No C 227/2 Official  Journal  of the European  Communities 10. 9. 79 
3. The  proposed  Regulation  stipulates  that  the 
subsidized  loans  must  be devoted  to financing  projects 
and programmes  relating  to the infrastructure,  provided 
such  loans  are consistent  with  the Community's  priority 
objectives,  especially  those  of regional  policy.  It further 
stipulates  that  the  interest  rate  subsidy  shall  be 3 % a 
year.  The  amount  of interest  rate  subsidies  financed  from 
this budget  may  not exceed  1 000  million  European  units 
of account,  divided  into  five  annual  instalments  of 200 
million  European  units  of account  each. 
4. The  Committee  approves  the proposal  to grant  the 
interest  rate  subsidies  so long  as they  are  in respect  of 
loans  used  primarily  for  financing  infrastructure  and energy  projects  and  programmes  which  are in line  with 
the Community's  priority  objectives.  The  Committee 
considers,  however,  that  to achieve  the  aims  set out  in 
paragraph  2 above,  all projects  to be financed  from  such 
subsidized  loans  should  be properly  appraised,  so as to 
ensure  that  the  returns  on them  reflect  as closely  as 
possible  the 'opportunity  cost'  of capital  in the recipient 
country. 
5. The  Committee  hopes  that  this  Regulation  will 
achieve  its objective,  but considers  that  the ability  of such 
a measure  to bring  economic  performances  within  the 
Community  closer  together  should  not  be  over-
estimated. 
Done  at Brussels,  22 May  1979. 
The Chairman 
of the Economic  and  Social  Committee 
Fabrizia  BADUEL  GLORIOSO 
Opinion  on the  possible  ways  of achieving  better  coordination  of the  Member  States' 
economic  policies  with  a view  to greater  convergence  of economic  performance 
The opinion  of the Committee  is not based  on any  text. 
A. LEGAL  BASIS  FOR  THE  OPINION 
At its 167th  plenary  session  held  on 4 and  5 April  1979  the Committee,  acting  on a proposal 
from  the Bureau,  decided  to deliver  an opinion  on the  abovementioned  subject  on its own 
initiative. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the  above  matter  at its 168th 
plenary  session  held  in Brussels  on 22 and  23 May  1979. 
The full  text  of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the  Treaty  establishing  the European 
Economic  Community,  and  in particular  Article  198 
thereof, 
Having  regard  to the conclusions  of the Presidency  of the 
European  Council  in Paris  on 12 and  13 March  1979 
(Chapter  IV 'Convergence'), 
Having  regard  to  the  communication  from  the 
Commission  to the  European  Council  entitled  'Use  of 
Community  instruments  and  greater  convergence  of 
economic  performance'  (Doc.  COM(79)  116  final  of 
7 March  1979), Having  regard  to the fourth  paragraph  of Article  20 of 
the Rules  of Procedure, 
Having  regard  to the decision  taken  by the Economic  and 
Social  Committee  on  4 and  5 April  1979  (on  the 
proposal  from  its Bureau)  to draw  up an opinion  on the 
matter, 
Having  regard  to the  decision  taken  by  its Bureau 
instructing  the  Section  for  Economic  and  Financial 
Affairs  to draw  up an opinion  and  a report  on the matter, 
Having  regard  to the  opinion  issued  by the  Section  for 
Economic  and  Financial  Questions  at its 51st  meeting 
held  on 8 May  1979, 
10. 9. 79 Official  Journal  of the European  Communities No C 227/3 
Having  regard  to the  oral  report  submitted  by  the 
rapporteur,  Mr Margot, 
Having  regard  to the opinion  adopted  on 24 June  1975 
(on the basis  of Mr O'Ceallaigh's  report)  on the degree  of 
convergence  of Member  States'  economic  policies  and 
the extent  to which  Member  States'  economic  policies 
comply  with  Community  objectives  (x), 
Having  regard  to the  discussions  at its 168th  plenary 
session  held  on 22 and  23 May  1979  (meeting  of 22 May 
1979), 
Whereas  the European  Council  considers  that  increased 
convergence  of the economic  policies  and  performances 
of the Member  States  is required  for the implementation 
of the European  monetary  system,  which  should  make  an 
important  contribution  towards  stable  and  sustained 
growth  in the Community; 
Whereas  the  European  Council  has  requested  the 
Council  (Economic  and  Financial  Affairs)  to strengthen 
the means  of coordinating  economic  policy,  on the basis 
of a proposal  from  the Commission,  and  has  moreover 
called  upon  the Council  and  the Commission  to examine 
in depth  how  the  Community,  through  its entire  range 
of policies,  can  make  a greater  contribution  towards 
increased  convergence  of the Member  States'  economies 
and a reduction  of the disparities  between  them, 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
unanimously: 
1. The  European  Council  and  increased  economic 
convergence 
1.1. The  Committee  approves  (Chapter  IV 
'Convergence')  of the  conclusions  of the  Presidency  of 
the European  Council  of 12 and  13 March  1979.  It notes 
in particular  that  these  conclusions  confirm  that  'the 
implementation  of the  European  monetary  system  . . . 
must  be supported  by increased  convergence  of the 
economic  policies  and  performances  of the  Member 
States'. 
1.2. This  implies  not  only  better  coordination  of the 
Member  States'  short-term  economic  policies  but  also 
increased  convergence  of their  medium-term  economic 
policies  and  performances.  As regards  the short  term,  the 
Committee  would  refer  to the opinion  on the economic 
situation  in the  Community,  which  is to be adopted 
shortly. 
1.3. The  Committee  agrees  with  the view  expressed  in 
the conclusions  of the  Presidency  of the  European 
Council  that  convergence  of economic  performance 
requires  suitable  measures,  for which  responsibility  lies 
primarily  with  the  Member  States  but  which  can  and 
(i) OJNoC  263,  17. 11. 1975,  p. 1. must  be  supported  and  guided  by  the  various 
Community  policies  within  the  framework  of increased 
solidarity. 
1.4. The  Committee  appreciates  the  difficulties  the 
Member  States  will  have  to overcome  if they  are to play 
their  part  in increasing  the  convergence  of economic 
policies  and  performances.  It would,  however,  stress  the 
need: 
— for  the Governments  of the Member  States  to check 
at regular  intervals  whether  their  economic  policies 
are convergent,  in view  of the  urgent  need  to 
promote  employment,  growth  and  price  stability, 
— for  mutual  consultation  between  the Governments  of 
the Member  States  before  any  decisions  are  taken 
that could  have  an influence  on convergence, 
— for  governments  to  impress  upon  national 
parliaments  and  public  opinion  the  desirability  of 
measures  to promote  convergence. 
The Committee  thinks  that  the  European  Parliament 
should  play  a stimulating  role  here.  The  European 
Parliament  could  help  in  making  public  opinion 
throughout  the Community  aware  of the importance  of 
such  measures. 
2. The  existing  instruments  and  the entire  range 
of policies 
2.1. The  Committee  notes  that,  at the request  of the 
European  Council,  the  Commission  has  issued  a 
communication  entitled  'Use  of Community  instruments 
and greater  convergency  of economic  performance'.  The 
European  Council  has  asked  the Council  (Economic  and 
Financial  Affairs)  to consider  what  action  should  be 
taken  on the proposals  contained  in that  communication, 
and has  also  recommended  (to  the  Council  and  the 
Commission)  a more  detailed  study  of the application  of 
the entire  range  of policies,  on the  basis  of which  the 
abovementioned  proposals  could  make  an even  greater 
contribution  towards  increased  convergence  of the 
Member  States'  economies. 
2.2. The  Committee  also  considers  that  effective  use 
of the existing  Community  financial  instruments  will  not 
be enough  to bring  about  an appreciable  reduction  in the 
disparities  between  the Member  States'  economies. 
2.3. An  in-depth  study  of the  application  of all 
policies  as a contribution  towards  greater  convergence 
must,  in the  Committee's  view,  set out  from  a sound 
definition  of convergence  policy.  The  goal  must  not  be 
convergence  culminating  in uniformity.  Convergence 
must  not  lead  to a mere  levelling-out  but must  be aimed 
rather  at reducing  the  structural  disparities  between 
Member  States  that  could  adversely  affect  the operation 
of the  European  monetary  system  and  at promoting 
universal  higher  growth,  greater  price  stability  and  a 
better  employment  situation. 
No C 227/4 Official  Journal  of the European  Communities 10. 9. 79 
2.4. The  Committee  intends  to review  all Community 
policies  in conjunction  with  the  preparation  and 
updating  of the  Community  medium-term  economic 
policy  programmes,  but  wishes  to concentrate  in this 
opinion  on the  Commission's  communication  on the 
use of the financial  instruments. 
3. The  use of the existing  financial  instruments 
3.1. The  communication  from  the  Commission  to 
the European  Council  entitled  'Use  of Community 
instruments  and  greater  convergence  of economic 
performance'  (Doc.  COM(79)  116)  rightly  recognizes 
the relative  importance  of the Community  instruments  in 
connection  with  the desired  convergence,  which  depends 
primarily  on the  Member  States'  economic,  monetary 
and social  policies  and  their  closer  coordination. 
3.2. The  Commission  considers  that  the instruments 
for financing  balance-of-payments  deficits  can  play  a 
significant  role  in promoting  greater  convergence  of 
economic  performance  although  it admits  that  the results 
have  not always  come  up to expectations.  That  is why  it 
thinks  that  these  instruments  should  be strengthened  and 
allotted  more  funds. 
3.3. In  assessing  the  role  the  Community  financial 
instruments  can  play  it is necessary  to distinguish 
between  the  various  funds  and  institutions,  each  of 
which  has  its own  specific  function. 
3.3.1.  As  the Commission  itself  admits,  the funds  with 
a structural  objective  (EAGGF,  Social  Fund,  Regional 
Fund)  have  not so far made  any  important  contribution 
towards  increasing  the  convergence  of  economic 
performance,  which  suggests  that  some  activities'have 
had economic  results  at variance  with  the  aim  of 
convergence.  The  Committee  considers  that  the criticism 
expressed  in the  Commission  document  should  be 
further  developed  and  that  those  responsible  for  the 
various  funds  should  modify  the  pattern  of their 
activities  where  appropriate. 
3.3.2.  As  far as the loan  instruments  (EIB,  ECSC)  are 
concerned,  the Commission  refers  to the growing  volume 
of Community  loans.  It cannot  be denied  that  certain 
Member  States  have  been  able  to make  substantial  use of Community  loans  (particularly  Ireland,  which  for 1978 
was granted  loans  amounting  to 124%  of the  gross 
domestic  product).  The  Committee  nevertheless  thinks 
that even  the  increased  volume  of loan  funds  now 
provided  for  can  make  only  a limited  contribution 
towards  eliminating  the  disparities  in  economic 
performance  at national,  regional  and  sectoral  level. 
4. Final  comments  and  proposals 
4.1. The  Committee  agrees  with  the  guidelines 
proposed  by the Commission,  which  are aimed  at better 
coordination  of  the  various  Community  financial 
instruments,  more  selective  use of funds  according  to the 
seriousness  of the handicaps  to be overcome  and  support 
for the efforts  of the national  authorities,  all within  the 
framework  of an overall  convergence  strategy  that 
furthers  basic  socio-economic  and  monetary  objectives. 
4.2. The  Committee  does  not dispute  that  the volume 
of funds  made  available  to the Community  instruments  is 
an important  factor  and  shares  the  Commission's 
opinion  that  it is necessary  to avoid  any  regressive  trend 
as far as Community  revenue  is concerned.  It would  also 
point  out that  the McDougal  report  took  the view  that,  if 
monetary  union  was  to be viable,  the  Member  States 
would  have  to transfer  between  2 • 5 and  7 • 5 % of the 
gross  domestic  product  to the Community  budget,  which 
is inconceivable  in the  present  circumstances.  The 
Committee  would  further  lay particular  stress  on the 
criteria  to be applied  in allocating  the  funds  at the 
disposal  of the Community  instruments. 
4.3. Since  the  effectiveness  of the  Community 
instruments  depends  largely  on the policies  pursued  by 
the Member  States  and  on the  use  they  make  of these 
basically  'complementary'  funds,  the  Committee 
recognizes  the  need  for  permanent  monitoring  of the 
results  of Community  action. 
4.4. The  Committee  therefore  considers  that  the 
Community  financial  instruments  should  include  in their 
periodical  reports  details  of the  contribution  they  are 
making  towards  convergence  of economic  performance. 
In addition,  coordination  of the  various  instruments 
should  be given  special  attention  in the  Community 
medium-term  economic  policy  programmes. 
Done  at Brussels,  22 May  1979. 
The Chairman 
of the Economic  and  Social  Committee 
Fabrizia  BADUEL  GLORIOSO 
10. 9. 79 Official  Journal  of the European  Communities No C 227/5 
ANNEX 
to the opinion  of the Economic  and  Social  Committee 
The following  amendments  were  rejected  during  the discussions: 
Paragraph  2.3 
Delete  the third  sentence  and  substitute: 
'Convergence  must  not lead  to a mere  levelling-out  but must  be aimed  at reducing  those  disparities  in 
economic  performance  between  Member  States  which  could  adversely  affect  the operation  of the 
European  monetary  system,  in particular  at promoting  higher  growth,  greater  price  stability  and 
reduced  unemployment.' 
Reasons 
Structural  disparities  between  different  Member  States  will  not  affect  the operation  of the European 
monetary  system  provided  that  the levels  of economic  performance  (as measured  by rates  of inflation, 
economic  growth,  and  balance  of payments)  converge. 
Voting 
For: 15; against:  31; abstentions:  34. 
Paragraph  4.2 
Re-word  the beginning  of this  paragraph  to read  as follows: 
'The  Section  does  not dispute  that  the volume  of funds  made  available  to the Community  instruments 
is an important  factor.  But rather  than  a regressive  trend  as far as Community  revenue  is concerned, 
which  the Commission  intends  to avoid,  the Section  is afraid  of an increase  in Community  levies 
unaccompanied  by a corresponding  reduction  in the charges  imposed  by national  governments  on the 
taxpayer.  It considers  that  any  growth  in Community  intervention  should  be accompanied  by a 
parallel  reduction  in national  intervention  and  a corresponding  lowering  of the charges  that  the 
Member  States  impose  on their  citizens.' 
Voting 
For: 30; against:  55; abstentions:  11. 
The following  passage  was  deleted  as a result  of an amendment  adopted  during  the discussions: 
Paragraph  1.4,  third  indent 
— to impress  upon  national  parliaments  and  public  opinion  the desirability  of measures  to promote 
convergence.