COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(91) 443 final 
Brussels, 8 November 1991 
Proposal for a 
COUNCIL DECISION 
jyjjg: grcinting a medium-term loan 
to the USSR and its constituent Republics 
(presented by the Commission) 
BÉÏfeËste 
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Explanatory memorandum 
On 10 September the Soviet authorities presented the Community with a 
request for assistance totalling ECU 5-6 billion. Requests were also 
addressed to other industrialized countries. The Council, meeting on 
7 October 1991 to discuss economic and financial affairs, agreed in 
principle to the granting of the aid covered by this Decision and 
representing the Community's contribution to an emergency aid package 
coordinated with the other main industrialized countries. 
The purpose of this measure is to grant a back-to-back loan to the USSR and 
its constituent Republics for the purchase of food, agricultural products 
and medical supplies. The corresponding funds will be borrowed on the 
market by the Commission, acting on behalf of the European Economic 
Community. 
The initiative will come on top of the assistance to the USSR already 
decided on by the Community, namely food aid amounting to ECU 250 million 
and an ECU 500 million credit guarantee. 
At least 50% of the loan will be allocated to the financing of imports from 
the Community, the remainder being used to finance imports from the 
countries of Central and Eastern Europe in so far as the latter are able to 
supply the goods needed. The aim is to help restore trade between those 
countries and between them and the USSR. 
Economic conditions will be attached to the granting of the loan, which 
will be made available to the USSR and its constituent Republics in three 
successive instalments. They may cover in particular the reform of the 
agri-foodstuffs industry and markets in the USSR. 
The following procedural arrangements will have to be implemented: 
(a) a Council Decision on the granting of the loan will have to be adopted; 
(b) the granting of the loan will require a token entry (p.m.) in the 1992 
budget; 
(c) a protocol to the agreement between the Commission and its Soviet 
partners will have to define accurately the identity of borrowers and 
the necessary guarantees to ensure that the loan is repaid. The 
detailed rules and conditions attached to the loan will also have to be 
defined and agreed. 
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PROPOSAL FOR A COUNCIL DECISION 
granting a medium-term loan 
to the USSR and its constituent Republics 
THE COUNCIL OP THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
and in particular Article 235 thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European Parliament, 
Whereas bilateral links between the Community and the USSR were 
strengthened by the cooperation agreement which entered into force on 
1 April 1990; 
Whereas the Community wishes to support the efforts of the USSR and its 
constituent Republics to bring about political reform and economic 
restructuring; 
Whereas the USSR and its constituent Republics are facing a critical 
economic and financial situation; 
Whereas the Soviet authorities have asked the European Community, the 
United States of America, Japan, Canada and other industrialized countries 
for financial assistance to underpin the development of democratic 
processes within the USSR and its constituent Republics and to help the 
country face up to the worsening food and medical situation; whereas the 
Soviet authorities have supplied adequate information on their needs in 
these areas; 
Whereas the granting by the Community of a medium-term loan of 
ECU 1 250 million to the USSR and its constituent Republics is an 
appropriate means of providing food and medical aid and supporting the 
continuation of the economic reforms; 
Whereas the assistance granted pursuant to this Decision is in addition to 
that already committed in the form of food aid to the USSR (direct food aid 
amounting to ECU 250 million and a credit guarantee of ECU 500 million for 
exports of agricultural and food products); 
Whereas Community assistance to the USSR and its constituent Republics 
> 
forms part of an overall package which should be based on balanced 
contributions by the main industrialized countries; 
Whereas provision should be made for measures to ensure that, while not 
compromising the normal conditions of supply according to the rules of the 
market, the Community loan is used to finance imports of agricultural and 
food products and medical supplies from the Community and from Bulgaria, 
Czechoslovakia, Hungary, Poland, Romania, Lithuania, Latvia, Estonia (and 
Yugoslavia) in so far as they are able to supply them; 
Whereas exports financed pursuant to this Decision may help to restore 
trade between the countries of Central and Eastern Europe and between those 
countries and the USSR on the basis of transactions being paid for in 
convertible currencies; 
Whereas the Community loan should be managed by the Commission; 
Whereas the Treaty does not provide, for the adoption of this Decision, 
powers other than those of Article 235, 
HAS DECIDED AS FOLLOWS: 
Article 1 
1. The Community shall grant to the USSR and its constituent Republics a 
medium-term loan of not more than ECU 1 250 million in principal, in three 
successive instalments and for a maximum duration of five years, in order 
to enable agricultural and food products and medical supplies to be 
imported from the Community, Bulgaria, Czechoslovakia, Hungary, Poland, 
Romania, Lithuania, Latvia, Estonia (and Yugoslavia), thereby helping to 
restore trade between the USSR and the countries of Central and Eastern 
Europe. 
2. The proportion of the loan used to finance imports from the Community 
shall be at least 50%, taking account of the possibilities of products 
being supplied by Bulgaria, Czechoslovakia, Hungary, Poland, Romania, 
Lithuania, Latvia, Estonia (and Yugoslavia). 
Article 2 
To this end, the Commission is hereby empowered to borrow, on behalf of the 
European Economic Community, the necessary resources that will be placed at 
the disposal of the USSR and its constituent Republics in the form of a 
loan. 
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Article 3 
The loan shall be managed by the Commission. 
Article 4 
The Community is hereby empowered to negotiate with the authorities of the 
USSR and its constituent Republics, after consultation with the Monetary 
Committee, the economic and financial conditions to be attached to the 
loan, the rules governing the provision of funds and the necessary 
guarantees to ensure loan repayment. 
Article 5 
The economic conditions shall relate in particular to the economic reforms 
in the agri-foodstuffs industry and markets in the USSR and its constituent 
Republics. 
Article 6 
1. Imports of products financed by the loan shall be effected at world 
market prices. Free competition shall be guaranteed for the purchase and 
supply of products, which shall meet internationally recognized standards 
of quality. 
2. The other detailed rules relating to the purchase, receipt, transport 
and distribution of products from the Community the importation of which is 
financed by the loan shall be adopted in accordance with the procedure set 
out in Article 8(2), on the basis of the negotiations between the 
Commission and the authorities of the USSR and its constituent Republics. 
Article 7 
The Commission shall verify at regular intervals that the loan conditions 
referred to in Articles 4, 5 and 6 are being fulfilled. 
Article 8 
1. The Commission shall be assisted in matters coming under Article 6(2) 
by an advisory committee made up of representatives of the Member States 
and chaired by the representative of the Commission. 
2. The representative of the Commission shall present to the committee 
proposals for the measures to be taken. The committee shall deliver its 
opinion on these proposals within a period which the chairman may determine 
according to the urgency of the matter, where appropriate putting the 
matter to a vote. 
The opinion shall be recorded in the minutes; each Member State shall also 
have the right to request that its own position be indicated in the same 
minutes. 
The Commission shall take the greatest possible account of the opinion 
delivered by the committee. It shall inform the committee of the manner in 
which it has taken account of that opinion. 
Article 9 
The loan shall be made available to the USSR and its constituent Republics 
in three successive instalments, subject to Articles 1 and 7. 
The initial instalment shall be released as soon as the borrowing 
operations have been concluded. 
The USSR and its constituent Republics shall be responsible for repayment 
of the principal and interest on the basis of the procedures laid down 
pursuant to Article 4. 
Article 10 
1. The borrowing and lending operations referred to in Articles 1 and 2 
shall be carried out using the same value date and shall not involve the 
Community in the transformation of maturities, in any exchange or 
interest-rate risk or in any other commercial risk. 
2. The Commission shall take the necessary steps, if the USSR and its 
constituent Republics so wish, to ensure that an early repayment clause is 
included in the loan conditions and can be exercised. 
3. At the request of the USSR and its constituent Republics, and where 
circumstances permit a reduction in the interest rate on the loan, the 
Commission may refinance all or part of its initial borrowings or 
restructure the corresponding financial conditions. Refinancing or 
restructuring operations shall be carried out in accordance with the 
conditions set out in paragraph 1 and shall not have the effect of 
extending the average duration of the borrowing concerned or increasing the 
amount, expressed at the current exchange rate, of capital outstanding at 
the date of the refinancing or restructuring. 
4. All related costs incurred by the Community in concluding and carrying 
out the operations provided for in this Decision shall be borne by the USSR 
and its constituent Republics. 
5. The Monetary Committee shall be kept informed of developments in the 
operations referred to in paragraphs 2 and 3. 
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Article 11 
At least once a year, the Commission shall address a report to the European 
Parliament and to the Council, which will include an evaluation, on the 
implementation of this Decision. 
Done at Brussels, 
For the Council 
The President 
FINANCIAL RECORD 
1. Budget line concerned 
Item (BO-2131) medium-term loan to the USSR and its Republics to be 
created in the 1992 budget. 
2. References (legal base) 
Article 235 of the Treaty 
3. classification of the Expenditure 
Obligatory 
4. Description and justification for the action -' 
a) Description of the action 
Provision medium-term loan to the USSR and its Republics for 
the exportation of food products and medical supplies from the 
Community, Bulgaria, the CSFR, Hungary, Poland, Romania, 
Lituania, Latvia, Estonia (and Yugoslavia) to the USSR and its 
Republics. 
b) Justification for the action 
- The USSR has asked the Community for financial assistance 
to support tne development of the democratic process and to 
help supply food products and mediaines, for which it is 
necessary that the Community grant the required loan. 
- The budget entry is intended to provide a budgetary support 
for the European Community loan extended to the USSR and 
its Republics. 
5. Nature of the expenditure and method of calculation 
a) Nature of the expenditure 
Possible financing of capital and interest repayments in the 
case of default. 
b) Method of calculation 
A token entry is proposed given that the amount and timing of 
any call on this budget line cannot be calculated, .in advance 
and futhermore it is to be expected that this budget entry will 
not be called on. 
6. Effect of the action on intervention credits 
Only in the case of an effective call on the budget due to default-
7. Financing of intervention expenditure 
Endownroent of the line by transfer, by reutilisation of 
reimbursed amounts (Article 27(3) of the Financial Regulation 
of 1977), or by amended and/or supplementary budget. 
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In order to fulfill its obligations, the Cocuaitision can 
provisionally ensure the debt service with funds ftora its 
treasury- In that case. Article 12 of the Council Regulation 
(EEC, Euratom) no. 15S2/89 of 29-5-1989 will apply-

ISSN 0254-1475 
COM(91) 443 final 
DOCUMENTS 
EN 11 
Catalogue number : CB-CO-91-499-EN-C 
ISBN 92-77-77437-1 
Office for Official Publications of the European Communities 
L-2985 Luxembourg