^oC16D5u22 Official]ournal of the European Communities 10 7 90 
C^pir^ion on the Mediterranean policy of the European Community 
(90^C16^B1^ 
Con 30 ]anuary!990 the Economic and Social Committee, acting under the fourth paragraph of 
Article 20 of its Rules ofProcedure, decided to drawup an opinion on the Mediterranean policy of 
the European Community. 
In ^iew of the deadline for adoption ofthis opinion, the Committee decided to appoint Mr Amato 
as rapporteur^general with the tasl^ of preparing its worl^ on the suh^ect. 
At its276thplenary session (meeting of 26 April 1990),the Economic and SocialCommittee 
adopted the following opinion hyama^ontyvote,withl^ abstentions 
1. Eoreword 
On 12]uly 19^9 the Economic and Social Committee 
adopted an ownimtiati^e opinion (accompanied hy a 
reportdrawn up hy theSection for E^ternalRelations, 
Lrade and lOevelopment Policy) calling for a new 
Mediterranean policy for the European Community,and 
setting out recommendations' 
Commissioner Ahel Matutes addressed the External 
Relations Section on 13 0ctoher 19^9, and hroadly 
endorsed the recommendations contained in the opinion. 
Pte promised that the Commission would tal^e account of 
them when framing its proposals for renewal of the 
Commumty^sMediterranean policy. 
LheEuropean Council in Strashourghassmceendorsed the 
need to intensifyMediterranean policy. 
T^heCommisson has also sent the CouncilaCommun^ 
cation entitled ^^r^c^^ r^ Co^^^^r^ M^^r^ 
On ^Eehruary 1990 the Council held an exploratory 
dehate on the action areas proposed hy the Commission, 
and asl^ed the Commission to put forward practical 
proposals in the light of the dehate. 
Hie present opinion sets out to gnBe the Committees 
response to theCommissioncommumcationandtothe 
Council^sconclusions, and to express regret at not heing 
consulted on the communication 
2. general commentsontheCommis^ion communication 
2,1. ^^ Co^^^o^^ro^o^^^ ^^^BM^^rr^^^^ 
2.1.1. Lhe proposal to relaunch Mediterranean policy 
forms part ofanew ^policy of neighbourly relations^aimed 
at strengtheningtheCommunity^shnleswithits closest 
neighbours' EEI5A, Eastern Europe and the MediterD 
ranean. L^he Committee fully supports such a policy. The 
Committee opmionof]uly 19^9arguedthattheCom 
mumty^spolicytowardsthethreeregionsshouldbedistinct 
from its policy towards other geographical regions, where 
the main considerations were either commercial interests 
or aid and development cooperation. Mediterranean policy 
must instead be directed towards complementary relations 
and synergy, and towards the prospect of economic 
integration. 
2.1.2. Phe Committee thus envisaged the creation ofa 
EuroMediterranean strategic area (political, economic, 
market) embracing the three regions covered by the ^policy 
of neighbourly relations5I^his area should be maposition 
to compete anddebatewiththe other twomain global 
strategic areas, i.e. America and Asia. 
In the Committees view, the upheavals on the world 
political scene triggered by the democratic revolutions in 
Eastern Europe confirm the need for suchastrategic area. 
Only by secunngasmgle economic and political future for 
the whole EuroMediterranean area can we shield Europe 
from the two dangers which are now apparent^nationahst 
tendencies and Islamic fundamentalism. 
Lo start worl^ now on the construction of a EuroD 
Mediterranean strategic area does not mean immediate 
exploration of the institutional hnl^s which will bind the 
area together^ rather it means framing a policy of 
convergence and integration between the different regions 
and, above all, integration within each region. I^his would 
also help to resolve the present debate about the borders of 
greater Europe. 
2.1.3. L^he locomotive role which the Community will 
necessarily play in this rests on two prerequisites^ 
— the Community must be abletoplayafull political role^ 
this means accelerating European Community political 
unification by setting upaEederation of the^fwelve, 
10. 7. 90 Official Journal of the European Communities No C 168/23 
— the Community must step up its role throughout the 
Euro-Mediterranean area, always bearing in mind the 
interdependence and common strategy being pursued, 
and avoiding underestimations. The pursuit of com­
plementary relations and integration will obviously 
have to take account of the development level and 
special features of each of the three regions (EFTA, 
Eastern Europe, the Mediterranean). 
2.1.4. For all these reasons, the Committee endorses the 
political, economic, social and environmental consider­
ations which the Commission adduces to explain the 
Community's renewed interest in the development of the 
Mediterranean non-Community countries (MNC) 'at a 
time when the expectations of the MNC are quite 
obviously influenced by the Community's new de­
velopments'. 
2.1.5. The points made in the Committee's 1989 opinion 
are echoed by the Commission's anxieties about the 
increasing demographic pressures, worsening social imbal­
ances, environmental deterioration of the whole Mediter­
ranean basin, and continued serious political instability. 
2.1.6. The Committee also endorses the emphasis which 
the Commission lays on the fears occasioned by the 
completion of the Community's internal market, both for 
trade reasons (50 % of MNC exports go to the Com­
munity) and on social grounds, 'notably in view of the 
anticipated impact of a common policy governing the 
granting of visas'. The Committee agrees that 'the prospect 
of much closer economic integration between the Com­
munity of 1992 and the EFTA countries, and the likelihood 
that privileged trade links will be established with the 
countries of Eastern Europe, all contribute to fuel these 
fears'. The Committee sees a danger that, despite the 
declarations on a 'policy of neighbourly relations', the 
Community may in the end underestimate the importance 
of the Mediterranean area. The conclusions of the 
Commission communication explain very well why the 
Community cannot afford to let this happen: 
'The Commission believes that current trends in the 
Community and the Mediterranean non-Community 
countries would quickly make a worsening of the 
economic and social imbalance between the two regions 
virtually unmanageable. 
Owing to its proximity and the volume of trade 
generated, the stability and prosperity of the Mediter­
ranean region are essential to the stability and 
prosperity of the Community. In a wider sense, the 
security of the Community is at stake (local or regional 
conflicts, political instability, terrorism, drugs, en­
vironment).' The Committee fully endorses this view, which lies at the 
heart of its 1989 opinion. The Committee feels moreover 
that only the prospect of a Euro-Mediterranean strategic 
area, on the abovementioned lines, can save the Com­
munity from the danger of a 'policy of neighbourly 
relations' which lacks balance in the South. 
2.1.7. The Committee also endorses the Commission's 
conclusion that 'the relations between the Community and 
the MNC must be broadened and strengthened to meet the 
region's political, economic and social challenges, its 
expectations vis-a-vis the Community and the latter's 
responsibilities in this part of the world'. 
2.1.8. The Committee notes that the Commission's 
broad endorsement of the analysis contained in the ESC's 
1986 opinion is an indication of the inadequacy (in terms of 
policy as well as instruments) of the agreements which the 
Community concluded with the MNC in the 1970s. 
2.1.9. The Committee considers that the Council must 
accept the full gravity of the Commission's criticism 
(echoing that made in the Section report of 26 June 1989) of 
the dwindling Community and Member State role in total 
official funding (official development aid and other flows) 
for the MNC; the share of the Community and Member 
States has fallen to 17 %, even though the MNC form the 
Community's third main market and 48 % of their imports 
come from the Community. 
2.1.10. The Committee fully endorses the Commission's 
view that action is urgently required, and supports the 
proposal that the Council should 'organize the Com­
munity's approach around a renewed Mediterranean 
policy'. This too was recommended in the Committee's 
opinion. 
2.2. Main features of the new Mediterranean policy 
proposed by the Commission 
2.2.1. The Commission outlines six action areas for the 
new policy: measures to support the economic reform 
process; encouragement of private investment; an increase 
in bilateral and Community financing; continued or 
improved access to the Community market; greater MNC 
involvement in the Community's progress towards the 
internal market; strengthening of economic and political 
dialogue. 
2.2.2. The communication does not explain exactly how 
the basic goals and guidelines of Mediterranean policy are 
to change. It is necessary to define a new general 
No C 168/24 Official Journal of the European Communities 10. 7. 90 
framework in which to situate the six action areas. 
However, the communication suggests that these six policy 
elements (which are generally endorsable if considered 
independently) are simply to be slotted into the present 
Mediterranean policy. If this is the case, they will not be 
effective and may in some cases even prove counter­
productive. 
2.2.3. The 1989 Committee opinion called for a changed 
general approach to Mediterranean policy, which would 
treat the whole Mediterranean as a single unit: the 
problems of the Mediterranean, starting with its Com­
munity flank, have to be tackled in a single strategic 
perspective. The Committee accordingly introduced the 
concept of joint development, moving towards com­
plementary relations and ultimately integration. 
2.2.4. Although the communication re-affirms the 
'global' nature of Mediterranean policy, it does not follow 
this through to the implications for policy implementation 
and instruments, or the definition of goals and types of 
intervention. It fails to update the 'globality' concept to 
take account of the problems of the Community's 
Mediterranean regions and the need for a corresponding 
review of other Community policies. 
2.2.5. The six action areas listed by the Commission will 
only be fully effective if they form part of a joint 
development policy. For example, improvements in MNC 
access to the Community market presuppose economic and 
productive adjustment measures for the Community's 
Mediterranean regions, as part of the policy of economic 
and social cohesion. A continued reform of the common 
agricultural policy, together with a successful conclusion of 
the current GATT round, should help to reduce MNC food 
dependency. And again, the economic cooperation pro­
grammes (investment, research and development, etc.) for 
the MNC will only achieve coherent development of the 
whole Mediterranean area if they make provision for the 
locomotive and supporting role of the Community's 
Mediterranean regions. 
2.2.6. A joint development policy is the only way of 
inducing MNC governments to address their responsibi­
lities as regards economic, social and demographic policy. 
Otherwise, the call for a more open economic system 
(pinpointed by the Commission) risks being a mere 
ideological rallying cry — a sound enough objective in absolute terms — rather than a concrete instrument for 
MNC development. 
2.3. The first stages of a new, overall policy for the 
Mediterranean 
2.3.1. The Committee notes the Commission's cautious 
statement that 'at this stage, no new institutional 
arrangements are envisaged'. However, intermediate 
objectives still have to be set as a step in this direction even 
though institutional machinery (such as the joint develop­
ment convention between the Community and the MNC, 
with its own institutions, mooted by the Committee) is not 
yet being established for the new policy. 
2.3.2. The 1989 opinion proposed four stages for the 
new policy. The Committee considers that the first and 
second stages of these could be completed during the 
timespan set by the Commission for implementing the 
proposals contained in the communication. 
2.3.3. Firstly, the setting-up of a Mediterranean 
Cooperation Council (proposed by the conference for 
global cooperation in the Mediterranean promoted in 1989 
by the European Parliament) and a Mediterranean Forum 
(as proposed by the United Nations) should provide 
vehicles for hammering out the guidelines on sectoral joint 
development policies which will underpin the implemen­
tation of the six action areas outlined by the Commission. 
Other alternatives could also be considered, such as the 
establishment of a sort of Euro-Mediterranean OECD. 
2.3.4. Secondly, the Committee stresses the need to set 
up a few pilot development agreements. Point 4 of the 1989 
opinion contains a full definition of the nature and 
objectives of the development agreement, and the Commit­
tee will here simply underline its overridingly practical 
nature. Such agreements could also be used for particular 
sectors of Mediterranean policy, but as they provide 
linkage between development projects (to be carried out 
synergically both within the MNC and in the Community), 
commercial contracts and financial commitments, they are 
the most innovative instrument of the new policy and offer 
the best tool for implementing the Commission's six action 
areas. 
2.3.5. Another realistic way of working towards the 
conclusion of a global convention would be to move away 
(even if not entirely) from bilateral cooperation, and focus 
on relations with the subregional groups which have 
recently been established such as the Arab Maghreb Union 
(AMU) and the Arab Cooperation Council (ACC). 
10. 7. 90 Official Journal of the European Communities No C 168/25 
The Committee is pleased to see that the Commission 
attaches priority importance to these forms of regional 
integration. It therefore proposes that the next financial 
protocols be drawn up with the AMU and the ACC rather 
than with the individual countries. 
3. Specific comments on the Commission's proposed 
action areas 
3.1. A preliminary point: MNC external debt 
3.1.1. The Committee agrees with the Commission that 
an increase in external funding is a precondition for the 
success of economic adjustment and reform processes, and 
for a return to economic growth. 
Yet all these measures will be ineffective if the even more 
serious problem of MNC debt is not tackled. MNC 
external debt has reached alarming proportions: the debt 
ratio (debt/GDP ratio) of many Mediterranean nations 
now exceeds that of the 'seriously indebted' countries and 
in some cases that of sub-Saharan Africa (J). Debt servicing 
constitutes an increasing burden (2) and in some MNC is 
rising steeply (3). The public-sector foreign debt is an 
increasingly important component of the State budget (4). 
In such a situation, any new funding would be used to 
service the debt, thus fuelling a vicious circle. Furthermore, 
(!) Debt ratio in 1988: Egypt 142%, Jordan 110%, Tunisia 
70 %,Morocco 106 %, Israel79 %,Turkey 58 %, Yugoslavia 
35 %, Algeria and Cyprus 48 %, Syria 33 %, Malta 20 %, 
seriously indebted nations 59 %, and sub-Saharan Africa 99 % 
(source: World Bank). 
(2) Debt-servicing ratio (debt servicing/exports) in 1988: Algeria 
96 % according to the World Bank and 75 % according to the 
Algerian Central Bank, Turkey 43 %, Morocco 29 %, Syria 
24 %, Tunisia 23 %, Israel 18 %, Jordan 28 %, Egypt 16 %, 
Yugoslavia 21 %, Cyprus 14 %, Lebanon 3 %, Malta 2 %, 
seriously indebted countries 37 %, sub-Saharan Africa 27 %. 
(3) Debt-servicing in Morocco rose by 15 % from 1988 to 1989. In 
Algeria the annual increase was 22 % in 1988 and 17 % in 
1989. 
(4) The public-sector foreign debt in Morocco accounts for one-
third of the State budget for 1989. the debt burden will still remain untenable (5), even under 
the most optimistic forecasts for growth of Mediterranean 
countries' GDP and exports. 
Even the foreign investment which the Commission intends 
to promote, and the repatriation of capital (or, at least, 
disincentives to the export of capital), would still be 
impeded by the fact that the debt and the prospect of 
insolvency make investment an insufficiently attractive 
proposition. Nor should we underestimate the dangers 
which the debt problem creates for the democratic 
institutions in these countries. As the Commission rightly 
notes, development of these institutions is one of the main 
goals of Mediterranean policy. 
3.1.2. The vicious circle of MNC debt must thus be 
broken by decisive measures to reduce the debt in line with 
the countries' development capacity and ability to pay. 
Such measures are crucial to the economic growth of most 
Mediterranean nations. 
3.1.3. The Commission proposal advocates 'the con­
tinuation of current experiments to reduce the debt-
servicing burden for certain highly indebted countries' and 
'the continuation or resumption of commercial bank 
lending in those middle-income countries which have 
managed to continue servicing their debt without reschedu­
ling arrangements'. 
The Committee would make the following comments: 
— Not only the debt-servicing burden should be reduced, 
but also the principal value. The Brady plan ac­
knowledges the need to act on both areas simul­
taneously. 
— The need to reduce debt also exists in countries which 
have hitherto honoured their debt without reschedu­
ling. Indeed, some of these countries have incurred a 
(5) In order to prevent the debt exploding, and to allow it to be 
gradually absorbed, the GDP growth rate must always be 
higher than the debt-servicing/GDP ratio. In 1988 this ratio 
was between 7 and 19 % in most Mediterranean countries, 
while the most optimistic forecasts for GDP growth are 
considerably lower. If GDP continues to grow at the present 
rate, the debt will explode. For the country to service its debt, 
the export growth rate must also be higher than the debt-
servicing ratio (ratio of debt-servicing/exports). As described 
in footnote (2), in 1988 in most MNC this ratio was between 21 
and 75 % (or 96 %). Even supposing ideal domestic and 
external conditions for increasing MNC exports (starting with 
an end to protectionism by the Community and the other 
industrialized nations), it would be a very long time before the 
debt/export ratio (which today varies from 160 to 400%) 
could be brought down to acceptable levels (below 100 %). 
No C 168/26 Official Journal of the European Communities 10. 7. 90 
greater debt-servicing burden than the MNC which 
have made rescheduling arrangements (*). 
3.1.4. The Community's Mediterranean policy cannot 
remain detached from measures to reduce MNC foreign 
debt. Even if the Community as a body has no effective 
powers in this field, and is only a minor creditor, it still can 
and should play a role. 
Its first task is to coordinate the action of Member States, 
some of whom are major creditors. Member States' 
bilateral policies have not taken the same line, often with 
adverse effects. Even greater importance attaches to 
Community coordination within the international finan­
cial institutions (IMF, World Bank, Club of Paris) of which 
the European Community Member States are important 
members. 
Rather than waiting for IMF decisions, as it does at present, 
the Community should play a part in the framing of these 
decisions. This is particularly important at a time when 
there are difficulties over the application to the MNC of the 
new guidelines, approved by the IMF executive committee 
on 23 May 1989, providing for IMF support on operations 
to reduce debt and debt-servicing. This support is tied to 
medium-term adjustment programmes with a heavy 
structural-reform bias (2). 
(!) Algeria is a case in point. Algeria has the highest debt-servicing 
ratio (75 % of export revenue goes on debt servicing), and the 
structure of the debt has worsened: the variable-rate debt has 
increased (53 % of the total in 1988); the short-term debt has 
rocketed (accounting for 25 % of debt-servicing). Hence from 
1985 to 1987 the average repayment period fell by almost half 
(from seven years to approximately three and a half) and 
Algeria's bargaining capacity on the international financial 
markets deteriorated. 
(2) The first concrete example of the new IMF guidelines is the 
programme for Mexico approved in May 1989 which contains 
the following important new features: (a) the programme is 
growth-oriented, reversing the method used hitherto by the 
IMF in its structural adjustment programmes (i.e. it starts by 
fixing growth targets and then decides on the external funding, 
rather than vice versa); (b) for the first time, the programme 
explicitly recognizes the excessive level of debt and the 
problems its poses, both for economic policy and for a return to 
growth; (c) for the first time in the case of a seriously indebted 
country, the programme was approved without financial 
guarantees from the creditor commercial banks. The banks 
thus no longer have the power to veto IMF programmes and 
have lost their de facto role of debt collector; (d) the 
programme has been framed in a medium-term context; 
financing has to be provided on a multi-year basis in order to 
reduce the legal uncertainty which annual negotiations caused; 
(e) the IMF has committed its own resources to reducing the 
debt. 3.1.5. The Community should sponsor an international 
plan for regulating the debt and for structural adjustment 
in the MNC. The plan should be discussed at the various 
international bodies (including the Group of Seven) and 
should centre on an IMF programme (similar to the 
Mexican one) designed for MNC in general but geared to 
the special needs and features of the target country. The 
plan should focus on: 
1. Substantial restructuring and reduction of the debt, 
individually geared to the economic conditions and 
ability to pay of each MNC; 
2. Structural economic and financial reforms to be carried 
out by the MNC; 
3. Extension of MNC export possibilities, to offset the 
burden of debt-servicing on their balance of payments; 
4. Support for growth, so that the (suitably reduced) debt 
burden absorbs an acceptable percentage of national 
economic and financial resources. 
3.1.6. The first point (action to reduce debt) should 
involve: 
(a) a cut in official credits, starting with those of the 
Member States, by means of coordinated Community 
action. The sum subtracted could be converted into 
social and ecological expenditure and spending on 
human capital, using counterpart funds in local 
currency. The repayment deadlines and interest rates of 
the remaining debt should be appropriately re­
structured ; 
(b) a mechanism for bank credit involving all the creditor 
banks (3). This should cover: 
— 'forgiveness' of the excess debt, defined as the part 
which, if written off, would leave a sum which could 
be exchanged at virtual parity on the secondary 
markets, 
— conversion of the rest of the debt into longer-term 
bonds carrying a rate of interest lower than the 
market rate, 
— provision of official guarantees on the payment of 
this reduced interest. These guarantees should be 
backed by the IMF or the Community, in order to 
encourage other countries and the commercial banks 
to grant loans to the MNC, 
(3) In the last few days Morocco has concluded an agreement with 
the private bank coordination committee (London Club). This 
is an agreement in principle to restructure and reschedule debts 
of US $ 3 200 million (17 % of Morocco's debt). 
10. 7. 90 Official Journal of the European Communities No C 168/27 
— the granting of new loans, which at this point would 
represent new financing. However, mechanisms 
should be devised to ensure that the new loans are 
not recycled to the financial markets of the creditor 
countries. 
Debt-for-equity swaps should not be permitted, as they 
are known to fuel inflation; 
(c) help with debt-reduction, by IMF financing of oper­
ations to reduce debt principal (repurchase or exchange) 
and by interest support (guarantees), according to the 
new IMF guidelines described above. The Community 
should play a positive role in securing a doubling of IMF 
resources (coordinating the positions of the Member 
States). The Community should also take decisive steps 
to encourage Member States to purchase a proportion 
of MNC debt by financing development projects in 
MNC. 
3.1.7. On similar lines to the arrangements in the EEC-
ACP Convention, the Community should provide the 
MNC with help, at their request, to: 
— devise concrete solutions to their debt, debt-servicing, 
and balance-of-payments problems, 
— introduce training schemes on external-debt manage­
ment and international financial negotiations, 
— set up flexible debt-management techniques and 
instruments in order to tackle any sudden fluctuations 
in interest and exchange rates. 
3.2. Measures to support the restoration of economic 
balance 
3.2.1. The Committee supports the Commission pro­
posal for Community action in this field — an area not 
hitherto covered by Mediterranean policy. However, here 
too the Community should do more than simply track the 
action of the international financial organizations, merely 
playing a complementary role and offsetting the damage 
done by the IMF's structural adjustment programmes. 
It is now widely recognized that the structural adjustment 
programmes carried out to date in the MNC have not 
achieved satisfactory results and have created excessive 
burdens. At the same time, the IMF seems reluctant to 
apply to the MNC the new guidelines — partial, but 
decidedly corrective — introduced for Mexico (see 
footnote 2 on page 26). 3.2.2. The Community's first task is to adopt a clear 
position (as the UN has) on the results of the structural 
adjustment programmes in the MNC and in the developing 
world in general. 
In the Committee's view, the judgement must be negative. 
The structural conditions and external imbalances facing 
these countries mean that a strategy based on restrictive 
monetary and fiscal policies and currency devaluations is 
too costly in terms both of GDP growth and development. 
Not only does the fall in domestic demand and public 
spending have serious social consequences on health, 
nutrition, primary education, employment and social 
services, in places where these are already far from 
satisfactory. Worst, the serious depression which is thus 
engendered acts as a disincentive to foreign investment and 
seriously undermines any possibility of recovery. One 
reason for this is that the structural adjustment program­
mes often even fail to achieve the limited objectives which 
the IMF sees as the preconditions for recovery (e.g. balance 
of payments equilibrium). The programmes are even less 
effective against inflation and fiscal deficits, and the 
underlying economic problems, such as structural weak­
ness and debt, either remain unaltered or become more 
acute 0). 
These failures are rooted in an approach which attributes 
secondary importance to the external causes of balance of 
(*) Tunisia is a good example. According to an analysis carried out 
by the economist Mahmoud Bel Romdhane (1990) in the wake 
of the structural adjustment programme agreed with the IMF 
in 1986, some results have been achieved. The squeeze on 
domestic demand and the devaluation of the dinar (31 % 
between 1986 and 1989), alongside measures to boost exports, 
have produced a 9 % annual increase in exports. The current 
account deficit, which from 1984 to 1986 stood at around 8 % 
of GDP, fell to 1 % of GDP in 1987 and 1988 and 4 % in 1989. 
Foreign exchange reserves have been built up again, and the 
Tunisian economy has been in large part liberalized. 
Nevertheless, the structural adjustment programme has had no 
effect on the two endemic problems of the Tunisian economy 
— debt and excessive reliance on imports. The import-to-GDP 
ratio has actually worsened, from 38 % in 1985 and 1986 to 
39 % in 1988 and 42 % in 1989. No progress has been made on 
the debt ratio. Tunisia has had to pay a high economic and 
social price for these far from satisfactory results: a 1 % annual 
drop in consumption; a 30 % fall in investment between 1983 
and 1984; 50 % unemployment; a 60 % drop in real wages 
above the minimum inter-professional guaranteed wage 
(which has fallen in real terms by 30 % since 1983); and a 
general deterioration of basic social services. 
No C 168/28 Official Journal of the European Communities 10. 7. 90 
payments problems, and pays scant attention to the effects 
which the excessive debt burden has on the adjustment 
process. The perverse effects of the structural adjustment 
programmes are therefore magnified in the seriously 
indebted countries by their impact on income distribution, 
and this in turn further aggravates economic instability. 
Hence the need for a radical rethink of the programmes. 
3.2.3. The Community must opt for a structural 
adjustment policy which: 
— first and foremost takes in hand the problem of debt 
reduction; at all events, this requires less austerity from 
the IMF, 
— is growth, development and employment-oriented, 
— acts on macroeconomic supply (rather than simply 
entailing short-term measures to influence the com­
ponents of demand), for example by focusing on public 
investment or on the relation of farm prices to non-farm 
prices, 
— identifies the necessary structural economic, fiscal and 
financial reforms, 
— increases productivity in key sectors of the economy, 
— diversifies the economy so as to reduce internal and 
external imbalances, while maintaining GDP growth, 
— improves the balance of payments situation, 
— strives to improve social welfare by defining minimum 
levels of compatibility between the social and political 
aspects of the adjustment process. 
The need is thus for medium-term programmes combining 
structural change and adjustment, and calling for con­
sensus from all the parties concerned. 
If the Community is to propose this type of structural 
adjustment for the MNC, it will also have to take 
congruent adjustment measures, within a framework of 
joint development. 
3.2.4. The Community should thus actively coordinate 
Member States' action, with a view to ensuring that 
traditional structural adjustment programmes are not 
implemented in the MNC ('), and that the abovementioned 
new approach to structural adjustment is adopted by the 
IMF (within the framework of the international plan 
(') This is a very real danger, if we consider the conditions for IMF 
assistance still being imposed on the Egyptian Government: a 
rise in bank interest rates, currently at around 20 % (with 
25 % inflation); a 25 % currency devaluation, realignment of 
exchange rates; and a rise in the price of oil products. for MNC proposed in 3.1.5), and by the Member States in 
their bilateral initiatives. 
3.2.5. Only on these terms can the Committee endorse 
the Commission proposals for helping MNC to implement 
structural reforms in support of the measures of the 
international financing bodies. 
3.2.6. Community measures on the social aspects of 
change and adjustment should, rather than 'being aimed at 
reducing the generally high social cost of adjustment 
policies', instead focus on the financing of schemes which 
offer new or alternative employment, and on an active 
labour and social policy, providing synergy with the 
economic change and adjustment measures. 
3.2.7. As far as possible, help with food supplies should 
not use the 'emergency aid' approach, but should 
complement and guide multi-year agricultural develop­
ment programmes (as proposed in point 9.10 of the 
Committee opinion of 12 July 1989). 
3.2.8. The steep population rise in the MNC is an 
important factor in the social compatibility of the change 
and adjustment programmes. At a time when the gap 
between birth rates and forecasted economic growth has 
serious implications for the entire Mediterranean basin, the 
Community should press the MNC to bring in effective 
family-planning policies. Such a move would be consistent 
with a joint development policy, and the Community 
should guarantee appropriate technical and financial 
support. 
3.2.9. In cases where joint assistance or cofinancing 
with international financial bodies is not feasible, the 
Community should provide financial support for structural 
change and adjustment as it does under the Fourth Lome 
Convention. 
3.3. Promotion of private investment 
3.3.1. The Committee agrees on the importance of this, 
and on the need for 'use of limited budget resources to 
encourage significant private-sector investment based on 
both the mobilization of domestic savings and direct 
European investment'. 
3.3.2. This subject was considered at some length in the 
Committee's 1989 opinion and the Section report. The 
Committee will here note a few guidelines which it asks the 
Commission to adopt. They are based on the general 
pointers (fully endorsed by the Committee) contained in 
the Commission document. 
10. 7. 90 Official Journal of the European Communities No C 168/29 
3.3.3. A number of factors have to be considered when 
deciding what private investment to support: quality of 
investment, level of technology, suitability to fill a specific 
niche in the development programmes, relation to local 
resources and markets, and integration into the region 
concerned and into the existing production network. 
3.3.4. Joint ventures should be the priority form of 
direct European investment. 
33.5. National conditions for direct investment in the 
MNC have improved, but much remains to be done at the 
level of legislative, administrative and financial provisions, 
starting with the freedom to repatriate profits. 
3.3.6. The Committee broadly endorses the types of 
support hitherto provided by the Community: EIB loans, 
contributions to the formation of risk capital (for which the 
Committee has recommended the establishment of a 
revolving fund rather than use of EIB loans) and the 
'Cheysson facility'. It would be helpful if the Commission 
could conduct an overall quantitative and qualitative 
analysis of the use made of these instruments (particularly 
with respect to joint ventures) under the EEC-MNC 
financial protocols. 
3.3.7. Community support for investment by MNC 
investors (including joint ventures) should include an 
interest rebate on similar terms to those laid down in the 
Fourth Lome Convention. 
3.3.8. Guarantees are an important factor in direct 
investment. Member States' rules vary, and are not always 
satisfactory. The Committee asks the Commission to draw 
up proposals for a Community guarantee system and for 
the coordination and harmonization of national systems. 
3.4. An increase in bilateral and Community financing 
3.4.1. The Committee considers that the worsening 
North-South imbalances and the new political situation in 
Eastern Europe call for an unprecedented Community 
financial commitment to cooperation policy. The Commit­
tee endorses the recent proposal to increase the commit­
ment (Member States plus Community) from 0,4 per­
centage points of Community GDP — 35 % of which goes 
to the Mediterranean countries — to one percentage point 
of GDP, with 25 % going to Mediterranean countries. 
3.4.2. The Committee therefore deplores the decision of 
the Ecofin (Economic and Financial) Council of 13 March 
1990 which, while increasing the budget allocations for 
Eastern Europe, did not increase funding of cooperation 
with other parts of the world such as the Mediterranean to 
the (albeit modest) extent proposed by the Commission. This decision fuels concerns that the financial aid which the 
Community is beginning to extend to Eastern Europe will 
mean a cut in Community solidarity with other areas. 
3.4.3. The Committee endorses the need for 'investment 
finance on a large scale, with greater regard for the region's 
economic and financial problems'. The Committee would 
here refer back to the 1989 opinion and report, and would 
again stress the need to insert these investment programmes 
in the development agreements proposed by the Commit­
tee. 
3.4.4. The Committee endorses the priority sectors 
chosen by the Commission (food self-sufficiency, small 
businesses, environment, and regional integration projects, 
e.g. for communications). However, these should tie up 
with local processing of oil, ore and agricultural products, 
and with the research and development programmes. 
The ability of these investment programmes to meet the 
general aims of a joint development policy will be directly 
proportional to their tie-up with complementary integrated 
measures from the Community, and first and foremost 
from the Community's Mediterranean regions. 
3.4.5. As regards the appropriate financial instrument 
for this enormous task, the Committee endorses the 
proposal made at political level to establish a Mediter­
ranean development bank. 
The Committee feels however that this institution should 
not be modelled on the World Bank. The project-by-project 
funding method applied by the World Bank cannot be used 
for programmes incorporated in the development agree­
ments proposed by the Committee. The Mediterranean 
development bank should be responsible for evaluating 
projects; the decisions on whether to provide finance 
would be taken by the political and administrative 
authorities. 
3.5. Continued or improved access to the Community 
market 
3.5.1. The Committee's 1989 opinion (see point 2) and 
report (see point 9) provided ample evidence that improved 
access of MNC products to the Community market would 
require a new form of development in the south of the 
Community, and a joint development policy under which 
competition would be replaced by complementary re­
lations and synergy. 
3.5.2. This is particularly true in the case of farm 
products, where the present position is unsatisfactory both 
for the MNC and for the Community's Mediterranean 
regions. Continuance of traditional export flows — and 
even this is not guaranteed by the 1987 and 1989 additional 
No C 168/30 Official Journal of the European Communities 10. 7. 90 
protocols — simply crystallizes existing imbalances and 
offers the MNC no prospect of development (see point 5 of 
the 1989 report). As we have seen, the MNC desperately 
need to increase their exports, and farm exports in 
particular. This paradoxical situation can only be resolved 
by a programme, agreed by the Community and the MNC, 
to repattern agri-food production throughout the Mediter­
ranean, in line with the criteria given in the Committee's 
1989 opinion (points 9.7 to 9.10). 
3.5.3. The Committee endorses the Commission's goal 
of giving MNC industrial products (including textiles and 
clothing) freer access to the Community. The Community 
has already called for an end to voluntary restraint 
agreements, provided that the Community (pending or in 
the absence of a proper GATT legal framework) concludes 
an agreement with the MNC defining rules and guarantees 
on free access, and covering dumping, export credits, 
counterfeiting, social dumping, and so on (see point 9.13 of 
the 1989 opinion). 
3.5.4. MNC greatly need to earn more hard currency 
from exports to the Community and the other indus­
trialized nations. This need could decrease if subregional 
common markets were established. The Community could 
make this a condition for further concessions for MNC 
exports. 
3.5.5. The Committee agrees that technical support for 
the improvement of MNC export facilities should be 
stepped up. The Committee repeats its call for the setting-
up of an agency, run jointly by the Community and the 
MNC, for the commercial promotion of Mediterranean 
products. 
3.5.6. The Community could also play an important 
role in encouraging the EFTA nations to open their markets 
more to MNC products. The case should also be 
considered for three-way European Community-MNC-
Eastern Europe trade agreements, in order to achieve the 
maximum complementarity. 
3.6. Closer MNC involvement in the development of the 
Community 
3.6.1. The Committee is pleased that the Commission 
has taken up the recommendation made in its 1989 opinion 
(point 9.17) that the MNC should be kept informed of 
progress towards the internal market. The Committee 
notes however that it also recommended technical 
assistance for the adjustments which the MNC would have 
to make in certain key sectors (product standards, patents, 
movement of goods, transport, banks, insurance, and so 
on). 3.6.2. An information and technical assistance pro­
gramme of this sort calls for an ad hoc body. The task could 
be performed by the centre which the Committee proposes 
should provide technical and planning support for the 
development agreements and for technology transfer. 
3.6.3. The programme should not only be targeted at 
the public administrations, but also at businesses and other 
socioeconomic groups. The Commission could depute 
certain tasks to the Economic and Social Committee, 
particularly those linked to information. 
3.6.4. The Committee notes that no scientific assess­
ment has yet been made of the impact of the internal market 
on the MNC, or on the Mediterranean economy in general. 
It therefore asks the Commission to draw up a report based 
on a study carried out by a research group including experts 
from the MNC. 
3.6.5. The Committee attaches special importance to 
the Commission's proposal for a programme enabling 
MNC to participate in certain Community programmes 
and policies. 
3.6.6. The first policy in which the MNC should be 
involved is, without doubt, regional policy — particularly 
the measures affecting the Community's Mediterranean 
regions, first and foremost those financed by the structural 
funds. New multiregional programmes, inter alia covering 
MNC regions, should be envisaged. To ensure maximum 
efficiency, the programmes should feature multiregional 
assistance coordinated around the Mediterranean area, to 
achieve a synergic effect. The programmes should be 
medium and long term, and give priority to structural 
assistance for sectors which have the most to win or lose 
from the single market. The programmes should achieve a 
'critical mass' of assistance in order to ensure significant, 
lasting results. They should support new forms of regional 
cooperation around the Mediterranean; they should 
promote trade, production diversification, and a reduction 
in reliance on the more developed areas. 
Cooperation between regional and local authorities, 
research centres, universities, training centres, businesses 
and other socioeconomic groups will be an important 
feature of these programmes. The programmes must be 
conceived as a single package; the parts to be carried out in 
the Community's Mediterranean regions must be of the 
Community-initiative type. The parts carried out in the 
MNC, on the other hand, should be included in the 
development agreements proposed by the Committee. 
The programmes as a whole should be framed by the 
Commission, with maximum involvement of the adminis­
trations of the Community's Mediterranean regions, 
10. 7. 90 Official Journal of the European Communities No C 168/31 
governments, MNC, and the relevant socioeconomic 
bodies. 
The programmes' financing should be additional both to 
the structural funds and to the MNC financial protocols. It 
will have to come from one or more ad hoc Community 
budget lines. 
The Committee recommends that pilot projects be set up as 
soon as possible, even if their funding is limited. These 
should cover clearly defined areas and should also try out 
new ways of coordination and consultation between the 
socioeconomic groups. 
3.6.7. In line with the Commission proposals, the 
Committee accords the utmost importance to MNC access 
to Community programmes and to measures accompany­
ing the completion of the internal market. Of particular 
importance are research and innovation (points 9.5 and 9.6 
of the 1989 opinion), small firms (point 9.16 of the 1989 
opinion), cultural exchanges, environment, tourism, 
labour market, and job creation. Special attention should 
be paid to the enhancement of human resources, by training 
and the promotion of socioeconomic initiatives (see 
points 9.2 to 9.6 of the 1989 opinion). Alongside particip­
ation in existing Community programmes it would be 
appropriate to establish an instrument jointly administered 
with the MNC similar to the one recently proposed by the 
Commission for Eastern Europe. 
3.7. Strengthening of political, cultural, economic and 
social dialogue 
3.7.1. The Committee endorses the Commission's goal 
and would make the following additional recommend­
ations. 
3.7.2. Given that democracy, peace and development 
are all inter-dependent, the strengthening of political 
dialogue must aim to: 
— increase MNC democracy — social as well as political 
— by encouraging the involvement of the social 
partners in the life of these countries, 
— stamp out violations of human rights which have been 
repeatedly denounced by the European Parliament and 
by international bodies, 
— help bring peace to the Mediterranean. The Community 
should make a much firmer contribution towards a 
peaceful solution for the many conflicts in the area, 
starting with the Palestinian problem (where much 
more is needed than the simple adoption of a stance, 
however right it may be — as in the response to the new 
settlements in the occupied territories — or the 
nevertheless laudable decision to double aid to the 
Palestinian people). It should also cover the conflicts 
between internal and external factions in the Lebanon, the Turkish Cypriot question, and the conflict in the 
Western Sahara. 
3.7.3. The cultural side of Community-MNC dialogue 
is also very important. Alongside programmes to increase 
awareness of each other's culture and cultural exchanges, 
the Committee attaches particular importance to the 
establishment of the European/Arab University in 
Granada. 
3.7.4. The Committee will clearly devote its main 
attention to economic and social dialogue. It endorses the 
Commission's proposal to develop this dialogue on sectoral 
issues (agriculture, energy) and to extend it to wider 
matters (environment, migration, etc.). As proposed in the 
1989 opinion, sectoral dialogue should enjoy the support of 
proper instruments and bodies (Mediterranean forum, 
joint institutions, etc.). At all events, it should spawn 
common guidelines on sectoral and more general policies 
which will form the basis for the subsequent framing of 
sectoral agreements between the Community and the MNC 
as a group. 
3.7.5. The Committee agrees that economic and social 
dialogue should begin to operate at regional level (Arab 
Maghreb Union, Arab Cooperation Council). 
3.7.6. Dialogue between the socioeconomic groups of 
the Community and those of the MNC will account for an 
important part of economic and social dialogue. As the 
1989 opinion noted (point 7), the success of a new 
Mediterranean policy is closely tied to the involvement and 
responsibility accorded these groups; to their ability to 
cooperate at national, regional and Euro-Mediterranean 
level; and to the opportunities they are offered to comment 
on the Mediterranean policy and its implementation. 
3.7.7. The Commission will thus have to find the best 
formula for direct talks with the socioeconomic groups of 
the countries concerned, designed to involve them in the 
pursuit of Mediterranean policy goals. Consultation of 
Community and MNC socioeconomic groups should be 
mandatory prior to any decisions on the various stages of 
the new policy (development agreements, structural 
adjustment programmes, programmes to support MNC 
reforms, investment schemes, and MNC involvement in 
Community programmes and policies). 
3.7.8. The Community will also have to help develop 
relations between the Community and MNC workers' and 
employers' organizations (including their supranational 
dimension), in order to help the MNC social partners to 
consolidate their arrangements for democratic represen­
tation. 
No C 168/32 Official Journal of the European Communities 10. 7. 90 
3.7.9. Support will also be needed for joint evaluation 
by Community and MNC socioeconomic groups of areas 
of Mediterranean policy where their role is particularly 
important. 
3.7.10. The Commission could also consider promoting 
a Euro-Mediterranean social dialogue, in line with 
Community practice. 
3.7.11. The Economic and Social Committee should 
play a fundamental role in economic and social dialogue 
and in promoting the involvement of MNC socioeconomic 
groups. The Committee's role should extend beyond 
consultative duties (important though these are, and much 
though they need to be developed with respect to the 
MNC). The Committee should be an active tool of the 
Council and Commission in Euro-Mediterranean econ­
omic and social dialogue. 
3.7.12. We should here reaffirm the Committee's 
commitment to set up, with the support of the Council, a 
standing group for liaison between the Committee and the 
MNC economic and social councils (where they exist) or 
socio-occupational organizations. The Committee also 
plans to organize an annual meeting of the socioeconomic 
groups of the Euro-Mediterranean area. The purpose of 
these arrangements would be to keep tabs on the 
implementation of Mediterranean policy in all its aspects, 
with special reference to those which most directly concern 
the socioeconomic groups. 
1. General comments 
1.1. The Committee, subject to the following com­
ments, welcomes the Commission's proposal and feels that 
it is in fact long overdue. It is pleased that the European 
Community should take such a stand in the interests of 
more humane treatment of animals. The use of leghold 
traps was partially banned in Greenland as early as 1938 
(l) OJ No C 134, 31. 5. 1989, p. 5. 4. Conclusions 
4.1. The Committee is pleased that the Commission is 
proposing a new Mediterranean policy and it endorses the 
specific proposals for the six action areas. However, it feels 
that the Commission should show greater boldness and 
coherence by framing a wider joint development policy into 
which these measures can be slotted. 
4.2. At the same time, the Committee cannot hide its 
regret that talks between Community Governments — as 
was clear at the Council meeting of 5 February 1990 — still 
have much ground to cover. Some governments feel that 
freer access for MNC products is all that is needed; others 
merely call for an increase in financial aid. This reflects a 
failure to grasp the strategic importance of the Mediter­
ranean issue and the need for Community policy to adopt a 
global approach. 
Done at Brussels, 26 April 1990. 
The Chairman 
of the Economic and Social Committee 
Alberto MASPRONE 
and totally banned in 1989. Its use is becoming less and less 
acceptable in more and more countries. We are living in a 
world of rapidly changing attitudes towards animals and 
what was acceptable some years ago is no longer so. 
As stated in the explanatory memorandum attached to 
COM(89) 198 final, the leghold trap has been banned in 
over 60 countries and other countries have imposed strict 
conditions on its use. Opinion on the proposal for a Council Regulation (EEC) on the importation of certain furs (!) 
(90/C 168/15) 
On 18 May 1989, the Council decided to consult the Economic and Social Committee, under 
Article 198 of the Treaty establishing the European Economic Community, on the abovementioned 
proposal. 
The Section for Protection of the Environment, Public Health and Consumer Affairs, which was 
responsible for preparing the Committee's work on the subject, adopted its opinion on 3 April 
1990. The rapporteur was Mrs Flather. 
At its 276th plenary session (meeting of 26 April 1990), the Economic and Social Committee 
adopted, by 70 votes for, 14 against and 35 abstentions, the following opinion: