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COM (84) 696 
 
 
 
Vol. 1984/0254 
  
 
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Conformément au règlement (CEE, Euratom) n° 354/83 du Cons eil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans c e doss ier ont été déclass ifiés conformément à l'article 5 dudit 
règlement. 
In acc ordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the opening to the public of the historic al archives of the European Ec onomic  
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as  
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), t his file is open to the public. Where nec essary, c lassified documents in this  
file have been declassified in conformity with Artic le 5 of the aforementioned regulation.  
In Übereins timmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.  
Februa r 1983 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeins chaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. September 2003  
(ABI. L 243 v om 27.9.2003, S. 1), ist dies e Datei der Öffentlichk eit zugänglich. Soweit  
erforderlich, wurden die Verschlusss achen in dieser Datei in Übereinstimmung mit Artik el 5 
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COMMISSION  
OF THE
EUROPEAN COMMUNITIES
G e n e ra l S e c re ta ria tCOM(84) 696 final 
Brussels, 11 December 1984
FOR OFFICIAL USE ONLY
Proposal for a 
COUNCIL DECISION
authorizing the Commission to negotiate a new protocol on 
financial cooperation between Yugoslavia and the 
European Economic Community
(submitted to the Council by the Commission)
COM(84) 696 final

-  1 -
The first EEC-YugosLavia finacial protocol
1. The first financial protocol between the Community and Yugoslavia
was signed on 2 April 1980 and entered into force on 1 July that year to 
run for five years. It will thus expire on 30 June 1985.(1)
The Protocol accorded Yugoslavia a total of 200 m ECU in the 
form of EIB loans from the Bank's own resources.
2. The money was intended to finance projects of mutual interest;
loans have been approved for the following infrastructure schemes :
date of signing amount
a) modernisation of electricity grid December 1982 67m Ecu
b) construction of 35 km of road forming
part of the trans-Yugoslavia highway June 1983 66m Ecu
c) modernisation of railway January 1984 67m Ecu
200m Ecu
3. In June this year the EIB approved an exceptional 60m Ecu own-
resource loan to Yugoslavia outside the financial protocol, as a contribution 
to the financing of priority sections of the Trans-Yugoslavia highway and the 
Karawanken tunnel which links up with the Austrian Tauern motorway.
(1) 0J No L 41, 14.2.83., p. 37

-  2 -
The shape of the second financial protocol
A· At the second meeting of the EEC-Yugoslavia Cooperation Council
on 18 June this year, the Community delegation agreed in principle to 
negotiations for a new financial protocol, and the Cooperation Council 
adopted Decision No 2/84 calling on the contracting parties to open negotiations 
for a second protocol before the current one expires.
5. (  The Commission departments concerned have held exploratory talks
with the Yugoslav authorities to find out their desiderata. Not only does 
Yugoslavia want a larger sum overall, it appears that contrary to its wishes 
in 1980, when the first financial protocol was concluded, it now wants 
the Community to provide funds from its own budget as well as EIB loans at 
market rates. Yugoslavia says its present financial situation is such 
that it cannot increase its level of indebtedness by borrowing as planned 
at market rates. It also points out that the development of its infrastructure, 
particularly the trans-Yugoslavia highway, benefits the Community by providing 
easier links between Community regions. Yugoslavia therefore regards it 
as only fair that the Community should be actively involved in financing the 
projects.
«
The Yugoslav authorities would also like provision in the new 
protocol for the financing by means of unsubsidesed EIB loans of economic 
projects, since some of these projects would be designed to facilitate the 
return to Yugoslavia of migrant workers currently in the Community.
Lastly, Yugoslavia would like to see cooperation and technical 
assistance activities expanded and a specific amount set aside for this 
purpose under the new financial protocol.

- 3 -
■* »
6· The Commission, for its part, believes the new financial protocol
should both give practical effect to the Community's political commitment to 
Yugoslavia and help the country, as a number of Member States are doing, to 
improve its economic and financial situation.
Accordingly, the Commission considers that the new protocol should 
be structured in the same way as most of the other protocols with Mediter­
ranean countries, offering not merely EIB own-resource loans but money from 
the budget Jn the form of special loans and grants to be used for interest 
subsidies and cooperation activities.
The Commission would also point out that Yugoslavia's desire 
for support from budget funds is in accordance with the approach outlined 
in its proposals on the future Mediterranean policy of the enlarged 
Community CD.
7. Special loans and interest rate subsidies would not only relieve 'lUgoslavia's 
debt burden but enable the Community actively to back projects of mutual 
interest, particularly road and rais infrastructure projects, where the 
Community would benefit from greater ease of transit through Yugoslavia. :
CD COM (84) 107 and SEC (84) 1301, p. 15

- 4 -
8. Decision No 3/84 of the second EEC-Yugoslavia Cooperation Council
meeting stressed the need to encourage cooperation activities. So far,1the shortage of funds has prevented much work in this direction and it has 
been impossible to devise a preparatory programme of related technical 
assistance. The Commission consequently feels that the new financial 
protocol must provide for grants to fund cooperation and technical assistance 
operations.
%
9. The Commission also considers that the Community could agree to 
Yugoslavia's submitting projects offering a normal return as well as infra­
structure projects for financing under the protocol. The term "mutual interest" 
in Article 1 of the present protocol should cover the funding of projects 
conducive to the establishment of synergy between the economies of the parties. 
Natural ly, such projects would qualify only for unsubsidized EIB loans.
10. As regards the overall financial package, the Commission considers 
the amount on offer should be raised,: ifi-line with the increases applied in 
respect of the second generation of the existing Mediterranean financial 
protocols, and should also reflect the fact that soon after the entry into 
force of the new protocol, the Community wilt probably have twelve members.
(1) It must be borne in mind that the relevant budget heading (Item 990) also has 
to finance cooperation activities carried out with a number of other non- 
Community countries as well as Yugoslavia (Pakistan, India, Bangladesh, Sri 
Lanka, Mexico, Brazil, the Andean Group, Canada, Romania, China and Israel).

- 5 -
11. The Commission therefore proposes that Yugoslavia be offered a new 
financial protocol worth 480 mECU, broken down as follows :
400m ECU of EIB loans from the Bank's own resources; up to 25% of 
this amount could be used for projects offering a normal return; 
80m ECU in aid from the Community budget, which could be broken 
down as follows:
i) 20m ECU of special loans for infrastructure financing;
ii) 60m ECU of grants to be used for interest rate subsidies 
(about 55m ECU), cooperation and related preparatory tech­
nical assistance activities (about 5m ECU).

Proposal fo r  a Council D ecision  
a u th o rizin g  th e Commission to  n eg o tia te a new  
p rotocol on fin a n c ia l cooperation between Yugo­
s la v ia  and th e European Economic Community
TH E C O U N C IL  O F T H E E U R O PE A N  C O M M U N IT IE S,
Having regard to  th e Treaty e s ta b lish in g  the European Economic Community
Having regard to  th e proposal from th e Commission,
Whereas th e EEC-Yugoslavia fin a n c ia l p rotocol exp ires on 30
June 1985 and n eg o tia tio n s should commence fo r  the conclusion of  
a new p ro to co l,
H A S DECIDED AS F O L L O W S:
Sole Article
The Commission i s  hereby authorized to  n eg o tia te a new p rotocol  
on fin a n c ia l cooperation w ith Yugoslavia in  co n su ltation  with rep­
r e s e n ta tiv e s o f th e Member S ta tes and in  accordance w ith th e d ir e c tiv e s  
annexed h ereto.
Done at For the Council
The President

Annex
1 . The new protocol on fin a n c ia l cooperation w ill run u n til 30 June  
1990. It. will provide for ETB own-resource loans and appropriations  
from th e Community budget t o  th e value ofs
Budget EIB Total
8 C ta  E C U  400m E C U  480m  E C U
2. The appropriations from the Community budget -  20m E C U  in  the form of
loan s on sp e c ia l terms and 60m E C U  in  grant form -  will be 
used fo r  th e fo llo w in g  purposes:
( i ) sp e c ia l loan s: 40 year m a tu rities, 10-year grace period,  
in te r e s t ra te o f 1$;
( i i )  3^ in te r e s t ra te subsidy on the. share of EIB loans earmarked for 
infrastructure projects;
grants fo r cooperation a c t i v i t i e s  and rela te d  preparatory  
te c h n ic a l a ss ista n c e .
3. The te x t o f th e p rotocol w ill be based on th ose o f th e p ro to co ls  
with the other Mediterranean co u n tries.

FICHE FINANCIERE
Les présentes propo sitions prévoient l'o c tr o i à La Yougoslavie d'un 
concours fin a n c ie r quinquennal de la Communauté d'un montant de 480 m illio n s  
d'Ecus dans le"cadre-d'un second p rotocole fin a n c ie r CEE/Yougoslavie prenant ·  ·  
cours le 1er j u i l l e t  1985.
La ré p a rtitio n  de cette aide se présentera de la manière suivante :
-  400 m illio n s  d'Ecus sous forme de prêts de la BEI, accordés sur ses
ressources propres
-  80 m illio n s  d'Ecus sous forme de concours accordés sur le budget de la ,
Communauté#
L'échéancier des engagements et des paiements p o u rra it se présenter 
com m e s u it :
1986 1987 1988 1989 1990
engagements 
pa'i ements30 25 15 10
05 15 20 20 20
/