of a guarantee by the Socialist Federal Republic of Yugoslavia may be required by the Bank as a condition of the grant of the loan.

Article 11

Throughout the duration of the loans accorded pursuant to this Protocol, Yugoslavia shall undertake to take all necessary measures, in conformity with its national legislation, to make available to debtors enjoying such loans and to guarantors of the loans the foreign currency necessary for the payment of interest, commission and other charges and repayment of the principal.

Article 12

The results of financial cooperation may be examined within the Cooperation Council.