COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 18.07.1997 
COM(97) 371 final 
1 
•M: COMMISSION REPORT TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT ON COOPERATION WITH 
THE MEDITERRANEAN PARTNERS 
1995 

THE EURO-MEDITERRANEAN PARTNERSHIP 
1. 1995 marked a turning point in relations between the European Union and its 
Mediterranean partners . After a series of visits by the Troika for discussions with the 
Mediterranean partners, the Cannes European Council of 26-27 June 1995 reached 
agreement on the Union's position for the Euro-Mediterranean Conference and on the 
financial cooperation necessary to implement the Partnership. A figure of ECU 4 685 
million from the Community budget for the Union's financial cooperation with the 
partners for the period 1995-99 was agreed, to be supplemented by European 
Investment Bank assistance in the form of increased loans. 
Continuing its work on the basis of the Commission's communication of 19 October 
1994 : " Strengthening the Mediterranean Policy of the European Union : establishing 
a Euro-Mediterranean Partnership", the Union prepared intensively for the Barcelona' 
Euro-Mediterranean Conference. At the Conference the Euro-Mediterranean 
Partnership was established, comprising: 
- a multilateral process, implemented through the various actions envisaged in the 
Barcelona Work Programme 
- a bilateral process, implemented primarily through the Euro-Mediterranean 
Association Agreements under negotiation with the partners and bilateral 
financial assistance from the Union to each partner. 
The Barcelona Process 
2. The Barcelona Euro-Mediterranean Conference, chaired by the Spanish 
Presidency of the Council of the Union, took place on 27-28 November. It was 
attended by the Foreign Ministers of the 15 EU Member States and Commission Vice-
President Manuel Marin, together with the Foreign Ministers of the twelve non-EU 
Mediterranean partners. The President of the European Parliament also attended. 
The Conference reached agreement on a Barcelona Declaration and a Work 
Programme covering three main themes : 
a political and security partnership whose objective is to create an area of peace 
and stability in the region. 
an economic and financial partnership based on the gradual establishment of a 
free trade area, accompanied by substantially increased economic and financial 
cooperation from the Union to its partners. 
Algeria, Cyprus, Egypt, Israel, Jordan, Lebanon, Malta, Morocco, the Palestinian Authority, Syria, 
Tunisia and Turkey. 
COM(94)427 of 19.10.94. 
a social, cultural and human partnership designed to increase exchanges and 
mutual understanding, particularly through an increased involvement of civil 
society. 
3. Under the political and security partnership the participants agreed on a number of 
fundamental principles which they undertake to respect, and they set up a political 
dialogue at the level of senior officials. They agreed on the possibility of establishing 
a Euro-Mediterranean pact with a view to the creation of an area of peace and stability 
in the Mediterranean. 
4. Under the economic and financial partnership the participants set themselves the 
target date of 2010 for the gradual establishment of a free trade area to cover most 
trade in accordance with WTO obligations; they agreed on the priorities for economic 
cooperation in a large number of sectors; and they noted the substantially increased 
volume of financial assistance from the Union to its partners and the framework for its" 
delivery. In this context it should be noted that the Commission's communication of 8 
March 1995 "Strengthening the Mediterranean Policy of the European Union: 
proposals for implementing a Euro-Mediterranean Partnership"3 identified three 
priorities for action : 
- assistance with economic transition; 
- assistance with achieving a better socio-economic balance; 
- backing for regional integration. 
5. As far as the social, cultural and human partnership is concerned, the participants 
underlined the value of contacts and exchanges to promote mutual understanding and 
recognized the important role which can be played by civil society in this process. 
6. The Barcelona Conference set up a "Euro-Mediterranean Committee for the 
Barcelona Process" at senior official level, consisting of representatives of the EU 
Troika and of the twelve non-EU partners, to meet regularly to prepare the next 
meeting of Ministers of Foreign Affairs and to take stock of and evaluate the follow-
up to the Barcelona process. It was agreed that follow-up work for the various 
meetings would be done by Commission departments. 
3 COM(95)72 of 8.03.95. 
Euro-Mediterranean Association Agreements 
7. The agreements provide for political dialogue, progressive establishment of free 
trade and a number of accompanying economic provisions, wide economic, social and 
cultural cooperation, and the setting-up of institutions to manage the Associations. 
The Commission continued its negotiations with a number of partners and agreements 
were signed with Tunisia (July) and Israel (November), negotiations were concluded 
with Morocco (November). The Commission continued to press forward in the 
negotiating process with Egypt, Jordan and Lebanon and preparatory work was 
continued with the other partners. Negotiations for a customs union with Turkey were 
successfully concluded, while Cyprus and Malta remain covered by the pre-accession 
strategy. The process of establishing a Euro-Mediterranean Free Trade Area was thus 
significantly advanced in 1995. 
Financial cooperation 
8. The report that follows gives an overall assessment of the progress made 
during 1995 in the implementation of cooperation, and in particular of the fourth 
financial protocols established between the Community and the Mediterranean partners 
for the period 1992-96. Furthermore, it includes information on the lending activities 
of the European Investment Bank under the bilateral protocols and horizontally during 
1995. 
9. In 1995 the Commission made proposals for a new programme of cooperation, 
known as the MEDA programme, for the period after 1996. In order to set the 
objectives and rules of administration of this new programme the Commission made a 
proposal for a Regulation on 8 June 1995. As with the PHARE and TACIS 
programmes for Eastern Europe and the Commonwealth of Independent States, the 
proposed MEDA programme envisaged a wide range of areas of cooperation going 
beyond the scope of development cooperation. 
10. The Commission proposal aimed to build on the experience gained through 
implementation of four generations of financial protocols over the period 1978 - 1995. 
The protocols awarded a predetermined financial envelope to each beneficiary country 
for a five-year period. This provided a framework for programming but there was no 
incentive to efficiently implement the agreed programmes. Thus the Commission 
proposed that under MEDA a three-year rolling programming exercise should take 
place on the basis of indicative amounts . Financial allocations could then be modified 
taking into account absorptive capacity and other factors. 
11. In advance of the establishment of the full MEDA programme ECU 172 million 
was allocated to the MEDA budget heading in 1995 in order to deepen the "off-
protocol" cooperation with the Mediterranean partners in favour of decentralized and 
regional socio-economic cooperation. The specific objectives were to accompany 
economic reforms, support the development of civil society, cooperation in the 
framework of the Middle East Peace Process and the Euro-Arab dialogue as well as 
protection of the environment. 
</ 
I. BILATERAL COOPERATION4 
ALGERIA 
1. Political and economic developments 
A number of major political developments took place in 1995: efforts by the 
Communauté de St. Egide in particular, which organized the Rome Platform for the 
peaceful settlement of the conflict between the Islamic extremists and the authorities, 
came to naught while President Lamine Zeroual was elected in the first round of the 
November presidential elections with 61% of the votes on a turnout of 70%, despite a 
boycott by the main opposition parties and the threats of the Muslim extremists. 
Despite major strides towards macroeconomic stabilization the economic and social 
situation remained difficult. The Algerian economy's vulnerability to outside factors 
such as the slide in oil rJrices and the dollar contributed to a worsening external debt 
which stood at 32 billion dollars in 1995. As a result, Algeria's debt to the Clubs of 
Paris and London had to be rescheduled in 1994 and 1995 following approval of 
World Bank and IMF support programmes. The structural reforms affecting all 
sectors of the economy and designed to put in place a market-based economy were 
held back by the climate of violence prevailing in the country. 
The Commission conducted a third round of exploratory talks with the Algerian 
Government with a view to negotiating a Euro-Mediterranean Association 
Agreement and in December the Madrid European Council called on the 
Commission to table draft negotiating directives for the conclusion of such an 
agreement. 
Is Financial anfl technical cooperation 
ECU 269 million in budget funds has been earmarked for Algeria via the four 
financial protocols (1978-96) and horizontal cooperation under the New 
Mediterranean Policy. The rate of commitment at the end of the year had topped 80% 
(74% from the fourth protocol), with payments.rising to just 48%. All operations are 
lagging well behind mainly owing to a deterioration in the security situation, the 
departure of foreign technical assistance staff and the closure of the Commission's 
Delegation in Algiers. Just as other donors were doing, the Commission undertook a 
thoroughgoing review of the project portfolio in order to wind up or restructure many 
projects, chiefly those coming under the first and second protocols, thereby releasing 
ECU 16 million. There were no new commitments in 1995. 
Three third-protocol contracts were closed mainly owing to the fall in the value of the 
dinar. This entailed partial cancellation of the amounts earmarked, thus making 
ECU 66 million available for future operations. 
The fourth financial protocol with Turkey approved in 1980 remained on ice in 1995. 
•The overall amount of EIB own-resources loans earmarked for Algeria was ECU 640 
million. The EIB has not yet allocated the risk capital under the fourth protocol (ECU 
18 million) owing to the difficult situation prevailing in the country. 
The process of economic liberalization under way caused delays in the 
implementation of financial and technical cooperation as the main Community 
programmes, which had been drawn up when the State was still in control of the 
greater part of the modern economy (for example through import permits), needed to 
be adjusted and reoriented.1 Consequently, in 1995, implementation of the main 
programmes proceeded at a slower pace. 
CYPRUS 
1. Political and economic developments 
The structurée dialogue with Cyprus as part of the pre-accession strategy was put in 
place in accordance with the provisions adopted at the Association Council meeting of 
12 June, paving the way for meetings at the level of Heads of State at the Cannes and 
Madrid European Councils and at the level of Ministers of Foreign Affairs, Justice, 
Transport, the Environment, the Economy, Culture and other matters covered by 
.accession. 
On the political front, legislative elections resulted in victory for the right-wing DIS Y 
(35%), which kept its 20 seats in Congress out of a total of 56. The Communist 
AKEL gained ground with 33% of the votes and 19 seats. The ruling coalition 
remained in power, however, thanks to the 10 seats won by coalition partner DIKO. 
These elections are important in view of the presidential elections due to be held in 
1998. On the economic front, the reforms aimed at aligning the economy on that of 
the Community continued with a liberalization of foreign trade. 
2. Financial cooperation 
Budget funds from the first two protocols (ECU 26 million) were committed in full 
and disbursed to the tune of 96%. 
At the end of the year all the budget funds under the third protpcol (1991-95) had been 
committed (97%, of which 76% disbursed). Total budget funds stood at ECU 18 
million and new commitments at ECU 5 million. 
The fourth financial protocol (1996-99) was signed in October., 
Implementation of financial and technical cooperation continued satisfactorily. 
Certain improvements to administrative procedures agreed with the Cypriot 
authorities were introduced, helping to speed up project implementation. 
All EIB resources were committed (ECU 44 million) via credit lines for operations in 
the water supply and industrial sectors. Disbursements stood at 44% at the end of the 
year. 
EGYPT 
L Economic apd political developments 
The Egyptian government's policy through 1995 remained one of commitment to 
economic reform. For the first time since Egypt initiated its economic and structural 
adjustment programme, the GDP growth rate (2%) almost matched the population 
growth rate (2.1%). Moreover, Egypt became a full member of the World Trade 
Organisation (WTO) in June. , " 
On the political front, awareness of the need to respond to the evolving situation in the 
Mediterranean region and on the international scene at large, could be seen in the 
government's continuing close involvement in all aspects of the Middle East Peace 
Process. The Government continued to play a leading role in bringing the partners 
together, both in bilateral negotiations and in the multilateral working groups. 
It also played an active role in the Economic Summit that took place in Amman in 
early November, which resulted, among other achievements, in the establishment of a 
'Middle East and North African Regional Bank' to be based in Cairo. 
The preparatory work done between the EU and the Egyptian government in 1994 led 
to the formal opening of negotiations in Brussels in 1995 with a view to creating a 
new EU/Egypt Euro-Mediterranean Association Agreement. Four rounds of 
negotiations were held at roughly quarterly intervals through 1995. By the end of the 
year, the negotiations had succeeded in clearing much of the initial groundwork and 
identifying the main points of difference. 
The EU/Egypt Partnership has been referred to in Egypt as the single most significant 
strategic initiative the country has taken in the past decade. Besides its economic 
implications, and the wide range of social, cultural and scientific relations which the 
new Mediterranean Agreement will embody, the full political dimension of the 
Partnership is an important factor for Egypt. 
2. Financial and technical cooperation 
The EC is giving full support to. the Egyptian government's efforts in undertaking 
economic reforms and structural adjustments. A total of ECU 80 million (or 39%) of 
the fourth protocol funds have been committed for the following programmes: Public 
Enterprise Reform and Privatization Programme (ECU 43 million), Private Sector 
Development Programme (ECU 25 million) and the Banking Sector Reform 
Programme (ECU 11.7 million). 
Under the current fourth financial protocol, ECU 95 million has been allocated to the 
agricultural and related sectors: Nile Valley Regional Programme (ECU 5 million), 
the Veterinary Services Programme (ECU 20 million) and the Agricultural Sector 
Development Programme (ECU 75 million). In addition, EU Member States approved 
in November the financing of the Bustan Agriculture Development Project (ECU 15 
million). 
Concerning EIB lending activity, three operations were concluded totalling ECU 
296 million, of which 220 million was in support of an Egyptian-Israeli private joint 
venture in the oil refinery sector. Commitments under the fourth protocol (ECU 
310 million) reached almost 80 % at the end of the year with the majority being for 
industry and the balance for the energy and SME sectors. Commitment of the 
protocol's risk capital (ECU 16 million) amounted to 68 %. 
Outside the framework of financial protocols, the EC and Egypt have agreed to use-
the counterpart funds generated by thé 'Special Emergency Import Programme (Arab 
Gulf Crisis)' towards financing of support programmes for economic adjustment: the 
Social Fund for Development (LE 776 million) and the Private Sector Financial 
Scheme (LE 330 million). 
Food Aid Counterpart Fund (TACF): in 1995, 48 FACF projects were implemented, 
including a contribution to the local cost of eight protocol projects. The joint Egypt-
EC Steering Committee held three meetings in 1995 and approved twenty-four 
financing requests for a total amount of LE 39 885 899. 
There were substantial achievements within the cooperation programme with Egypt 
in 1995: credit lines for the agricultural sector are operating efficiently and are 
reaching almost all categories of farmers across Egypt. 
A number of other agricultural projects, the Helwan Waste Water Treatment Project 
(the cost of which reached ± ECU 100 million), the Natural Park sector projects in 
Sinai and the projects related to economic cooperation were completed on time with 
satisfactory impact. 
1995 saw the almost complete exhaustion of the fourth protocol funds and the 
beginning of the implementation of the MEDA budget heading with ECU 2.9 million 
being committed for environmental protection. In July, a programming mission took 
place to decide on the priorities for cooperation for 1996-1998. 
It is sometimes difficult to measure the real impact of the assistance. In the past, 
delays have been encountered in implementation. Implementing agencies have not 
always been committed and sometimes management weaknesses have hampered 
monitoring. It has also been difficult to identify new projects in traditional areas of 
operation. 
With the new challenges and opportunities brought by the MEDA programme there 
is certainly a need to improve further the implementation performance of EC-
financed assistance programmes in Egypt. The new agreement should aim to foster 
a more interactive form of cooperation, allowing the EC to provide support at a 
sector level, where there are clear policy reform tendencies. 
The USA and the Bretton Woods institutions provided substantial support in 1995 in 
the sectors of private sector development, education, health and professional training. 
These are widely perceived to be key areas for the future development of Egypt. 
JQJRPAN 
1. Economic and political developments: 
Jordan's commitment to the Peace Process was confirmed, after the signing on 26 
October 1994 of the Peace Treaty with Israel, as illustrated by the signing of various 
cooperation agreements with Israel (including trade and transport agreements). 
Jordan began negotiations for an Association Agreement with the EU in July 1995 
and has shown its commitment to fully participate in the Euro-Mediterranean 
Partnership initiated in Barcelona. 
On the economic front, in the wake of the Amman Economic Summit (October 1995), 
the first regional summit to discuss economic issues facing the region as a whole, 
Jordan launched a strong reform programme, aimed at opening and liberalizing the 
economy, through the removal of trade and foreign investment barriers. This 
programme aims to build on the progress achieved by the programmes negotiated 
with the Bretton Woods Institutions in 1989. 
2. Financial and technical cooperation: 
Structural adjustment support (cf. II. Structural Adjustment): 
Support for Jordan's macroeconomic policies remained the main priority, in line with 
fourth protocol provisions. An ECU 20 million grant was allocated as Structural 
Adjustment Support and disbursed in 1995. 
Private sector development complements the support to structural adjustment, and 
aims at contributing to the economic transition. Private sector development was 
promoted in a number of ways: establishment of a Euro-Info Centre, the European 
Community Investment Partners scheme (ECIP) and the preparation of a Med-. 
Partenariat meeting for the establishment of joint ventures. 
Support to the Peace Process (cf • III. Regional Co-operation): 
Jordan is one of the main beneficiaries of this support (ECU 11.3 million in 1995), 
which consists of large-scale studies on regional infrastructure projects. Most of these 
studies largely involve Jordan (Joint Israeli-Jordanian water projects, Transport study, 
Regional Development in the Gulf of Aqaba). 
The implementation of EC financial and technical cooperation appears overall to be 
largely satisfactory: 
* fourth protocol funds were 90% committed at the end of 1994, indicating that 
Jordan has a strong absorption capacity. 
* On Structural Adjustment Support, ECU 100 million (ECU 15 million out of the 
bilateral protocol and 85 out of the Special Facility for Structural Adjustment) were 
committed and disbursed in the years 1992 to 1995. This type of support has helped 
Jordan in meeting the targets of its structural adjustment programme implemented with 
the support of IMF and World Bank. 
-Some difficulties appear in the implementation of individual projects: 
* macroeconomic management in Jordan appears to be better than the management of 
sectoral policies by the public administration. 
* delays are frequent owing to the inefficiency and excessive centralization of the 
local administration and to complex EC procedures. 
As for EIB lending activity, commitments under the fourth protocol rose to some 90% 
at the end of 1995, with operations in favour of the water, transport, 
telecommunications and industrial sectors. New operations during 1995 amounted to 
ECU 38 million including ECU 13 million under horizontal operations in respect of 
water/waste water and transport sectors. 
1995 saw the transition from the fourth protocol funds to the start of the 
implementation of the MEDA budget heading. The first programme to be approved 
under that heading was, in September 1995, a Private Sector Development 
Programme (ECU 7 million). This programme consists of a Business Service Centre 
to be established in Amman whose main task will be to provide high-level services to 
local companies. In July 1995, a programming mission took place to decide on the 
priorities of cooperation for 1996-1998. 
The Bretton Woods institutions, Japan and the US provided substantial balance-of-
payment support in 1995, either through-loan operations or debt forgiveness (as in the 
case of US). 
Donor interest is high in the water sector, with the prospect of projects related to the 
Israeii-Jordanian Treaty. 
LEBANON 
L Political and economic developments 
Lebanon continued along the path towards domestic consolidation. Political 
continuity was provided by Prime Minister Hariri as the country asserted its 
independence. At the back of the queue in the peace process, Lebanon is seeking to 
10 
forge links that will help it assert itself, for example, its ties with the European Union 
with which negotiations on a Euro-Mediterranean association agreement were opened. 
At the March cooperation council the Lebanese authorities expressed a desire to open 
talks for a new agreement with the EU. Exploratory talks were held in April and an 
initial round of negotiations got under way in November. 
The economic recovery which started in 1991 is looking quite promising and the 
Lebanese pound has remained stable since 1993. The exchange rate was 1.610 
Lebanese pounds to the dollar at the end of 1995, while inflation stood at 13.5% (16% 
in 1994). 
The reconstruction programme is proceeding satisfactorily, with grants and outside 
loans standing at USD 1 500 million. But the country is falling into debt. External 
debt stood at 20% of GDP. Some headway has been made on administrative reform: 
State structures are being restored as are the law courts and legal bodies. They" 
remain, however, in a precarious state. 
2. Financial and technical cooperation 
The commitment rate for the fourth financial protocol from budget resources stood at 
. 79% in 1995 while the first three protocols were completely used up. 
Projects involving evaluation of damage and technical assistance for the 
reconstruction programme come to an end in 1995, among other things having helped 
with the National Reconstruction Programme in the main sectors. Other donors 
consider this project to be a guarantee of the effectiveness of their own aid. 
In 1995, the Commission and the Lebanese authorities identified the following key 
objectives of their cooperation: 
(a) strengthening administrative management of the State as part of the National, 
Administrative Reform Programme; 
(b) enhancing the regulatory framework of the private sector. 
Projects along these lines were prepared at the end of 1995 pending approval of the 
MEDA Regulation. 
The EIB undertook new loan operations of ECU 73 million in 1995, committing the 
full amount of the risk capital (ECU 3 million) under the third and fourth protocols, as 
well as largely committing the "Exceptional Assistance" facility (ECU 50 million) 
and the fourth protocol. Operations under the latter two facilities have been in favour 
of projects in the water/wastewater and transport sectors. A further EIB operation in 
favour of the Air Traffic sector (ECU 10 million) was also made under the horizontal 
operations. 
II 
in the operations under way the main difficulty lies with the administrative weakness 
of Lebanese structures. Future projects are designed to come to the aid of this 
administration. The rise in the public debt remains the major economic problem. 
Aid provided by other donors has been concentrated on the National Reconstruction 
Programme. At the end of 1995 outside financing stood at 2 729 million dollars. 
The European Union and its Member States were the main donor (40%, 1 094 million 
dollars), followed by the Arab funds (36%, 971 million dollars) and the World Bank 
(16%, 440 million dollars). 
The electricity sector received 967 million dollars in aid, the water sector 252 million 
and the airport 194 million dollars). 
MALTA 
1. Political and economic developments 
The structured dialogue with Malta as part of the pre-accession strategy got under way 
in accordance with the provisions adopted at the Association Council meeting of 
12 June. Meetings were subsequently held at the level of Heads of State at the Cannes 
European Council in June, and then at foreign minister level in November and 
transport minister level in December. 
Politics in Malta continues to be characterized by two fiercely partisan camps, on the 
one side a Nationalist party with a slender majority in favour of membership and a 
Labour party sceptical about membership and in favour of a free trade area with the 
EU, complemented by sectoral cooperation agreements. 
The Government's reforms aimed at aligning the country's economy on the 
Community's and at liberalizing foreign trade have continued. VAT was introduced. 
2. FINANCIAL COOPERATION 
The three financial protocols (1979-93) from which Malta has benefited are 
committed in full (ECU 93.5 million). Budget funds (ECU 38.5 million) have been 
disbursed up to 64% and EIB resources (ECU 55 million committed in full) to the 
tune of 92%. 
Budget funds were chiefly earmarked for infrastructure, training and the promotion of 
local economic activity, chiefly in the tourism sector. EIB own resources were set 
aside chiefly for infrastructure (40%), telecommunications (20%) and the environment 
and drinking water. 
The fourth financial protocol (1995-98) was signed in October. No commitment was 
made in 1995. 
12 
MOROCCO 
1. Political and economic developments 
There was no significant progress on the political front. The "transitional" centre-right 
government has been in power since March 1994. King Hassan II left the government 
in place but took a number of initiatives, among them a decision announced on the 
occasion of the "fourth anniversary of the Revolution, the King and the people" to 
hold a referendum on the Kingdom's constitution. Hassan also decided to make 
public a confidential report approved by five key ministers on the state of the 
Kingdom and the main objectives of the medium-term economic and social strategy 
1995 was the difficult year economically speaking. The agricultural sector was hit by 
a long period of drought leading to a 6.5% fall in GDP given agriculture's important 
role in the economy. Public finances continued to follow a negative trend with a 
deficit of 5.1% as expenditure outstripped revenue and a steep rise in debt 
expenditure. 
The external balances also deteriorated: there was an increase in the trade deficit and a 
fall in tourist revenues and remittances from Moroccan workers abroad. 
Relations between Morocco and the European Union saw the negotiation of new 
fisheries and association agreements. The Commission and the Moroccan 
Government initialled the texts on 15 November. 
2. Financial and technical cooperation 
At the end of the year the rate of commitment of the four protocols was 94% for 
grants and 100% for EIB loans. 
In 1995, three financing decisions were taken and charged to the fourth protocol. 
PROGRAMME I AMOUNT I DESCRIPTION 
(ECU million) 
Training in the priority 6 Project to enhance and bolster 
areas vocational training in tourism, 
textiles/leather and mechanical 
- engineering 
Drinking water in small 20 Continuation of programme to 
centres supply water and improve waste 
water treatment in rural areas 
Erosion protection works 5.5 Integrated rural development 
on Sidi-Driss programme to manage the Sidi-Driss 
catchment area 
Implementation of programmes went ahead at a satisfactory pace but the start-up of 
new projects encountered teething problems. This is reflected in the low rate of fourth 
protocol payments at the end of 1995, just 26%, owing to slow decision-making 
processes in the Moroccan administration, a problem shared by all donors. The 
situation got better towards the end of the year, however. 
13 
The first operation under the new MEDA budget heading was approved in 1995 for 
ECU 30 million with the aim of setting up a business advice and support centre (Euro-
Maroc Entreprise) and a management and coordination unit for schemes to support the 
private sector. These activities will be operational in 1996. 
The balance of fourth-protocol EIB own-resources loans was committed in full and 
the eventual breakdown of funds was in line with the initial indicative programming: 
41 % in economic infrastructure and 14% in the industrial sector. 
SYRIA 
Economic and political development 
Syria's political and economic system is highly centralized, regulated and controlled 
but since the mid-eighties, whilst maintaining the existing political structure, the 
Government has embarked on a tentative modernization and liberalization programme 
entailing development of the private sector, opening up certain economic activities to 
private investment, phasing out exchange controls and modest reform of the public 
sector. 
The reaction of the private sector has been encouraging and unused capital has been 
mobilized: the private sector now accounts for 60% of GDP, 62% of the country's 
exports and 25% of its imports. 
However, as Syria's economic plan is geared to stability, the Government is keeping a 
tight rein on economic management and the reforms adopted so far have been slow in 
coming. 
Syria participated actively in the Euro-Mediterranean Conference in Barcelona in 
November but took no definitive decision as to the possibility of negotiating an 
association agreement. 
Financial and technical cooperation 
Budget funds set aside under the first two protocols were committed in full. The third 
and fourth protocols (ECU 79 million), which had been frozen by the European 
Parliament and did not enter into force until January 1993 and April 1994 
respectively, have since then been 48% committed. 
1995 was mainly given over to implementation of projects financed under the third 
and fourth protocols and committed in 1994, namely : 
14 
- Development of the electricity sector ECU 11 million 
- Support for the banking sector ECU 4.5 million 
- Demography and family planning ECU 2 million 
Implementation of these projects has not so far posed major problems. 
In the course of 1995, ECU 9 million was committed to set up a business centre with 
the purpose of supplying services and advice to Syrian firms. 
Efforts were also made to identify, with the Syrian authorities, fields in which the 
Community could provide assistance over the period 1996-98, namely: 
- modernization of administrative structures; 
- follow-up support to businesses; 
- training. 
Studies were undertaken in these fields in order to prepare cooperation projects to be 
funded by MEDA. 
EIB own-resources loans from the first and second protocols (ECU 98 million) were 
committed in full. EIB loans under the third and fourth protocols (ECU 225 million) 
have yet to be used. They were chiefly intended to finance improvements to the 
power distribution, roads and rural telephone networks. EIB operations in Syria 
during 1995 remained suspended on account of arrears owed by Syria to certain 
Member States of the Bank. 
TUNISIA 
1. Political and economic developments 
Tunisia's political system is characterized by centralization of powers with the 
President. The transition to multiparty democracy and the protection of basic 
freedoms has slowed down in recent times. 
In 1986 Tunisia embarked on a major structural adjustment programme aimed at 
putting in place market mechanisms and creating a climate conducive to business. 
The results of the country's economic reforms in 1995 are satisfactory by and large. 
GDP swelled by 2.6 % and the budget deficit shrank from 5.4% in 1986 to 4.4% in 
1995. Inflation was kept in check. Exports of manufactures grew on average by 8.4% 
between 1987 and 1995. 
The reform of public enterprises continued while the pace of privatization sio wed-
In July, Tunisia signed a Euro-Mediterranean accord with the EU. 
15 
2. Financial and technical cooperation 
At the end of 1995 the rate of commitment for the four financial protocols was 96% 
for grants and 100%» for EIB loans. Including the operations listed below, the rate of 
commitment for the fourth financial protocol stood at 91%. Implementation of 
programmes financed through the financial protocols is satisfactory on the whole. 
The Commission approved the following programmes in 1995 for a total of ECU 53 
million in the form of grants and risk capital: 
PROGRAMME I AMOUNT I DESCRIPTION " 
(million ECU) 
Water and soil 20.00 The objective is to combat erosion by 
conservation measures. water and to manage the catchment areas 
Phase II through a participatory approach and to 
obtain water resources for domestic, 
agricultural and pastoral purposes. 
* Rural development in the 5.00 The project is designed to develop 
Sfax region agriculture by creating and strengthening 
cooperatives responsible for using 
infrastructure 
Risk capital 8.00 This operation, run by the EIB, targets 
Tunisian industry in its drive to 
recapitalize and create joint ventures. 
Structural adjustment 20.00 (see section on structural adjustment) 
The rural development sector received 64% of the Community funds and the results 
have been satisfactory. The programme to conserve water and soil (ECU 65 million) 
achieved its main objectives, namely to catch rainwater and strengthen the water table 
and, on the other hand, initiate agricultural development in these areas with the 
involvement of the farmers. These programmes will help improve living conditions in 
the countryside, check emigration to the coast and urban regions and create jobs. 
Major delays were experienced in implementing the programmes concerning the 
establishment of two vocational training centres and support for quality management, 
partly as the authorities concerned are not sufficiently cognizant with Community 
procedures and partly because their contract award procedures are so cumbersome. 
The situation improved towards the end of the year and these programmes should get 
off the ground without any hitch in 1996. 
The first operation, worth ECU 20 million, financed from the new MEDA budget 
heading was approved in setting up the "Euro-Tunisie Entreprise" programme. The 
project will provide a number of services to the private sector so that it can restructure, 
and become more competitive. The programme has fallen behind for administrative 
reasons but these problems will be ironed out in 1996. It is expected that the 
programme will start in mid-1996. 
The Bank's own resources (Fourth Protocol) were committed in full by the end of the 
year: 45% for industry (credit line, creation of industrial zones) and tourism (credit 
16 
line) and 55% for economic infrastructure (mobilization of water resources and means 
of communication). 
Risk capital was committed in full to strengthen the capital of Tunisian firms via local 
financial institutions. 
WEST BANK AND GAZA 
1. Economic and political developments 
Following the signature of the Israel-Palestinian Interim Agreement on 28 
September 1995, Israel redeployed its army from the main Palestinian towns in the 
West Bank (except Hebron), opening the way to the first-ever democratic 
presidential and legislative elections in the West Bank and Gaza Strip on 20 January 
1996. 
The Palestinian Authority now has jurisdiction over civilian government functions 
throughout the West Bank and Gaza Strip, although Israel still maintains a strong 
and highly visible security presence. The greatest danger to current arrangements, 
and to further progress in talks on what will be the permanent status of the West 
Bank and Gaza Strip, remains the continuing threat of terrorist attack on Israelis. 
In the relatively benign atmosphere leading to the end of 1995, economic activity 
showed signs of picking up, and a good revenue performance allowed the 
Palestinian Authority to rein in what had been predicted in April to be a serious 
budget deficit. By the end of the year, the Palestinian Authority had put together a 
list of "core investment projects", in effect its list of priority investments in public 
infrastructure. These were for presentation to the donors for funding according to 
pledges originally made in 1993, at the Ministerial Conference on Economic 
Assistance which was to take place on 9 January 1996. 
In the wake of the Barcelona Conference, the Commission sought to involve the 
Palestinians as full partners in the building of the Euro-Mediterranean Partnership. In 
October the Council requested the Commission to explore the conclusion of an 
agreement with the Palestinians in the interest of confirming the Palestinians as full 
participants in the Barcelona process. The Commission thus began a process of 
exploratory talks with the Palestinians. 
2. Donor activity 
Donors continued to carry out their own programmes, loosely coordinated with 
each other through the local aid coordination committees. The deflection of donor 
funds from reconstruction still dogged the donor effort; at the April 1995 meeting 
of the donors, a budget deficit of $136m was forecast by the end of the year. 
Donors agreed to meet this deficit according to the conditions of the Tripartite 
Action Plan. The TAP, signed by Israel, the Palestinian Authority and by Norway, 
representing the donors, in April 1995, obliged the Palestinian Authority to exercise 
17 
expenditure restraint, and Israel to facilitate normal flow of Palestinian trade and 
labour. 
By the end of the year, as the deficit position improved, attention turned once again 
to long-term development. The Palestinian Authority, working with the World 
Bank, prepared a list of priority investments, first introduced to the donors at the 
World Bank Consultative Group on the West Bank and Gaza Strip in October 1995, 
which were to be presented formally to the donors at the Ministerial Conference. 
Faced with a wide array of international donors, and a huge influx of donor funds, the 
Palestinian Authority seemed to have some difficulty in prioritizing and implementing 
a large number of infrastructure projects. Donors became increasingly frustrated at 
the seeming lack of a single locus of authority for the programming of donor funds. 
Meanwhile the administration continued to grow, and at the beginning of the year the 
budget deficit threatened to deflect attention away from the task of long-term-
development. 
These problems explain why the donors insisted on the signature of the Tripartite 
Action Plan in April 1995, and on a single interlocutor for the programming of 
assistance projects. By the end of the year, this approach seemed to be working; the 
deficit was under control, and the Palestinian Authority was due to present its priority 
funding needs to the donors at the major Ministerial Conference on Economic 
Assistance to the Palestinians, in Paris on 9 January 1996. 
The elections in the same month confirmed the beginning of a new stage in the 
development of the West Bank and Gaza Strip. Horrendous bomb attacks in 
Jerusalem and Tel Aviv just a few weeks after the elections were instead to provoke 
in 1996 the re-imposition of tight closure by Israel on the West Bank and Gaza 
Strip, the upsetting of the donor programmes of assistance, a major fall-off in 
economic growth and an upward trend once again in the Palestinian Authority 
budget deficit. 
3. Financial and technical cooperation 
During 1995 the Commission committed nearly ECU 100 million in development 
assistance for the West Bank and Gaza Strip, closely coordinated with the Palestinian 
Authority. Community assistance in 1995 amounted to around one third of all donor 
commitments in 1995, confirming the Community as the biggest single donor. 
Projects in 1995 included a major programme of investment in municipal 
infrastructure, with the emphasis on labour-intensive projects, the Gaza City solid 
waste programme, the completion of the European Gaza Hospital at Khan Younis, as 
well as, later in the year, a programme of support to the private sector. Meanwhile the 
Commission continued the implementation of other major projects, such as the ECU 
42 million programme of housing construction, the rehabilitation of UNRWA schools 
in the West Bank and Gaza Strip, and the reintegration of ex-prisoners into Palestinian 
society. 
IS 
However, the importance to the peace process of the Palestinian Authority taking over 
the administration of the West Bank and Gaza Strip from its inception in May 1995, 
meant that the donors were under some pressure to counter the immediate financing 
difficulties of the new administration. The member states advised that it would be 
appropriate that funding be accorded from the Community budget. Although vit 
prefers always to finance long-term infrastructure investment projects, in this case the 
Commission dedicated nearly 40% of 1995 Community assistance to the recurrent 
costs of the Palestinian Authority. This was a greater proportion than any other 
donor. 
Furthermore, none of the donors wished that dependence on external financing of the 
budget become chronic. The Commission was instrumental in pushing the idea of the 
Tripartite Action Plan to help control the deficit, and by the end of the year this tactic 
appeared to be working. The Commission equally began to press the_ Palestinian 
Authority to define a development strategy to provide direction to the donor activities.-
The European Investment Bank made its first loan to the West Bank and Gaza Strip, 
under the horizontal arrangements, committing ECU 26 million as credit to 
Palestinian enterprise through two local banks, although the political and economic 
conditions have militated against rapid utilization of theses lines of credit. 
The eighth EC-UNRWA (United Nations Relief and Works Agency for Palestine 
refugees) Convention, governing Community contributions to the Agency for the 
period 1993-96, came to a close. The Commission was mandated by the Council to 
commence the negotiation of a ninth convention. The EU remains the largest donor to 
UNRWA's recurrent budget, counting the contribution from the Community and the 
bilateral contributions of the Member States (the Community alone being the second 
largest donor after the US). The Community also committed funds in 1995 to the 
rehabilitation, under the auspices of UNRWA, of the water and waste networks in 
eight Palestinian refugee camps in Lebanon. 
At the same time the Commission continued throughout 1995 its programme for the 
technical preparation of elections, including, amongst other aspects, the drawing up of 
constituency and polling district boundaries, the preparation of registration, the 
training of registration and election officers. Working with the Palestinian 
Commission for Local Government and Elections, this work was indispensable to the 
holding of elections in January 1996. 
The electoral period began in November 1995, and by that time the European Union 
was mobilizing, with Commission logistical support, the first of 300 EU observers, 
whose presence would help lend international legitimacy to the election of the 
President of the Palestinian Authority and of the Palestinian Legislative Council. The 
Commission also put in place a team of administrators who not only directed the 
activities of these observers, but were also responsible, in the name of the EU, for the 
coordination of a further 300 international observers. 
19 
II. Structural adjustment 
The special ECU 300 million package to support economic reforms in the southern 
and eastern Mediterranean countries implementing a structural adjustment programme 
is an innovation of the fourth generation of financial protocols covering the period 
1992-96. 
A limited share of the funds allocated under the fourth protocol concluded with those 
countries may be added to the funds provided under the package. 
A new approach to support for structural adjustment was adopted in 1995. An 
ECU 20 million operation for Tunisia brings in for the first the time the new approach 
to structural adjustment recommended by the Council on 1 June 1995 (Resolution No 
7566/95) which involves direct aid for balance of payments instead of an imports 
programme, plus implementation of a coherent budget strategy (social) rather than 
precise targeting of counterpart funds. 
Funds were allocated to eligible countries on the basis of parameters measuring 
structural imbalance and long-term development needs. 
By the end of 1995, ECU 260 million out of a total ECU 300 million had been 
committed (see table below): 
EU SUPPORT FOR STRUCTURAL ADJUSTMENT 
COMMITMENTS AS AT END 1995 (in ECU million) 
ALGERIA 
MOROCCO 
TUNISIA 
JORDAN 
RESERVE 
TOTAL special package 
55 
60 
60 
85 
40 
300 financial protocol 
15 
20 
-
15 
50 TOTAL 
70 
80 
60 
100 
It would be premature to attempt an evaluation of the full effects of the programmes 
but it could be said that they have contributed to the implementation of the economic 
reforms, reduced the need for external funding and boosted expenditure on the most 
disadvantaged groups of the population. 
Algeria was granted a contribution of ECU 70 million to supportits reform 
programme in the low-cost, housing sector. Despite administrative hold-ups, 1995 
saw implementation of the first instalment of the sectoral imports programme and the 
beginning of the constitution of the corresponding counterpart funds. At the same 
time, an agreement in principle was reached on the budgetization of the counterpart 
funds and their use. 
20 
After a decision by the Council to support the macro-economic stabilization 
programme through a second macro-financial loan, the Commission disbursed the 
first instalment in 1995 (ECU 100 million). 
Morocco was granted ECU 80 million in Community aid for its structural adjustment 
programme. The results have been more than satisfactory both from the point of view 
of the economic reforms and in terms of budget support (loans made available from 
counterpart funds have been taken up and economic indicators in the target sectors 
have shown sustained growth for the period concerned). 
Tunisia was the first country to receive Community aid for its structural adjustment 
programme (ECU 40 million). The counterpart funds financed job creation schemes, 
which thanks to Community support have been kept going. Economic reforms have 
been implemented according to plan and social indicators have improved. In 
mid-1995 a new adjustment operation worth ECU 20 million was approvedr 
Community aid is supporting a reform programme and will contribute to reducing 
Tunisia's external funding needs, controlling its budget deficit and maintaining the 
appreciable level of social spending. 
In 1995, Jordan received ECU 20 million in support on top of the ECU 50 million in 
1992-93 and ECU 30 million in 1994, bringing the total to ECU 100 million for 
1992-95. This programme follows on from previous ones and has helped significantly 
towards satisfactory implementation of the structural adjustment programme in 
collaboration with the IMF and the World Bank. 
21 
III. REGIONAL COOPERATION 
The Commission approved resources of ECU 11.3 million for a range of Middle East 
Peace Projects designed to initiate and support regional cooperation. These.projects 
cover a wide range of topics:-
• Water Projects arising out of the Israel/Jordan Peace Treaty 
• Regional Development Projects 
Gulf of Aqaba 
South Eastern Mediterranean 
• Transport Infrastructure 
• Interconnection of Electricity Grids 
• Water Data Bank 
• Regional Veterinary Cooperation 
• REDWG Monitoring Committee Secretariat 
Project Steering Committees, comprised of representatives of the Egyptian, Israeli, 
Jordanian and Palestinian administrations, and chaired by the Commission at the 
request of the regional parties, have been set up and cooperative working relationships 
between the members have been established. The opportunity to jointly tackle 
problems of common concern and to set up cross-border initiatives leading to a more 
secure future has been welcomed. The REDWG Secretariat has been formally opened 
in Amman and is functioning efficiently. 
Part of the funds committed under the 1995 budget have been used for preparatory 
work with the regional authorities in drafting and agreeing terms of reference for 
feasibility and other studies, for concept papers, and for expenses related to meetings 
of the Steering Committees. The bulk of the funds have been utilized to finance 
contracts with European consulting consortia to perform the techno-economic 
feasibility studies for the various projects. The results of these feasibility studies will 
be available during 1997. A Technical Support Unit has been set up to provide locally 
resident project managers who, within the framework of regional development, will 
identify, detail, promote and supervise the implementation of the different studies, 
projects and programmes for the Gulf of Aqaba and the South Eastern Mediterranean 
regional development projects. 
Work has also been initiated with the regional transport authorities on the process to 
define and agree upon a series of trans-national transport corridors through the region. 
Corridor Standing Committees have been set up and held their first meetings in 
Amman in June 1996. The Regional. Animal Health Programme has been established 
and technical assistance had been provided to the Palestiman Authorities to assist in 
building a functioning veterinary service. 
22 
Demography 
The Commission continued to manage 41 population programmes in the 
Mediterranean, allocating a total of ECU 49 million. Demography Programmes for 
the Mediterranean mainly concentrated on West Bank and Gaza Strip and Turkey (see 
budgetary table in part IV). 
A three-year ECU 4.26 million agreement was signed with the Palestinian Ministry 
of Health for a National Programme for Women, Health and Family Planning in Gaza 
and the West Bank. An additional ECU 360 000 was allocated for technical 
assistance to the programme, provided by the British NGO Population Initiatives for 
Peace. 
In Turkey, the Family Planning Association together with Pathfinder International, 
commenced a three-year Family Health and Family Planning, Education, Information, 
Training and Services Programme in Diyarbakir. Total amount of the project was 
ECU 482 357. 
In the course of 1995, the Commission tabled a proposal for a Council Resolution on 
support for demographic policies and programmes in developing countries, as a legal 
basis for the corresponding, special budget heading B7- 631, specifically targeting the 
follow-up to the ICPD Programme of Action. 
The 1995 budget heading B7-5050 evaluation highlighted the constraints the 
European Commission had in efficiently developing and managing population 
programmes in the Mediterranean. One of the reasons was the lack of a clear policy. 
During 1995 internal coordination began on the development of a population policy 
for the European Commission; this work will continue in the context of MEDA in 
1996. 
Migration 
Projects under heading B7-5055 "Observatory for migratory flows and positive action 
concerning migration" (total ECU 3 million) were allocated as follows: 
ECU 1 million was used by the Secretariat-General (Justice and Internal Affairs Task 
Force) in the framework of the "Observatory for Migration Flows". 
ECU 1.85 million was earmarked for 10 projects of which the different themes are: 
integration of women and youth, creation of enterprises, human resource 
management, economic development, local democracy, and health. The total budget 
for these projects is ECU 1.9 million. 
The remaining ECU 150 000 was used for small schemes such as a feasibility study 
on the role of women in migration. 
23 
Communication 
The Commission has tried to develop a communication programme which entails 
dialogue with the relevant partners and has fostered activities which reflect this 
approach. The budget for 1995 was around ECU 500 000 and has allowed the 
following activities to be undertaken: 
1. Promotion of EU policies towards the Mediterranean Partners 
* 
a) Provision of press releases whenever required and ' forwarding to the 
Spokesman's Service where they are published and distributed to the 
accredited press in Brussels. 
b) In coordination with the Spokesman's Service, organisation of technical 
briefings for accredited journalists in Brussels on special MNC events. 
c) On request, provision of articles concerning relations between the EU and the 
MNC and the Middle East 
d) coordination of a number of publications : 
Brochures: The MED-Programmes Handbook, Upper Golf and Aqaba Oil 
Spill Contingency Project, The Barcelona Declaration . All brochures have 
been published in English, French and Arabic. 
2. Support of the MNC delegations' activities 
a) Preparation of newsletter material: provision of articles and background 
material on EU-MNC events to supplement material on general EU subjects. 
b) Constant contact with delegations: link between the delegations, facilitation 
of the exchange of information and reply to all kind of queries (video 
material, photographs, background information, etc.). 
c) Organization of Information Officers' meetings: The objective of these 
meetings was to establish an overview of the delegations' information 
activities, as well as to discuss ways of improving cooperation between the 
delegations and Brussels and between delegations themselves. 
3. Organization of information visits (content and logistics^ 
Visit of young diplomats from Mediterranean partners, September 1995 
Maghreb journalists'visit, OctoberT 995 
Syrian journalists' visit, December 1995 
These visits have been aimed at exposing the different interest groups of the 
region to the EU and its institutions with a special focus on the EU's relations 
with the relevant countries. Generally a one-week programme was organized 
including subjects which were requested by the visitors. 
b) Contract between DGIB and International radio and TV stations: 
24 
AITV - Agence Internationale d'Images: National TV stations of the 
following countries subscribe to this French TV agency : Saudi Arabia, 
Egypt, The United Arab Emirates, Jordan, Morocco, Oman, Qatar, Syria, 
Tunisia, Yemen, Djibouti, Israel, Mauritania, Iran and Algeria. In 1995 they 
produced news flashes, dossiers of 4 - 5 minutes and magazines of 12 
minutes. The programmes cover subjects of Euro-Arab interest and are 
chosen in close cooperation with AITV's local correspondent in Brussels. 
Conclusion: 
In the future it may be useful to consider how to ensure that the above activities fall 
within a coherent and comprehensive framework thus facilitating" management of the 
activities whilst increasing the variety and impact. For example, more specialized 
publications, aimed at informing the Mediterranean Partners about EU activities in the 
region, the reinforcement of the Euro-Mediterranean Partnership and the follow up of 
the Barcelona Conference, should be produced. These should be published in Arabic, 
French and English. 
Culture 
The importance of the cultural and information dimension of Community action vis-à-
vis its Mediterranean partners is npw widely recognized. One of the Commission's 
fields of action in the Mediterranean is the common cultural programme of the EU's 
delegations in the Mediterranean partner countries. 
The Commission extended the scope of already existing events with joint action 
involving the Member States, adding in 1995 the new dimension of joint action with 
the partners aimed at highlighting Europe's cultural diversity and the contribution of 
the Mediterranean partners' culture to European culture. 
In 1995 two types of cultural activity were pursued to the tune of ECU 400 000: 
1. activities with a potentially "regional" character: the tour of thé European Chamber 
Music Orchestra (ECCO), the tour of the European Baroque Music Orchestra, the Jazz 
Caravan (itinerant Jazz Festival) and the European Film Festival, etc.; 
2. activities of a "local nature": Archaeology Festival in Damascus, European Cultural 
Fortnight in Morocco (Views on Europe), etc. 
Another field of action is support for the production and dissemination of cultural 
products, covering books, the cinema, music, translation,, cultural festivals (Festival of 
Israeli and Palestinian Culture in Brussels), archaeology. 
Decentralized Cooperation 
Decentralised cooperation aims to increase mutual understanding between the Union 
and its Mediterranean Partners and to promote the role of civil societies. The need for 
25 
this type of cooperation with the Mediterranean Partners was made very clear at the 
Barcelona Euro-Mediterranean Conference in November 1995 where decentralized 
cooperation was given the full support of Foreign Ministers of both the EU and the 
non-EU Mediterranean Partners. 
Decentralized cooperation played an important role in the Commission's activities in 
1995 through Med Urbs (ECU 9 million), Med Media (ECU 7 million), Med Campus 
(ECU 9 million), Med Invest (no new commitments), Med Migration (ECU 2 million) 
and Med Avicenne (no new commitments). 
Some 200 projects were cofinanced by the Commission through the Med programmes 
in 1995 and a call for proposals for projects for the years 96/97 was published in mid-
1995. 
Following evaluations carried out by outside experts in 1994 and needs assessment-
seminars held together with the participants in the Med programmes in 1995 some 
changes were introduced to the different programmes to reflect the needs of the 
Mediterranean Partners more closely and take into account certain lessons learned 
during the first two years of the programmes: 
• projects previously financed on a yearly basis have been.converted into multi-
annual projects to increase efficiency; s 
• a limitation in the number of themes and network partners has been introduced; 
• the application procedures have been changed in order to allow a better selection 
system; 
• more emphasis has been put on concrete results and outputs of the projects. 
In October 1995 the Court of Auditors gave the Commission advance warning of a 
report it was conducting on the operation of the programmes and which had 
uncovered serious deficiencies in their management system and the delegation of 
responsibilities to external organisations. In the light of this warning the Commission 
called a halt to the operation of the programmes at the end of 1995 in order to devise a 
new management system to take account of the deficiencies uncovered by the report 
and to take action against any body responsible for irregularities. At the same time the 
Commission made clear that this in no way called into question the value of 
decentralized cooperation as a means of supporting civil society in the Mediterranean 
partners and the Commission's wish to pursue such activities subject to putting in 
place the necessary precautionary mechanisms. 
26 
IV. FINANCIAL OVERVIEW 
PROGRAMME: Partnership with the Mediterranean countries. 
MEDA BUDGET HEADING (B7 410) 
ECU thousand 
Commitments 
Payments 1994 
Budget 
65 850 
52 200 Execution 
% 
98.4 
61.5 1995 
Initial 
budget 
162 900 
85 000 Actual 
budget 
172 900 
91000 .-% 
99.8 
54.4 Carryover 
to1996 
N.B. This chapter incorporates former items B7-4080 (multi-regional cooperation), 
B7-4081 (Euro-Arab regional cooperation) and B7-4082 (job creation in the 
Maghreb). 
135 projects and operations were implemented, of which 20 were for an amount in 
excess of ECU 1 million. 
Those 20 projects break down as follows (commitments made in 1995, in million 
ecus): 
Support for economic reforms 
Development of the private sector in Morocco 
Development of the private sector in Occupied Territories 
Support centre for Tunisian firms 
Global EIB loan for investment 
in SMEs in Occupied Territories . 
Programme to develop 
Jordanian private sector ECU million 
30.0 
3.0 
20.0 
6.Q 
7.0 
27 
Support for development of civil society 
MED Techno 
MED Urbs 
MED Media 
MED Campus 
Programme to develop 
communities in Occupied Territories 
Regional cooperation 7.0 
12.0 
8.0 
10.0 
5.0 
Middle East peace process 
University of Peace in the Middle East 
Agricultural training programme in 
Mediterranean partner countries 
Environmental protection 
Interest rate subsidies for environment projects 
in Israel 
in Turkey 
in Jordan 
Water project in Limassol, Cyprus 
Technical assistance in Aegean (Turkey) 
Strengthening FODEP pollution fund 
in Tunisia 
Upper Gulf of Aqaba Oil 
spill contingency project, 
Egypt 
TOTAL 11.3 
1.2 
2.0 
2.4 
8.2 
9.5 
3.1 
2.0 
8.3 
3.0 
2.9 
161.9 
28 
PROGRAMME : Support for peace process (West Bank / Gaza) 
BUDGET HEADINGS : B7 711 
thousand ECU 
« 1 
Commitments 
Payments 1994 
Budget 
60 000 
45 000 Execution 
% 
97.7 
98.7 1995 
Initial 
budget 
52 000 
30 000 Actual 
budget 
68 400 
85 000 Execution 
% 
100 
"63 Carryover 
to 1996. 
-
The table below summarizes commitments made during the course of 1995 on the 
budget heading in question: 
Project 1995 
commitments 
Universities and community colleges - recurrent costs 15 
Primary and secondary schools - recurrent costs 10 
Support for the 1996 central budget of the PA 15 
Gaza City solid waste programme - completion 5 
institutional support programme 2.5 
Municipal support programme 10 
Completion of the construction of the Khan Younis hospital 7.5 
Preparation of elections • 2 
TOTAL . 67 
29 
PROGRAMME OR ACTION : Economie cooperation with Mediterranean countries 
BUDGET HEADINGS : B7 4050, B7 4051, B7 406, B7 407 
V 
thousand ECU 
Commitments 
Payments 1994 
Budget 
299 000 
254 000 Execution 
% 
99.9 
83.7 1995 
Initial 
budget 
305 000 
305 000 Actual 
budget 
299 500 
193 000 Execution 
% 
99.7 
86.3 Carryover 
to 1996 
-
The attached tables give an overview of the implementation of the four financial 
protocols covering the period 1978 - 91. Note that 69% of third protocol funds 
committed 21% of fourth protocol funds have been paid. 
III. Operations carried out and utilization of budget allocations 
Item B7-4050: first and second protocols with southern and eastern Mediterranean 
One project in excess of ECU 1 million was committed: 
4.9 Programme to develop the agricultural 
sector in Egypt: 
Item B7-4051 : third and fourth financial protocols with the southern and eastern 
Mediterranean countries 
In 1995, 63 projects or measures were approved, of which 23 for an amount in excess 
of ECU 1 million. 
30 
The 23 projects break down as follows (1995 commitments in ECU million): 
Project 
Morocco 
Erosion protection works on the Sidi Driss 
Drinking water supply and 
waste water 
Support for training in priority sectors 
Support for maternal and 
neonatal health 5.5 
20.0 
6.0 
9.0 
Tunisia 
Conservation of water and soil 20.0 
Development of dams 3.0 
and irrigation system 
Rural development in Sfax region 5.0 
Programme of support for structural adjustment 20.0 
Egypt 
Interest rate subsidy for an environment project 5.0 
for the Alexandra National Iron and Steel Company 
Population programme in Upper Egypt 10.0 
Gulf of Aqaba protection development 
project 
Helwan waste water project 
MISR compressor factory 
risk capital operation 
Agricultural sector development 
programme 10.0 
3.0 
6.0 
70.0 
31 
I Lebanon 
Global loan Lebanon invest 1.0 
Global loan capital risk Lebanon Invest 2.0 
Syria 
PEE Transfer of interest rate subsidy 6.0 
Population programme 2.0 
PEE Transfer of interest rate subsidy 7.0 
Euphrates irrigation 2.0 
Programme to develop private sector 9.0 
Jordan 
JEPCO IV interest rate subsidy 3.0 
Structural adjustment support programme 20.0 
TOTAL 240.0 
Projects costing less than ECU 1 million targeted programmes to develop urban 
communities, tourism, rehabilitation of public administration and studies to prepare 
programmes to develop the private sector. 
Article B7-406: support for the Kurds in Iraq 
A project worth ECU 1 million was committed. 
Support for the UNCF 1.0 
Article B7- 407: Support for UNRWA 
Social welfare programmes for Palestinian 32.0 
refugees 
32 
Funds actually available under chapter B7-40 for 1995 and administered by DG IB 
were implemented: 
99.7% for commitment appropriations 
86.7% for payment appropriations 
33 
Annex 1 List of 1995 demography projects in the Mediterranean 
1. 
2. 
3. 
4. 
5. 
6. 
7. 
8. 
9. 
10. 
11. 
12. Recipient body 
Palestinian Ministry of Health 
Population Initiatives for 
Peace (P1FP) 
PIFP - Johns 
Hopkins University 
FPA Turkey/ 
Pathfinder International 
Turkish Family Health and 
Planning Association 
Population Initiatives for 
Peace (PIFP) 
World Population Foundation 
IIASA 
Centro de Investigaciones y 
Promociôn 
Iberoamérica-Europa (CIPIE) 
Femconsult 
Euro Health Group 
Marie Stopes International 
(MSI) 
GRAND TOTAL Amount 
ECU 
4 260 000 
360 000 
50 000 
500 000 
43 452 
51 700 
37 152 
50 000 
28 356 
66 224 
66 000 
165 310 
5 678 194 Project 
National Programme for 
Women, Health and 
Family Planning in Gaza 
and the West Bank 
Technical Assistance to 
Programme Palestinian 
Ministry of Health 
Video film : "Arab 
women speak out" Gaza, 
West Bank 
Family Health & Family 
Planning, Education, 
Information, Training 
and Services, Diyarbakir 
Conference on "Family 
Planning & Family 
Health in Islam" 
Needs assessment 
mission for IEC 
programme 
Feasibility mission, 
birth spacing 
programme 
Workshop/study: future 
demographic trends, 
countries of N. Africa 
Preventive health 
programme and 
assistance for women, 
Tendrara 
Evaluation of budget 
heading B7-5050 
Evaluation of IPPF Arab 
Region Programme 
European Parliament 
Forum Country 
Palestine 
Palestine 
Palestine 
Turkey 
Turkey 
Yemen 
Jordan 
N Africa 
Morocco 
General 
General 
General 
34 
BALANCE OF THE SEM FINANCIAL PROTOCOLS(2) 
MOROCCO 
ALGERIA (1) 
TUNISIA 
EOYPT 
LEPANON 
JORDAN 
SYRIA 
STRUCT. ADJ. 
TOTAL P1 
0 
7 
0 
0 
0 
0 
0 
7 P2 
1 
12 
0 
3 
0 
0 
0 
16 P3 
1 
0 
2 
1 
0 
0 
4 
8 P4 
28 
24 
8 
16 
5 
3 
29 
113 S.A. 
40 
40 BALANCE 
30 
43 
10 
20 
5 
3 
33 
40 
184 BREAKDOWN OF BALANCE 
PROJECT I.S. (3) R.C. (4) 
25 
25 
10 
7 
5 
1 
40 
113 9 
2 
29 
40 ' 5 
I8 
4 
4 
31 
(1) Breakdown of balance (subject to modification) (see special loans first and second protocols) 
(2) Balance of SEM commitments including structural adjustment 
(3) Interest rate subsidy 
(4) Risk capital 
LA) 
FINANCIAL IMPLEMENTATION OF FOURTH SEM PROTOCOLS 
| 
1. BILATERAL COMPONENT 
| 
BUDGET: 31/12/95 
EIB :31/12/95 
MOROCO 
ALGERIA 
TUNISIA 
MAGHREf 
EGYPT 
LEBANON 
JORDAN 
SYRIA 
MASMREC 
ISRAEL 
TOTAL TOTAL 
218 
70 
116 
404 
258 
24 
46 
43 
371 
775 BUDGET 
Commitments 
Amount 
190 
47 
108 
345 
242 
19 
43 
18 
322 
667 %1) 
0,87156 
0,671429 
0,931034 
0,85396 
0,937984 
0,791667 
0,934783 
0,418805 
0,867925 
0,860645 
1.1. Risk capital (incl. in bilateral component 
| 
BUDGET: 31/12/95 
EIB 31/12 
MOROCC 
ALGERIA 
TUNISIA 
MAGHREE 
EGYPT 
LEBANON 
JORDAN 
SYRIA 
MASHREC 
TOTAL TOTAL 
25 
18 
15 
58 
16 
2 
2 
2 
22 
80 ' I 
Commitments 
Amount 
20 
0 
15 
35 
12 
2 
2 
16 
51 
-%1) 
0,8 
0 
1 
0,603448 
0,75 
1 
1 
0 
0,727273 
0,6375 Payments 
Amount 
50 
16 
48 
114 
8 
4 
18 
0 
30 
144 %2) 
0,263158 
0,340426 
0,444444 
0,330435 
0,033058 
0,210526 
0,418605 
0,093168 
i 
0,215892 
Payments 
Amount 
5 
0 
3 
8 
1 
1 
9 
1 ) Commitments 2) Payments / Commitments %2) 
0,25 
0,2 
0,228571 
0 
0,5 
0,0625 
0,176471 (1991-1996) 
TOTAL 
220 
280 
168 
668 
310 
45 
80 
115 
550 
82 
1300 EIB 
Commitments 
Amount 
220 
180 
168 
568 
242 
29 
71 
0 
342 
82 
992 %1) 
1 
0,642857 
1 
0,850299 
0,780645 
0,644444 
0,8875 
0 
0,621818 
1 
0,763077 Payments 
Amount 
41 
24 
49 
114 
42 
15 
57 
30 
201 %2) 
0,186364 
0,133333 
0,291667 
0,200704 
0,173554 
0,211268 
0,166667 
0,365854 
0,202621 TOTAL PROTOCOL 
TOTAL 
438 
350 
264 
1072 
568 
69 
126 
158 
921 
82 
2075 Commitments 
Amount 
410 
227 
276 
913 
484 
48 
114 
18 
664 
82 
1659 
2nd COMPONENT. STRUCTURAL ADJUSTMENT 
I ' 
BUDGET : 31/12/95 
MOROCCO 
ALGERIA 
TUNISIA 
MAGHREB 
EGYPT l 
LEBANON 
JORDAN 
SYRIA 
MASHREQ 
TOTAL TOTAL 
60 
95 
60 
215 
0 
85 
85 
300 %1) 
0,936073 
0,648571 
0,971831 
0,851679 
0,852113 
0,695652 
0,904762 
0,113924 
0,720955 
1 
0,799518 
Commitments 
Amount 
60 
55 
60 
175 
85 
85 
260 %1) 
1 
0,578947 
1 
0,813953 
1 
1 
0,866667 Payments 
Amount 
91 
40 
97 
228 
50 
4 
33 
0 
87 
30 
345 %2) 
0,221951 
0,176211 
0,351449 
0,249726 
0,103306 
0,083333 
0,289474 
0,131024 
0,365854 
0,207957 
Payments 
Amount 
60 
20 
40 
120 
65 
65 
185 %2) 
1 
0,363636 
0,666667 
0,685714 
0,764706 
0,764706 
0,711538 
Sources: F01,Pics, Olas and EIB 
(ECU million) 
FINANCIAL IMPLEMENTATION OF THE FIRST THREE SEM PROTOCOLS 
BUDGEV- 31/12/95 
EIB 
TOTAL BUDGET 
Commitments 
Amount 
PROTOCOL 1/1978-1981 
MOROCCC 
ALGERIA 
TUNISIA 
MAGHREB 
EGYPT 
LEBANON 
JORDAN 
SYRIA 
MASHREQ 
ISRAEL 
TOTAL 74 
44 
54 
172 
77 
10 
22 
26 
135 
X7 74 
37 
54 
165 
77 
10 
22 
26 
135 
300 
PROTOCOL 2/1961-1966 
MORROCC 
ALGERIA 
TUNISIA 
MAGHREB 
EGYPT 
LEBANON 
JORDAN 
SYRIA 
MASHREQ 
ISRAEL 
TOTAL 109 
44 
61 
214 
126 
16 
26 
33 
201 
415 106 
32 
61 
201 
123 
16 
26 
33 
166 
399 
PROTOCOL 3/1986-1991+A25 
MOROCCC 
ALGERIA 
TUNISIA 
MASHREQ 
EGYPT 
LEBANON 
JORDAN 
SYRIA 
MASHREQ 
ISRAEL 
TOTAL 173 
56 
93 
322 
200 
20 
37 
36 
293 
615 172 
56 
"91 
319 
199 
20 
37 
32 
266 
607 %1) 
1 
0,840909 
1 
0,959302 
1 
1 
1 
1 
1 
0,977199 
0,990826 
0,727273 
1 
0,939252 
0,97619 
1 
1 
1 
0,965075 
0,961446 
0,99422 
1 
0,978495 
0,990683 
0,995 
1 
1 
0,888889 
0,962935 
0,966992 Payments 
Amount 
74 
32 
53,55 
159,55 
72 
7 
22 
26 
127 
286,55 
100 
18 
61 
179 
112 
8 
23 
24 
167 
346 
136 
18 
77 
231 
126 
12 
28 
5 
171 
402 %2) 
1 
0,864865 
0,991667 
0,96697 
0,935065 
0,7 
1 
1 
0,940741 
0,955167 
0,925926 
0,5625 
1 
0,890547 
0,910569 
0,5 
0.884615 
0,727273 
0,843434 
.0,867168 
0,790698 
0,321429 
0,846154 
0,724138 
0,633166 
0,6 
0,756757 
0,15625 
0,59375 
0,662273 I 
(1978-1991) 
TOTAL 
56 
70 
41 
167 
93 
20 
18 
34 
165 
30 
362 
90 
107 
78 
275 
150 
34 
37 
64 
285 
40 
600 
151 
183 
131 
465 
249 
53 
63 
110 
475 
63 
1003 EIB 
Commitments 
Amount 
56 
70 
41 
167 
93 
20 
18 
34 
165 
X 
362 
90 
107 
78 
275 
150 
34 
37 
64 
285 
40 
600 
151 
142 
131 
424 
242 
53 
63 
0 
358 
63 
845 %1) 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
0,775956 
1 
0,911828 
0,971888 
1 
1 
0 
0,753684 
1 
0,842473 Payments 
Amount 
56 
70 
41 
167 
93 
20 
18 
34 
165 
30 
362 
90 
89 
76 
255 
150 
29 
' 37 
52 
268 
40 
563 
91 
70 
107 
268 
187 
27 
63 
0 
277 
57 
602 %2) 
1 
0,831776 
0,974359 
0,927273 
1 
0,852941 
1 
0,8125 
0,940351 
1 
0,938333 
0,602649 
0,492958 
0,816794 
0,632075 
0,772727 
0,509434 
1 
0 
0,773743 
0,904762 
0,712426 * 
TOTAL PROTOCOL 
TOTAL 
130 
114 
95 
339 
170 
30 
40 
60 
300 
30 
669 
199 
151 
139 
489 
276 
50 
63 
97 
486 
40 
1015 
324 
239 
224 
787 
449 
73 
100 
146 
768 
63 
1618 Commitments 
Amount 
130 
107 
95 
332 
170 
X 
40 
60 
300 
X 
662 
. 198 
139 
1X 
476 
273 
X 
63 
97 
483 
40 
999 
323 
196 
222 
743 
441 
73 
100 
32 
646 
63 
1452 %1) 
1 
0,938596 
0,979351 
"1 
0,989537 
0,994975 
0,92053 
1 
0,973415 
0,98913 
1 
1 
1 
0,993827 
1 
0,964236 
0,996914 
0,828452 
0,991071 
0,944091 
0,982183 
1 
1 
0,219178 
0,841146 
1 
0,897404 Payments 
Amount 
1X 
102 
94,55 
326,55 
165 
27 
40 
X 
292 
X 
648,55 
190 
107 
137 
434 
262 
37 
X 
76 
435 
40 
909 
227 
88 
184 
499 
313 
X 
91 
443 
57 
%ft£? %2) 
1 
0,953271 
0,995263 
0,983584 
0,970588 
0,9 
1 
1 
0,973333 
1 
0,979683 
-
'0,959596 
0,7X784 
0,985612 
0,911765 
0,959707 
0,74 
0,952381 
0,783505 
0,900621 
1 
0,90991 
0,702786 
0,444444 
0,828829 
0,671602 
0,709751 
0,534247 
0,91 
0,685759 
0,904762 
0,688017 

ISSN 0254-1475 
COM(97) 371 final 
DOCUMENTS 
EN 11 10 17 
Catalogue number : CB-CO-97-364-EN-C 
ISBN 92-78-22752-8 
Office for Official Publications of the European Communities 
L-2985 Luxembourg 
3?