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COM (85) 429 
 
 
 
Vol. 1985/0 167 
  
 
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Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the openi ng to the public of the historical archives of the European Econom ic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this f ile is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 198 3 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 vom 27 .9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
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COMMISSION OF THE EUROPEAN COMMUNITIES
C0PK85) 429 fin a l
Brussels, 9 august 1985
AIDE-MEMOIRE
O N  T H E  FIXING O F  T H E  E C S C  LEVY R A T E  
A N D  O N  T H E  D R A W IN G  U P  O F  T H E  
E C S C  OPERATING  B U D G E T  F O R  1986
COM C85) 429 fin a l

Preamble Page
I .  G E N E R A L INTRODUCTION 3
A. E C O N O M IC  C O N TE X T 3
1. The economic outlook for 1985 and 1986 3
2. Outlook for the coal industry 8
3. Outlook for the steel industry 9
B. POLICY C O N TE X T 10
1. Coal policy guidelines 1 1
2. Steel policy guidelines 13
.  3. Social and employment policy guidelines 16
4. Financial a ctiv itie s  22
C. B U D G E T A R Y  C O N TE X T 26
1. The E C S C  budget: examination of the comments
m ade by the Court of Auditors in its  report  
on the accounting and financial management of
the E C S C  in 1983 26
2. N ew  approach to the financing of social measures
in connection with the restructuring of the
coal and steel industries 30
I I .  D R A FT E C S C  OPERATING  B U D G E T  F O R  1986 32
A. COM M ISSIO N A P P R O A C H  32
B. FINANCING P R O P O S A LS  33
C. D R A FT B U D G E T  34
A N N E X E S
A. Outturn of the E C S C  operating budget for 1984:
- sum m ary table 35
B. Forecast outturn of the E C S C  operating budget for 1985:
-  sum m ary table 36
C. E C S C  balance sheet at 31 December 1984 38
D. Analysis of requirements reported and resources
available for the financial year 1986 39
I .  R EQ UIREM ENTS R E P O R TE D  F O R  1986 40
1. Ordinary requirements 40
2. Requirements not entered in the budget:
loans for financing subsidized housing 70
I I .  R E S O U R C E S  AVAILABLE 72
1. Resources for the financial year 72
2. Covering of requirements not entered in the
budget 84
3. Sum m ary of resources available for 1986 84
E. Draft E C S C  operating budget for 1986:
-  summary table 85

-  2 -
AIDE-MEMOIRE  
on the fixing of the E C S C  Levy rate and on  
the establishment of the E C S C  operating budget for 1986
A s  usual, the views of Parliament w ill be sought before the Commission  
takes a decision on the levy rate and the E C S C  operating budget for  
the financial year 1986.
This aide-mémoire forms the basis for the consultation of Parliament.  
It  is divided into the following chapters:
I. General introduction.
I I .  Draft operating budget.
Specific factors affecting the covering of budgetary requirements for  
1986 are described in Chapter I I .
The aide-mémoire w ill also be sent to the E C S C  Consultative Committee  
for information.
In its  replies to the Court of Auditors' Report on the accounting and  
financial management of the E C S C  in 1983 the Commission stated that it  
intended to examine the ECSC's current financial policy. The results  
of this examination are set out in Chapter 1.C of the aide-mémoire.
The aide-mémoire takes account of the foreseeable effects of the  
enlargement of the European Communities on 1  January 1986 with the  
accession of Spain and Portugal.

I. G E N E R A L INTRODUCTION
This chapter summarizes the information needed to set the draft E C S C  
operating budget for 1986 in its economic, policy and budgetary context.
A. E C O N O M IC  C O N TE X T
1. The economic outlook for 1985 and 1986
The revival of economic activ ity  found a  firmer base in most Mem ber States  
in 1984. However, average real growth of gross domestic product in the  
Community countries remained low (2.1%), reflecting the restrictive  
effects on domestic demand of adjustment policies in several Mem ber States  
and the possible effect of wage disputes, in particular in the  
United Kingdom. Although it  stopped the f a ll in employment, this  
expansion was not sufficient to absorb the increase in the labour force,  
and unemployment averaged over 10.9% for the year as a whole. However,  
substantial progress w as m ade in reducing the average rate of consumer  
price in flatio n  (6.3%) despite the adverse consequences for import  
prices of the sharp appreciation of the U S  dollar.
There is unlikely to be any substantial change in economic patterns this  
year. Recent estimates indicate that the real increase in Community  
G D P  could rise slightly to around 2.3%; however, behind this Community  
average lie  a marked rise in the United Kingdom (3.5% in 1985 as  
against 1.6% in 1984) following the end of the miners' strike and the  
slight but distinct drop expected in a ll other Mem ber States apart from  
Ita ly  and the Netherlands. In the Community as a  whole domestic  
demand, stocks excluded, should contribute more to growth than in the  
previous year. Private consumption should benefit from a slight increase

in real disposable incomes since the rate of in fla tio n  should f a ll faster  
than the change in average wages. Investment in capital goods should  
continue to pick up, reflecting a general improvement in the financial  
situation of the private sector and an easing in interest rates.
However, building investment might once again drop because of the  
adverse effects the adjustment policies are having on public investment  
and the combined influence which slack demand and the delays caused by  
the exceptionally severe winter are having on housing investment.
The drop in activ ity  forecast for the American economy and the repercussions  
this w ill have on import demand w ilt considerably reduce the growth  
in world trade. According to estimates, the volume of world trade  
outside the Community increased 10%  last year but w ill rise by only  
5.5% in 1985. Nevertheless, the increase in demand on the Community's  
traditional markets and the continuingly favourable competitive position  
of exporters should keep the f a ll in Community exports re la tiv ely  lim ited.  
However, the increase in imports should drop even more as a delayed  
reaction to the increase in the relative price of imports and a decline  
in stock-building. These changes in volume should be more than 
sufficient to m ake up for a slight deterioration in the Community's  
terms of trade and contribute to a greater improvement in the Community's  
current balance of payments with a surplus of around U S D  10 000 m illion,  
corresponding to 0.4% of G D P  for the fu ll year.

-  5  -
The progress m ade in reducing in flation should continue since the  
continuing slowdown in the increase in unit labour costs w ill be backed  
by a certain easing of the inflationary pressure of import prices  
because of the assumed f a ll in the value of the d ollar. The average  
rate of in flation for consumer prices in the Community is therefore  
expected to fa ll by around one percentage point to 5.4%.
Although the increase in production in 1985 is s t i l l  modest by past  
standards (Community G D P  grew by an average 2.9% during the period  
1971-1980), it  should be higher than the increase in labour productivity,  
giving rise to the hope of a slight increase in to tal employment in the  
Community. However, the improvement in the general employment situation  
w ill not be sufficient to absorb the fresh increase in the labour  
force, and unemployment in the Community is expected to reach an average  
of 11.2% of the c iv ilia n  labour force in 1985.
According to the in itia l figures available, the Community economy  
should continue to grow in 1986 at the current rate of 2.25%, but a  
gradual change is expected in the factors underlying this growth.
Domestic demand could benefit from the weakening of the deflationary  
effects of the adjustment policies and the continuing f a ll in in fla tio n .  
In p articular, private consumption should increase while fixed capital  
formation could be encouraged by a slight recovery in building a c tiv ity .  
However, this expansion in domestic demand w ill be offset by a  somewhat  
lower increase in exports reflecting the expected erosion of the  
competitive position of Community exports as a result of exchange rate  
fluctuations.

-  6 -
The expected change in the components of demand should not lead to any  
further drop in imports. However, the balance of goods and services in  
terms of volume should m ake a modest contribution to G D P  growth and,  
together with a slight improvement in the terms of trade, should produce  
a further increase in the Community's trade surplus. Despite the risk of  
a slight deterioration in the invisible trade balance, the Community's current  
surplus is expected to reach U S D  19 000 m illio n , corresponding to 0.7% of G D P.
There is every chance of the current downward trend in in flatio n  
continuing in 1986. Exchange rate movements are like ly  to increase  
import prices, expressed in foreign currencies, at a considerably  
lower rate than in 1985. W age settlements should not stop the continuing  
decline in the rate of in fla tio n . Average consumer price in fla tio n  in  
the Community could thus f a ll below 5 %  for the fir s t time since the  
firs t o il shock.
However, l i t t l e  progress is expected in reducing the Community's  
unemployment rate. Although the economic growth should produce a  net  
increase in employment, this w ill merely absorb the rise in the labour  
force. With the effects of current policies on the labour market,  
unemployment in the Community as a whole should stab ilize at m uch the  
sam e level as this year's average, but a drop is expected in som e  
Mem ber States.

- 7 -
G R O S S  D O M ESTIC  PRO DUCT, A T C O N S TA N T PRICES
(Percentage change over previous year)
1983 . 1984 19851
BeIgi u r n 0.4 2.0 1.6
Denmark 2.0 3.9 2.9
Germany 0.9 2.6 2.5
Greece 0.3 2.6 1.9
France 1  .0 1  .4 1,1
Ireland 0.6 3.6 2.9
Ita ly 1.2 2.6 2,6
Luxembourg 2.2 2.4 1.2
Netherlands 0.6 1.9 2,0
United Kingdom 3.3 1  .6 3.5
E E C 1.0 . 2.1 2,3
Commission s ta ff forecasts (June 1985).
Source: Commission of the European Communities
Directorate-General for Economic and Financial A ffairs.

-  8 -
2. Outlook for the coal industryx
In 1984, while energy demand grew by 4 %  with the economic recovery,  
the proportion of the Community's gross domestic energy consumption  
accounted for by solid fuels w as reduced to 21.8%, as against 24%  
between 1981 and 1983.
This drop w as due to the 11%  decline in domestic coal consumption from  
293 m illion tonnes in 1983 to 262 m illion tonnes in 1984. With total  
Community production fa llin g  by 31%, mainly as a result of the British  
miners' s trike , drawings on stocks by producers and major consumers  
in the Community and the record level of imports from outside the  
Community failed to m ake up the difference.
Outside the United Kingdom, deliveries increased by 5 %  to meet demand  
from the steel industry and power stations.
In 1985 Community production w ill be another 15%  lower than in 1983  
(229 m illion tonnes).
D em and w ill be dow n by only 3% .
These estimates are s t i l l  very uncertain.
For demand in general, the main factors of uncertainty are the output  
of nuclear power stations, unpredictable weather and the competition  
of natural gas for various types of use.

-  9 -
3. Outlook for the steel industry
The revival of consumption in autumn 1983 continued in 1984 and the  
firs t half of 1985. Crude steel production in 1984 totalled 120.3 m illion  
tonnes, an increase of 10.8 m illion tonnes over 1983 and 6.3 m illion  
tonnes higher than originally forecast.
This improvement w as due to the higher level of exports attributable  
to the continuing recovery in the United States. The capacity u tiliza tio n  
rate improved, reaching 67.1%, as against 57%  in 1983, the best rate  
since 1979.
The current estimates for 1985 point to a production figure of around  
118 m illion tonnes, on the assumption that consumption w ill slow dow n  
slig h tly during the year and that the level of stocks w ill remain the  
same.
Medium-term prospects w ill be determined by macroeconomic factors.
Growth, which has been v irtu a lly  n il in recent years, picked up last  
year and could be as high as 2.3% in 1986. This is recognized as the  
minimum required to offset downward pressures on specific steel  
consumption and stabilize the market. The high level of investment in  
1984 should drop in 1985 and no improvement is expected for 1986.
In view of these trends, the prospects for an increase in steel  
consumption in 1986 are not encouraging.
Steel production forecasts for 1986 point to a m axim um  of 120 m illion  
tonnes; in view of the factors set out in the fir s t part of the  
introduction, it  would be best to take 118 m illion tonnes as a production  
forecast, as in 1985. Forecast production of 13.6 m illion tonnes in  
Spain and Portugal should be added to this figure to give a to tal of  
131.6 m illion E C U  for the twelve-nation Community.

-  1 0  -
B. POLICY C O N TE X T
The general objectives of the E C S C  are determined for a ll time by  
Articles 1  to 5 of the Treaty of Paris.
For both coal and steel, the Commission at intervals makes proposals  
for new  measures and presents general objectives or guidelines bearing  
on the future development of the E C S C  industries. Coat is one of the  
areas covered by general papers produced by the Commission on the  
subject-of Community energy policy. These also cover manpower  
questions, indicating that the social dimension forms an integral  
part of the Community policies conducted by the Commission/High Authority  
pursuant to the Treaty. In two annual reports -  the Report on the  
Results of the Survey on Investment in the Community Coal and Steel  
Industry and the E C S C  Financial Report -  it  publishes facts and  
figures on the recent and foreseeable trend of investments and what  
the Community is doing to finance them.
The remarks which follow are not intended to take the place of the  
data in those reports. They concentrate rather on certain key points  
or recent developments which the Commission wants to highlight in  
establishing its  draft of the ECSC's operating budget for 1986. The  
industries themselves, the ECSC's social policy and the Community's  
financial operations are dealt with in turn.

-  11 -
1  ■  Coal policy guidelines
The Commission's coal policy proposals relate to several main themes:  
measures to promote consumption, research and the improvement of the  
production structure. Last year the Council also agreed to extend to  
the end of 1986 a Community aid scheme for coking coal and coke for  
the iron and steel industry in the Community.1
Policy on consumption is founded on a p o litic a l undertaking by the  
Council to promote the use of solid fuels in industry, public buildings  
and d is tric t heating systems. In M ay 1983 the Council adopted two  
recommendations to Mem ber States along these lin e s .2
The Commission is also continuing its  incentive measures .for investment  
in the use of solid fuels by granting interest subsidies on industrial  
loans from the E C S C  budget under the second paragraph of A rticle 54 of  
the E C S C  Treaty (20.1 m illion E C U  in 1984).
In research, development and demonstration (R&D + D ) the Commission has  
constantly emphasized the need for active support. It  has adopted  
medium-term guidelines for coal research in order to coordinate and  
harmonize research a c tiv itie s , concentrate efforts in those areas most  
likely to lead to practical results and fa c ilita te  the choice of  
projects and the selection of the most important which the Commission  
w ill finance from A rticle 55 of the E C S C  budget. The aim of this  
research is to m ake the coal industry more competitive.
The third non-nuclear energy R & D  programme contains a subprogramme on  
the use of solid fuels in industry. This is the fir s t time that solid  
fuels have been included in a R & D  programme financed from the Community  
budget.
0J L  80, 24.3.1984, p. 14.  
20J L  140, 31.5.1983, p. 25.

-  1 2  -
Solid fuels continue to be an important aspect of the EEC's  
demonstration projects in the fie ld  of energy. Both the liquefaction  
and gasification of solid fuels and new methods for u tiliz in g  solid  
fuels are given support. A s the current regulations expire at the end  
of 1985, the Commission has presented the Council with proposals for  
extending these measures to 1990.^ Coal use programmes are financed  
from the general budget while the research programmes financed by the  
E C S C  budget relate to production techniques.
A s  regards production, the Commission based its proposals on two  
major principles: the need to promote the development of a more  
effective and more competitive Community solid fuels industry and  
Community responsibility for som e of the social consequences of change  
in the solid fuel industries.
However, as regards the fir s t point, the Council has so far been  
unable to reach agreement on the Commission's proposal to aid  
investment in solid-fuel-producing industries, including coal mines.
Finally, the Commission is now  looking at the basic problem of coal's  
potential role in the general context of energy policy, realizing that  
the maintenance of substantial production aid is inevitable but that  
the level of aid granted must be consistent with the general economic  
interest of the Community. In the near future it  w ill be putting to  
the Council a proposal for a decision based on the fir s t paragraph of  
A rticle 95 of the E C S C  Treaty which w ill replace the current Community  
aid scheme when it  expires on 31 December 1985.
C0MC85) 29 fin a l/1  of 25 February 1985.

-  13 -
2. Steel policy guidelines
The worst of the steel recession is nearly over. After five years 
of a n ti-c ris is  action, involving the introduction of compulsory  
production quotas from October 1980 and the adoption of a public-aids  
code in June 1981, things are looking up but, for a gradual return to  
a liberalized and fu lly  competitive market, a transitional period of  
up to three years (1986-88) w ill undoubtedly be necessary.
At the end of 1985 the Community w ill have fu lfille d  the policy compact  
concluded at Elsinore in November 1982 between the Industry Ministers  
of the Ten and the European Commission, calling for production capacity  
(hot-rolled equivalent) to be cut back by 30-35 m illion tonnes from  
the 1980 level.
At 31 December 1985 the to tal cutback in Community steel capacity w ill  
work out at som e 32 m illion tonnes, the process involving very heavy  
job losses of nearly 200 000.
Thanks to this restructuring, the European steel industry should return
to v ia b ility  starting in 1986. The Commission's 1990 General Objectives  1
for steel predict, however, that
(i) the steel market w ill steady to som e extent from 1986;
( i i )  at best there w ill s t i l l  be som e 20-25 m illion tonnes overcapacity.
The normal break-even point for a heavy industry like steel is to have  
capacity running at about 80%; in early 1986 the figure is expected  
to be only 70%  at best.
Moreover, the world steel outlook remains problematic: there is substantial
overcapacity world-wide, and stabilization is s t i l l  som e years away.
The restructuring of the European steel industry after 1985 w ill have
C0M(85)208 fin a l of 31 M ay 1985.

-  14 -
social and economic side-effects which the Community must take in hand  
now.
The Community already has substantial funds set aside for the social  
and economic rehabilitation of the E C S C  employment areas. In 1981-84  
something like 6 700 m illion E C U  were mobilized, including 2 200 m illion  
in 1984 alone, in the steel areas, to help preserve jobs or create  
them to offset the contraction in steel.
The Community has two deadlines coming up at the end of the year:
(i) the expiry of the aids code;
( i i )  the expiry of the Decision on market controls.
This being so, it  is determined to get the market back quickly to normal  
competitive operation as envisaged in the E C S C  Treaty, and w ill pursue  
the following objectives:
(i) to maintain the steelmakers' confidence in the behaviour of the market;
( i i )  to encourage the industry to press ahead with restructuring in  
order to achieve a balance between supply and demand;
( i i i )  to channel more from its  structural fa c ilitie s  to help create jobs  
in the steel areas, especially those hardest h it.
The Commission is considering the following measures to this end:
N ew  market arrangements
In 1986 the lib eralizin g  of the steel market w ill get under way.
However, with overcapacity persisting it  w ill be necessary to retain  
som e market controls, to be phased out by the end of 1988.
The Commission is accordingly thinking in terms of a transitional period  
to bring the state of manifest crisis to an end. The period w ill be  
divided into two stages.
In the f ir s t , lasting 18-24 months, market controls w ill be substantially  
eased, with progressive lib era liza tio n  of the various quota product  
categories and more fle x ib le  management of the remaining quota products,  
and suspension of the minimum prices imposed in December 1983, though

-  15 -
there w ill s t i l l  be control of market prices; in the second stage only  
a minimum of controls w ill remain in the run-up to the recommencement  
of normal market operation.
This future market set-up w ill include a number of incentives to restructuring:
(i) in the case of the liberalized categories market forces w ill have  
free rein;
( i i )  in the case of the remaining quota categories undertakings deciding  
on further cutbacks w ill be entitled to additional quotas under  
procedures to be agreed.
S trict discipline on aid
Also to enable the market to operate unimpeded, a ll aid for covering  
undertakings, operating losses or priming their investment, regional  
or otherwise, w ill be prohibited from 1  January 1986. The Commission  
may, however, authorize aid for research and development and for  
environmental protection.
It  m ay also, subject to very stringent conditions and for a limited  
period, authorize aid to encourage undertakings to close more plants,  
this aid to help cover social costs (e.g. departure bonuses, early-retirement  
payments) and compensation not exceeding the value of the plant concerned.
External constraints
The external a n ti-c ris is  measures were designed to complement the internal  
measures. The external measures have been in existence since 1978 and  
have been renewed from year to year on the Council's authority. For 1985  
arrangements have been m ade with 15 supplier countries providing for  
slight increases in m axim um  deliveries to the Community in the light  
of domestic consumption levels.
The policy to be followed in 1986 w ill depend on the decisions to be
taken in the second half of 1985, particularly as regards the internal measures.
A s  far as Community exports are concerned, relations with the United States  
have been marked by further d iffic u ltie s , which could lead to tighter  
restrictions on our exports there in future.

- 16 -
3. Social and employment policy guidelines
The social and employment policies conducted by the High Authority/  
Commission use a number of financial instruments provided by Articles  
54 to 56 of the ECSC Treaty."*
In the case of the coal and steel industries, the Commission can
- grant low-interest loans from own funds to assist workers' housing  
under Article 54 ECSC;
- finance research projects on occupational safety under Article 55  
ECSC.
These measures will continue on the basis of the principles outlined  
in Annex D to this aide-mémoire.
Whereas these aids enable the Commission to help improve the working  
and living conditions of workers employed in ECSC industries,
Article 56 of the Treaty enables it to help workers who have lost  
their jobs, are forced to change jobs or are threatened by  
unemployment as a result of technological change or fundamental  
changes in market conditions in the coal or steel industries.
The Commission's operations in this sector have been considerably  
stepped up in recent years because of the structural and cyclical  
crisis and technology changes affecting the steel industry in  
particular and the greater needs caused by the rationalization of
For the sake of completeness it should be noted that under the general  
budget of the Communities the European Regional Development Fund has  
been financing an operation from its non-quota section since 1981 to  
promote the regional development of certain areas affected by the.  
restructuring of the steel industry (Reg. No 2616/80, 0J L 271,  
15.10.1980, and Reg. No 216/84, OJ L 27, 31.1.1984).

- 17 -
coal mining. These needs have grown considerably as the result of  
multiannual modernization and restructuring programmes.
The aids granted by the Commission under this article take two forms:
- under paragraph 2 (a) loans may be granted to help create jobs  
likely to reabsorb steel and coal workers into the labour market.  
These loans carry an interest subsidy. Although this aid comes  
primarily under the heading of ECSC social policy, it is also an  
important regional policy instrument because it provides new  
opportunities for the economies of coalmining and steelmaking  
areas;
- under paragraphs 1(c) and 2(b) non-repayable aid for the  
redeployment of workers is granted in the form of tideover  
allowances, contributions to early retirement pensions and  
contributions to the resettlement or vocational retraining of  
workers in accordance with conventions or agreements reached with  
the Governments of the Member States.
The importance of these two types of aid from the High Authority can  
be gauged when it is considered that, between 1974 and April 1984  
the Community steel industry, not counting Greece, lost more than  
41% of its labour force as 328 000 workers were made redundant. The  
numbers of jobs lost in 1981, 1982, 1983 and 1984 were 49 000,
35 000, 33 000 and 30 200 respectively.
Between 1975 and 1984, 154 235 jobs have been lost in the coal  
industry, which represents 26% of the labour force in 1975.
Because of the simultaneous decline of most other branches of  
industry, and the increase in the number of unemployed, particularly  
young people, redundant steelworkers have found it increasingly  
difficult, especially since 1979, to get a new job. This is

- 18 -
illustrated by the unemployment statistics since 1978. At the end  
of 1984, total unemployment in the ten Member States stood at  
13 145 600, as against 6 200 000 in 1978.
Although 1985 and 1986 are expected to see some initial signs of  
economic recovery and a levelling-off or even a reduction in  
unemployment in certain countries, it is unlikely that there will be  
a corresponding improvement in the unemployment situation throughout  
the Community.
In view of this situation, the Commission has for some time
emphasized the need to develop policies and actions which will
result in the creation of new jobs. Conversion loans, which carry
an interest subsidy, may contribute greatly to the creation of jobs
from which the first beneficiaries wilt be unemployed workers in the  1ECSC industries. Although greater than in the past, the amount of  
appropriations requested and the capacity of new, economically sound  
firms to use them have meant that loans can only be granted to cover  
a small number of the jobs lost in the steel industry. It should be  
observed that existing firms often develop without taking on  
substantial numbers of new staff through improved productivity and  
greater use of automation (robots and computers). Even though a  
large number of new firms are being set up, the number closing down,  
mainly through bankruptcy, has risen sharply.
These policies and actions do not remove the need for appropriate  
redeployment measures. ECSC redeployment aid has constituted and  
still constitutes an important means of providing acceptable  
conditions in which redundant workers may make a new start
A decision taken by the Commission on 6 April 1984 authorizes  
interest subsidies on conversion loans to be combined with national  
aids and the social clause (loans with interest subsidies must  
relate to the creation of new jobs likely to be filled by former  
coal and steelworkers) to be calculated on a flat-rate basis in the  
priority area of ECSC employment.

- 19 -
immediately after dismissal. They assist the new employe, to allow  
a redeployed worker a period of adaptation and help the worker acquire  
new skills and, if necessary, move house. If the worker cannot find  
a new job, he may receive income support after dismissal to ease the  
difficulties of being out of work.
The particularly difficult situation in the steel industry has necessitated  
the adoption by the Commission of special measures. As long ago as 1979,  
the Commission drew up proposals for temporary aid extending to the  
end of 1982. In June 1981 the Council approved Community financial  
aid for early retirement and short-time working. Since these were  
exceptional measures which the ECSC was unable to cover from its ordinary  
resources, this 212 million ECU programme was financed from national  
budgets and transfers from the Community's general budget to the ECSC  
budget.
In April 1983, in an attempt to cope with the heavy job losses, the
Commission adopted a "social support scheme for restructuring in the
steel areas of the Community", which includes not only the initial
measures adopted to deal with social aspects but also three other measures
to assist ECSC workers to find new jobs or jobs of a different type.
In October 1984 the Council authorized the transfer of the first
instalment of 62.5 million ECU under the social measures for 1983-86;
the new measure was to part-finance redeployment premiums allowing
steelworkers to obtain jobs outside the steel industry. The Commission
has proposed to the Council that 330 million ECU should be transferred
■ 1from the EEC budget to the ECSC budget for these measures.
The Commission means to respond to the prospect of falling employment  
in consequence of continuing restructuring by using its structural  
instruments to do more to promote job creation in the steel areas in  
the four years ahead.
C0M(83) 158 final of 13 April 1983.

-  20  -
In the autumn of 1985 new machinery will be set up at the instigation  
of the Commission to tackle the worst problems in some hard-hit areas.
Through coordinated operations using the structural instruments - aid  
and lending - together it will be possible to deploy them promptly and  
straightforwardly, with the focus on certain new departures directly  
related to employment - easier access for small and medium-sized  
undertakings to risk capital and credit, encouragement to set up new  
business and innovation centres, assistance for local subcontracting,  
grants to help develop small business projects, local employment initiatives.
In the other areas of ECSC employment, Community schemes will be continued  
but redirected towards employment: the new measures, though rating
lower priority than in the worst-affected areas, will apply there too.
The funding for this Community activity in the steel areas will be  
stepped up as follows:
(i) lending to these areas will be substantially increased to 800 million ECU  
over four years in redevelopment loans; ECSC industrial loans (environment,  
energy-saving, sale of steel) will also be increased for these areas;
(ii) additional budget funds will also be made available to the steel  
areas by reapportionment of the funds in hand for the various  
structural instruments under the existing regulations; this will  
yield some 70 million ECU a year to boost interest subsidies on  
redevelopment and NCI loans (50 million ECU from the ERDF) and on  
ECSC industrial loans (a maximum of 20 million ECU to be charged
to future operating budgets within the limit of the resources available).

-  21  -
These new moves will bring Community outlay on tackling the social and  
economic effects of the restructuring of the steel industry to around  
10 000 million ECU for the years 1985-88 inclusive.
The decline in coalmining has continued with some increase in closures  
during the last two years. The economic crisis has involved a reduction  
in energy consumption which, despite some conversion of oil-fired plant  
to coal, has meant that coal stocks have grown considerably.
The Commission's recommended balanced policy for solid fuels includes  
assisting the development of the most profitable mines, opening up new  
workings and investing to restore to profitability mines which are making  
only a slight loss, so that coal can be produced in the near future at  
a price which is competitive with that of other forms of energy. The  
modernization and restructuring programmes are expected to last for five  
years.
These programmes will involve speeding up the closure of obviously  
unprofitable mines and in some areas this will involve heavy job losses.
The Commission has therefore proposed temporary exceptional contributions  
to the ECSC from the general budget. In 1984 the Council authorized the  
first instalment of 60 million ECU from the 180 million ECU in the  
three-year programme (1984-86) presented by the Commission.
C0M(83) 583 final of 6 October 1983.

-  22  -
4. Financial activities
ECSC Financial Report No 30, outlining the Community's borrowing and  
lending operations and financial aid in 1984 will be published  
shortly.
Borrowings contracted in 1984 totalled 822.5 million ECU, compared  
with 749.6 million ECU in 1983 and 712.0 million ECU in 1982.
Industrial loans amounted to 541.3 million ECU in 1984 compared with  
618*4 million ECU in 1983 and 559.7 million ECU in 1982, conversion  
loans to 247.5 million ECU, compared with 139.5 million ECU and  
162.8 million ECU, and subsidized housing loans^ to 36.7 million ECU,  
compared with 20.2 million ECU and 18.0 million ECU (see the tables  
below).
Total borrowing and lending since the inception of the ECSC is thus  
brought to 12 942.0 million ECU and 12 815.4 million ECU respectively  
(including 291.9 million ECU in loans from own funds). The  
outstanding balance of loans raised at 31 December 1984 was  
7 073.7 million ECU.
In 1985 loans raised at 30 June amounted to 442.1 million ECU and  
loans paid out were at a corresponding level.
The prospects for borrowing and lending activities in 1986 depend on  
such factors as the implementation of the restructuring programmes  
planned by the companies and approved by the Community and the grant  
of aids for interest subsidies for conversion, the increased use of  
Community coal (criteria of 31 December 1982) and, possibly, other  
categories of investment to which the Commission considers that  
priority should be given.
Article 54 ECSC.
Article 56 ECSC.
Loans under Article 54 ECSC paid from ECSC special reserve funds  
and part of the former ECSC pension fund.

- 23 -
The coal industry, after investing some 1  800 million ECl in 1983, will  
invest between 1  500 million ECU and 2 000 million ECU in 1985 and 1986.
The problems caused by the crisis and restructuring beyond the  
objectives set in the aids code make it particularly difficult to  
estimate steel industry investment but it seems that expenditure in  
1986 may well be around the 3 000 million ECU invested in 1983.
If the active policies envisaged above can be implemented, borrowing  
by the ECSC could amount to about 1  000 million ECU in 1986 if market  
conditions allow.

- 24 -
ECSC ~ BORROWING AND LENDING OPERATIONS  
AMOUNTS RECEIVABLE
HEADINGMillion ECU
Forecast
1986Forecast
1985Outturn
1984
1.0Loans raised 1  000 1  100 822.5
1.1Redemption of Loans 1  000 740 786.0
granted
1.2Interest payments to
the ECSC 730 700 653.3
1.3Repayment of costs
involved in borrowing
and Lending operations 15 15 10.3
AMOUNTS PAYABLE
HEADINGMillion ECU
Forecast
1986Forecast
1985Outturn
1984
2.0Loans granted 1 000 1  100 825.5
2.1Redemption of loans
raised 990 700 817.4
2.2Interest payments 725 690 625.3
2.3Payment of costs
involved in borrowing
and lending operations 30 30 25.8

- 25 -
LOANS FOR WORKERS' HOUSING
million ECU
Community Total loans  
paid at 
31 December  
1983New loans
in 1 1984Situation at 31 December 1984
Total
paidloans Amount
outstanding
Belgium 37.7 1.0 38.7 8.1
Denmark 1.6 0.1 1.7 0.9
FR of Germany 172.310.2 182.5 91.6
Greece 0.6 0.1 0.7 0.6
France 42.0 3.9 45.9 24.6
Ireland 0.8 0.1 0.9 0.7
Italy 48.118.7 66.8 54.3
Luxembourg 6.6 0.2 6.8 2.5
Netherlands 16.4 0.7 17.1 6.7
United Kingdom 17.7 1.7 19.4 11.4
TOTAL 343.836.7 380.5 201.4
I
After allowing for new rates for the conversion of national  
currencies into ECU.

- 26 -
C. BUDGETARY CONTEXT
1. The ECSC budget: examination of the comments made by the Court of  
Auditors in its report on the accounting and financial management of  
the ECSC in 1983
Since 1981 the exceptional social measures implemented by the ECSC in  
connection with the restructuring of the coal and steel industries  
have been financed by resources transferred from the general budget.
In its report the Court of Auditors concluded that the accumulation  
of large cash holdings as a result of the Commission's current  
financial policy was not the best way to manage Community funds.
The Court recommended that, before considering any future transfer of  
appropriations from the general budget to the ECSC, there should be a  
detailed examination of whether such measures were necessary. It set  
out four subjects which should be examined with this in mind.
In its replies contained in an annex to the Court's report, the  
Commission set out its initial reactions to the Court's questions.
It has now made a detailed study of the changes which could be made  
to the ECSC's present financial management and balance-sheet  
accounting policy in the areas referred to in the Court's comments.  
Its conclusions are summed up below.
(a) Establishment of guidelines to determine the amount necessary  
for the guarantee fund in accordance with banking criteria  
The ECSC reserves, in particular the guarantee fund, are an  
essential basis for the borrowing and lending operations by which  
it supports investment in the coal and steel industries. The correct  
level of reserves evidently depends on such factors as the assessment  
of capital markets on which the ECSC currently has a triple A rating  
and the Commission does not consider that the current reserves are

- 27 -
by any means excessive when viewed from this angle. It <  ould also  
point out that the only free item among the reserves and provisions  
is the guarantee fund, which amounted to 380.0 million ECU at  
31 December 1984 for 7 161.9 million ECU in loans outstanding. The  
establishment of precise criteria to determine the ideal level of  
the guarantee fund at any one time would be an extremely uncertain  
exercise.
However, the Commission has decided to ask an independent body to  
conduct an inquiry into the establishment, use and level of the  
ECSC reserves. It will inform Parliament and the Court of any  
change in its balance-sheet accounting policy which may result.
(b) Commitment of appropriations only on the basis of a legal  
commitment
The Commission intends to adopt this practice from the beginning  
of the 1986 financial year. Beginning with the balance sheet at  
31 December 1986 the provision for budgetary commitments to be  
implemented will therefore be deleted.
(c) More detailed and more realistic analysis of outstanding  
commitments to ensure that commitments which are not going to be  
carried out are cancelled without delay
There is already a regular review of outstanding commitments so  
that any commitment which is not going to be implemented can be  
cancelled. In the current financial year 55 million ECU has  
already been cancelled and reallocated, 45 million ECU of it for  
redeployment and 10 million ECU for interest subsidies under  
Article 56 (see Annex B).

- 28 -
(d) Introduction of a system to make annual revenue coincide with annual  
expenditure and not revenue with commitments
In its replies to the Court's report, the Commission has already stated  
that management of the ECSC's financial aids cannot be based on a  
"cash budget". It maintains this position, putting forward the following  
arguments:
- General abandonment of the traditional policy whereby the commitments  
for budget aids entered on the liabilities side of the balance sheet  
are virtually balanced on the assets side by revenue already  
collected would seriously affect the Community's financial standing  
which provides fundamental support for borrowing and lending operations  
totalling three times the ordinary budget. Uncovered obligations  
would thus have to be set against future resources, in particular the  
future outturn from a levy which is generally considered to be  
inflexible and which, in certain circumstances, might have to be used, under  
Article 50 ECSC, for debt servicing.
- The loss of the interest received under the present arrangements on  
provisions relating to the budget (70 million ECU was entered in the  
budget in 1985) would lead to the disappearance of the aids now  
granted in the form of interest subsidies on investment in the  
conversion of coal and steel areas since, from the legal point of  
view, these aids cannot be financed from levies.
- The ECSC has a limited lifespan of fifty years, over thirty of which  
have already passed. A system of finance which systematically  
encumbers future years is not compatible with this fact.
- The "cash budget" system means that each year's budget is largely  
pre-determined by the need to implement multiannual commitments

- 29 -
entered into in the past. This problem of the "cost or the past" is  
recognized as a major handicap for the general budget. However, it  
does not arise for the ECSC because of the ECSC budget approach.  
Introducing this concept would cause management difficulties, in  
particular the risk of a seesaw effect on the levy rate, which would  
then be largely determined by the schedule of payments against past  
commitments.
In conclusion the Commission would be against any basic change in the  
ECSC1s financial policy as regards the financing of ordinary aids from  
ordinary resources.
However, these arguments do not have the same force as regards the  
exceptional aids financed from the general budget since 1981. These  
are measures of limited duration which are financed separately. Here  
the Commission could accept the introduction in 1986 of a system of  
finance relating future revenue to expenditure, i.e. aid payments.
This new approach to financing the special social measures is set out  
in detail at 1.C.2 below.
In conclusion, the Commission, after detailed examination of the  
points raised by the Court of Auditors in connection with the ECSC's  
current policy as regards financial management and balance-sheet accounting,  
able to accept two of the four ideas put forward by the Court  
(commitment of appropriations on the basis of a legal commitment;  
immediate cancellation of commitments which are not going to be  
carried out), It considers that it would be difficult to act on the  
suggestion that guidelines be produced for the guarantee fund but  
this problem is still being examined. Finally, it sees no need to  
change the ECSC's financial policy in the case of traditional budget  
measures financed by levies and the ECSC's own resources; however,  
for the exceptional social measures, it proposes that a system be

- 30 -
introduced in 1986 to make annual revenue coincide with expenditure.
Along the lines of the rules for implementing the Social Fund, it is  
also planned to introduce a system for the payment of advances on  
aids granted; this would speed up the settlement of the corresponding  
commitments.
2. New approach to the financing of social measures in connection with  
the restructuring of the coal and steel industries
From 1986 the Commission proposes to adopt a new approach to the  
financing of the exceptional social measures introduced by the ECSC  
in connection with the restructuring of the coal and steel industries  
and financed from the general budget.
This approach involves the following:
- the policy of recent years, under which the ECSC implements special  
social measures financed from the general budget, will continue while  
restructuring operations are going on in the industries;
- the ECSC will make firm financial commitments as and when programmes  
of special measures are approved;
- advances amounting to 50% of commitments will be paid;
- the commitments will be entered on the liabilities side of the  
ECSC balance sheet in the traditional form of a provision for  
financial aids;
- the contra-item on the assets side of the balance sheet to this  
provision in the operating budget will be a debt due from the EEC  
(revenue receivable) and not revenue already collected;
- the EEC will give a firm undertaking, by means of a Council  
decision under Article 235 EEC, to make the necessary funds  
available to the ECSC as payments fall due.

- 31 -
The Commission has submitted to the Council a proposal tcr a decision
on this undertaking.
The new approach will have the following effect on financial operations:
- payments falling due under programmes already approved will be  
financed from appropriations already transferred from the general  
budget until these are exhausted;
- future payments under the remaining programmes will be covered by a  
transfer from the general budget to the ECSC in the year of payment;
- the overall cost of the measures proposed by the Commission totals
510 million ECU (180 million ECU for the coal industry^ and2330 million ECU for the steel industry ) ·  of this total,
122.5 million ECU was transferred in 1984 (60 million ECU for the  
coal industry and 62.5 million ECU for the steel industry) and the  
same amount is earmarked for transfer in the 1985 budget; this leaves  
265 million ECU (510 - (2 x 122.5)) to be transferred to cover  
payments still to be financed;
- according to the current estimates, once the EEC has given the  
above undertaking, the 245 million ECU already entered in the  
budget will be sufficient to cover the payments needed for the  
special measures at least until the end of 1986. In its  
preliminary draft budget for 1986 the Commission has therefore  
proposed that the relevant chapter of the general budget  
(Chapter 65) should carry a token entry.
C0M(83) 583 of 6 October 1983  
C0M(83) 158 of 13 April 1983.

- 32 -
II. DRAFT ECSC OPERATING BUDGET FOR 1986  
A. COMMISSION APPROACH
For the purposes of evaluating the draft budget for 1986, the Commission  
considers that a price increase of 4.6% should be used as the basis for  
comparing the figures for 1985 and those for 1986.
Since 1981 the ECSC's traditional operating budget has been supplemented  
by exceptional social measures financed from exceptional resources.
Continuation of these measures - connected with the restructuring of  
the coal and steel industries - depends on resources being made available  
from the general budget of the Communities.
As stated at 1.C.2 above, the Commission has proposed new arrangements  
for financing these measures. If they are to be applied, the Council  
will have to take a decision under Article 235 EEC by 31 December 1985.
The commitments to be entered into in 1986 under the programmes concerned  
(160 million ECU, of which 60 million ECU is for the coal industry and  
100 million ECU for the steel industry) will not be covered by provisions  
until after this decision is adopted,
At the current levy rate (0.31%), ordinary resources for 1986 are estimated  
at million ECU, of which 170 million ECU will come from levies and  
109 million ECU from interest and other sources. It has been calculated  
that each 0.01% increase in the levy rate yields an additional 5.48 million ECU.
The Commission, in its capacity as the High Authority of the ECSC, has  
the power to fix a higher levy rate to provide sufficient cover for

- 33 -
next year's requirements. However, it considers that no such increase can  
be made in the current economic situation.
6. FINANCING PROPOSALS
The Commission's proposals for the 1986 ECSC operating budget are  
tabulated in Annex E and are based on the following factors:
- total resources of 439 million ECU. However, 160 million ECU is  
accounted for by the amount received from the EEC for the exceptional  
social measures in connection with the restructuring of the coal  
and steel industries (see I.C.2 above). The Commission will not  
take decisions on these aids (60 million ECU for the coal industry  
and 100 million ECU for the steel industry) until the Council has  
adopted the decision giving the relevant undertaking by the EEC.
-requirements to be covered by the non-allocated resources of  
279 million ECU:
.  5 million ECU for administrative expenditure;
.  150 million ECU for redeployment aid; »
.  60 million ECU for research expenditure;
.  58 million ECU for interest subsidies;
.  6 million ECU for coking coal.
As regards research appropriations, the Commission proposes that
28.5 million ECU be devoted to steel (an estimated 24 million ECU in  
1985), 22 million ECU to coal (19 million ECU in 1985) and
9.5 million ECU to social research (8 million ECU in 1985).
As regards interest subsidies, the Commission proposes that 49 million ECU  
should go to conversion as direct aid for the creation of new jobs  
(an estimated 44 million ECU in new appropriations and 10 million ECU in  
released appropriations in 1985) and 9 million ECU to investments  
(6 million ECU in 1985).

Lastly, the Commission proposes that the 1986 ECSC operating budget be  
adopted at a total amount of 439 million ECU.
It therefore proposes that the levy rate be set at 0.31%.
C. DRAFT BUDGET
The draft budget established by the Commission and amounting to  
439 million ECU is presented in Annex E.

OUTTURN OF ECSC OPERATING BUDGET FOR 1984 ANNEX A
SUMMARY TABLE (million ECU)
REQUIREMENTS
OPERATIONS TO BE FINANCED FROM  
CURRENT RESOURCES(NON-REPAYABLE)
1. Administrative expenditure
2. Aid for deployment (Art. 56)
3. Aid for research (Art. 55)
3.1 Steel
3.2 Coal
3.3 Social
4. Interest subsidies
4.1 Investment (Art. 54)
4.2 Conversion (Art. 56)
5. Aid for coking coal and  
metallurgical coke (Art. 95)
6. Measures connected with  
restructuring of the steel industry
7. Measures connected with  
restructuring of the coal industry
Sub-total
Surplus
Budget total
OPERATIONS FINANCED BY LOANS FROM  
NQN-BORROWED FUNDS  
8. Subsidized housingFORECASTd)
5
1 3 0
5 1
7 02 4
1 9
8
9
6 1
62,5
6 0
384,5OUTTURN
140 (3)
50,9
83,9 (3)2 4
1 9
7,9
20,9
6 3RESOURCES
RESOURCES FOR THE FINANCIAL YEAR
62,5
6 01. Current resources
1.1 Yield from levy at 0.31%
1.2 Interest on investments and on  
loans from norrborrowed funds
1.3 Fines and surcharges for late  
payment (2)
1.4 Miscellaneous
2. Cancellation of commitments  
unlikely to be implemented
3. Revaluation of assets and  liabilities
4. Ihused resources carried over  
from 1983
Exceptional revenue
5.1 Measures connected with
restructuring of the steel  industry
5.2 Measures connected with re­
structuring of the coalindustry
5. Drawings on contingency reserveFORECASTd)
408,3
384,5 408,3
10 10Sub-total 
D e fi cit
Budget total
ORIGIN OF N0N-BORR0WED FUNDS
7. Special reserve and former ECSC  
Pension Fund1 4 1
7 0
5
p.m.
3
p.m.
13,2
62,5
6 0
29,8
384,5
384,5
10OUTTURN
.136,4
7 0
8.8
p.m.
31,3
p.·.
1 3 ,2
62,5
6 0
26.1
408,3
408,3
10
(1) Forecast made by the Commission at 10 August 1984.
(3) These^affdt am8Afr?ÎiLî?i!JC^ rlpres!rts totaL rec?ipts in 1984; the 121.1 million ECU outstanding at 31 December 1984 is not taken into accomt.  mese aias are partly financed from the appropriations resulting from the cancellation of existing commitments (13.1 million ECU for redeployment and  15.9 million ECU tor interest subsidies).

FORECAST OUTTURN OF ECSC OPERATING BUDGET FOR 1985  
SUMMARY TABLEANNEX B
(million ECU)
REQUIREfENTSBUDGET
FIGURE.FORECAST
OUTTURNRESOURCESBUDGET
FIGUREFORECAST
OUTTURN
OPERATIONS TO BE FINANCED FROM CURRENT  
RESOURCES (NON-REPAYABLE)I
RESOURCES FOR THE FINANCIAL YEAR '
1. Administrative expenditure 5 5,  1. Current resources  
j  1.1 Yield from levy at 0.31% 147 147
2. Aid for redeployment (Art. 56)
3. Aid for research (Art. 55)
3.1 Steel
3.2 Coal
3.3 Social
4. Interest subsidies125
51
24
19
8
50208 (1 )  
51
24
19
8
60■  1.2 Interest on investments and on loans from  
norrborrowed funds
1.3 Fines aid surcharges for late  
payment
1.4 Miscellaneous
2. Cancellation of commitments unlikely to be  implemented70
17
p.m.
370I
35
p.m.
55
4.1 Investment (Art. 54)
4.2 Conversion (Art. 56)6
446
5 4 (1 )3. Revaluation of assets and  
liabilities p.m. p.m.
5. Aid for coking coal and metallurgical  
coke (Art,95)
6. Measures connected with restructuring  
of the steel industry
7. Measures connected with restructuring I  
of the coal industry6
6 2 ,5
606
6 2 ,5
604. Uhused resources carried over from 1984
5. Exceptional revenue
5.1 Measures connected with restructuring of the  
steel industry
5.2 Measures connected with restructuring of the  
coal industry
6. Drawings on contingency reservep * f l )  ·
62,5
60
p .ff).p.m.
6 2 ,5
60
23
BUDGET TOTAL3 5 9 ,5 452,5 i  BUDGET TOTAL 359,5 4 5 2 ,5
OPERATIONS FINANCED BY LOANS FROM  
NGN-BORROWED FUNDS;ORIGIN OF NON-BORROWED FUNDS
8. Subsidized housing12127. Special reserve and former ECSC Pension  
Fund , 12 12
These aids are partly financed from the appropriations resulting from the cancellation of existing commitments (45 million'ECU for redeployment and  
10 million ECU for interest subsidies under Article 56).

- 37 -
Information relating to levies
The Latest available information on production and the levy yield for the  
current financial year is given below:
Levy yield for the period from January to March 1985 (provisional estimate)
Production
Productserving as a  
basis for the  
calculation of  
the levy
Cmillion tonnes) ,Yield
per tonne 
at 0.31% 
levy rateLevy yield 
(mi Llion ECU)
(1) (2) (3 )
Brown-coal briquettes and
semi-coke 1,2 0,17428 0.21
All types of hard coal 34,9 0,23628 8.25
COAL - TOTAL 8.46
Pig-iron other than that
required for the manufacture ,
of ingots 0,6 0.45177 0,27
Steel ingots 29.2 0,66256 19,35
Finished products 22.5 0.30779 6,92
STEEL - TOTAL•26,54
GRAND TOTAL 35,0
(3;= (1) x (2)

ANNEX C
ECSC BALANCE SHEET AT 31 DECEMBER 1984
(million ECU)
ASSETS LIABILITIES
1. Cash in hand and balances with  
central banks
2. Claims on credit institutions  
~ repayable on demand
- with agreed maturity dates or  periods of notice3. Debt securities held in portfolio
4. Loans outstanding
5. Recoverable issuing costs and  
redemption premiums
6. Bank deposits for bonds and coupons  
due but not yet presented for  
payment
7. Land and buildings
8. Other assets
9. Accruals and deferred income.1 ,7
1.061,6
42,8
1.018,8
619,3
7.161,9
72,7
51,2
0,5
114,9
215,2
9.299,01. Bonds and coupons due but not yet  
presented for payment
2. Long-term and medium-term debts
3. Other liabilities
4. Accruals and deferred income
5. Provisions for ECSC operating budget
6. Reserves
- Guarantee fund
- Special reserve
- Former pension fund
7. Surplus brought forward51,2
7 163,0
1 .4
415,2 
1  000,0
587,8
380.0
163.0 
44,8
80.4
9.299,0

- 39 -
AK .EX D
ANALYSIS OF REQUIREMENTS REPORTED AND RESOURCES AVAILABLE FOR THE  
FINANCIAL YEAR 1986
In response to the wishes expressed by Parliament in its resolution of  
114 December 1982 , the presentation of requirements reported and  
foreseeable resources which follows is modelled on the systematic analysis  
of the data for the various budget headings in the general budget. As  
with the general budget this presentation lists the main features of each  
heading (references and description of the operation, type of expenditure  
and explanation). Three categories of expenditure take priority in that  
they derive from decisions already taken (administrative expenditure and coking  
aids) or from framework agreements with the Member States (aid for  
redeployment).
OJ C 23, 17.1.1983, p. 36.

1. ORDINARY REQUIREMENTS
REQUIREMENTS
I
1986 Approps 1985 Approps Outturn
‘  Art. Heading proposed authorized 1984
CHAPTER 10 - ADMINISTRATIVE
f EXPENDITURE 5 5 5
CHAPTER 10 ~ TOTAL 5 5 5
CHAPTER 20 - AID FOR
REDEPLOYMENT
j L h  ,  .  . .Articte(56 ECSC) 150 125 140

- 41 -
REQUIREM ENTS
Art, Remarks
10 1. References and description
- Article 50 of the ECSC Treaty;
- Article 20 of the Merger Treaty;
- Council Decision of 21 November 1977 (0J L 306, 30.11.1977, p.28);
- ECSC contribution to the Commission's administrative expenditure.
2. Type of expenditure
Annual payment in four equal quarterly instalments.
3. Method of calculation and explanation of change
The Council has set the annual amount of the payment at 5 million ECU.  
Percentage change 1985-86: 0%.
20 1. References and description
- Articles 50 and 56 of the ECSC Treaty;
- Bilateral agreements concluded between the High Authority/Commission and  
the Governments of the Member States.
The High Authority/Commission provides non-repayable aid towards:
(i) the payment of tideover allowances to workers;
(ii) the financing of allowances to workers taking early retirement;
(iii) the payment of resettlement allowances to workers;
(iv) the financing of vocational retraining for workers having to change  
job.
The grant of the aid is conditional upon payment by the State concerned of  
a special contribution of not less than the amount of that aid.

- 42 -
REQUIREMENTS
f  »
Art. Headi ng1986 Approps 
proposed1985 Approps  
authorizedOutturn
1984
20Aid for redeployment (contd.)1

- 43 -
REQUIREM ENTS
Art, Remarks
2. Type of expenditure
Provision to subsidize the expenditure on redeployment incurred by the  
Member States according to the procedure set out in the agreements signed.
3. Method of calculation and explanation of change
In 1984 the coal industry's requirements increased considerably as the  
Community coal industry entered an important stage of its restructuring and  
modernization programme involving the closure of a large number  
of uneconomic pits and the rationalization of operating conditions at those  
left open. Between 1982 and 1984  a total of 46 432 workers in this sector  
lost their jobs while the number of persons receiving ECSC aids rose from  
10 000 in 1982 and 15 000 in 1983 to 25 000 in 1984.
Under the multiannual programmes now drawn up by the Member States concernée,  
additional redundancies will increase the number of persons receiving ECSC  
aids.
In order that these restructuring measures can take place in acceptable  
social conditions, some Member States a.re planning to increase their  
financial assistance to persons whose jobs are affected by increasingly  
difficult circumstances.
In 1985 the volume of aid is expected to remain at much the same level  
as in 1984. However, the breakdown of appropriations between the  
Member States will show a drop in the number of applications by the  
United Kingdom, where

- 44 -
REQUIREM ENTS
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
20Aid for redeployment (cont'd)
.S
CHAPTER 20 - TOTAL 150 125 140

* ·
- 45 -
REQUIREMENTS
Art. Remarks
the programmes covered the strike period, and no applications from  
Belgium. Total coal industry requirements for 1986 are estimated  
at 81.5 mi llion ECU.
The gradual closure of iron ore mines will continue as long-term supply  
contracts expire. In relative terms, however, the requirements of this  
sector are small.
For the steel industry, expenditure on redeployment fell considerably  
in 1984 compared with previous years mainly because the applications  
under the French and Italian aid programmes for 1983 and 1984  were 
deferred to 1985. While applications from the Federal Republic and the  
United Kingdom will remain the same in 1985, the total volume of  
applications for aid will thus be far larger.
The requirements announced for 1986 suggest that there will be a slight  
fall to an estimated 68.5 million ECU.
All in all then total requirements for traditional aids under  
Article 56(2)(b) can be estimated at 150 million ECU for 1986.
Percentage change 1985-86: +20%  (not including 83 million ECU  
reallocated to this heading in 1985).

- 46 -*
REQUIREMENTS
1986 Approps 1985 Approps Outturn
Heading proposed authorized 1984
CHAPTER 30 - AID FOR RESEARCH
STEEL RESEARCH 28.5 24 24

- 47 -
R  E  Q  U  I  R  E  M  E  N T S
Art. Remarks
30 1. Refereaces and description
Articles 50 and 55 of the ECSC Treaty
The High Authority/Commission is required to encourage technical and  
economic research into the production and increased use of coal and steel  
and occupational safety in the coal and steel industries. To this end  
it grants aid to finance research after receiving the Council's assent.
2. Type of expenditure
Provision to cover repayment of a proportion of the actual costs of  
research projects approved by the High Authority/Commission in accordance  
with the procedures provided for in the Treaty (consultation of the ECSC  
Consultative Committee and the receipt of the Council's assent).
In most cases, the aid granted amounts to 60% of the estimated and  
substantiated costs.
3. Method of calculation and explanation of change
The 60 million ECU proposed in total aid for research is 18% higher than  
the appropriations authorized in 1985. The grounds for the aid proposed  
for each of the research categories (steel, coal and social) are  
explained in the following paragraphs.
310 1986 will be the first year in which the new General Objectives for
Steel-1990 will be taken into consideration. As regards research and  
development, a draft of the new general objectives for 1990 was 
presented by the Commission at a recent bilateral meeting with the  
steel industry in Brussels. Unanimous agreement was reached on the  
Commission draft.

- 48 -
REQUIREMENTS
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
310STEEL RESEARCH (cont'd)

- 49 -
REQUIREMENTS
A rt. Remarks
1This draft is a Logical extension to the General Objectives for 1983  
since it aims to:
- complete the restructuring started in earlier years;
- continue technological modernization and increase competitiveness in  
order to continue competing by improving productivity and product  
quality;
- develop and intensify research and development activities in large  
sectors of use such as the motor industry, the building sector and  
electrical engineering.
Although it accounts for only around 10% of Community steel research,
the current research programme which the Commission is supporting
continues to play a major and acknowledged role in meeting common
requirements in the steel sector, in accordance with the medium-term
guidelines. As with the General Objectives for Steel, the medium-term
2guidelines for 1981-85 served as a basis for draft medium-term  
guidelines for 1986-90 which were approved at the consultative meeting  
of steel industry representatives on 22 February 1985.
This research programme is supplemented by the parallel programme of  
pilot and demonstration projects0 in order to meet the increasing need  
to boost and speed up the transfer of the results of laboratory research  
to the operational stage.
T h e  t w o  programmes share the following overall objectives:
- increased competitiveness as regards the cost of manufacturing and  
processing steel, accompanied by a more regular level of quality  
in its various forms;
- stimulation of the use of steel on domestic and export markets through  
the development of new types of steel and new applications for products  
which are economically more advanced than those of our competitors.
1C0M(83)239
*0J C 99, 2.5.1981.  
50J C 81, 24.3.1983.

- 50 -
R E Q U I R E M E N T S
A rt. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
310STEEL RESEARCH (cont'd)
320COAL RESEARCH 22 19 19

REQ UIREM ENTS
Art. Remarks
320In 1986, the two programmes will cover the following technical fields:
- sintering and pelletizing,
- use of coal and its by-products in the steel industry,
- blast furnace and direct reduction technology,
- oxygen and electric steelmaking,
- casting and solidification,
- processing and treatment of steel,
- properties and utilization of steel.
Percentage change 1985-86: +19%.
The Commission has stressed on a number of occasions the importance of ^  
coal research as one of the ways of achieving the Community's energy goals.
Even though there have been major changes in the general situation in  
the energy sector and in the market conditions in recent years, the  
Community's energy policy still pursues the aim of using indigenous  
sources, in particular coal, as economically as possible to limit  
dependence on energy imports.
If coal is to be given a suitable role in the Community's energy supply,  
it will be necessary to concentrate efforts and overcome the difficulties  
arising from natural mining conditions or the market situation:
- Community mines are reaching increasing depths and, as a result,  
increasingly serious difficulties have to be overcome (pressure, fire  
damp, heat).
- In many cases, the natural limits set by the field cannot be overcome  
despite full mechanization or even automation of extraction. This is  
why equipment and capital are utilized to only a relatively low extent.
- Mechanization of extraction has made the coal qualities very difficult  
to adapt to market requirements, leading to considerable expenditure  
on coal preparation.
- The fall in steel production together with the large drop in the  
specific use of coke have an adverse effect on the coking coal market.
- Public opinion is increasingly sensitive to environmental pollution.
^Framework research programme 1984-87 (C0M(82)865)
Five-year programme on energy and energy research <COMC83)315)
Working programme on solid fuels (C0M(83)54).

- 52 -
R E  Q  UIREM ENTS
A r t Heading
320 C O A L  R E S E A R C H  (cont'd)1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984

- 53 -
REQ UIREM ENTS
Art. Remarks
- Although acceptable from the viewpoint of environmental protection,  
the new coal combustion processes (pressurized fluidized bed,  
electricity generation in combined-cycle power stations) have not yet  
reached the stage of development at which they could soon replace  
conventional coal-fired power stations.
- Coal gasification and liquefaction processes have reached a high level  
of technical development but still cannot compete economically with the  
products to be replaced. This is particularly true of the use of  
European coal and the production of liquid products.
The overall political situation and the current state of technology  
suggest that the coal industry should satisfy the following basic  
requirements:
- reduction of costs and increased productivity;
- rational exploitation of existing fields;
- better exploitation and rational use of products and by-products;
- improvement of working conditions, safety and environmental protection;
- quick application of R&D findings.
The Commission has already taken account of these developments and  
problems in two recent measures:
First, it included a chapter on the combustion of both imported and  
domestic coal in its third non-nuclear energy research programme.' One  
of the reasons was to allow the limited funds of the ECSC budget to be  
concentrated on research into European coal.
Second, the Commission decided to draw up new medium-term coal research  
guidelines for 1986-90. This document sets out the current fields and  
selection criteria for projects. It thus serves as a basis for the  
1986 research programme.
The research programme for 1986 will concentrate on the following fields:
Mining engineering
Development work
Ventilation, firedamp, mine climate
Coal-getting techniques
Outbye operations underground
Modern management techniques
10J L 83, 25.3.1985.
^SEC(85)652 final.

- 54 -
REQUIREMENTS
1986 Approps 1985 Approps OutturnA rt. Heading proposed authorized 1984
320COAL RESEARCH (cont'd
330SOCIAL RESEARCH 9.5 8 7.9
CHAPTER 30 - TOTAL 60 51 50.9
--------------- ----

- 55 -
REQUIREM ENTS
Rem arks
Utilization and beneficiation
Coal preparation  
Coking
Beneficiation and new  products  
Percentage change 1985-86: +16%
The success of previous programmes justifies the continuation of the  
current programmes.
The various sectors of the industries concerned, management and workers  
and the research institutes are all concerned to see the development of  
research projects aimed at improving working conditions.
The general medium-term guidelines for technical coal research (1986-90)  
and the general objectives for steel indicate that the value of the  
research must contribute to improving the aspects of health,  
environmental protection and protection at the place of work.
Technological development also raises new problems which have to be  
quickly solved if the objectives to improve competitiveness laid down  
in the programmes approved by the Commission with the Council's assent  
are to be achieved.
For these reasons Community research is of benefit to all those  
concerned with health and safety at work. Since the ECSC social research  
programme is the only one at Community level concerned with health and  
safety at work, the various sectors covered by multiannual research  
programmes are:
- the effect on workers' health of occupational hazards and physical  
conditions at their place of work
- ergonomics (fifth programme)
- mine safety: the second programme was adopted by the Commission in
July 1982
- industrial health in coal mines (measures against dust and harmful  
gases in mines)
- technical measures to combat pollution at the place of work and near  
to steelworks.
Percentage change 1985-86: +19%

I- 56 -
REQUIREMENTS
Art Heading1986 Approps  
proposed1985 Approps  
authorized
CHAPTER 40 - AIDS IN THE FORM
OF INTEREST SUBSIDIES
410INVESTMENTS

-  5 7  -
REQUIREME N T S
Art. Remarks
401. References and description
Articles 54 (investment) and 56 (conversion) of the ECSC Treaty, and
Decisions of the High Authority/Commission.
The ECSC may use its own resources to provide interest relief on certain
types of loan. The subsidy is calculated in ECU at a rate and for a term
fixed by the Commission. It currently stands at 3% for five years, or
5% for global loans.
2. Type of expenditure
Provision for offsetting part of the interest due on loans disbursed by
the ECSC, in accordance with the contracts drawn up between the Commission
and the beneficiaries.
3. Method of calculation and explanation of change
ECSC Loans with interest subsidies are the principal financial instrument
for promoting priority investments to meet the requirements for the coal
and steel industries and to create jobs for former ECSC workers.
The grounds for the aids proposed for each category of Loan (investment
and conversion) are explained in the following paragraphs.
410In the investment field, the aim of interest subsidies is to encourage
certain types of investment in the ECSC industries. The Commission's
current criteria for granting subsidies are as follows:
- research and training centres, and the elimination of bottlenecks
(0J C 73, 18.6.1970);
- stabilization of coal production: subsidies are limited to
investment in shafts, underground workings and haulage and winding
equipment
(0J C 79, 29.3.1980);
- promoting the consumption of Community coal (0J C 343, 31.12.1982).

-  5 8  -
REQUIREMENTS
1986 Approps 1985 Approps Outturn
Art. Heading proposed authorized 1984
410Investments (eont'd)
420CONVERSION 49 44 63

-  5 9  -
REQUIREME NTS
Art. Remarks
420The Commission reserves the right to apply and adapt these criteria in  
the light both of its assessment of current priorities and of the  
appropriations available.
Percentage change 1985-86: + 11%
Conversion loans with interest subsidies are granted to firms or public  
bodies which encourage investments creating new jobs in regions hit by  
declining economic activity in the coal and steel industries.
The guidelines drawn up by the Commission for granting conversion loans  
are published in 0J C 178, 27.7.1977. They have since been changed  
slightly (0J C 191, 16.7.1983) to improve and clarify the terms of global  
loans, which have proved a very effective instrument for creating new  
jobs in small and medium-sized undertakings.
The maximum loan eligible for interest relief at the rate of 3% for  
5 years - 5% for global loans - at the moment is 20 000 ECU per new job,  
equivalent to maximum non-repayable aid of 3 000 to 5 000 ECU per job.  
When recruiting, the recipients undertake to give priority to former  
ECSC workers.

-  6 0  -
REQUIREMENTS
1986 Approps 1985 Approps Outturn
Art. Heading proposed authorized 1984
420Conversion (cont'd)
>
t
CHAPTER 40 - TOTAL 58 50 83.9
CHAPTER 50 - AIDS UNDER
ARTICLE 95 OF THE ECSC
TREATY (COKING COAL AND COKE
FOR THE STEEL INDUSTRY) 6 6 6

-  6 1  -
R E Q U I R E M E N T S
Art Remarks
50Apart from the continuing conversion requirements in the steel industry,  
there are additional requirements in 1985 resulting from redundancies in  
the coal industry, sometimes in the same areas, due to the restructuring  
programme.
It should also be noted that both the non-quota and quota sections of the  
European Regional Development Fund help to create jobs in regions hit by  
the steel crisis.
Percentage change 1985-86: + 11% (not including 10 million ECU in
appropriations lapsing which were reallocated to this heading in 1985).
1. References and description
(i) Article 95 of the ECSC Treaty
(ii) High Authority/Commission Decision 73/287/ECSC of 15 July 1973  
(0J L 259, 15.9.1973), as last amended and extended by Decision  
759/84/ECSC of 23 March 1984 (OJ L 80, 23.3.1984) and applicable  
until 31 December 1986.
The ECSC makes a lump-sum contribution to the special fund for easing  
intra-Community trade, the rest of the finance being provided by the  
Member States and the steel industry.
2. Type of expenditure
Provision for a lump-sum contribution of 6 million ECU to the fund  
(ECSC contribution). Community aid is for a maximum amount of  
36 million ECU, corresponding to 10 million tonnes of coking coal  
per annum. If trade drops below these limits, the reduced subsidies will

-  6 2  -
REQUIREMENTS
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
50AIDS UNDER ARTICLE 95 OF THE
ECSC TREATY (COKING COAL AND
COKE FOR THE STEEL INDUSTRY
(cont'd)
CHAPTER 50 - TOTAL  
CHAPTER 60 - SOCIAL MEASURES6 6 6
IN CONNECTION WITH THE
RESTRUCTURING OF THE STEEL 100 62.5 62.5
-INDUSTRY

-  6 3  -
R E Q U I R E M E N T S
Art, Remarks
be drawn first from the Community's contribution (6 million ECU) and the  
6 million ECU contributed by the steel industry and then from the  
24 million ECU paid in by the Member States.
3. Method of calculation and explanation of change
The aim of the special system of aid to coking coal and coke is to help  
maintain production of blast-furnace coal for the Community's iron and  
steel industry, and also to enable the coal and the coke produced to be  
sold at prices reflecting world market prices.
Apart from Community aid the system lays down pricing rules for the  
products concerned and authorizes the producing countries to grant  
production and sales aid to their collieries.
Percentage change 1985-86: 0%
60 1. References and description
On 13 April 1983 the Commission transmitted proposals to the Council on a
financial contribution by the ECSC under Article 56(2)(b) of the Treaty
towards the implementation of the social support scheme for restructuring1in the steel areas of the Community in.the period 1983-86.
The measures recommended in the action programme are aimed at:
- continuing the aid to early retirement and short-time working which was  
approved in the 1981 social measures;
C0M(83)158 final of 13 April 1983.

- 64 -
REQUIREMENTS
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
60SOCIAL MEASURES IN CONNECTION
WITH THE RESTRUCTURING OF THE
STEEL INDUSTRY (cont'd)  
-------------- ---,--.---

-  6 5  -
REQUIREM ENTS
Remarks
- financing the maintenance of jobs through reductions in working time;
- introducing a new aid to facilitate the integration of former  
steelworkers in other sectors of activity.
These measures supplement the traditional aids for resettlement
authorized under Article 56(2)(b). The Community contribution is
estimated at 330 million ECU. Since the resources provided for in the
ECSC Treaty are not sufficient in the present circumstances to finance
these measures, 62.5 million ECU was transferred from Chapter 65 of the
1EEC budget to the ECSC in 1984 and another 62.5 million ECU is  
contained in the 1985 budget.
2. Type of expenditure
Provision for the partial reimbursement of the expenditure incurred by the  
Member States. The conditions for granting aid are laid down for each  
Member State in accordance with common criteria applicable to the  
Community as a whole.
3. Method of calculation and explanation of change
The Commission estimates that 330 million ECU is needed to supplement the  
social support scheme for restructuring' the steel industry in the context  
of the general objectives for steel.
This estimate is based on the hypothesis that 150 000 jobs will be lost  
over the period 1983-86. It is likely that roughly half of the workers  
affected will take early retirement or be kept in work thanks to
Decision 84/541/ECSC, EEC, 23 October 1984.

- 66 -
REQUIREMENTS
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
60SOCIAL MEASURES IN CONNECTION
WITH THE RESTRUCTURING OF THE
STEEL INDUSTRY (CONT'D)
CHAPTER 60 - TOTAL 100 62.5 62.5
CHAPTER 70 SOCIAL MEASURES  
IN CONNECTION WITH THE  
RESTRUCTURING OF THE COAL  
INDUSTRY60 60 60

-  6 7  -
R E Q U IR E M E  N T S
Art. Remarks
measures involving adjustments in working time, while the remainder will  
have to find jobs in other sectors of the economy.
The cost of measures relating to early retirement and aids for short-time  
working is put at 195 million ECU. Measures designed to facilitate a  
return to the labour market will cost an estimated 135 million ECU, giving  
a total of 330 million ECU.
Percentage change 1985-86: + 60%
701. References and description
The Commission has transmitted a proposal to the Council on the ECSC's
financial contribution to the implementation of measures in connection with1the restructuring of the coal industry in the period 1984-86. These
measures supplement the traditional aids for resettlement authorized under
Article 56(2)(b). The Community contribution is estimated at
180 million ECU. Since the resources provided for in the ECSC Treaty are
not sufficient in the present circumstances to finance these measures,
60 million ECU was transferred from Chapter 65 of the EEC budget to the  
2ECSC in 1984 and another 60 million ECU is contained in the 1985 budget.
2. Type of expenditure
Provision for the partial reimbursement of the expenditure incurred by the
C0M(83)583 final of 6 October 1983.
Decision 84/348/EEC, 23 July 1984.

- 68 -
REQUIREM ENTS
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
70CHAPTER 70 - SOCIAL MEASURES  
IN CONNECTION WITH THE  
RESTRUCTURING OF THE COAL  
INDUSTRY (cont'd)
CHAPTER 70 - TOTAL 60 60 60
TOTAL REQUIREMENTS  
-—_______________ ___43
9 359.5 408.3

- 69 -
R E Q U I  R E M E N T S
Art. Remarks
Member States. The conditions for granting aid are laid down pursuant to
Article 56(2)(b) of the ECSC Treaty.
3. Method of calculation and explanation of changes
Given the comparative stagnation of the market for energy-generating  
products, the substantial stocks of coal held in the Community and the  
heavy losses incurred by certain coalmines, there is a clear need to step  
up efforts to restructure this industry and, in particular, to close the  
least profitable pits. Several coal-producing Member States have already  
made public their multiannual restructuring programmes, and the Commission  
envisages the loss of over 20 000, and even as many as 25 000, jobs a year  
over the period 1984-86.
Percentage change 1985-86: 0%.

- 70 -
REQUIREMENTS NOT ENTERED IN THE BUDGET: LOANS FOR FINANCING SUBSIDIZED HOUSING
In addition to the requirements to be financed by non-repayable grants from the  
year's resources, there is the ECSC housing subsidy scheme, which has been in  
operation since 1954. Forecasts for this programme are included in this aide-  
mémoire to complete the picture of all ECSC operations for Parliament and the  
Consultative Committee.
1. References and description
Article 54 and Decisions of the High Authority/Commission assigning to the  
housing programmes the funds from the "special reserve" constituted by interest  
from investments and from loans against own funds.
ECSC intervention takes the form of reduced-interest loans, and eases the cost  
of financing housing by adding the funds lent by the Community to resources  
provided nationally (and, in some cases, funds borrowed by the ECSC on the  
capital markets).
2. Type of expenditure
Grant of long-term loans at 1% interest to the responsible national bodies  
or other financial institutions.
A tenth programme covering five years (1984-88) has been adopted and the first  
stage involving 22 million ECU is in progress. A proposal for the second stage  
(1986-1988) is to be submitted to the Commission. It is proposed that this  
second stage should be given 39 million ECU to cover the additional  
requirements of the new Member States.
3. Explanation
This scheme has the twin aim of:
- complementing Community policy in the coal and steel industries; and

- improving Living conditions for workers in these industries.
The criteria for granting Loans were adopted by the Commission on  
110 December 1984. They wiLL be revised during the 10th programme in  
Line with the experience gained.
The scheme is both in the interest of workers, since it aLLeviates the  
effects of price increases and high interest rates, and of benefit to the  
industry, since it faciLitates reorganization. The number of dweLLings  
subsidized by means of ECSC Loans at 31 December 1984 stood at around  
187 000. The Loans granted are broken down by country at I.B.4.
0J C 119, 14.5.1985.

- 72 -
RESOUCES FOR THE FINANCIAL YEAR
million ECU
!
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
110CHAPTER 10 GENERAL RESOURCES  
LEVIES1170 147 136.4
Assuming that the current 0.31% rate is renewed.

- 73 -
RESOURCES
Art
110Remarks
1. References and description
- Articles 49 and 50 of the ECSC Treaty
- Decisions 2/52 and 3/52 of 23 December 1952.
The levies are calculated on the basis of a fixed scale per tonne  
which is decided each financial year by the Commission and  
published in the Official Journal.
In its Decision of 11 April 19831  2  3  the Commission brought forward the  
reference period used for calculating the average values for calculating  
the levy base. For 1986 this period will be the 1984 calendar year.
The aim of this change is to harmonize the date for presenting the  
draft ECSC operating budget with that for the general budget of the  
European Communities.
2. Type of resource
Levy resources are duly established entitlements in the form of levies  
payable on output in the 1986 financial year and calculated on the  
basis of the production declarations made by the undertakings.
3. Method of calculation and explanation of changes
The latest estimates of the average values which serve as the basis for  
calculating the levies suggest that the figures for the 1986 financial  
year, which relate to the reference period from 1  January to  
31 December 1984, will be some 6.9 higher for coal and 5% higher for  
steel than the figures for 1985.
It should be noted that there is an appreciable margin of uncertainty  
in these figures; this is because all the requisite data are not yet  
available, and forecasting production in present economic conditions is  
a very uncertain exercise.
Levy rate: 0.31%.
Percentage change 1985-86: +16%
10J C 101, 14.4.1983, page 4,

- 74 -
RESOURCES
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
110Levies (cont'd)
120INTEREST ON INVESTMENTS AND  
LOANS AGAINST NON-BORROWED  
FUNDS 75 70 70

- 75 -
RESOURCES
Remarks
Tonnage subject to the Levy and yield from a Levy rate of 0.01%
Product Production forecasts  
on which the levy is  
calculated 
(mi llion tonnes)Yield from levy  
rate of 0.01%  
(million ECU)
Brown coal briquettes and  
semi-coke derived from  
brown coal 3.7 0.02
Hard coal of all categories 180.0 1.50
Coal- total 1.52
Pig iron other than that  
used for making ingots 2.3 0.03
Steel in ingots 131.6 3.00
Finished products 90.3 0.93
Steel - total 3.96
GRAND TOTAL __5*48
1. References and description
Under its Decision of 30 April 1975, the Commission enters in the  
budget the interest available from the previous financial year.
2. Type of resource
Resources deriving from income on investments and on loans against  
non-borrowed funds will be determined when the Commission adopts the  
balance sheet at 31 December 1985.
3. Method of calculation and explanation of change
The figure for interest revenue is based on an estimate of the  
resources which the Commission will be in a position to release when  
it adopts the balance sheet at 31 December 1985.
Percentage change 1985-86: +7%

- 76 -
RESOURCES
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
130FINES AND SURCHARGES FOR LATE
29 17 8.8 PAYMENT
CHAPTER 10 - TOTAL 274 234 215.2
CHAPTER 20 - CANCELLATION OF  
COMMITMENTS UNLIKELY TO BE  
IMPLEMENTED 3 3 31.3

- 77 -
RESOURCES
Art, Remarks
130 1. References and description
Articles 47, 58 and 60 of the ECSC Treaty (mainly). The Commission may  
impose fines on undertakings contravening the current price and quota  
systems.
2. Type of resource
From an accounting point of view, revenue from the fines imposed by the  
Commission under Article 58 of the ECSC Treaty should be regarded to a  
certain extent as deferred resources, in view of the appeals made to  
the Court of Justice.
3. Method of calculation and explanation of change
It is very difficult to forecast the amount which will be collected in  
1986, especially since the legal proceedings in disputed cases are  
likely to go on for one or two years. It is proposed that only those  
cases where recovery is in progress should be taken into consideration.  
On the basis of the information currently available, it is proposed  
that 29 million ECU be entered under this heading.
Percentage change 1985-86: +70% (not including an increase of  
18 million ECU in fines expected to be collected in 1985)
20 1. References and description
Provisions based on Commission aid decisions must be given tangible form
by the contracting of legal commitments.
The Commission’s Internal Rules for the drawing up and implementation  
of the ECSC operating budget provide that once all parties have  
discharged their obligations under the legal commitment, any  
remaining part of the provision will be cancelled. Any contract  
running into difficulties of implementation may also be cancelled.

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RESOURCES
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
510CHAPTER 20 - TOTAL
CHAPTER 30 REVALUATION OF  
ASSETS AND LIABILITIES
CHAPTER 30 - TOTAL
CHAPTER 40 UNUSED RESOURCES  
FROM THE FINANCIAL YEAR 1985
CHAPTER 40 - TOTAL  
CHAPTER 50 EXCEPTIONAL REVENUE5 3 31.3
p ·  m ■ p.m. -
p.m.
p.m.p.m.
p.m. 13.2
p.m.
100p.m.
62.513.2
62.5SOCIAL MEASURES IN CONNECTION
WITH THE RESTRUCTURING OF THE
STEEL INDUSTRY

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RESOURCES
Art.
30
40Remarks
The amounts.thus released become available again as resources for the  
current financial year.
2. Type of resource
Any cancellation of provisions normally indicates complete discharge of  
the contract, agreed with the other contracting party.
The estimate of 5 million ECU show in this chapter relates, in essence,  
to cancellations of allocations for conversion and resettlement aid.
Only a token entry would be needed for the other items which might be  
involved (cancellations of balances remaining in respect of contracts  
which have been performed in full, etc.).
3. Method of calculation and explanation of change
It is difficult to estimate the rate of cancellation as it depends on  
several factors such as negotiations with the governments concerned.
The estimated figure of 5 million ECU for 1986 is based on a usual rate.
Percentage change 1985-86: +66% (not including an increase of  
52 million ECU in cancellations in 1985).
This chapter, carrying a token entry, is to record the net effect of  
changes in exchange rates during the financial year.
This chapter, carrying a token entry, records any balance remaining from  
the previous financial year as resources for the current financial year.
510 1. References and description
- Conclusions of the 717th Council meeting of 24 June 1981,
- Article 235 of the EEC Treaty,
- Commission proposal to the Council (decision to be taken under  
Article 235 EEC)

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RESOURCES
1986 Approps 1985 Approps Outturn
Art. Heading proposed authorized 1984
510SOCIAL MEASURES IN CONNECTION
WITH THE RESTRUCTURING OF THE
STEEL INDUSTRY (qont'd)
520SOCIAL MEASURES IN CONNECTION
WITH THE RESTRUCTURING OF THE
COAL INDUSTRY 60 60 60

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RESOURCES
Art. Remarks
2. Type of -resource
Funds from the general budget to cover the aids approved. This chapter  
records the additional resources intended solely for financing social  
measures in connection with the restructuring of the steel industry  
(Article B.6). The Commission proposes that this temporary measure  
should be continued by means of a transfer from Article 650 of the  
general budget to the ECSC budget on the basis of a decision to be taken  
pursuant to Article 235 EEC.
3. Method of calculation and explanation of change
In Article 650 of its preliminary draft budget for 1986 the Commission  
has proposed a token entry so that appropriations may be transferred  
from the EEC budget when the ECSC actually pays the aid and not when  
it is committed, as is the case at present. The sum of 100 million ECU  
thus represents the revenue to be obtained from the general budget.
The Commission has proposed that the Council give an undertaking that  
the necessary appropriations will be made available as payments are  
made (see I.C.2).
Percentage change 1985-86: +60%
520 1. References and description
- Article 235 of the EEC Treaty,
- Commission proposal to the Council (decision to be taken under  
Article 235 EEC).
2. Type of resource
Funds from the general budget to cover the aids approved. This chapter  
records the additional resources intended solely for financing social  
measures in connection with the restructuring of the coal industry.

t - 82 -
RESOURCES
Art. Heading1986 Approps  
proposed1985 Approps  
authorizedOutturn
1984
520SOCIAL MEASURES IN CONNECTION  
WITH THE RESTRUCTURING OF THE  
COAL INDUSTRY (cont'd)
CHAPTER 50 - TOTAL
CHAPTER 60 CONTINGENCY  
RESERVE
CHAPTER 60 - TOTAL  
TOTAL RESOURCES160
p.m.122.5
p.m.122.5
26.1
p.m.
439p.m.
359.526.1
408.3

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RESOURCES
Art. Remarks
60The Commission proposes that these measures should be financed by means  
of a transfer from Article 651 of the general budget on the basis of a  
decision to be taken pursuant to Article 235 EEC.
3. Method of calculation and explanation of change
In Article 651 of its preliminary draft budget for 1986 the Commission  
has proposed a token entry so that appropriations may be transferred  
from the EEC budget when the ECSC actually pays the aid and not when it  
is committed, as is the case at present. The sum of 60 million ECU thus  
represents the revenue to be obtained from the general budget. The  
Commission has proposed that the Council give an undertaking that the  
necessary appropriations will be made available as payments are made  
(see I.C.2).
Percentage change 1985-86: 0%
This chapter has been given a token entry so that an appropriate amount  
may be entered if necessary to cover any deficit arising in 1986. The  
amount available for the contingency reserve will be fixed when the  
Commission adopts the balance sheet at 31 December 1985.

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2. COVERING OF REQUIREMENTS NOT ENTERED IN THE BUDGET
Funds to cover requirements for the construction of subsidized housing  
are obtained from:
- the resources available for this in the former ECSC pension fund;
- the resources in the special reserve.
These resources are made up of the repayments of loans already made  
and fresh appropriations allocated to the special reserve.
The decision on the allocation to the special reserve of the  
additional resources required will be taken when the Commission adopts  
the balance sheet at 31 December 1985.
3. SUMMARY OF RESOURCES AVAILABLE FOR 198)6
The estimates of traditional resources other than levies amount to  
109 million ECU (interest available: 75 million ECU; fines: .  ...
29 million ECU; cancellations: 5 million ECU). As the yield of a levy  
rate of 0.01% has been estimated at 5.48 million ECU, the yield of the  
levies can be estimated at 170 million ECU, assuming that the current  
rate of 0.31% is maintained. The total ordinary resources available  
for 198:6, assuming that the levy rate remains unchanged, is thus  
estimated at 279 million ECU.
In addition, there is exceptional revenue of 160 million ECU to finance  
measures connected with the restructuring of the steel and coal  
industries, giving a total of 439 million ECU in resources available.

DRAFT ECSC OPERATING BUDGET FOR 1986  
SUMMARY TABLEANNEX E 
(million ECU)
REQUIREMENTS PROPOSALS RESOURCES PROPOSALS
OPERATIONS TO BE FINANCED FROM CURRENT RESOURCES FOR THE FINANCIAL YEAR
RESOURCES (NON-REPAYABLE)
1.Administrative expenditure 5 1.Current resources 170
2.Aid for redeployment (Art. 56) 1501.1 Yield from 0.31% levy
1.2 Interest on investments and3.Aid for research (Art. 55) 60 on loans from non-borrowed
3.1 Steel 28.5 funds 75
3.2 Coal 22 1.3 Fines and surcharges for
3.3 Social 9.5 late payment 29
4.Interest subsidies 581.4 Miscellaneous p.m.
4.1 Investment (Art. 54) ' 92.Cancellation of commitments
4.2 Conversion (Art. 56) 49 unlikely to be implemented 5
5.Aid to coking coal and coal for the 3.Revaluation of assets and
steel industry (Art. 95) 6 Liabilities p.m.
6.Social measures connected with ^ 4.Unused resources carried over
restructuring of the steel industry 100 from 1985 p.m.
7.Social measures connected with ^ 5.Exceptional revenue
restructuring of the coal industry 60 5.1 Social measures connected
with restructuring of steel
industry 100
5.2 Social measures connected with
restructuring of coal industry 60
6.Contingency reserve p.m.
439 439
OPERATIONS FINANCED BY LOANS FROM ORIGIN OF NON-BORROWED FUNDS
NON--BORROWED FUNDSSpecial reserve and former7.
8.Subsidized housing 13 ECSC Pension Fund 13
pAny additional resources would be allocated to interest subsidies on investment aid.
Implementation of these chapters depends on the exceptional revenue actually being made available.