Proposal for a COUNCIL DECISION amending Decision 2000/24/EC so as to establish an EIB special action programme in support of the consolidation and intensification of the EC-Turkey customs union

(presented by the Commission)

EXPLANATORY MEMORANDUM

I. Background

1. Council on 23 December 1963 adopted Decision 64/732/EEC on the establishment of an Association Agreement between the EEC and Turkey [1] ("the Ankara Agreement") aiming at bilateral trade liberalisation and the establishment of a customs union. The Additional Protocol effective since 1 January 1973 and annexed to the Association Agreement [2] set down the conditions, arrangements and timetables for the progressive establishment of the Customs Union in three phases within a period of 22 years.

[1] OJ 217 , 29/12/1964 p. 3685ff.

[2] OJ L 293 of 29/12/1972, p. 4.

2. On 6 March 1995, Council agreed on a global package regarding the development of future relations with Turkey, which besides the general political framework included the draft Decision of the EC-Turkey Association Council on the implementation of the final phase of the Customs Union (see point 4 below), and a related Community declaration concerning financial co-operation.

The declaration on financial co-operation concluded that in order to adapt its industrial sector to the new competitive situation created by the customs union and to improve its infrastructure linkage with the EU, "the Community will resume its financial co-operation with Turkey before the entry into force of the customs union and decide in the first half of 1995 on detailed arrangements for it". The declaration continued that the resumed financial co-operation with Turkey shall be based, inter alia, on the following elements:

- substantial budgetary resources made available for co-operation with Turkey over a five-year period starting in 1996;

- continued access to EIB loans available under the 1992-1996 horizontal Mediterranean policy for the financing of infrastructure projects in the fields of environment, energy, transport and telecommunications [3];

[3] Council Regulation No. 1763/92 of 29 June 1992, O.J. L 181of 01/07/1992, p.5.

- additional EIB loans over a five-year period starting in 1996, in order to improve the competitiveness of the Turkish economy following the entry into force of the Customs Union;

- funding facilities (budgetary resources as well as EIB loans) which the Community will make available, as from 1996, for all Mediterranean countries (under MEDA).

3. Subsequently, on 25 July 1995, on the basis of the above declaration, the Commission put forward a proposal for a Council Regulation on the implementation of a special measure of financial co-operation with Turkey covering a Ecu 375 million grant facility to support Turkey in improving its social and economic infrastructure in the final phase of establishing the Customs Union [4].

[4] COM(95)389final of 25/07/1995, OJ C 271, 17/10/1995, p. 12.

In the same proposal, the Commission invited the Council to approve a special EIB lending facility strengthening the competitiveness of the Turkish economy following the entry into force of the customs union. The proposal did not put forward a specific amount for this special action. The ceiling considered at the time in the context of the Association Council of 6 March 1995, however, was Ecu 750 million for a period of 5 years.

The objective was to have the package of the two facilities adopted in time for the October 1995 meeting of the Association Council. The Commission proposal encountered fundamental difficulties in the legislative process, however, and the legal basis was not approved by Council. The two facilities, including the EIB special action, therefore did not become operational.

4. On 22 December 1995 the EC-Turkey Association Council adopted Decision No. 1/95 on implementing the final phase of the Customs Union [5]. This decision, on the basis of reciprocal and balanced obligations, lays down the rules for implementing the final phase of the Customs Union. Following the assent given by Parliament on 13 December 1995, the Customs Union entered into force on 31 December 1995.

[5] Decision 96/142/EC, OJ L 35, 13/02/1996, p. 1.

5. With the entry into force of the Customs Union Turkey abolished customs duties and equivalent charges as well as quantitative restrictions and equivalent on industrial products imported from the Community. It also adopted large parts of the Community acquis, notably in the areas of customs, commercial policy, competition and the protection of intellectual, industrial and commercial property. Turkey is obliged furthermore, by 31 December 2000, to incorporate into its national law all Community legislation on the removal of technical barriers to trade.

The Customs Union, which covers trade accounting for more than 90 % of bi-lateral trade flows, economically has benefited both the EU and Turkey. Trade flows between the EU and Turkey since its entry into force have increased substantially, from EUR23.9 bn in 1995 to EUR31.5 bn in 1999. The share of EU trade in Turkey's total trade rose from 49% in 1995 to 53% in 1999. The EU's nominal trade surplus with Turkey increased slightly from EUR4.9 bn in 1995 to EUR6.2 bn in 1999. One of the principal effects of the customs union during the period 1995 to 1999 has been a redirecting of the relative share of Turkish imports from third countries towards the EU.

6. The Luxembourg European Council of 12 and 13 December 1997 confirmed Turkey's eligibility for accession to the European Union. It called for a strategy to be drawn up to prepare Turkey for accession by bringing it closer to the European Union in every field.

On 4 March 1998 the Commission correspondingly adopted the "European Strategy for Turkey" [6], covering a work programme to consolidate and add substance to the Customs Union and step up co-operation in other areas significant for the further development of relations with Turkey. The strategy mainly consists of the promotion of industrial co-operation and investment including by SMEs, a reciprocal improvement in preferential market access for primary agricultural products, the conclusion of a preferential agreement on the liberalisation of services, the mutual opening of government procurement markets, the harmonisation of Turkish telecommunications legislation with that of the Community, the approximation of environmental legislation, and the establishment of a macro-economic dialogue, notably covering greater liberalisation of the movement of capital.

[6] COM(1998)124final of 04/03/1998.

The Cardiff European Council of 15 and 16 June 1998 welcomed this strategy and agreed that, as a package, it provides the platform for developing the EU-Turkey relationship on a sound and evolutionary basis. It invited the Commission to carry forward the strategy, including the tabling of any proposals necessary for its effective implementation. Recalling the need to support the strategy financially, the European Council noted the Commission's intention to reflect on ways and means of underpinning the implementation of the strategy, and to table appropriate proposals to this effect.

7. The Helsinki European Council of 10 and 11 December 1999 designated Turkey as a candidate country for EU membership. Turkey is part of the pre-accession strategy on equal footing with other candidate countries. The centre piece, an Accession Partnership, which will set out the priorities for Turkey, is to be adopted for the first time in November 2000.

8. The Customs Union continues to form the backbone of the relationship between the EU and Turkey, to the benefit of both parties. Financial co-operation relative to the Customs Union, at the moment, amounts to EUR15 million for the period 2000 to 2002 [7]. In line with the European strategy for Turkey and the new status of Turkey as candidate country following the Helsinki European Council of December 1999, the Commission has resolved to put forward to Council and Parliament a proposal for the establishment of an EIB special action programme in support of the consolidation and intensification of the EC-Turkey Customs Union, replacing the proposal for an EIB special action made in 1995.

[7] Council Regulation (EC) No 764/2000 of 10 April 2000, OJ L 094, 14/04/2000 p. 6.

II. The proposal

9. The present communication puts forward a Commission proposal to amend the general EIB external lending mandate laid down in Decision 2000/24/EC so as to establish an EIB special action programme, amounting to EUR450 million spread over the years 2000 to 2004, in support of the consolidation and intensification of the EC-Turkey customs union.

10. This proposal replaces the proposal for a special EIB action to strengthen the competitiveness of the Turkish economy made in the framework of Commission communication No. 389 of 25 July 1995 (see point 3 above), which has not been approved by Council. The proposal at the time did not specify an amount for the special action. However, the ceiling considered in the context of the declaration of the Association Council of 6 March 1995 on the resumption of financial co-operation with Turkey was Ecu 750 million for a period of 5 years.

The EIB's Board of Governors on 4 January 2000, following a recommendation of the Board of Directors of 24 November 1999, approved the extension of the so-called "Pre-Accession Facility" for lending from the Bank's own resources in the accession countries for up to EUR8.5 bn during a period of 3 ½ years as from January 2000. The Pre-Accession Facility does not benefit from a Community guarantee. Its eligibility is presently limited to the countries that were candidate for membership at the time of the recommendation by the Board of the Bank to its Governors. Following the Helsinki European Council, it is expected that the EIB will put forward a proposal to its Governors to make Turkey eligible to receive loans under the Pre-Accession Facility.

The Pre-Accession Facility does not set country shares or allocations in any form. Financing is made available at the Bank's usual criteria including the Bank's customary security requirements and decided solely on the basis of credit risk. On the basis of fair expectations it can be considered, however, that the aggregate of the new EUR450 million facility put forward in the current proposal and lending under the Pre-Accession Facility will deliver the EU commitment on special EIB lending in Turkey in the context of the 1995 customs union.

11. In the light of the competitive situation in the Customs Union, the present facility should, in line with the objectives of the 1995 proposal, notably support:

- investments assisting the competitiveness of industry in Turkey and in particular the SME sector;

- investments in infrastructures in Turkey, covering transport, energy and telecom improving the links between the EU and Turkish infrastructures, including where appropriate and if within the scale of available resources, projects related to the Trans-European Transport Network in the candidate countries (the TINA Network), the "Interstate crude oil and gas transportation to Europe" ("Inogate") hydrocarbon energy links to Europe and the "Transport corridor Europe-Caucasus-Asia via Turkey" ("Traceca");

- investments supporting direct investment activities by EU companies in Turkey;

- investments in technical installations facilitating the functioning of the customs union such as laboratories or standardisation facilities, where EIB loan finance is an appropriate instrument.

12. The special action shall form a new and specific envelope within the general EIB lending mandate, earmarked for lending supporting the consolidation and intensification of the EC-Turkey Customs Union. Correspondingly, the overall ceiling of the credits to be opened under Decision 2000/24/EC shall be increased by EUR450 million and a special envelope for EUR450 million for the aforementioned purpose be opened. All the other provisions of the general EIB lending mandate, including the duration and the reporting arrangements, shall remain unchanged.

13. The EIB's interventions under the present proposal shall be coherent with the other EIB facilities available for Turkey. Turkey is eligible for EIB lending under the EUR6.425 billion Mediterranean envelope of the recently renewed general EIB lending mandate, valid between 2000-2007 [8] (under the EUR2.31 billion Mediterranean envelope of the 1997 general EIB lending mandate [9] Turkey benefited from loans amounting to EUR205 million, predominantly in the environmental sector - notably water management - and global loans for industry). Under the special earthquake reconstruction mandate of 1999 [10], the Bank in early 2000 approved two loan facilities for Turkey totalling EUR600 million covering (i) the reconstruction of infrastructure, housing and small businesses and (ii) assistance to affected SMEs through global loans to three Turkish banks. Two loans amounting to EUR225 million have already been signed. Financing under the EIB's Pre-Accession Facility will depend on the credit assessment by the Bank of borrowers or projects. Under MEDA II, between 2000-2002 Turkey shall receive EUR127 million per year in grants, risk capital (managed by the EIB) and interest rate subsidies (linked to EIB environmental loans).

[8] Council Decision 2000/24/EC of 13/01/2000, O.J. L 9, 13/01/2000, p. 24.

[9] Council Decision 97/256/EC of 14 April 1997, O.J. L 102, 19/04/1997, p.33.

[10] Council Decision 1999/786/EC of 29 November 1999, O.J. L 308, p. 35.

14. The Community attaches great importance to the process by which Turkey has embarked on the improvement of its democratic practices, the promotion of respect for fundamental human rights and the closer involvement of civil society in its development [11]. In this respect, in the framework of the pre-accession strategy, the Commission at yearly intervals adopts a regular report on the whole of EU-Turkey relations, with specific attention given to the Copenhagen criteria applicable to candidate countries.

[11] see also Council Regulation (EC) No 764/2000 of 10 April 2000, OJ L 094, 14/04/2000, p.6.

15. As invited by the Helsinki and Feira European Councils, the Commission, as soon as possible, intends to put forward a proposal for a single framework for co-ordinating all sources of EU financial assistance during the pre-accession of Turkey, in line with Council Regulation (EC) No 622/98 of 16 March 1998 on assistance to the applicant states in the framework of the pre-accession strategy, and in particular on the establishment of Accession Partnerships [12]. The current proposal is fully compatible with the single framework.

[12] OJ L 085 , 20/03/1998 p. 1.

III. Budgetary implications

16. The present proposal for adding a new envelope to Decision 2000/24/EC so as to establish an EUR450 million EIB special action programme in support of the intensification of the EC-Turkey customs union will have a total impact on the guarantee fund for external actions of EUR26.33 million [13].

[13] see Council Regulation (EC, Euratom) No. 2728/1994 of 31 October 1994 establishing a Guarantee Fund for external actions, OJ L 293 of 12/11/1994, p.1, amended by Council Regulation (EC, Euratom) No. 1149/1999 of 25 May 1999, OJ L 139 of 2/6/1999, p.1.

17. The Commission proposes to schedule lending under the special action as indicated under point 12.1. of the financial statement in Annex. The provisioning required for the indicated amounts would be EUR11.7 million in 2000, EUR5.85 in 2001, and EUR2.93 per year from 2002 to 2004.

18. The margin remaining in the reserve for the Guarantee Fund for 2000 currently stands at EUR21.43 million, taking into account all external actions already decided or proposed as well as those that can be foreseen with some certainty. The present proposal will bring this margin down to EUR9.73 million. If required, this remaining margin for 2000 could still cover either EUR108 million in new macro-financial assistance or EUR166 million in new EIB lending.

19. As for the following years, the yearly provisioning required for the current proposal would bring the residual reserve in the guarantee fund to EUR35.54 million in 2001, EUR30.61 m in 2002, EUR51.51 m in 2003 and EUR64.17 m in 2004.

With these amounts, the Community could guarantee either EUR395 million in new macro-financial assistance or EUR600 million in new EIB facilities in 2001; EUR340 million in new macro-financial assistance or EUR520 million in new EIB facilities in 2002; EUR570 million in new macro-financial assistance or EUR880 million in new EIB facilities in 2003; or any combinations. In the light of the reserve available in the guarantee fund the situation is tight in particular in the year 2002, but manageable, other things being equal.

20. The current proposal is put forward with the objective of reaching adoption in time for requesting a transfer from the reserve for guarantees to the Guarantee Fund still in 2000. If adoption cannot be achieved in time to allow for the corresponding transfer from the reserve for loans and loan guarantees to the Guarantee fund for external actions to take place before 31 December 2000, the Commission and the EIB will, in line with point 3 of the Annex to Council Decision (EC, Euratom) No. 2728/1994 of 31 October 1994, laying down that for guarantees relating to EIB lending "payments into the (Guarantee) Fund will be made in annual tranches calculated on the basis of the annual amounts indicated in the financial statement attached to the Commission proposal, adapted where appropriate in the light of the Council decision", adjust the financial statement and reschedule the foreseen loans accordingly (for example, the EUR200 million of loans foreseen for 2000 could be rescheduled to 2005 and 2006).

2000/0197(CNS)

Proposal for a COUNCIL DECISION amending Decision 2000/24/EC so as to establish an EIB special action programme in support of the consolidation and intensification of the EC-Turkey customs union

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 308 thereof,

Having regard to the proposal from the Commission [14],

[14] OJ C , , p. .

Having regard to the opinion of the European Parliament [15],

[15] OJ C , , p. .

Whereas:

(1) Council on 23 December 1963 adopted Decision 64/732/EEC on the establishment of an Association Agreement between the EEC and Turkey [16]. The Additional Protocol effective since 1 January 1973 and annexed to the Association Agreement [17] set down the conditions, arrangements and timetables for the progressive establishment of the Customs Union within a period of 22 years.

[16] OJ 217 of 29/12/1964 p. 3685ff.

[17] OJ L 293 of 29/12/1972, p. 4.

(2) On 6 March 1995 Council agreed on a global package regarding the future relations with Turkey, including the draft Decision of the EC-Turkey Association Council on the implementation of the final phase of the customs union, and a related Community declaration concerning financial co-operation.

(3) The declaration on financial co-operation specified that the resumed financial co-operation with Turkey shall be based, inter alia, on "additional EIB loans over a five-year period starting in 1996, in order to improve the competitiveness of the Turkish economy following the entry into force of the Customs Union".

(4) On 25 July 1995, on the basis of the above declaration, the Commission put forward a proposal for a Council Regulation on the implementation of a special measure of financial co-operation with Turkey. In the same proposal, the Commission invited the Council to approve a special EIB lending facility strengthening the competitiveness of the Turkish economy following the entry into force of the Customs Union. The Commission proposal encountered fundamental difficulties during the legislative process and the legal basis has not been approved.

(5) The Luxembourg European Council on 12 and 13 December 1997 called for a strategy to be drawn up to prepare Turkey for accession by bringing it closer to the EU in every field. On 4 March 1998 the Commission submitted to the Council a communication entitled "the European Strategy for Turkey", which put forward a work programme to consolidate and add substance to the Customs Union and step up co-operation in other areas significant for the further development of relations with Turkey.

(6) The Cardiff European Council on 15 and 16 June 1998 welcomed the European Strategy for Turkey as a platform for developing relations between the European Union and Turkey on a sound and evolutionary basis. Recalling the need for financial support for the European Strategy, the European Council noted the Commission's intention to reflect on ways and means of underpinning the implementation of the strategy, and to table appropriate proposals to this effect.

(7) The Helsinki European Council of 10 and 11 December 1999 decided that Turkey was a candidate state destined to join the Union on the basis of the same criteria as applied to the other candidate states.

(8) In line with the European Strategy for Turkey and the new status of Turkey as candidate state following the Helsinki European Council, the present Decision should establish an EIB special action programme supporting the consolidation and intensification of the EC-Turkey Customs Union. It should facilitate progress in areas that still merit attention as regards the implementation and effective application of certain legislation of relevance for the Customs Union as identified by the regular reports by the Commission on Turkey's progress towards accession and in relevant areas identified by the European Strategy for Turkey.

(9) This Decision replaces the proposal on an EIB special action programme made in 1995. The present Decision, together with Turkey's expected eligibility under the EIB's Pre-Accession Facility, is meant to deliver the EU commitment on special EIB lending in Turkey in the context of the 1995 Customs Union.

(10) The EIB's intervention under this Decision should be coherent with the other EIB facilities available in Turkey and support investments assisting the competitiveness of industry in Turkey, in particular the SME sector; investments in infrastructures, covering transport, energy and telecom improving the links between the EU and Turkish infrastructures, including where appropriate and if within the scale of available resources projects related to the TINA Network, the "Traceca" corridor, and the "Inogate" energy links; investments supporting direct investment activities by EU companies in Turkey; and where EIB loan finance is an appropriate instrument investments for technical installations facilitating the functioning of the Customs Union.

(11) Council Decision 2000/24/EC [18] grants the EIB a Community guarantee against losses under loans for projects outside the Community (Central and Eastern Europe, Mediterranean countries, Latin America and Asia and the Republic of South Africa).

[18] OJ L 9, 13.1.2000, p. 24.

(12) Council Decision 2000/24/EC gives recourse to the guarantee fund for external actions established by Council Regulation (EC, Euratom) No. 2728/94 of 31 October 1994 [19], amended by Council Regulation (EC, Euratom) No. 1149/1999 of 25 May 1999 [20];

[19] OJ L 293 of 12/11/1994, p. 1.

[20] OJ L 139 of 2/6/1999, p. 1.

(13) The Community guarantee covering the general EIB external lending mandate laid down in Decision 2000/24/EC should be extended to cover an EIB special action programme supporting the consolidation and intensification of the EC-Turkey Customs Union. Decision 2000/24/EC should therefore be amended accordingly.

(14) The provisions of this Decision are based on respect for democratic principles, the rule of law, human rights and fundamental freedoms and respect for international law, which underpin the policies of the European Community and its Member States. The Community attaches great importance to the need for Turkey to improve and promote its democratic practices and respect for fundamental human rights, and more closely involve civil society in that process.

(15) The Treaty does not provide, for the adoption of this Decision, powers other than those under Article 308,

HAS DECIDED AS FOLLOWS:

Article 1

The second sentence of the second subparagraph of the first paragraph of Article 1 of Decision 2000/24/EC is hereby amended as follows:

(a) in the introductory part, "EUR 18 410 million" shall be replaced by "EUR 18 860 million";

(b) the following fifth indent shall be inserted after "the Republic of South Africa": "-Special action supporting the consolidation and intensification of the EC-Turkey Customs Union: EUR 450 million."

Article 2

This Decision shall be published in the Official Journal of the European Communities. It shall take effect on the day of its adoption.

Done at Brussels,

For the Council

The President

FINANCIAL STATEMENT

1. Title of operation

European Community guarantee for an EIB special lending programme in support of the consolidation and intensification of the EC-Turkey Customs Union.

2. Budget heading(s) involved

B0-220. European Community guarantee for loans granted by the European Investment Bank to third countries in the Mediterranean Basin.

3. Legal basis

Article 308 of the Treaty.

4. Description of operation

4.1 General objective

To provide financial support for investments in Turkey assisting the consolidation and intensification of the customs union.

4.2. Description

The budget entry is intended to provide budgetary back-up for a budget guarantee granted by the Community to the European Investment Bank to cover loans amounting to EUR450 million to be extended in Turkey.

4.3 Period covered and arrangements for renewal

The duration of the general EIB external lending mandate as laid down by Decision 2000/24/EC. The guarantee extends until the last reimbursement by the borrower, within a maturity to be determined autonomously by the EIB.

5. Classification of expenditure or revenue

Compulsory expenditure/Non-differentiated appropriations.

6. Type of expenditure or revenue

A guarantee in favour of the European Investment Bank.

7. Financial impact

Only if a call is made on the guarantee. The guarantee is a global guarantee, the coverage of which is restricted to 65% of the aggregate amount of the credits opened under Decision 2000/24 EC, i.e. 65% of EUR18,860 million.

7.1 Method of calculating total cost of operation (relation between individual and total costs)

A token entry is proposed, given that the amount and timing of any call on this budget heading is fraught with uncertainty and cannot be calculated in advance.

7.2 Itemised breakdown of cost

Not applicable.

7.3 Operational expenditure for studies, experts etc. included in Part B of the budget

Not applicable.

8. Financing of expenditure for operations

In the event of a default, payments would be made directly to the creditor from the Guarantee Fund established by Council Regulation (EC, Euratom) No. 2728/94 of 31 October 1994, amended by Council Regulation (EC, Euratom) No. 1149/1999 of 25 May 1999.

If the Guarantee Fund did not contain sufficient resources to cover a default, additional payments would be called up from the budget, with

- any margin remaining in the reserve for guarantees being the first recourse;

- any margin available under the ceiling of Category 4 of the Financial Perspective or following redeployment within Category 4 being the second recourse;

- a revision of the Financial Perspective in line with the provisions of the Interinstitutional Agreement which might involve redeployment within other categories being the third recourse.

In order to meet its obligations, the Commission may provisionally undertake debt servicing by drawing on its liquid assets. In that event, Article 12 of Council Regulation (EEC, Euratom) No. 1552/89 of 29 May 1989 is applicable.

9. Measures to verify that guarantee arrangements have been implemented

In accordance with the EIB's usual procedures including appropriate control arrangements.

10. Elements of cost-effectiveness analysis

10.1 Specific and quantified objectives; target population

- Quantifiable objectives: To enable industry in Turkey, and notably SMEs, to cope with the competitive situation arising from the customs union; to improve Turkey's infrastructure links with the EU (road transport, ports, airports, railways, telecommunications and electricity); to support direct investment activities by EU companies in Turkey; where EIB loan finance is an appropriate instrument, to support investments in technical installations facilitating the functioning of the Customs Union.

- Population: Turkey.

10.2 Justification of the operation

- To support the consolidation and the intensification of the EC-Turkey customs union.

- Choice of ways and means: the EIB began its lending operations in Turkey in 1965, and has since extended loans in Turkey under several EC facilities. Through its existing operations it has established regular contacts to the relevant Turkish private and public sector bodies as well as the International Financial Institutions active in Turkey.

- Main factors of uncertainty which could affect the specific results of the operation: certain political developments in Turkey.

10.3 Monitoring of the operation

Performance indicators selected

- According to recital 18 and Article 2 of Decision 2000/24/EC the Commission information to be submitted to the European Parliament and the Council annually shall include an assessment of the contribution of the lending under the present Decision to the Community's relevant external policy objectives, taking into account the operational objectives and appropriate measurements of their fulfilment to be established by the European Investment Bank for lending under Decision 2000/24/EC. The successful implementation of the current action shall be judged by taking into account the objectives as laid out in recital 10 of the current Decision.

11. Administrative expenditure (Section III, Part A of the budget)

Not applicable. The proposed operation will not involve any increase in the number of Commission staff or administrative expenditure.

12. Impact on the reserve for guarantees

12.1 Provisional schedule of loans to be committed while the decision is in force

>TABLE POSITION>

12.2. Estimated use of the guarantee reserve to provision the Guarantee Fund

The provisioning rate of the Guarantee Fund for external actions as from 1 January 2000 is 9%. The rate of the blanket guarantee is 65%.

>TABLE POSITION>

12.3 Estimated use of the guarantee reserve by the present proposal [21]

[21] S ituation as of 1 July 2000.

>TABLE POSITION>

* Annotation: as regards the year 2001 onwards, this statement does not take into account the assumptions of EUR400 million per year for macro-financial assistance [22] as indicated in recital 21 of Council Decision 97/256/EC. The full realisation of the assumptions of EUR400 million per year for macro-financial assistance with yearly provisioning requirements of EUR36 million would result in a remaining margin within the reserve of zero in the years 2001 and 2002, EUR15.51 m in 2003 and EUR28.17 m in 2004. For the sake of comparison, macro-financial assistance in 1997 amounted to EUR460 m, in 1998 to EUR150 m and in 1999 to EUR390 m. Furthermore, Council Decision 94/179/EURATOM of 21 March 1994 empowers the Commission to contract borrowings to finance projects to increase the safety and efficiency of nuclear power stations in certain non-member countries or projects relating to the decommissioning of such installations. The authorisation of projects under this Decision could require additional provisioning of up to EUR36.77 million over the period 2001 to 2003. The current level of provisioning for Euratom covers the expected volume of loans to be signed in 2000, i.e. EUR 716 million (a first loan of EUR212.5 million to Bulgaria was signed on 29 May 2000).