5. 3. 90 Official Journal of the European Communities No C 53/47 
Recommendation for a Council Decision (EEC) on the conclusion of a Protocol on financial and 
technical cooperation between the European Economic Community and the Republic of Cyprus 
COM(89) 431 final 
(Submitted by the Commission on 12 October 1989) 
(90/C 53/04) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, and in particular 
Article 238 thereof, 
Having regard to the recommendation from the Commission, 
Having regard to the assent of the European Parliament, 
Whereas the Protocol of financial and technical cooperation between the European Economic 
Community and the Republic of Cyprus should be approved, 
HAS DECIDED AS FOLLOWS: 
Article 1 
The Protocol on financial and technical cooperation between the European Economic Community 
and the Republic of Cyprus is hereby approved on behalf of the Community. 
The text of the Protocol is attached to this Decision. 
Article 2 
The President of the Council shall give the notification provided for in Article 21 of the Protocol (1). 
Article 3 
This Decision shall enter into force on the day following that of its publication in the Official 
Journal of the European Communities. 
(!) The date of the entry into force of the Protocol will be published in the Official Journal of the European 
Communities by the General Secretariat of the Council. 
PROTOCOL 
on financial and technical cooperation between the European Economic Community 
and the Republic of Cyprus 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
of the one part, and 
THE GOVERNMENT OF THE REPUBLIC OF CYPRUS, 
of the other part, 
ANXIOUS to promote the development of the Cypriot economy and the objectives of the Agreement 
establishing an Association between the European Economic Community and the Republic of Cyprus; 
No C 53/48 Official Journal of the European Communities 5. 3. 90 
MINDFUL of the declaration of the European Economic Community concerning a third Financial Protocol 
contained in the Final Act annexed to the Protocol laying down the conditions and procedures for the 
implementation of the second stage of the Agreement establishing an Association between the European 
Economic Community and the Republic of Cyprus and adapting certain provisions of the Agreement and taking 
into account the newly established relationship between the Community and Cyprus as it results from the said 
Protocol; 
HAVE DECIDED to conclude this Protocol and to this end have designated as their Plenipotentiaries: 
THE COUNCIL OF THE EUROPEAN COMMUNITIES 
THE GOVERNMENT OF THE REPUBLIC OF CYPRUS 
WHO, having exchanged their full powers, found in a good and due form, 
HAVE AGREED AS FOLLOWS: 
Article 1 
Within the framework of the financial and technical 
cooperation provided for in the Agreement establishing an 
Association between the European Economic Community 
and the Republic of Cyprus, the Community shall 
participate on the terms set out in this Protocol in the 
financing of projects intended to contribute to the 
economic and social development of Cyprus with special 
emphasis on the productive sectors of Cyprus' economy, 
thus facilitating their adjustment to the new competitive 
conditions. 
Article 2 
1. For the purposes specified in Article 1, and for a period 
expiring on 31 December 1993, an aggregate amount of 
ECU 62 million may be committed as follows: 
(a) ECU 44 million in the form of loans from the European 
Investment Bank, hereinafter referred to as 'the Bank', 
made from its own resources; 
(b)ECU 13 million from the Community's budgetary 
resources, in the form of grants; 
(c) ECU 5 million from the Community's budgetary 
resources, in the form of contributions to risk capital 
formation. 
2. The loans referred to in point (a) of paragraph 1 shall 
carry a 1,5 % interest rate subsidy financed by means of the 
funds referred to in point (b) of paragraph 1. 
3. The risk capital referred to in point (c) of paragraph 1 
shall contribute to the cooperation objectives and oper­
ations defined in Article 3, in particular those indicated in 
the first indent of paragraph 2 of that Article. 
It shall be used primarily to make equity capital or the like 
available to Cypriot private undertakings, public undertak­
ings and undertakings with State participation, preferably 
those with which natural or legal persons who are nationals 
of a Community Member State are associated. It may be 
used under the same conditions to finance specific studies 
for the preparation and development of such undertakings' projects and to assist such undertakings in their starting-up 
period. 
It shall be granted and administered by the Bank and may 
take the form of: 
(a) subordinated loans, where repayment and payment of 
any interest will not be made until other bank claims 
have been settled; 
(b) conditional loans, where repayment or duration will 
depend on the fulfilment of conditions specified at the 
time when the loan is granted; 
(c) acquisition of temporary minority holdings on behalf of 
the Community in the capital of undertakings es­
tablished in Cyprus; 
(d) finance for the acquisition of holdings, in the form of 
conditional loans granted to Cyprus or, with the 
Cypriot Government's agreement, to Cypriot undertak­
ings, either directly or through the intermediary of 
Cypriot financial institutions. 
Article 3 
1. The total amount fixed in Article 2 shall be used 
primarily for the financing or part-financing of cooperation 
projects or operations aimed at strengthening the economic 
links between the Community and Cyprus in their mutual 
interest by developing cooperation in the fields of industry, 
agriculture, training and research, technology, commerce 
and other services in order to restructure and modernize the 
Cypriot economy and to increase its competitiveness. 
Economic infrastructure and capital projects which are 
complementary to the above operations may also be 
financed. 
2. Priority shall be given to those of the eligible projects 
and operations having the following aims: 
— in the industrial, agricultural and service sectors, 
promotion of joint ventures between firms from the 
Community Member States and Cypriot firms, direct 
contacts, exchange of information, promotion of 
5. 3. 90 Official Journal of the European Communities No C 53/49 
investment and private-sector capital flows, and 
support for small and medium-sized enterprises, 
including craft businesses, in order to promote employ­
ment, 
— in the field of science and technology, expansion of 
Cypriot training and research capability and the 
establishment or development of links between Cypriot 
and European private and public sector training and 
research institutions, 
— in the trade sector, diversification and promotion of 
exports and organization of contacts between Cypriot 
firms and firms from the Community Member States, 
— in the priority areas referred to above, practical training 
schemes linked to projects or operations in firms and 
research institutions. 
3. The Community's financial contributions shall be used 
to cover internal and external costs necessarily incurred in 
carrying out approved projects or schemes (including costs 
in respect of studies, consultants and technical assistance). 
They may not be used to cover current administrative, 
maintenance or operational expenditure. 
Article 4 
1. Capital projects shall be eligible for financing either by 
loans from the Bank, combined with interest rate subsidies 
on the terms set out in Article 2 (2), or by risk capital, or by 
grants, or by a combination of these means. 
2. Technical and economic cooperation shall normally be 
financed by grants. 
Article 5 
1. The amounts to be committed each year shall be as far 
as possible distributed throughout the period of application 
of this Protocol. 
2. Any funds not committed at the end of the period 
referred to in Article 2(1) shall be used until exhausted in 
accordance with the arrangements laid down in this 
Protocol. 
Article 6 
1. Loans granted by the Bank from its own resources shall 
be made in accordance with the arrangements, conditions 
and procedures laid down in its statute. They shall, as 
regards their duration, be subject to terms established on 
the basis of the economic and financial characteristics of 
the projects for which these loans are intended, also taking 
into account the conditions obtaining on the capital 
markets on which the Bank procures its resources. The interest rate shall be determined in accordance with the 
Bank's practice at the time of signature of each loan 
contract, subject to the interest rate subsidy referred to in 
Article 2 (2). 
2. The terms and arrangements for contributions to risk 
capital formation shall be determined on a case-by-case 
basis. 
3. Aid from the Community's budget resources, other 
than that intended for interest rate subsidies for loans from 
the Bank of that intended for risk capital operations shall 
be granted and administered by the Commission. 
4. The funds referred to in Article 2 may be granted 
through the intermediary of the State or appopriate Cypriot 
bodies, on condition that they allocate the amounts to the 
recipients on terms decided, by agreement with the 
Community, on the basis of the economic and financial 
characteristics of the projects and operations for which 
they are intended. 
Article 7 
Aid contributed by the Community for the execution of 
certain projects may, with the agreement of Cyprus take the 
form of cofinancing in which, in particular, credit and 
development bodies and institutions of Cyprus, of Member 
States or of third States or international finance organiza­
tions would take part. 
Article 8 
The following shall be eligible for financial and technical 
cooperation: 
(a)in general: 
— the State of Cyprus; 
(b) with the agreement of the Cypriot Government, for 
projects or operations approved by it: 
— official Cypriot development agencies, 
— private agencies working in Cyprus for economic 
and social development, 
— undertakings carrying on their activities in accord­
ance with industrial and business management 
methods and set up as legal persons within the 
meaning of Article 12, 
— groups of producers who are nationals of Cyprus 
and, exceptionally, where no such groups exist, the 
producers themselves, 
— scholarship holders and trainees sent by Cyprus and 
the training schemes referred to in Article 3. 
Article 9 
1. With a view to making optimum use of the instruments 
and means provided for in this Protocol and achieving the 
objectives laid down in Article 3, the Community and 
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Cyprus shall, by mutual agreement on the basis of 
information provided by Cyprus draw up an indicative 
programme committing both parties and determining the 
specific objectives of financial and technical cooperation, 
the priority sectors for intervention and the action 
programmes envisaged by reference to the priorities set out 
in Cyprus's development plan. 
2. The indicative programme may be reviewed by mutual 
agreement to take account of any changes in Cyprus's 
economic situation or in the objectives and priorities laid 
down by its development plan. 
3. The Community and Cyprus shall continue their 
exchanges of views within the appropriate bodies and shall, 
at least once during the period of implementation of this 
Protocol and at the latest before the end of the third year 
following its entry into force, make an assessment of the 
implementation of the indicative programme. 
Article 10 
1. Within the framework laid down in accordance with 
Article 9, the State of Cyprus or, with the agreement of its 
Government, the other possible beneficiaries referred to in 
Article 8, shall submit their requests for financial aid to the 
Community. 
2. The Community shall appraise the requests for 
financing in collaboration with the competent Cypriot 
authorities and other beneficiaries, in accordance with the 
objectives referred to in Article 9, and shall inform them of 
the decisions taken on such requests. 
Article 11 
1. The execution, management and maintenance of 
schemes that are the subject of financing under this 
Protocol shall be the responsibility of Cyprus or of the 
other beneficiaries referred to in Article 8. 
The Community shall make sure that this financial aid is 
expended in accordance with the agreed allocations and to 
the best economic advantage. 
2. The projects and action programmes shall be the 
subject of appropriate evaluation, the outcome of which 
shall be communicated to both parties, which shall take 
appropriate measures by mutual agreement. 
3. Certain rules for administering the financial aid 
granted by the Community shall be the subject of an 
exchange of letters or a framework agreement between the 
Commission and Cyprus upon conclusion of this Protocol. 
Article 12 
1. All natural and legal persons falling within the scope of 
the Treaty establishing the European Economic Com­
munity and all natural and legal persons of Cyprus may 
participate on equal terms in tendering procedures and other procedures for the award of contracts likely to be 
financed. Any such legal person formed in accordance with 
the law of a Member State of the European Economic 
Community or of Cyprus must have its registered office, its 
administrative head office or its principal establishment in 
the territories in which the EEC Treaty is applied or in 
Cyprus; however, where only its registered office is in the 
said territories or in Cyprus the activities of such legal 
person must be effectively and continuously linked with the 
economy of those territories or of Cyprus. 
2. In agreement with Cyprus, natural and legal persons 
who are nationals of developing countries associated with 
the Community by comprehensive cooperation or associ­
ation agreements may exceptionally, on a case-by-case 
basis, be authorized by the Community to participate in the 
operations referred to in paragraph 1 which are financed by 
the Community. The eligibility of such natural or legal 
persons shall be assessed, mutatis mutandis, on the terms 
set out in paragraph 1. 
Article 13 
To promote participation by Cypriot undertakings in the 
performance of contracts and to ensure the rapid and 
effective implementation of projects and operations 
financed from resources administered by the Commission: 
(a) an accelerated procedure for issuing invitations to 
tender involving shorter time limits for the submission 
of tenders, may be used by Cyprus in agreement with the 
Commission for works contracts which, because of 
their scale, are mainly of interest to Cypriot undertak­
ings. 
The organization of this accelerated procedure shall not 
rule out the possibility of issuing an international 
invitation to tender where it appears that the nature of 
the works to be carried out or the usefulness of widening 
participation justifies recourse to international competi­
tion; 
(b) in urgent cases or where the nature, small scale or 
particular characteristics of certain works or supplies so 
warrant, Cyprus may exceptionally, in agreement with 
the Commission, authorize the placing of contracts 
following restricted invitations to tender, the conclusion 
of contracts by direct agreement and the performance of 
contracts through public works departments. 
The procedures referred to in points 1 and 2 may be used 
for operations with an estimated cost of less than ECU 3 
million. 
Article 14 
1. Cyprus shall apply to contracts awarded for the 
execution of projects or schemes financed by the Com­
munity fiscal and customs arrangements no less favourable 
5. 3. 90 Official Journal of the European Communities No C 53/51 
than those applied vis-a-vis the most favoured State or the 
most favoured international organization. 
2. The content of arrangements referred to in paragraph 
1 shall be established by means of an exchange of letters 
between the Parties. 
Article 15 
Cyprus shall take the necessary measures to ensure that 
interest and all other payments due to the Bank in respect of 
transactions concluded under this Protocol are exempted 
from any national or local tax or levy. 
Article 16 
Where, as foreseen in Article 8 above, a loan is accorded 
with the agreement of the Cyprus Government to a 
beneficiary other than the State, the provision for a 
guarantee by the latter or other adequate guarantee shall be 
required by the Bank as a condition of the grant of the loan. 
Article 17 
Throughout the duration of the loans and risk capital 
operations provided for in Article 2, Cyprus shall 
undertake to: 
(a) place at the disposal of the beneficiaries or of their 
guarantors the currency necessary for the payment of 
interest and commission and amortization of loans and 
risk capital aid granted for the implementation of 
operations on its territory; 
(b) make available to the Bank the foreign currency 
necessary for the transfer of all sums received by it in 
national currency which represent the net revenue and 
proceeds from transactions involving the acquisition by 
the Community of holdings in the capital of companies 
or firms. Article 18 
The results of financial and technical cooperation may be 
examined within the Association Council which shall 
establish, where appropriate, the general guidelines for 
such cooperation. 
Article 19 
One year before the expiry of this Protocol, the Contracting 
Parties shall examine what arrangements could be made for 
financial and technical cooperation during a possible 
further period. 
Article 20 
This Protocol shall be annexed to the Agreement 
establishing an Association between the European Econ­
omic Community and the Republic of Cyprus. 
Article 21 
1. This Protocol shall be subject to approval in concor­
dance with the Contracting Parties' own procedures; the 
Contracting Parties shall notify each other that the 
procedures necessary to this end have been completed. 
2. This Protocol shall enter into force on the first day of 
the second month following the date on which the 
notifications provided for in paragraph 1 have been given. 
Article 22 
This Protocol is drawn in two original copies in the Danish, 
Dutch, English, French, German, Greek, Italian, Por­
tuguese and Spanish languages, each of these texts being 
equally authentic.