A4-0204/96

Resolution on the Commission communication on the European Union's financial contribution to reconstruction in former Yugoslavia (COM(95)0581 - C4-0608/95)

The European Parliament,

- having regard to the communication from the Commission (COM(95)0581 - C4- 0608/95),

- having regard to Articles J.3 and J.11 of the Treaty on European Union,

- having regard to the conclusions of the Cannes European Council of 26 and 27 June 1995,

- having regard to the guidelines of the Brussels European Council of 29 October 1995,

- having regard to the Council decision of 11 December 1995 on a joint action of the Union in Bosnia-Herzegovina ((OJ L 309, 21.12.1995, p. 2.)),

- having regard to the Paris Peace Agreement of 14 December 1995 and the Rome Consolidation Conference of 17 and 18 February 1996,

- having regard to its resolution of 29 February 1996 on financing the reconstruction of the former Yugoslavia ((OJ C 78, 18.3.1996, p. 33.)),

- having regard to the report of the Committee on Budgets and the opinions of the Committee on External Economic Relations and the Committee on Budgetary Control (A4-0204/96),

A. whereas the European Union supports reconstruction in the republics of the former Yugoslavia and regards it as a priority foreign policy objective,

B. whereas the European Union supports all measures which can contribute to a lasting peace settlement in Bosnia-Herzegovina,

C. whereas the decisions of the Dayton Accord and the Rome Conference on 17 and 18 February 1996 represent the foundations of financial aid for reconstruction in the former Yugoslavia,

D. whereas the World Bank has estimated that the financial support needed for reconstruction up until 1999 will be of the order of US$ 5.1 bn, but whereas the international donor community has so far made only partial commitments regarding the raising and allocation of these resources,

E. whereas at the second conference of donors on 12 and 13 April 1996 in Brussels US$ 1232 m were committed, thus achieving and even slightly exceeding the target of US$ 1.8 bn for the whole of 1996,

F. whereas the European Union made available ECU 87 m from its budget at the first donor conference, of which ECU 62.5 m were taken from budget heading B7-500 (PHARE),

G. whereas in December 1995 the European Parliament, as an arm of the budgetary authority, made available ECU 12.13 m for the administrative expenditure of the High Representative,

H. having regard to transfer of appropriations 9/96 approved on 20 May 1996 transferring ECU 20 million from Chapter B0-40 - Provisions - to Article B7- 541 - Measures for the reconstruction of the Republics formerly part of Yugoslavia - with a view to financing an initial programme for projects in Sarajevo,

I. having regard to transfer of appropriations 11/96, part 2, approved on 21 May 1996, from Chapter B0-40 - Provisions - to Article B8-013 - Other joint actions of the European Union for the common foreign and security policy - transferring ECU 3.6 million, relating to the Community's policy on emergency aid for mine clearance in Bosnia-Herzegovina and Croatia,

J. having regard to the serious underspending of the newly installed Chapter B7-54 - Financial Cooperation with the Republics formerly part of Yugoslavia,

K. whereas the use of the PHARE appropriations originally intended for Yugoslavia is now restricted to a few of the new republics, excluding Slovenia and the Republic of Serbia-Montenegro,

L. whereas the EU's financial contribution to aid measures in the former Yugoslavia is already leading - and will continue to lead in the forthcoming financial year - to a shortfall in heading 4 of the Financial Perspective, assuming that other foreign policy commitments are not cut in order to fund reconstruction,

M. whereas the current proposal for a revision of the financial perspective up to 1999 contains no proposals for reallocating funds or replenishing with new funds for the reconstruction of former Yugoslavia,

N. whereas the planning of the EU's financial contribution to the reconstruction of the former Yugoslavia assumes that the Union will contribute 20-25% to the measures as a whole, whilst the remaining appropriations will be supplied by the individual Member States and the remainder of the international donor community,

1. Reiterates its conviction that the European Union has a major political responsibility as regards international support for reconstruction in the former Yugoslavia;

2. Considers that the Republics of former Yugoslavia, especially Bosnia- Herzegovina, urgently need massive aid for reconstruction, which must be used in particular for the rapid elimination of the damage caused by the war to infrastructure (bridges, roads, telecommunications and power stations) and social services (schools, hospitals and housing); points out, in this context, that only in this way can the preconditions for fundamental reform and a reactivation of overall economic activity be created, which is essential if the process of peace and reconciliation between the sides involved in the civil war is to progress successfully;

3. Considers, furthermore, that the reconstruction of former Yugoslavia means that the new republics must tackle a difficult transition to a market economy and a fully democratic and pluralist political system;

4. Calls the attention of the Commission and the Council to the fact that the reconstruction of former Yugoslavia is a long-term task which requires from the international community, in particular from the European Union, a global programme of reconstruction for the region and adequate financial resources; stresses, in this context, that the EU should draw up a medium-term programme of assistance for reconstruction appropriate for the actual situation in the region and including the specific arrangements for intervention required by the situation;

5. Reiterates its willingness to give constructive support to all measures which contribute to a lasting peace settlement in the former Yugoslavia, and calls to mind the decisions of the Dayton Accord, the Paris Conference and most recently the Florence Conference on 13 and 14 June 1996;

6. Stresses that the practical allocation of financial resources by the international donor community, especially the EU, must be conditional on the comprehensive implementation of all parts of the Dayton Accord and the results of the Rome talks (especially as regards respect for human rights and the guaranteed free movement of persons and goods) by all the republics of the Bosnia-Herzegovina Federation;

7. Supports the efforts of the High Representative Carl Bildt and of the Commission in Sarajevo and in other parts of the country to lay the foundations for a stable peace settlement by giving a rapid boost to the devastated economy and by providing immediate relief for the most urgent social distress;

8. Recalls that the European Union has an interest in a peace process which includes the whole of the former Yugoslavia;

9. Notes that the World Bank has estimated that the funding requirement for reconstruction measures up to 1999 at US$ 5.1 bn;

10. Urges the international donor community to reach agreement as soon as possible on the total funding of this sum and highlights the need for a financial estimate and a detailed breakdown of the costs between the donor countries, together with an accurate schedule;

11. Acknowledges that the international donor community decided at its second conference on 12 and 13 April 1996 to fund urgent measures in 1996;

12. Reminds the Commission that the PHARE Programme was not created as an instrument for the reconstruction of a war-torn country but derives its political legitimacy essentially from the Eastern and Central European countries' need to adjust and prepare for possible accession to the European Union; reiterates that the legal basis of PHARE is too inflexible for the procurement of fast and efficient aid, and that it is therefore not fit for this task; regrets that at the expense of the beneficiaries the Commission has refrained from utilizing its resources from the new B7-54 budget lines on the basis of the budgetary authority's specifications;

13. Urges the Commission to give the EU Commission's representative in Bosnia- Herzegovina more discretionary power for micro-projects (up to ECU 10 000) in order to achieve rapid improvements in the housing sector in key areas before the elections; demands that these means should be allowed to bypass government authorities in order to help local communities directly;

14. Questions the Commission's plans to divert a total of ECU 600 million from the PHARE Programme for the purposes of reconstruction aid in the period from 1996 to 1999; reminds the Commission that, in the event of a partial rearrangement of PHARE obligations, agreement must be reached with the budgetary authority on the incorporation of reconstruction projects in the PHARE objectives and that the consequences of such a rearrangement for operational programmes in countries already receiving aid must remain restricted to the absolute minimum;

15. Notes that the Commission has made available for the remaining months of 1996 a further amount of US$ 260 m from the EU's 1996 budget;

16. Notes that the Commission is planning to make available a total amount of ECU 1 bn for reconstruction from the European Union budget for the period up to 1999;

17. Reminds the Commission that the funding of reconstruction aid in the former Yugoslavia has led to a shortfall of around ECU 200 m in heading 4 of the 1996 Financial Perspective and that a deficit will also occur in the coming year unless drastic cuts are made in the funding of other foreign policy commitments;

18. Reminds the Council that it should not take any foreign policy decisions on behalf of the EU involving financial commitments and not covered by the EU budget without consulting the European Parliament;

19. Calls on the Council, in view of the precarious financial situation of heading 4 of the Financial Perspective, to make new appropriations available in the context of a review of the Financial Perspective for the funding of new policies such as participation in reconstruction in the former Yugoslavia; recalls in this connection that the ceilings agreed unanimously for the Union budget by the European Council in Edinburgh in 1992 provide sufficient leeway for adjustments of this type to the Financial Perspective;

20. Notes that the Commission did not carry out adequate financial planning for participation in the reconstruction of the former Yugoslavia and did not call on the budgetary authority in good time: the figures submitted contradict each other, draw on often questionable budget headings and exceed the ceiling of heading 4 of the Financial Perspective; calls on the Commission to carry out reliable, transparent and consistent financial planning;

21. Calls on the Commission as a matter of urgency to propose a new draft for the review of the Financial Perspective taking account of the abovementioned dilemmas raised by the Union's financial participation in reconstruction;

22. Considers it essential that the EIB should develop a broad programme of regional support in the Republics of former Yugoslavia, in collaboration with the EBRD and other multilateral financial institutions, such as the World Bank; to this end priority should be given to actions which help to promote regional economic cooperation, by developing infrastructures which constitute a structured area, and which promote interregional trade;

23. Approves of the possibility of the PHARE programme financing projects which prepare for EBRD investment in the sectors of telecommunications, energy and the development of SMUs, in accordance with the terms laid down in the Bangkok Agreement; nevertheless, calls the Commission's attention to the fact that the donor countries should contribute funds to the financing of projects requiring investment, in view of the reduced international solvency of most of the Republics of former Yugoslavia;

24. Considers that making funding available for the peace process in the former Yugoslavia is a decisive factor in putting political decisions into practice, but that it is conversely not possible to produce a peace process by financial means alone; reconstruction aid can only work to the extent and at the pace at which all those involved support and promote all aspects of the peace process;

25. Points out that the rapid reconstruction of the former Yugoslavia must go hand-in-hand with maximum transparency in the use of financial aid and strict monitoring of expenditure, because these conditions are crucial for the success of the reconstruction efforts; notes that both its Committee on Budgets and Committee on Budgetary Control must be fully involved in this process;

26. Considers it essential that, with the exception of humanitarian aid, technical, financial and macroeconomic assistance from the European Union to the Republics of former Yugoslavia should be made subject to the criteria of political and economic conditionality laid down by the General Affairs Council at its meeting of 30 and 31 October 1995;

27. Insists on the introduction of suitable procedures which ensure that it receives information immediately it becomes available and on a permanent basis and calls on the Commission to submit quarterly implementation reports;

28. Instructs its President to forward this resolution to the Council, the Commission and the governments and parliaments of the Member States.