PROPOSAL FOR A COUNCIL DECISION ON PROVISION OF FINANCIAL ASSISTANCE FOR ISRAEL AND THE PALESTINIAN POPULATION OF THE OCCUPIED TERRITORIES
Date: 1991-04-09
Institutions: European Commission
Subjects: Community loan, Israel, development aid, financial aid, interest rate subsidy, occupied territory

COMMISSION OF THE EUROPEAN  COMMUNITIES 

C0M(91) 125 final 

Brussels, 9  Apr iI 1991 

Proposal  for a 

COUNCIL  PEdSlQN 

on provision of financial assistance for 
Israel, and the Palestinian population of tiie Oocupied Territories 

(presented by the Commission) 

t 

ECTIANATORÏ MHCRANDTJM 

1. Following the Coraraission cararaunication on additional financial aid for 
countries in the Middle East and the Mediterranean affected by the Gulf 
War of 28 February (O0M(91) 61 final), the Council has endorsed the 
principle of two schemes to provide financial aid for Israel and the 
Palestinian population of the Oocupied Territories, which are suffering 
in different degrees the adverse effects of hostilities in the Gulf. 

In the case of Israel, economic activity in general is suffering.  In 
the Oocupied Territories, the arrival of returning workers and a 
significant reduction in remittances from the Gulf states simply 
aggravate an already seriously deteriorated économie situation. 

2. The aid will comprise a Conmunity loan of a sum equivalent to ECU 

180 million financed on the capital markets and non-relinbursable aid of 
up to ECTJ 87.5 million from the Community budget (1991).  Before the 
relevant appropriations can be entered in the 1991 budget by means of a 
supplementary and amending budget, the celling for heading No 4 ("Other 
policies") in the financial perspective for 1991 must be raised.  The 
Commission has duly made the necessary proposals.  This action should 
help alleviate the adverse effects of the Gulf war on the populations of 
Israel and the Occupied Territories. 

3. It has been agreed that these funds be used to provide Israel with 

financial aid in the form of a loan to support the country's balance of 
payments.  The loan is to be topped up with an interest-rate subsidy of 
ECTJ 27.6 million, financed from the Community budget.  Financial aid for 
the Oocupied Territories would take the form of an ECU 60 million  grant 
from the budget to help to improve economic and social conditions and to 
integrate Palestinians returning from Kuwait (by providing Jobs, 
housing, hospitals, etc.). 

4. Arrangements should be made to enable this financial aid to be used in 

ways suited to the specific problems of Israel and the Oocupied 
Territories.  In the case of Israel, the operation will be carried out 
before the end of 1991; in the case of the Oocupied Territories, 
institutional constraints may require ijnplementation over a two-year 
period. 

3 

PROPOSAL FOR A COUNCIL DBCISICN 
on financial jytd for Israel and 
the Palestinian population of the Oocupied Territories 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having regard to the Treaty establishing the European Eoonomic 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 the Community has decided to mount an operation to give financial 
aid to Israel and the Palestinian population of the territories on the West 
Bank of the River Jordan and the Gaza Strip occupied by Israel (hereinafter 
referred to as the "Oocupied Territories") in order to help alleviate the 
adverse consequences of the war in the Gulf; 

whereas the economic and financial capacity of Israel and of the Oocupied 
Territories is such that financial aid to Israel should take the form of a 
subsidized loan to provide medium-term support for its balance of payments 
while that for the Oocupied Territories could take the form of grants; 

Whereas the Community must have the means to undertake the said operation; 

Whereas the amount of Community financial resources needed to pay for the 
interest-rate subsidy and grant components of this operation has to be 
estimated; whereas the appropriations actually available will be 
established during the budgetary procedure in accordance with the financial 
perspectives annexed to the Interlnstitutional Agreement of 29 June 19881; 

Whereas the breakdown of funds as between Israel and the Palestinian 
population of the Oocupied Territories is based on an evaluation of their 
respective requirements in the light of the scale of the social and 
economic effects of the war, the sections of the population affected and a 
comparison of living standards; 

Whereas the loan to Israel will have to be financed by tanmunity borrowing 
on the capital markets; whereas this loan must be administered by the 
Commission; 

Whereas implementation of this operation is designed to contribute to the 
achievement of Community objectives; 

Whereas the Treaty does not provide, for the adoption of this Decision, for 
powers other than those of Article 235, 

HAS DECIDED AS FOLLOWS: 

1 OJ No L 185, 15.7.1988, p.33. 

Article 1 

The Community shall provide financial aid of up to an estimated total of 
ECU 247.5 million for Israel and the Palestinian population of the Oocupied 
Territories. 

Article 2 

1. Otoe financial aid for Israel to support its balance of payments  shall 

be made available in the form of a medium-term loan of a principal 
equivalent to ECU 160 million for a maximum period of seven years. 

2. The loan will be accompanied by an interest-rate subsidy to be financed 

from the general budget of the Community. 

The estimated cost to the Community of financing the subsidy in 1991 is 
ECU 27.5 million. 

The budgetary authority shall establish the avail able appropriations. 

3. The loan and the related subsidy shall be accorded on the terras and 

conditions set out in Article 3. 

Article 3 

1. To make the loan referred to in Article 2(1) the Commission is hereby 

empowered to borrow, on behalf of the Community, the necessary resources 
on the capital markets after consultation of the Monetary Committee. 

2. The loan shall be made available to Israel in a single instalment.  It 

will be paid to the National Bank of Israel. 

3. The Commission shall establish the arrangements for payment of the 

interest-rate subsidy referred to in Article 2(2) and take the necessary 
implementing measures. 

4. The borrowing and lending operations referred to in paragraph 1 shall be 
carried out using the same value date and must not involve the Ctammunity 
in the transformation of maturities, exchange or interest-rate risks or 
any other commercial risk. 

5. The Commission shall take the necessary steps, if Israel so wishes, for 

inclusion in the conditions and possible application of an early 
repayment clause. 

t> 

6. At the request of Israel, and where circumstances permit an improvement 
in the interest rate on the loan, the Commission may refinance all or 
part of its initial borrowings or restructure the corresponding 
financial terms.  Refinancing or restructuring operations shall be 
carried out in accordance with the conditions set out in paragraph 4, 
and shall not have the effect of extending the average duration of the 
borrowings œncerned or of increasing the amount of capital, expressed 
at the current exchange rate, outstanding at the date of the refinancing 
or restructuring. 

7. All costs incurred by the Community in mounting and executing the 
operation provided for in this Decision shall be borne by Israel. 

8. The Monetary Committee shall be kept informed of the progress of the 

operations referred to in paragraphs 5 and 6. 

Article 4 

1. The financial aid for the Palestinian population of the Occupied 

Territories shall take the form of grants, the estimated cost of which 
to the Oammunity is ECU 60 million in 1991.  The budgetary authority 
shall establish the appropriations available. 

The aid shall cover expenditure aimed at alleviating the social and 
economic problems facing the Palestinians following the Gulf conflict, 
such as health, education and housing, and also the technical assistance 
necessary to implement the operation. 

It will be accorded in instalments on the basis of general guidelines 
adopted in accordance with the procedure laid down in Article 5. 

2. The Commission shall ensure that such funds, paid to provide the aid 

referred to in paragraph 1, are used in accordance with the objectives 
set out in this Decision by the beneficiaries, which shall be required 
to submit a programme specifying the use to be made of the funds, and 
afterwards a report on the actual use made thereof. 

Article 5 

1. The Commission shall be assisted by a Committee composed of 

representatives of the Member States and chaired by a representative of 
the Commission. 

-C 

2. The representative of the Commission shall submit to the Committee a 
draft of the measures to be taken.  The Committee shall deliver its 
opinion on the draft within a time limit which the Chairman may lay down 
according to the urgency of the matter.  The opinion shall be delivered 
by the majority laid down in Article 148(2) of the Treaty in the case of 
decisions which the Council is required to adopt on a proposal from the 
Commission.  The votes of the representatives of the Member States 
within the Committee shall be weighted in the manner set out in that 
Article.  The Chairman shall not vote. 

3. Measures adopted by the Commission shall be of immediate effect. 

However, if these measures are not in accordance with the opinion of the 
Committee, they shall be <3cmmunicated by the Commission to the Council 
forthwith. 

In that event, the Commission shall defer application of the measures 
which it has decided on for a period of two months from the date of 
communication. 

The Council, acting by a qualified majority, may take a different 
decision within the time limit referred to in the preceding 
subparagraph. 

Article 6 

The Commission shall present to the European Parliament and the Council by 
30 June 1992 an initial report on the implementation of the aid operation 
carried out under this Regulation.  A final report shall also be presented 
as soon as the operation is completed. 

Done at Brussels, 

1991 

For the Council 
The President 

> 

FICHE  FINANCIERE 

VOLET  1  : IMPLICATIONS  FINANCIERES 

1. 

Intitulé de  I'action : 

Assistance  financière  en  faveur  d'Israël  et  des  populations 
palestiniennes desTerritoires Occupés. 

2. 

Liane budgétaire  concernée : 

A  déterminer  dans  le  caire  d'un  budget  rectificatif  et 
supplémentaire. 

3. 

Base  légale : 

Article  235 du traité  instituant  la Communauté  Européenne. 

4. 

Description  de  l'action  : 

4.1. 

Objectifs spécifiques de  l'action : 
Les  objectifs  de  cette  action  sont  d'une  part  apporter  un 
soutien  à  la  balance  des  paiements  d'Israël  et  d'autre  part, 
pour  ce  qui  est  des  populations  palestiniennes  des  Territoires 
Occupés,  de  contribuer  à  améliorer  la  situation  économique  et 
sociale  ainsi  que  d'intégrer  les  ressortissants  rapatriés  du 
Kowe i t. 

4.2. 

Durée : 
1991 - 1992 

4.3. 

Populations visées par  l'action : 
L'ensemble  de  la  population  d'Israël  et  des  populations 
palestiniennes des Territoires Occupés. 

5. 

Classification de  la dépense : 

5.1. 

DNO 

5.2. 

CD 

6. 

Quelle est  la nature de  la dépense : 

6.1. 

Subvention  à  100%  pour  l'action  en  faveur  des  Territoires 
Occupés  (60 millions  d'écus) 

6.2. 

Subvention  pour  co-financement  avec  d'autres  sources  du  secteur 
public ou privé  : néant 

6.3. 

Bonification  d'intérêt  : 27,5 MECUS  sur  un  prêt  hors  budget  de 
160 MECUS en faveur  d'Israël 

6.4. 

Autres 
d'Israël. 

Garantie  budgétaire  relative  au  prêt  en  faveur 

6.5. 

6.6. 

7- 

7.1. 

7.2. 

En  cas  de  réussite  économique  de  l'action,  un  remboursement 
partiel  ou  total  de  l'apport  financier  communautaire  est-il 
prévu  :  non 

L'action  proposée  impIique-t-elle une modification  du niveau des 
recettes  : non 

Incidence  financière sur  les crédits d'Intervention : 

Mode de caI eu I : 
Les montants  prévus  tiennent  compte  des orientations  politiques 
du Conse il. 

Indiquez  la part  du mini-budget  dans  le coût  total  de  l'action. 
Explicitez  le mode de calcul  : 
Sans objet. 

7.3. 

Echéancier  indicatif  des C E.  et C.P.  (en MECUS): 

1991 

1992 

C E. 

87,5 

C.P. 

57,5 

30 

Quelles  sont  les  dispositions  anti-fraudes  prévues  dans 
proposition d'action  : 

Sans objet. 

VOLET 2  : DEPENSES ADMINISTRATIVES 

L'action  proposée  impIique-t-elle  une  augmentation  du  nombre 
d'effectifs de  la Commission  : non 

Montant  des dépenses  : Sans objet. 

VOLET  3  : ELEMENTS  D'ANALYSE  COUT-EFFICACITE 

1. 

Objectifs et  cohérence  avec  la programmation  financière  : 

1.1. 

1.2. 

1.3. 

2. 

a. 

b. 

c. 

Object if(s) spécifiques(s) de  l'action  proposée. 
Cfr.  4.1. 

L'action  est-elle  prévue  dans  la programmation  financière  de  la 
D.G. pour  les années  concernées  ? 
Oui. 

dans  la 
Indiquez  à  quel  objectif  plus  général 
programmation  financière  de  la  D.G.  correspond  l'objectif  de 
I'action proposée  : 
Stabilité  politique  de  la région. 

défini 

Justification  de  l'action  : 

Coût  : 87,5  MECUS 

Effets dér ivés : 
Contribuer  à  la stabilité  politique  de  cette  zone. 

Effets multiplicateurs  : 
Image  et  visibilité  politique  de  la Communauté  dans  une  zone  de 
turbulence. 

3. 

Suivi  et  évaluation  de  l'action  : 

Les  actions  feront  l'objet  d'une  évaluation  ex-post. 

ISSN 0254-1475 

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