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t,'-i* '^il REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 
ON THE IMPLEMENTATION 
OF FINANCIAL AND TECHNICAL COOPERATION WITH MEDITERRANEAN NON MEMBERS 
COUNTRIES AND ON FINANCIAL COOPERATION WITH THOSE COUNTRIES AS A GROUP 
- 2 
PREAMBLE 
1. In line with Article 10(4) of Council Regulation (EEC) No 1762/92 of 
29 June 1992, the purpose of this document is to give a progress report on 
projects financed in the Mediterranean countries from the Community budget 
and EIB funds. 
2. In addition to financial and technical cooperation governed by 
individual financial protocols, the New Mediterranean Policy (NMP) adopted 
by the Council on 18 December 1990 extended financial cooperation with 
Mediterranean non-member countries to embrace activities involving all those 
countries as a group. This document will also report on the implementation 
of the new instrument, which entered into force in 1992, in accordance with 
Article 10(1) of Council Regulation (EEC) No 1763/92 of 29 June 1992. 
3. The report covers cooperation between the Community and the northern 
Mediterranean countries, cooperation with the southern and eastern 
Mediterranean countries (implementation of the first three generations of 
financial protocol, plus introduction of a fourth generation), and finally 
the "horizontal" cooperation launched in 1992. 
4. The report contains an overview of financial and technical cooperation 
going back to the first protocols (1978) in order to give a full picture of 
such cooperation right up to the present day. From next year, only 
cooperation taking place in the year in question will be covered. 
1 
NORTHERN MEDITERRANEAN 
I. INTRODUCTION 
1. Turkey was the first northern Mediterranean country to sign a financial 
protocol with the Community, as an annex to the association agreement 
concluded on 12 September 1963. The Turks were followed by Malta in 1978, 
and then Cyprus in 1979, in accordance with the provisions of the 
association agreements concluded with those countries in 1970 and 1972 
respectively. 
Slovenia is not taken into account here; it is the only new republic of 
former Yugoslavia to have benefited from a financial protocol in force in 
the course of 1993, amounting to ECU 20 million in budget funds and 
ECU 150 million in EIB funds. 
Financial protocols are in principle concluded for a period of five years, 
and are designed to promote the development of the countries concerned and 
economic cooperation in the areas targeted by the contracting parties. 
2. In the period 1965-93, the Community made a total of ECU 934.5 million 
available for development activities under three generations of financial 
protocols. This total comprised ECU 672.5 million from the Community budget, 
and ECU 262 million from EIB funds. 
3. Fourth-generation financial protocols for a further five-year period 
are due to be negotiated with Malta and Cyprus this year. The fourth 
financial protocol with Turkey, which ought to have come into force in 1981, 
remains suspended for political reasons. 
During the period covered by the first three financial protocols, EIB loans 
to the countries concerned benefited from a 2% interest rate subsidy. 
4. The type of budget funds deployed has changed over the years, in that, 
in addition to grants, the first two financial protocols also provided soft 
loans (at 1% over 40 years, with 10 years' grace). The third protocols with 
Malta and Cyprus saw the introduction of risk capital, primarily for the 
development of the banking sector in those two countries. 
II. IMPLEMENTATION OF FINANCIAL AND TECHNICAL COOPERATION UNDER THE FIRST 
THREE FINANCIAL PROTOCOLS WITH THE NORTHERN MEDITERRANEAN COUNTRIES 
(1965-93) 
1. C3eneral 
1.1. Implementation of the first three protocols has, on the whole, 
proceeded satisfactorily. The first two protocols have both been wholly 
committed, with respective disbursement rates of 100% and 98%. The third 
protocols are 96% committed, with 95% disbursed. 
1.2. There are certain differences between the northern Mediterranean 
countries, with implementation proceeding more rapidly in Turkey and Malta 
and more slowly in Cyprus, for administrative reasons. 
1.3. As regards the structure of the financial protocols, the proportion of 
EIB funds increased slightly over the three protocols (by 16%, 24% and 38% 
respectively). The third protocols also saw the introduction of risk 
7 
capital (Cyprus: ECU 5 million; Malta: ECU 2.5 million) primarily targeting 
the banking sector. 
1.4. Budget funds allocated to the northern Mediterranean countries under 
the financial protocols have primarily been channelled into infrastructure 
(45%), energy (26%, including construction of thermal power stations), 
trade, and industry and services (22%). 
2. Country-bv-country analysis 
2.1. CYPRUS 
Under the first three financial protocols, covering the period between 1979 
and 1993, Cyprus received a total of ECU 136 million, comprising 
ECU 92 million from the EIB and ECU 44 million from the Community budget. 
All the budget funds allocated under the first two protocols went to urban 
infrastructure projects benefiting both of the island's communities (sewage 
systems, drains, improvements), while the third protocol was used to promote 
the integration of Cyprus's economy with that of the Community. 
The risk capital (ECU 5 million) input primarily took the form of a general 
loan to the banking sector to provide support to Cypriot SMEs associated 
with European partners. ECU 100 000 was used to secure a direct EIB holding 
on behalf of the Community in the Cyprus Development Bank. 
EIB funds were channelled into the water, energy and industry sectors via a 
general loan. 
Overall, the implementation of financial and technical cooperation with 
Cyprus has progressed satisfactorily: 77% of the ECU 44 million in budget 
funds has been committed, with 94% disbursed, while 68% of the EIB funds 
have been committed, with 87% disbursed. 
2.2. MALXA. 
The three financial protocols concluded between the Community and Malta 
since 1978 have provided a total of ECU 93.5 million, consisting of 
ECU 55 million in EIB funds and ECU 38.5 million in budget funds. 
The bulk of the budget funds allocated has gone to telecommunications 
infrastructure, particularly under the first two protocols. More recently, 
the emphasis has been on aligning the Maltese economy with the Community's 
(standardization), developing tourism and protecting the marine environment. 
The ECU 2.5 million risk capital allocation under the third protocol took 
the form of a general loan to the banking sector. 
EIB funds have been channelled into transport (40%) and telecommunications «• 
infrastructure (20%), and the environment (desalination, waste). 
Commitment rates: budget funds (ECU 38.5 million) - 100%; EIB funds 
(ECU 55 million) - 100%. Disbursement rates: budget - 57%; EIB - 76%. 
2.3. TJJEKEÏ 
p 
Between 1963 and 1981 Turkey received ECU 705 million, of which 
ECU 590 million in budget funds (not counting the ECU 75 million in special 
assistance granted outside the protocol in 1981) and ECU 115 million in EIB 
funds. 
Budget funds went chiefly to the infrastructure, energy and industrial 
sectors (47%, 29% and 22% respectively), while EIB funds were allocated 
mainly to the industrial sector (91%), with the balance going to the energy 
sector. 
EIB and budget funds were committed and disbursed in full. 
G 
SOUTHERN AND EASTERN MEDITERRANEAN 
I. INTRODUCTION 
1. Since 1978, when the cooperation agreements concluded with the Southern 
and Eastern Mediterranean (SEM) countries entered into force,1 the Community 
has used the associated five-year financial protocols to contribute to the 
development of those countries and to economic cooperation with them in the 
sectors targeted by the contracting parties. 
2. Over the period covered by the first three financial protocols (1978-
91),2 the Community contributed a total of ECU 3 169 million, consisting of 
ECU 1 337 million in budget funds (42%) and ECU 1 832 million from the EIB 
(58%) . 
3. The fourth generation of financial protocols entered into force in 
1992, and covers the period ending on 31 October 1996. 
During the period covered by the first three financial protocols, EIB loans 
to the countries concerned benefited from a 2% interest rate subsidy. This 
arrangement became optional for the fourth protocols, with only Egypt and 
Jordan choosing to retain it. 
In view of Israel's level of economic development, it has not been eligible 
for subsidized EIB loans. 
4. The type of budget funds deployed has changed over the years, in that, 
in addition to grants, the first two financial protocols also provided soft 
loans (at 1% over 40 years, with 10 years' grace). 
The third protocols saw the introduction of risk capital to promote joint 
ventures between Community and SEM companies. This trend was consolidated in 
the fourth generation of protocols, which - as part of the NMP - also 
introduced a special allocation designed to support the structural 
adjustment policies adopted by several of the countries concerned. 
The total of ECU 2 075 million was allocated under the fourth protocols, 
including ECU 775 million (37%) from the Community budget. An additional 
ECU 300 million has been made available from budget funds to support 
economic reform in countries carrying out structural adjustment programmes. 
The total contribution under the fourth protocols is 47% higher than the 
previous generation. 
II. IMPLEMENTATION OF FINANCIAL AND TECHNICAL COOPERATION UNDER THE FIRST 
THREE FINANCIAL PROTOCOLS WITH THE SEM COUNTRIES (1978-91) 
l. general 
1.1. Implementation of the first three protocols has, on the whole, 
proceeded satisfactorily. At 31 December 1993, the first and second 
protocols were almost entirely committed (99%), with disbursement rates of 
95% and 81% respectively. For the third protocol, the figures were 90% 
The SEM countries are: Algeria, Egypt, Israel, Jordan, Lebanon, 
Morocco, Syria and Tunisia. 
First financial protocol: 1978-81; second protocol: 1982-86; third 
protocol: 1987-91. 
3 
(commitment) and 43% (disbursement). 
1.2. There are significant differences between the SEM countries, with 
implementation generally proceeding more rapidly in Jordan, Morocco and 
Tunisia than in the other countries, for either administrative or political 
(e.g. Lebanon) reasons. The picture for the third protocol as a whole is 
influenced by Syria, where the third protocol finally got under way in 
January 1993. 
1.3. The proportion accounted for by Community budget funds has declined 
slightly over the years, from an initial 48% to 40% for the third protocols, 
which also saw the replacement of soft loans (at 1% over 40 years, with 10 
years' grace) with risk capital designed to support the industrial sector, 
particularly SMEs, through joint venture projects. The risk capital 
allocation for the SEM countries as a whole rose from ECU 37 million in the 
third protocols to ECU 80 million in the fourth. 
1.4. The priority sectors for budget funds have been infrastructure 
(including sewage systems), agriculture and rural development, and 
vocational training, although there are differences from country to country, 
dictated by individual national development priorities. 
2. Country-by-country analvsiB 
2.1. ALGERIA. 
Between 1978 and 1991 Algeria received a total of ECU 504 million under the 
first three financial protocols, comprising ECU 360 million in EIB funds and 
ECU 144 million from the Community budget. The relatively small proportion 
of the total package accounted for by Community funds (28%) is due to 
Algeria's wealth of natural resources, reflected in a per capita GDP that is 
higher than that of the other countries of the region. 
The budget funds allocated under the first two protocols targeted scientific 
cooperation projects and vocational training. The third protocol continued 
the support for scientific cooperation, while also backing several projects 
directly linked to rural development and SMEs. 
The third protocol's ECU 4 million risk capital package was used for a 
conditional loan (energy sector studies) and to secure a direct EIB holding 
(on behalf of the Community) in FINALEP, a specialized finance company, 
which was also granted a credit facility. 
The lion's share of the EIB funds (59%) went on basic infrastructure 
projects (including urban sewage systems), with irrigation projects 
accounting for 29% and the energy sector for the remaining 12%. 
Implementation of the first three protocols has been markedly slower than 
the SEM average, primarily as a result of administrative shortcomings on 
both sides. 
The ECU 144 million in budget funds has been 89% committed, with 42% 
disbursed. For the EIB funds (ECU 360 million), the figures are 100% and 48% 
respectively. 
2-2. EGXEI 
Between 1978 and 1991, Egypt received a total of ECU 895 million, consisting 
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of ECU 492 million from the EIB and ECU 403 million (46%) from the Community 
budget. Egypt alone accounted for a little less than 30% of the total 
Community contribution. 
The budget fund allocation was targeted at environmental (particularly 
sewage) infrastructure projects (33% of the total), and support for 
agriculture (32%) and industry (25%), notably by means of sectoral 
programmes and credit facilities. 
The ECU 11 million contributed in risk capital was mostly used to acquire 
indirect stakes in Egyptian companies associated with European partners; 
ECU 8 million was invested in this way in three industrial and agro-
industrial ventures and one project in the tourism sector. The balance was 
used to set up a credit facility at the Export Development Bank of Egypt to 
finance direct holdings in Egyptian SMEs associated with European partners. 
Around 50% of the EIB loans went to the energy sector (electricity and gas 
distribution), with 28% going to industrial development through general 
loans benefiting SMEs and direct loans for larger projects. The environment 
and agriculture were the other main sectors to benefit. 
Implementation was slow to get started, but picked up considerably once it 
was under way. Nearly all the ECU 403 million allocation (99.5%) has been 
committed, with a disbursement rate of 57%. For the ECU 492 million in EIB 
funds, the figures are 100% and 74% respectively. 
2.3. ISRAEL 
Given its level of development, Israel has received only EIB loans, 
totalling ECU 30 million, 40 million and 63 million respectively for the 
first three financial protocols. 
These loans were allocated in the form of credit facilities for the 
Industrial Development Bank of Israel to finance SMEs active in the 
industrial and tourist sectors (around 85% of the total), the balance going 
to environmental projects. 
These funds have been committed in their entirety, with a disbursement rate 
of 96%. 
2.4. JORDAN 
Under the first three protocols, Jordan received a total of ECU 203 million, 
comprising ECU 118 million from the EIB and ECU 85 million (42%) from the 
budget. 
The budget funds were primarily channelled into agriculture and education 
(vocational training and technical and scientific back-up at university 
level, in line with national development priorities). 
The risk capital input (ECU 2 million) was channelled through the Industrial 
Development Bank to boost the equity of companies originally from the Gulf 
countries which had set up in Jordan as a result of the conflict of 1990-91. 
The EIB loans were distributed among the following sectors: industry (31%), 
infrastructure/drinking water (36%), energy (22%) and agriculture 
(agricultural loans, 11%). 
3. 
Jordan is one of the quickest and most efficient countries in implementing 
the protocols. The ECU 8b million in budget funds has been wholly committed, 
with ECU 62 million (73%) disbursed, while the corresponding figures for the 
EIB funds are 100* and 92V.. 
2.5. LEBANON 
Implementation of the financial protocols concluded with Lebanon has been 
influenced by the war there. 
The budget funds allocated under the first two protocols (ECU 26 million) 
have been committed in their entirety, with a disbursement rate of 54%. 
Nearly three quarters of these funds have been channelled into the education 
sector, particularly primary education (consstruction and rehabilitation) 
Thé EIB, having suspended its activities in Lebanon in 1982, re-established 
its operational contacts at the beginning of 1992. 
The EIB funds committed under the first protocol (ECU 20 million) were 
allocated to the energy sector, while for the second and third protocols the 
emphasis was on reconstruction, embracing the energy sector, port 
infrastructure and rehabilitation of the water distribution and sewage 
systems. ECU 16 million is as yet uncommitted under the third protocol. 
2.6. MOROCCO 
During the period 1978-91, Morocco received ECU 653 million under the first 
three financial protocols, comprising ECU 297 million in EIB loans and 
ECU 356 million (55*) from Community funds, the size of the latter figure 
being explained by Morocco's low per capita GNP. 
The budget funds were allocated to social and agricultural water engineering 
projects, vocational training, technical and scientific cooperation, 
agricultural loans and insect pest control measures. 
Most of the risk capital was used to extend an open loan to the Moroccan 
banking sector as a whole to boost the equity of Moroccan businesses 
associated with European partners. The EIB also helped set up a specialized 
finance company. 
The EIB loans primarily went to agricultural and irrigation projects (47*) 
and the energy sector (28%), with the balance being distributed among port 
infrastructure projects, urban sewage systems and the industrial sector. 
The first three protocols have been almost wholly committed, with 
disbursement rates of 80% for budget funds and 76* for EIB loans. 
Commitment and implementation has been rapid and - as in Jordan and 
Tunisia - generally highly efficient. 
2.7. SYRIA 
Financial and technical cooperation with Syria has been strongly influenced 
by political problems between the Community and that country. It was not 
possible to implement the third protocol until January 93. 
1 o 
The budget funds were targeted at road infrastructure, agriculture and rural 
development, scientific cooperation and vocational training. 
The EIB loans under the first two protocols went entirely to the energy 
sector (28%) and road and agriculture infrastructure projects (for which 
budget funds were used to finance studies and technical assistance). 
The Syrian authorities have requested that the entire third protocol (not 
yet programmed) be channelled into the electricity generating sector, where 
the chronic shortage of capacity is seriously undermining the country's 
economic development. 
The ECU 59 million in budget funds and ECU 98 million in EIB loans allocated 
under the first two protocols have been wholly committed, with 76% disbursed 
(70% for the former, 80% for the latter). 
As for the third protocol, it has been possible to commit only 22% of the 
budget funds, out of a total allocation of ECU 36 million in budget funds 
and ECU 110 million in EIB loans. 
Implementation has been fairly slow compared to the SEM average. 
2.8. TUNISIA 
Between 1978 and 1991, Tunisia received a total of ECU 458 million under the 
first three financial protocols, comprising ECU 208 million in budget funds 
(45%, similar to Egypt) and ECU 250 million in EIB loans. 
The lion's share of the budget funds went to help the agriculture and rural 
development sector (52%), while social infrastructure (including sewage 
systems) and support for SMEs and trade promotion each accounted for a 
further 17%. The environment and public health sectors together received 
just under 11%. 
ECU 6 million in risk capital was channelled through the Banque de 
Développement Economique de Tunisie into strengthening the equity base of 
Tunisian SMEs associated with European partners. 
Around 44% of the EIB funds allocated went to agricultural development in 
the form of general loans. The other sectors to benefit were industry and 
tourism (25% in the form of credit facilities), the environment (17%) and 
infrastructure (14%). 
Implementation has been very fast and efficient. The full ECU 208 million in 
Community budget funds has been committed, with ECU 176 million (85%) 
disbursed. The corresponding figures for EIB loans are 100% and 77%. 
III. IMPLEMENTATION OF THE FOURTH FINANCIAL PROTOCOLS CONCLUDED WITH THE 
SEM COUNTRIES (1992-96) 
1. General 
The fourth generation of financial protocols forms part of the New 
Mediterranean Policy (NMP), the guidelines for which were adopted by the 
Council in December 1990. The protocol with Tunisia was the first to enter 
into force, on 1 February 1992, followed by all the other SEM countries on 
4 4 
1 March 1992, with the exception of Morocco and Syria, Parliament having 
failed to endorse their protocols in January. This endorsement was finally 
obtained in October, and Morocco's fourth, and Syria's third, financial 
protocols entered into force in 1993. 
2*. Features 
2.1. Altogether, ECU 2 075 million was allocated to the fourth protocols, an 
increase of 28% on the previous generation. However, counting the special 
allocation of ECU 300 million provided by the NMP to support structural 
adjustment programmes implemented by SEM countries, the total increase was 
47%. 
2.2. With a view to boosting industrial cooperation by bringing SEM and 
Community companies together, the risk capital envelope was increased from 
ECU 37 million to ECU 80 million. 
2.3. As regards sectoral programming, in addition to the continuing emphasis 
on rural development, socio-economic infrastructure and training, the use of 
budget funds in the fourth protocols focuses more on measures to accompany 
the economic reform policies implemented by several Mediterranean countries. 
2.4. The allocation of ECU 300 million to support economic measures in SEM 
countries implementing structural reforms is an innovation introduced by 
this generation of protocols. 
A limited amount from the funds allocated under the fourth financial 
protocols (1992-96) may also be made available for this purpose. 
Community aid takes the form of financing for general and sectoral import 
and technical assistance programmes linked to macro-economic and sectoral 
support programmes. The counterpart funds generated by the import programmes 
are used to finance measures to palliate the negative social .repercussions 
of the adjustment process, particularly through job creation schemes 
targeting the underprivileged. 
Funds are distributed on the basis of parameters indicating structural 
imbalances and long-term development requirements. 
2.5. Only Egypt and Jordan opted for interest rate subsidies on EIB loans 
from budget funds. 
2.6. The implementation of the fourth protocols got under way in 1992. By 
the end of December 1993, 32% of the funds (including EIB loans) had been 
committed, with 15% disbursed. For the structural adjustment allocation, 
ECU 195 million of the ECU 300 million (65%) had been committed, with 
ECU 130 million (67%) disbursed. 
3. Country-by-country analysis 
3.1. ALGERIA 
Algeria's overall allocation increased by 46% against the previous protocol, 
the biggest percentage rise. EIB loans increased by 53% from ECU 183 million 
to ECU 280 million, while the budget fund allocation rose by 25%. Risk 
capital input designed to encourage the growth of SMEs rose from 
ECU 4 million to ECU 18 million. 
4t 
The targets agreed for the budget funds (excluding risk capital, which is 
managed by the EIB and has not yet been assessed) are as follows : 
nearly ECU 30 million for a programme to import agricultural inputs; 
ECU 15 million for a structural adjustment programme (social 
accommodation), to add to the ECU 55 million from the structural 
adjustment facility; 
the balance will be used to support SMEs and to provide technical 
assistance. 
Algeria is receiving ECU 70 million to support its social accommodation 
reform programme, with ECU 55 million (ECU 20 million disbursed) from the 
special allocation of ECU 300 million and ECU 15 million from budget funds 
allocated under the fourth financial protocol. 
The support will take the form of a sectoral programme to import the 
materials required for the completion of the social accommodation programme, 
with counterpart funds being used to finance measures to refurbish, 
rehabilitate and build accommodation. 
Around 55% of the EIB loan allocation will go to water management, with the 
balance being distributed between the energy sector and financing for other 
economic infrastructure projects. 
At the end of 1993, 29% of these EIB funds had been committed to the water 
sector, while a major road project, accounting for 35% of the protocol 
allocation, was approved in November 1993. 
At that stage, 66% of the budget funds were committed (33% disbursed) , while 
the figure for EIB loans was 36%. 
3.2. EGYPT 
Egypt's allocation rose 27% to ECU 568 million, the biggest package of all 
the SEM countries, with budget funds increasing by 29% to ECU 258 million, 
and EIB loans 24%. 
Egypt opted for a 2% interest rate subsidy from budget funds. 
At the programming stage, the following sectors were selected as priority 
targets for budget funds : 
support for economic reform programme; 
support for agriculture. 
It was decided to distribute the EIB loans as follows: 
40% for economic infrastructure; 
40% for energy (particularly electricity) 
20% for the industrial sector. 
A first risk capital operation, to be signed at the beginning of 1994, will 
take the form of a ECU 5 million credit facility at the Commercial 
International Bank to boost the equity of Egyptian businesses associated 
with European companies. 
At the end of 1993, 24% of the budget funds and 15% of the EIB funds had 
43 
been committed, with 75% going to industry and 25% to electricity. Other 
projects, accounting for 27% of the total available, were approved and are 
to be signed at the beginning of 1994. 
3.3. ISRAEL 
As with the previous protocols, Israel's EIB allocation will partly be used 
for a general loan to the Industrial Development Bank of Israel to finance 
SMEs and small-scale environmental projects. The balance will be channelled 
into larger-scale environmental projects. 
At the end of 1993, 41% of the funds had been committed, with 32% disbursed. 
3.4. JORDAN 
Under the fourth financial protocol, Jordan will receive ECU 126 million, 
comprising ECU 46 million in budget funds (including ECU 2 million in risk 
capital) - up 24% on the previous protocol - and ECU 80 million in EIB loans 
(+27%). 
Jordan has opted for a 2% interest rate subsidy on its EIB loans. 
As in the past, the budget fund allocation will primarily be used in the 
water sector, where the situation is precarious, and in education. 
ECU 10 million will be added to the adjustment allocation of ECU 40 million 
to support the economic reform programme Jordan is implementing in close 
cooperation with the World Bank and the IMF. The counterpart funds will be 
channelled into health, education, water and roads projects, with particular 
emphasis on job creation. 
The ECU 80 million EIB package will be distributed as follows: 
40% for improving water supply systems and waste water treatment; 
30% for economic infrastructure (electricity and transport); 
20% for industry; 
10% for agriculture. 
At the end of 1993, 30% of the EIB funds were committed, with 63% going to a 
road project and 37% to irrigation water supply projects. A fourth operation 
(a credit facility to finance SMEs accounting for 12% of the protocol total) 
was approved at the end of the year. 
A ECU 2 million risk capital operation to boost the equity base of Jordanian 
businesses through the IDB was also approved at that time. 
As with previous financial protocols, implementation has been rapid: by 
31 December 1993, 57% of budget funds and 30% of EIB funds had been 
committed, with 20% disbursed. 
3.5. LEBANON 
The third and fourth financial protocols were programmed jointly by the 
Commission and the EIB in October 1992, the third protocol having been 
postponed on account of the war and the resulting lack of organization and 
administration. 
The allocations were as follows: 
•fY 
3rd protocol: ECU 73 million, comprising ECU 53 million in the form of EIB 
loans and ECU 20 million in budget funds; 4th protocol: ECU 69 million, 
comprising ECU 45 million in EIB loans and ECU 24 million in budget funds. 
The programming exercise allocated around 35% of the EIB loans to transport 
infrastructure, 25% to the energy sector and 25% to drinking water 
distribution and sewage systems, with the balance going to economic 
infrastructure. 
At the end of 1993, 82% of the budget funds had been committed, with nearly 
ECU 6 million going to war damage assessment studies covering all the 
sectors targeted by Lebanon's reconstruction programme, and ECU 30 million 
to technical assistance to the Lebanese government. The main donors feel 
that the technical assistance project will guarantee the efficiency of their 
own aid programmes. 
The bulk of operations are aimed at underpinning the process of 
rehabilitating the country's public services. 
At the end of the year, ECU 37 million in EIB funds had been committed under 
the third protocol. 
3.6. MOROCCO 
The fourth financial protocol failed to receive Parliament's endorsement at 
its first reading in January 1992, eventually being approved in October that 
year. 
The overall package of ECU 438 million is up 35% on the third protocol 
total, with the budget fund allocation rising 26% and EIB loans 46%. At 
ECU 25 million, Morocco also has the largest risk capital envelope of the 
SEM countries. 
In December 1992, a joint Commission/EIB team visited Morocco to draw up the 
indicative programme. 
The budget fund allocation administered by the Commission totals 
ECU 193 million, broken down as follows: 
68% rural development; 
17% vocational training and economic reform; 
15% transfers of know-how and support for economic reforms. 
The ECU 25 million risk capital envelope will primarily be used to boost the 
equity of Moroccan businesses, particularly those associated with Community 
companies. Following on from the work carried out under the third protocol, 
a loan of ECU 20 million channelled through the Moroccan finance sector was 
approved in December 1993. 
Morocco is also receiving ECU 80 million in Community support for its 
structural adjustment programme. The ECU 60 million allocation from the 
special structural adjustment envelope will be supplemented with 
ECU 20 million from budget funds. Counterpart funds will be used to palliate 
the negative social impact of the adjustment programme by boosting public 
spending in the health and education sectors. 
The distribution of the ECU 220 million in EIB loans agreed with the 
Moroccan authorities is as follows : 
4 s 
45% for agriculture and irrigation projects; 
40% for economic infrastructure such as electricity and drinking water 
distribution; 
15% for industry. 
At the end of the year, 50% of the EIB funds had been committed (23% to an 
agricultural credit facility, 27% to the energy sector), while a drinking 
water distribution operation accounting for 18% of the protocol was approved 
in November 1993. 
Of the 11% (ECU 25 million) of the budget funds committed, 80% 
(ECU 20 million) has been disbursed. 
3.7. SJÉRIA. 
The fourth financial protocol has been formally ratified on 24.01.1994. 
3 . 8 . • TJBHSIA 
Tunisia will receive a total of ECU 284 million under the fourth protocol, 
consisting of ECU 116 million in budget funds (including ECU 15 million in 
risk capital) and ECU 168 million in the form of EIB loans. This represents 
a 27% increase on the third protocol. 
Some 75% of the ECU 101 million in budget funds administered by the 
Commission will go to the agricultural sector (mobilization of water 
resources, water and soil conservation, support for agricultural production 
and safeguarding rural employment). 
The industry and services sectors will receive 20% of these resources, with 
particular emphasis on vocational training projects. The balance of 5% will 
be used to finance studies and one-off measures. 
Of the ECU 15 million in risk capital administered by the EIB, ECU 7 million 
has been committed and ECU 1 million disbursed via the Banque de 
Développement Economique de Tunisie to continue the work of the previous 
protocol by boosting the equity of Tunisian businesses. 
During the programming of the fourth protocol, the Tunisian authorities 
asked the EIB to allocate its loans to rural development and water resource 
mobilization (45%), industry and tourism (40%) and the environment (15%). 
Tunisia was the first country to receive a Community contribution to its 
structural adjustment programme. The ECU 40 million allocated from the 
special envelope of ECU 300 million was fully disbursed by 31 December 1993. 
The counterpart funds are being used to finance integrated urban development 
programmes designed to soften the social impact of the adjustment process, 
notably through job creation schemes. 
At the end of 1993, 53% of the budget funds were committed, with 45% 
disbursed. The figures for EIB funds at the same date were 71% committed 
(divided equally between industry/tourism and the water sector) and 19% 
disbursed. 
4£ 
COOPERATION WITH ALL MEDITERRANEAN NON-MEMBER COUNTRIES3 
I. INTRODUCTION 
1. On 18 December 1990 the Council adopted a decision in principle on the 
Community's New Mediterranean Policy (NMP). Based on proposals put forward 
by the Commission on 1 June, the policy added new instruments to the 
Community's cooperation with the Mediterranean non-member countries, which 
had previously been limited to traditional and bilateral cooperation 
measures. 
2. The relevant regulation, Council Regulation (EEC) No 1763/92, was 
adopted on 29 June 1992. Article 3 lays down the priority areas for 
"horizontal cooperation" with all the countries concerned as follows : 
regional cooperation, environment, demographic matters, encouragement of 
investment and the cultural dimension of development. 
3. This is the main innovation of the NMP, the aim being to support measures 
benefiting the Mediterranean countries as a group. The importance attached 
by the Community to this aspect of our cooperation with the Mediterranean 
countries is underlined by the financial resources allocated to it. For the 
period 1992-96, the Council has earmarked ECU 230 million in budget funds 
and a further ECU 1 800 million in EIB funds.4 
II. IMPLEMENTATION 
Despite a slow start, a number of horizontal cooperation projects got off 
the ground in 1992; the following year some of these projects went into 
their second phases, and a number of new ones were launched. 
The Community has been careful to balance out its input between the 
different regions and countries. 
The principal innovation, at least in the Mediterranean basin, has been the 
increased emphasis on decentralized cooperation, which will be one of the 
main priorities targeted over the period ending in 1996. 
i. Budget funds 
The budget allocation (heading B7-4080) for 1992-93 was ECU 127.5 million in 
commitment appropriations and ECU 75.7 million in payment appropriations. By 
the end of 1993, ECU 110.93 million had been committed and ECU 41.76 million 
disbursed.5 
The delayed adoption of the implementing regulation on 29 June 1992 explains 
why only 55% of the payment appropriations envisaged has been disbursed. 
1.1. The projects, programmes and other measures financed by budget funds 
(see below for details) break down into the following sectors: 
Environment 27% 
3 i.e. the northern Mediterranean and SEM countries as a group. 
4 Including ECU 500 million for environmental projects, which will 
benefit from an interest rate subsidy of 3%. 
5 The initial allocation was reduced following transfers of funds to the 
Kurds and the Occupied Territories. 
'9 
Decentralized cooperation 43% 
Demography 9% 
Culture/communication 3% 
Risk capital (EIB managed) 8% 
Microprojects 10% 
100% 
1.2. Main projects financed by budget funds: 
1.2.1. In the environmental protection sector, the funds were used for 
interest rate subsidies on EIB loans. 
Funding was also provided for the following projects: 
IMPHOS (World Phosphate Rock Institute), research on the removal of 
cadmium from phosphates; 
training activities with the European Water Institute, with particular 
emphasis on the management of waste water disposal; 
sewer network for the municipality of Raafa (Gaza). 
In addition to these projects, financing was also provided for seminars and 
feasibility studies. 
1.2.2. In the decentralized cooperation sector, Community budget funds were 
used to finance the following projects: 
MED-CAMPUS, a programme to support cooperation between Mediterranean 
and Community universities; 
MED-INVEST, a programme to support Mediterranean SMEs in association 
with Community SMEs and professional bodies; 
MED-URBS, a programme to support cooperation between Mediterranean and 
Community local authorities; 
MED-MEDIA, a programme to support Mediterranean and Community media 
organizations ; 
MED-AVICENNE, a programme to support Mediterranean and Community 
research institutes; 
ICAMAS, a programme to support agricultural training and research 
institutions in the SEM countries. 
These decentralized cooperation programmes are designed to set up 
cooperation networks bringing together those responsible for social and 
economic development, with a view also to creating and consolidating links 
between the Community and the Mediterranean countries, and among the 
Mediterranean countries themselves. 
1.2.3. In the field of demography, a programme to create and improve family 
planning services and to carry out information and public awareness 
campaigns has been set up; it is being run by the NGO International Planned 
Parenthood Federation, working though family planning associations in the 
Mediterranean countries. 
1.2.4. On the cultural front, financial support is being given to the 
EURONEWS station, more specifically for its broadcasts in Arabic. 
1.2.5. The EIB allocated ECU 9 million in risk capital to finance part of 
European businesses1 participation in joint venture projects. These funds 
were channelled through the risk capital financial management bodies 
1% 
specified in the financial protocols. 
2. EIB funds 
At the end of December 1993, 18% of the total amount had been committed to 
four projects not covered by the protocols: 
an ECU 80 million loan to a telecommunications project in Morocco 
designed to develop the capacity of the international and national 
networks. Amongst other things, this project will help bring about a 
significant improvement in telecommunications links between Morocco and 
Europe. 
a loan of ECU 17 million (with a 3% interest rate subsidy) to the 
Tunisian "Office National d'Assainissement" (waste water disposal 
authority) to build, rehabilitate and extend treatment plants and sewer 
systems in three coastal towns. This investment will make a 
considerable contribution to improving the Mediterranean environment; 
the project will also channel much of the waste water into irrigation. 
a loan of ECU 200 million for the construction of the Algerian section 
of the Maghreb-Spain gas pipeline. This investment will finance the 
first section of a 1 870 km high-capacity natural gas pipeline linking 
Algeria's Hassi R'Mel gas fields to the distribution network in Spain 
and then other European countries via Morocco, the Straits of 
Gibraltar, Cordoba (Andalucia), Teruel (Aragon) and Castellôn 
(Valencia). This project is a key component of the energy objectives 
pursued by the Community and the Maghreb countries. A further loan of 
ECU 438 million has been authorized by the EIB Governors to finance the 
section between Morocco and Spain; 
a loan of ECU 20 million for a telecommunications project in Jordan, to 
renew and extend international links with neighbouring countries and 
Europe. 
The EIB has also approved an as yet unsigned loan of ECU 40 million for the 
construction of two effluent treatment plants and associated infrastructure 
in the Syrian coastal towns of Tartus and Latakia. 
A3 
CONCLUSION 
With the introduction of the New Mediterranean Policy and its innovative 
approach focusing on structural adjustment and cooperation with all the 
Mediterranean non-member countries as a group, the Community has plugged the 
cooperation gaps that had become apparent during the implementation of 
earlier financial protocols. 
However, cooperation with the southern and eastern Mediterranean countries 
is by no means restricted to this type of action. The Community budget is 
financing a whole host of projects in these countries covering sectors 
ranging from science and energy to NGOs, while the European Community 
Investment Partners (ECIP) programme is starting to establish a solid 
presence in the Mediterranean basin. 
Community financial support for the Occupied Territories and for refugees 
has been stepped up significantly over time, particularly in the wake of the 
headway made in the Middle East peace process, in which the Community has 
been playing a bigger role. 
£ C\ 
IIST ÔF ANNEXES 
1. FINANCIAL IMPLEMENTATION OF MEDITERRANEAN PROTOCOLS 
(NORTHERN MEDITERRANEAN) 
2. EINANŒALIWŒTJEMENTATrON OF MEDITERRANEAN PROTOCOLS 1-3 
(SOUTHERN AND EASTERN MEDITERRANEAN) 
3. FINANCIAL IMPLEMENTATION OF FOURTH MEDITERRANEAN 
PROTOCOLS (SOUTHERN AND EASTERN MEDITERRANEAN) 
4. COOPERATION COVERING ALL MEDITERRANEAN NON-MEMBER 
COUNTRIES 
A N N £ X 1 
FINANCIAL IMPLEMENTATION OF MEDITERRANEAN PROTOCOLS (NORTHERN MEDITERRANEAN) 
(ECU in) 
BUDGET 1 31.12.93 BUDGET 
TOTAL 'Cojmritment9 
vncatae-! % 1) Payments 
Value 1 *2> E..-I B 
TOTAL -gfVn *TOe Payments 
nrnr TOTAL PROTOCOL 
TOTAL vaiSr^fa-payments 
PRPTPOÇL.1, 
.TURKEY-
CYPRUS 
•MALTA 176 
10 
10 176 
10 
10 100% 
100% 
100% 176 
10 
10 100% 
100% 
100% 20 
16 20 
16 100% 
100% 20 
16 100% 
100% 17B 
30 
26 176 
30 
26 100% 
100% 
100% 175 
30! 
26 10QÎ 
100*, 
1009 
TOTAL 19B 196 100% 106 100% 36 30 100% 36 100% 231 231 100% 231 1009 
PROTOCOL % 
TURKEY 
CYPRUS 
MALTA 
TOTAL 195 
16 
13^6 
224,6 196 
10 
13,6 100% 
100% 
100% 
224,6 100% 196 
16 
8,0 'Jl 100% 
94% 
66% 26 
26 
16 
218,0 08% 80 26 
28 
16 100% 
100% 
100% 26 
28 
16 100% 
100% 
100% 
60 100% 89 100% 220 
44 
29x6 
283,6 220 
44 
29x6 
293,6 100% 
100% 
100% 
100% 220 
43 
24,8 
287,9 1005 
849 
985 
PflOTOOOl.3 
TURKEY 
CYPRUS 
MALTA 220 
18 
18 220 
7,7 
16 100% 
43% 
100% 220 
8,7 
3,1 100% 
87% 
21% 90 
44 
23 90 
16 
23 100% 
34% 
100% 90 
7,2 
10 100% 
48% 
43% 310 
62 
30 310 
22,7 
38 100% 
37% 
100% 310 
13,9 
13,1 100?-
815 
349 
ITOTAL 263 242,7 96% 229,8 96% 167 128 82% 107,21 84% 410 370,7 90% 337 819 
A HNEX ?_ II FINANCIAL IMPLEMENTATION OF MEDITERRANEAN PROTOCOLS 1-3 (S£M) 
DOC. 1W3 
1) Camritments/Total. 2) Payments/Commitments. Includes current commitments. 
ANNEX 3 
FINANCIAL IMPLEMENTATION OF FOURTH MEDITERRANEAN PROTOCOLS <-SEM) 
1. BILATERAL COMPONENT (1991-1998) 
BUDGET r 31/12/93 
EIB: 31/12/93 BUDGET 
TOTAL connu tments 
Value I % if Payments 
Value I %2)" EIB 
TOTAL Ccmml 
ValuT tments | Payments" 
%1) Value 2H TOTAL PROTOCOL 
TOTAL Cotrmi tments" 
Value ~%W Payments 
Value %2) 
MOROCCO 
ALGERIA 
TUNISIA 
MAGHREB 
EGYPT 
LEBANON 
JORDAN ' 
SYRIA 
. MASHREQ 
ISRAEL 216 
70 
116 
404 
258 
24 
46 
43 
371 25 
«16 
62 
133 
63 
17 
26 
106 11% 
66% 
53% 
33% 
24% 
71% 
57% 
29% 20 
15 
28 
63 
10 
10 60% 
33% 
45% 
47% 
30% 
9% 220 
200 
186 
668 
310 
45 
80 
115 
560 
62 110 
100 
120 
330 
47 
24 
71 
34 50% 
36% 
71% 
49% 
15% 
30% 
13% 
41% 23 
20 5% 
19% 
9% 
11 32% 438 
350 
284 
1072 
568 
69 
126 
156 
921 
B2 135 
146 
182 
463 
110 
17 
60 
177 
34 31% 
42% 
84% 
43% 
19% 
25% 
40% 
19% 
41% 28 
'16 
61 
92 19% 
10% 
28% 
20% 
20% 
6% 
TOTAL 776 239 31% 73 31% 13ÛO 435 33% 40 0% 2075 674 32% 102 16% 
1.1 Risk capital (included in bilateral component) 2. STRUCTURAL ADJUSTMENT 
BUDGET: 31/12/93 
EI8: 30/09/93 
MOROCCO 
ALGERIA 
TUNISIA 
MAGHREB 
EGYPT 
LEBANON 
JORDAN 
SYRIA 
MASHREQ 
TOTAL TOTAL 
25 
18 
16 
58 
16 
2 
2 
2 
22 
80 Commitments 
Value I mp 
47% 
12% 
9% Payments 
Value! %2) 
14% BUDGET: 31/12/93 
MOROCCO 
ALGERIA 
TUNISIA 
MAGHREB 
EGYPT 
LEBANON 
JORDAN 
SYRIA 
MASHREQ 
-Reserve 
TOTAL TOTAL 
60 
55 
40 
166 
40 
40 
105 
300 Commitments 
Value 
60 
65 
40 
166 
40 
40 
195 " %1) 
100% 
100% 
100% 
100% 
100% 
100% 
66% Payments 
Value 
30 
20 
40 
90 
40 
40 
130 %2) 
50% 
dQ% 
100% 
58% 
100% 
100% 
67% 
1) Commitments/Total 2) Payments/Conraitments. Includes current commitments. saworplcs and EIB (ECU million) 
Doc, 1993 
ANNEX4 ?H 
COOPERATION COVERING ALL MEDITERRANEAN NON-MEMBER 
COUNTRIES 
Implementation as at 31 December 1993 
(Budget funds) 
SECTOR OF Acnvrry COMMITMENTS (ECU tmOlonS 
1. Environment 
1.1. Interest iate subsidies (EEB loans) 13JJ9 
1.2. IMPHOS - cadmium removal (phosphate) 1.10 
1.3. BCW training 0.53 
1.4. Gaza - sanitation project 15.00 
Total 1 30.22 CTI<£\ 
2. Peccn*T»t™** ^ooptcaiioa 
2.1. CIHEAM 
2.2. MED-TJRBS 
2.3. MED-CAMPUS 
2.4. MED-INVEST 
2.5. MED-MEDIA 
2.6. MEDAVTCENNA 
Total 2 3.00 
13.42 
14.40 
10.00 
4.94 
1.43 
47J2(43%) 
ftftffonwT coopération 
3.1. Framework contract 
3.2. Population. 
3.3. EORONEWS 
3.4. Risk capital 
3.5. Micro projects (*) 
GRASP TOTAL Total 3 0.50 
10.50 
3.00 
9.00 
10.52 
3JL52(30%) 
113.93 (100%) 
(*\ MICRO PROJECTS 
SECTOR OF ACTIVITY 
Technical assistance 
Studies 
Trade promotion 
Training, seminars COMMITMENTS (ECU million) .& 
2.28 21.7 
3.56 33.8 
0.16 0L5 
432 43.0 
4/ 
KSN 0254-1475 
COM(94) 384 final 
DOCUMENTS 
EN il 10 
Catalogue number : CB-CO-94-480-EN-C 
ISBN 92-77-81362-8 
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