Proposal for a COUNCIL DECISION On the conclusion of an exchange of letters between the European Community and the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) concerning additional funding in 2001 under the current EC-UNRWA Convention for the years 1999-2001

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Introduction

Since 1972 the EC and UNRWA have signed ten conventions [1] governing the EC contribution to the regular and food aid budgets of the Agency. Each convention has:

[1] ECC-UNRWA Convention 1972-74, OJ L 304 of 31.12.1972, p. 24. ECC-UNRWA Convention 1975-78, OJ L 203 of 28.07.1976, p. 40. ECC-UNRWA Convention 1979-80, OJ L 108 of 26.04.1980, p. 56. ECC-UNRWA Convention 1981-83, OJ L 392 of 31.12.1981, pp. 3-6. ECC-UNRWA Convention 1984-86, OJ L 188 of 16.07.1984, pp. 18-19. ECC-UNRWA Convention 1987-89, OJ L 136 of 26.05.1987, p.43. ECC-UNRWA Convention 1990-92, OJ L 118 of 09.05.1990, p. 36. ECC-UNRWA Convention 1993-95, OJ L 9 of 13.01.1994, p. 16. EC-UNRWA Convention 1996-98, OJ L 282 of 01.11.1996, pp. 69-71. EC-UNRWA Convention 1999-2001, OJ L 261 of 07.10.1999.

* set out the contribution to the regular budget (education, health and relief and social services programme) for the forthcoming three year period; and

* allowed for the annual negotiation of the contribution to the food aid budget.

The proposed additional contribution of EUR15 million (over and above the current funding under the 10th EC-UNRWA Convention) is intended in response to UNRWA's financial crisis and its financing gap in 2001.

2. Justification for intervention

On 21 May 2001, Mr Kofi Annan, Secretary General of the United Nations in a letter addressed Commission President, Mr Romano Prodi, referred to UNRWA's precarious budgetary situation and emphasised the importance of UNRWA's role in the Middle East.

On 16 July 2001, Mr Peter Hansen addressed the General Affairs Council requesting additional support to reduce the financial gap of UNRWA's regular programmes and to help re-establish financial security as the basis for a stable operation. On 23 July 2001, Mr Hansen, turned to Commissioner Patten requesting additional support in order to cope with new, long-term responsibilities imposed on the UNRWA by the current crisis, with chronic and lasting effects that will need to be addressed by the health, education, and social services financed out of UNRWA's General Fund.

In their Communication to the Commission of 19 September 2001, Commissioners Patten and Nielson referred to the fact that the deepening crisis in the Middle East has caused additional strains on UNRWA and that the organisation finds itself short of funds for current expenditure. The Communication also mentioned that most other donors, including Member States have either increased their contributions or were considering doing so.

At a meeting of UNRWA's major donors in Amman on 24 September, UNRWA raised the issue of additional support: UNRWA continues to face a critical financial situation, characterised by large funding shortfalls in the regular budget, continued enforcement of austerity measures, and depleted working capital and cash reserves. The main problem facing the UNRWA is not over-expenditure in relation to the budget but shortfalls in income. The latest estimates of income and expenditure indicated that the UNRWA's regular cash budget for 2001 would face a deficit of US$ 58 million by the end of 2001.

The World Bank in its recent assessment of the economic situation in the West Bank and Gaza Strip recommended as one of six measures to be taken by the international donor community that additional support be provide to UNRWA given that the refugee population in these areas remains heavily dependent on UNRWA for basic social services and welfare payments.

3. Conclusion

The Commission:

- noting UNRWA's financial difficulties and the increased burdens placed on UNRWA by the current crisis in the Middle East; and

- noting the support amongst donors, including Member States, given to UNRWA to provide a minimum of support consistent with the maintenance of provision to the refugee of services at reasonable levels;

proposes that the Council approve, after consultation of the Parliament, an exchange of letters between the European Community and the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) concerning an additional contribution of EUR 15 million to the existing funding in 2001 under the current EC-UNRWA Convention for the years 1999-2001.

The necessary appropriations of EUR 15 million will be transferred from B7-420 (Community operations connected with the Israel/PLO Peace Agreement).

2001/0288 (CNS)

Proposal for a COUNCIL DECISION On the conclusion of an exchange of letters between the European Community and the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) concerning additional funding in 2001 under the current EC-UNRWA Convention for the years 1999-2001

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 181 in conjunction with Article 300 (3) first subparagraph thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas:

(1) The current crisis in the Middle East has put additional burden on UNRWA.

(2) The Community assistance to UNRWA is an important element in stabilising the situation in the Middle East and furthermore forms part of the campaign against poverty in developing countries and therefore contributes to the sustainable economic and social development of the population concerned and the host countries in which the population lives.

(3) Support of UNRWA operations would be likely to contribute to the attainment of the Community objectives described in the above paragraph.

(4) The current Convention between the European Community and the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) for the years 1999 to 2001 (EC-UNRWA Convention [2]), and in particular Article 6 thereof foresees adjustments to the financial contributions,

[2] OJ L 261, 07.10.1999, p. 36.

HAS DECIDED AS FOLLOWS:

Article 1

The exchange of letters between the European Community and the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) concerning an additional contribution of EUR 15 million to the existing funding in 2001 under the current Convention is hereby approved.

The text of the exchange of letters is attached to this Decision.

Article 2

The President of the Council is hereby authorised to designate the persons empowered to sign the exchange of letters in order to bind the Community.

Done at Brussels,

For the Council

The President

ANNEX

Agreement

In the form of an Exchange of Letters between the European Community and the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) concerning additional funding under the EC-UNRWA Convention for the years 1999 to 2001

A. Letter from the European Community

Done at Brussels,

Sir,

I have the honour to refer to the negotiations between the representative of the European Community and UNRWA concerning additional funding under the Convention, signed on 19 September 1999, between the European Community and UNRWA covering aid to refugees in the countries of the Near East, for the years 1999-2001.

Pursuant to Article 6 of the above-mentioned Convention, we are pleased to inform you that the Community agrees to provide a contribution to UNRWA in addition to the contribution for the year 2001 referred to in Article 2. The size of this additional contribution shall be EUR 12.7 million for the education programme and EUR 2.3 million for the general health programme.

All other conditions of the Convention shall remain unchanged.

I shall be grateful if you could confirm the agreement of UNRWA to the foregoing.

Please accept, Sir, the assurance of my highest consideration.

On behalf of the European Community

B. Letter from UNRWA

Done at Brussels,

Sir,

I have the honour to acknowledge receipt of your letter of today's date with the following content:

"Sir,

I have the honour to refer to the negotiations between the representative of the European Community and UNRWA concerning additional funding under the Convention, signed on 19 September 1999, between the European Community and UNRWA covering aid to refugees in the countries of the Near East, for the years 1999-2001.

Pursuant to Article 6 of the above-mentioned Convention, we are pleased to inform you that the Community agrees to provide a contribution to UNRWA in addition to the contribution for the year 2001 referred to in Article 2. The size of this additional contribution shall be EUR 12.7 million for the education programme and EUR 2.3 million for the general health programme.

All other conditions of the Convention shall remain unchanged.

I shall be grateful if you could confirm the agreement of UNRWA to the foregoing.

Please accept, Sir, the assurance of my highest consideration.

On behalf of the European Community"

I confirm the agreement of UNRWA to the foregoing.

Please accept, Sir, the assurance of my highest consideration.

For UNRWA

LEGISLATIVE FINANCIAL STATEMENT

1. Relevant articles of the Community budget

B7-421 (Aid to the United Nations Relief and Works Agency for Palestine Refugees in the Near East).

2. Description of action

Provided additional EUR 15 million to UNRWA's General Fund in 2001, over and above the current funding under the 10th EC-UNRWA Convention.

3. Legal base

Article 181 in conjunction with first subparagraph of Article 300 (3) of the Treaty Establishing the European Community.

4. Financial implications

The Commission is proposing to provide additional support in 2001 to UNRWA's General Fund amounting to EUR 15 million.