Proposal for a COUNCIL REGULATION (EC) on financial and technical measures to support the reform of economic and social structures in Mediterranean non- member countries and territories
Date: 1995-06-07
Institutions: European Commission
Subjects: Mediterranean third countries, economic reform, financial cooperation, financing of aid, social change, technical cooperation

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  7.06.1995 
COM(95)  204  final 

95/0127  (CNS) 

Proposal  for a 

COUNCIL  REGULATION  (EC) 

on financial and technical  measures to support the reform of economic and social  structures in 
Mediterranean non-member countries and territories 

(presented  by  the  Commission) 

EXPLANATORY  MEMORANDUM 

A new Regulation has been made necessary by the creation of the new MED A budget 
heading (B7-410), for financing of technical and financial co-operation measures in favour 
of the Mediterranean region and by the significant  increase in funds which is foreseen, 
given the strategic importance of the region. The present proposal for a Council 
Regulation sets out the rules for the administration of this budget heading.  Proposals for 
the objectives, activities and instruments of such co-operation over the years to come 
were presented by the Commission in its Communication of 8 March  1995 entitled 
"Strengthening the Mediterranean Policy of the European Union:  proposals for 
implementing a Euro-Mediterranean partnership". 

A number of  modifications are made to the existing arrangements.  In particular: 

The bilateral financial protocols and the Regulation for regional co-operation will, 

1. 
for the most part, be replaced by the proposed Regulation after a transitional period. 
Under the latter, the measures to be taken shall be selected taking into account both the 
beneficiaries" priorities and the objectives of the Community.  This selection process shall 
lead to the establishment of a rolling three year indicative programme; however, budget 
funds and projects will continue to be adopted annually.  A Management Committee of 
type Ha is proposed to assist the Commission in order to streamline decision making in the 
context of the additional volume of co-operation which is envisaged.. 

Article 235 of the Treaty establishing the European Community provides the legal 

2. 
base given that, on the one hand, the envisaged activities go beyond those belonging to 
traditional development and that, on the other hand, certain countries in the region do not 
belong to the category of'developing country'.  The regulation is open ended. 

3. 
The beneficiaries ( referred to as Mediterranean partners) under the proposed 
Regulation  are the Maghreb and Mashrek countries and territories as well as Turkey, 
Cyprus and Malta.  Explicit provision is made for decentralised co-operation in order to 
allow more flexibility and better targeting in view of the wide range of measures which are 
envisaged. 

In line with the communication of 8 March 1995 and with the strategic objective 

4. 
of a Euro-Mediterranean  partnership, the priority axes of co-operation are: support to 
economic transition and the establishment of a Euro-Mediterranean free trade area, 
support to a better socio-economic balance and support to regional co-operation. 
Promotion of good governance shall also be an important theme for future  co-operation. 

The participation of women shall be promoted and provisions have been made 

5. 
regarding the respect of democratic principles and human  rights. 

The Commission considers it appropriate that invitations to tender and contracts 

6. 
be open on equal terms to all natural and legal persons of the Member States and of 
Mediterranean partners. 

As in the past, co-financing is possible with the recipient countries, the Member States, 
the European Investment Bank, third countries or multilateral bodies.  Co-operation with 
the European Investment Bank on risk capital and interest rate subsidies for environment 

-L 

projects continues to be foreseen  Particular importance is attached to co-ordination and 
co-operation with the Member States, international financial institutions and other donors. 

i 

COUNCIL REGULATION  (El  C) N° 

/... 

of...  1995 
on financial and technical measures to support the reform of economic and social  structures in 
Mediterranean non-member countries and territories 

The Council of the European Union, 

Having  regard  to  the  Treaty  establishing  the  European  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  stability  and  prosperity  of  the  Mediterranean  region  require  a  new  phase  of 
relations  to  be  established  which  foresee  the  establishment  of  a  free  trade  area  between  the 
European Community  and Mediterranean  non-member  countries  and territories  as well  as the 
associated applicant countries Cyprus and Malta and a customs union with Turkey, 

Whereas the Essen European Council of 9-10  December  1994 affirmed  that the Mediterranean 
constitutes a priority area of strategic  importance to the European Union and adopted the aim 
of establishing a Euro-Mediterranean partnership, 

Whereas it is necessary to  pursue efforts  to ensure that the Mediterranean becomes  an area  of 
political  stability and security founded  on respect for democracy, good governance and respect 
for human  rights, 

Whereas  for  the  non-member  Mediterranean  countries  and  territories  the  establishment  of  a 
free trade area will involve profound  structural reform, 

Whereas  it  is  therefore  necessary  to  .support  the  efforts  that  Mediterranean  non-member 
countries and territories will undertake to reform their economic and social structures, 

Whereas  intensified  regional co-operation and in particular the development  of economic links 
and  trade  flows  between  Mediterranean  non-member  countries  and  territories  which  are 
conducive to economic reform and restructuring should be encouraged, 

Whereas  the  bilateral  protocols  on  financial  and  technical  co-operation  concluded  by  the 
Community  with  Mediterranean  non-member  countries  provided  a  useful  initial  basis  for  co 
operation  and now  it  is necessary  to  build  on the experience  which  has been  acquired  and  to 
enter into a new partnership within a unified  framework 

Whereas rules for the administration of such partnership have to be determined, 

Whereas  to  this  end  the  present  regulation  will  apply  to  the  range  of  measures  which  came 
under  Council  Regulation  (EEC)  N°  1762/92  on  the  implementation  of  the  protocols  on 
financial and  technical  co-operation  concluded  by  the  Community  with  Mediterranean  non-
member countries, Council Regulation  (EEC) N°  1763/92 concerning financial co-operation in 
respect  of  all  Mediterranean  non-member  countries  for  measures  whose  scope  extended 
beyond the  scope  of a single country,  Council  Regulation  (EEC) N°  1734/94  on financial and 
technical  co-operation  with  the  Occupied  Territories  and  proposal  COM(94)  289  final  for  a 
Council  Regulation  in  the  field  of  employment  creation  and  support  to  small  and  micro-
enterprises in the Maghreb countries, 

Whereas therefore,  the  present  regulation  replaces the above  mentioned  regulations  as from 1 
January  1997, whilst it is necessary to maintain Council Regulation (EEC) N°  1762/92 in force 
for the management  of financial protocols  still applicable  at this  date  and for the  commitment 
of funds remaining under the expired financial  protocols, 

Whereas  in  respect  of  environmental  projects  the  loans  granted  by  the  European  Investment 
Bank, hereinafter referred to as "the Bank", from its own resources under conditions laid down 
by it, in accordance with its Statute, may receive an interest-rate subsidy, 

Whereas in loan operations involving interest-rate subsidies, the granting of a loan by the Bank 
from its own resources and the granting of an interest-rate subsidy financed by the budgetary 
resources of the Community must be linked and are conditional upon each other; whereas the 
Bank may, in accordance with its Statute, and in particular by a unanimous decision of its 
Board of Directors in the presence of an unfavourable opinion by the Commission, decide to 
grant a loan from its own resources, subject to granting of the interest-rate subsidy; whereas, 
on account of this aspect, it is necessary to ensure that the procedure adopted for granting 
interest-rate subsidies results in every case in an express decision, whether to grant the subsidy 
or to refuse it, where appropriate; 

Whereas it is necessary to make provision for a Committee consisting of representatives of the 
Member States to assist the Bank in the tasks attributed to it to implement this Regulation; 

Whereas to  allow  for effective  management  of the  measures foreseen  in this regulation  and to 
facilitate policy dialogue with the beneficiary  countries  a multiannual approach is required, 

Whereas  the  measures  foreseen  by  the  present  regulation  go  beyond  the  framework  of 
development  cooperation  and are destined to  apply to  countries  which  cannot  be  classified  as 
developing countries; therefore this regulation cannot be adopted other than on the basis of the 
competences foreseen by Article 235  of the EC Treaty. 

HAS ADOPTED THIS REGULATION: 

Article 1 

The  Community  shall  implement  measures  to  support  the  efforts  that  Mediterranean 
in  Annex  1  (hereinafter  referred  to  as 

1. 
non-member  countries  and  territories 
'Mediterranean partners') will undertake to reform their economic and social structures. 

listed 

2. 
The beneficiaries  of support measures may include not  only  States and regions but also 
local  authorities,  regional  organisations,  public  agencies,  local  or  traditional  communities, 
organisations  supporting  business,  private  operators,  co-operatives,  mutual  societies, 
associations, foundations and non-governmental  organisations. 

T 

Article 2 

Support measures shall be undertaken in coherence with the objective of achieving long 

1. 
term stability and prosperity and in particular in the fields of economic transition, achieving 
socio-economic  equilibrium and regional and cross-border co-operation. 

Support to economic transition and the establishment of a Euro-Mediterranean free 

2. 
trade area shall include notably: 

- private sector development  and employment creation, including improvement of the 
business environment and support to  SMEs 

- promotion of European private investment, including industrial  co-operation 

- upgrading of economic  infrastructure 

- operations in support of structural adjustment  programmes 

3. 

Support to achieving a better socio-economic balance shall include notably: 

- the improvement of social  services 

- harmonious and integrated rural development 

- reinforced  co-operation concerning  fisheries 

- environmental  co-operation 

- participation of civil society in development 

- integrated development  of human resources, notably in education and vocational 
training, as well as improving the potential for scientific  and technological research 

- strengthening democracy and the respect for human  rights 

- cultural  co-operation 

- through the above measures, co-operation and technical assistance in order to 
reduce illegal immigration, drugs trafficking  and international crime 

4. 

Regional and cross-border co-operation shall be supported notably by: 

- establishing structures and improving infrastructure for regional  co-operation 
between Mediterranean partners 

- establishing the infrastructure necessary for regional trade, including transport, 
communications and energy, improvement of the regulatory framework and small-
scale infrastructure projects in the context of border -crossing facilities:  particular 
attention will be paid to border-crossing facilities on borders between the 
Mediterranean partners and the Union, to co-operation on the level of large geographic 
regions as well as to measures complementary to those undertaken in this field within 
the Union. 

G 

-co-operation with the Arab League and its agencies as well as other Pan Arab and 
regional activities 

5. 
Good  governance  shall  be  promoted  by  supporting  key  institutions,  including  local 
government, trade unions, media and organisations supporting business and by assisiting in the 
improvement  of  the  capacity  of  the  public  administration  to  develop  policies  and  manage 
implementation. 

Measures  taken  under  this  regulation  shall  take  due  regard  to  the  promotion  of  the 
6. 
participation  of  women.  Special  importance  shall  be  attached  to  the  creation  of  jobs  for 
women and young people. 

7. 
The  activities  financed  under  this  regulation  shall  mainly  take  the  form  of  technical 
assistance,  training,  institution  building,  policy  dialogue,  information,  seminars,  studies, 
investment  projects  and  actions  to  ensure  the  visibility  of  Community  projects  and 
programmes.  Recourse  should be made to  decentralised  co-operation where this may prove 
effective.  Risk  capital  operations  and  interest  rate  subsidies  may  be  financed  notably  in 
collaboration  with  the  European  Investment  Bank.  Costs  incurring  to  the  beneficiaries from 
the  preparation,  implementation,  monitoring,  audit  and  execution  of  support  measures  may 
also be covered. 

8. 
When  an  essential  element  for  the  continuation  of  support  measures  is  missing,  in 
particular in cases of violation of democratic  principles and human rights, the Council  may, on 
a  proposal  from  the  Commission,  acting  by  a  qualified  majority,  decide  upon  appropriate 
measures concerning the assistance to a Mediterranean partner. 

Article 3 

1. 
Measures  to  be financed under this  Regulation  shall  be  selected  taking  account,  inter 
alia,  of the  beneficiaries'  priorities,  evolving  needs  and  progress towards  structural  reform  as 
well  as on the  basis  of  an assessment  of  the  effectiveness  of those  measures  in achieving  the 
objectives  aimed  at by Community  support,  in line with the  provisions  of  Association  or  Co 
operation Agreements where applicable. 

2. 
Indicative programmes covering three-year periods shall be established  at national and 
regional  level,  taking  into  account  the  priorities  identified  with  the  Mediterranean  partners, 
including  the  conclusions  of  economic  dialogue,  and  shall  be updated  annually,  as  necessary. 
These  programmes  shall  define  the  principal  objectives  of  and  guidelines  for  Community 
support  in the  indicative  areas  referred  to  in  Article  2  and  may  include  a financial estimate. 
These programmes may be amended during the period of their application taking into  account 
the  experience  accumulated  in  the  implementation  of  this  regulation  as  well  as  progress  in 
structural  reform,  macro-economic  stabilisation  and  social  progress  achieved  by  the 
Mediterranean partners. 

Financing  decisions  based  notably  on these  indicative  programmes  shall be  adopted  in 

3. 
accordance with the procedure provided for in Article  10 . 

¥ 

Article 4 

1. 
The  Commission  shall,  together  with  the  Member  States  and  on  the  basis  of  the 
information  supplied  by  them,  ensure  the  effective  co-ordination  of  the  assistance  efforts 
undertaken  by the  Community  and  individual  Member  States.  In  addition  co-ordination  and 
co-operation with international financial institutions and other donors shall be encouraged. 

2. 
The measures referred  to  in this Regulation  may be  granted  by the  Community,  either 
independently  or  in  the  form  of  co-financing  with  the  Mediterranean  partners  themselves  or 
with,  on  the  one  hand,  public  or  private  bodies  of  the  Member  States  and  the  European 
Investment Bank, or on the other hand, third countries or multilateral bodies . 

Article 5 

Community financing shall notably be in the form of grants or risk capital.  Concerning 
1. 
cooperation  measures in the field of the  environment  it may  equally  take  the  form  of  interest 
rate subsidies  for loans granted by the Bank on its own resources. 

Grants may be used  to finance or co-finance  activities,  projects  or programmes  which 
2. 
contribute  to  the  realisation  of  the  objectives  defined  in  Article  2.  The  extent  to  which 
activities, projects or programmes will be financed by grants shall also depend on their capacity 
to yield financial return. 

3. 
Financing  decisions  and  any  financing  agreements  and  contracts  resulting  therefrom 
shall expressly provide,  inter alia, for supervision and financial control by the  Commission and 
audits by the Court of Auditors to be carried out on the spot. 

Article 6 

1. 
Measures  under  this  regulation  may  cover  expenditure  on  imports  of  goods  and 
services and local expenditure needed to carry out the projects and programmes.  Taxes, duties 
and charges  shall be excluded from Community  financing. 

Contracts for the implementation  of Community funded  measures under this Regulation  shall 
enjoy,  in  the  Mediterranean  partners  concerned,  fiscal  and  customs  arrangements  no  less 
favourable  than those  applied  by  such  partners in respect  of the  most  favoured  State  or most 
favoured international development organisation. 

2. 
Maintenance  and  operating  costs  may  be  covered  for  training,  communications  and 
research programmes and for other projects; however, for the latter such costs may be covered 
only in the start-up stage  on a declining scale. 

3. 
For investment projects Community financing shall be combined with own resources  of 
the  promoter  or  with financing at  market  conditions,  taking  into  account  the  nature  of  the 
project.  However, Community financing may not exceed 80% of total investment cost. 

Article 7 

Invitations to tender and contracts shall be open on equal terms to  all natural and legal 

1. 
persons of the Member States and of Mediterranean partners. 

2) 

* 

2. 
In the  case  of  co-financing,  participants  from  countries  other  than  the  Mediterranean 
partners  concerned  in  invitations  to  tender  and  contracts  may  be  authorised  by  the 
Commission,  on  a case-by-case  basis.  In these  cases  participation  of undertakings  from third 
countries shall only be acceptable if reciprocity is granted. 

Article 8 

Financing decisions exceeding ECU 2.000.000  other than those relating to  interest-rate 
1. 
subsidies  on European Investment  Bank loans and risk capital  shall be  adopted  in  accordance 
with the procedure laid down in Article  10. 

Financing  decisions  on  overall  allocations  shall  be  adopted  in  accordance  with  the 
2. 
procedure laid down in Article  10.  The Commission  shall inform  the Committee referred to in 
Article  10 of the use made of these overall allocations. 

3. 
Decisions  amending  decisions  adopted  in accordance  with the  procedure  provided  for 
in  Article  10  shall  be  taken  by  the  Commission  where  they  do  not  entail  any  substantial 
amendments or additional commitments in excess of 20 % of the original commitment. 

4. 
Financing decisions relating to interest-rate subsidies on Bank loans shall be adopted in 
accordance  with  the  procedure  laid  down  in  Article  11.  Financing  decisions  relating  to risk 
capital shall be adopted in accordance with with the procedure laid down in Article  12. 

Article 9 

Measures  referred  to  in  this  Regulation  which  are financed from the  general  budget  of  the 
European  Community  shall  be  appraised,  decided  upon  and administered  by the  Commission, 
without  prejudice  to  the  management  by  the  Bank  of  interest-rate  subsidies  and  risk-capital 
operations  under  authority  conferred  on  it  by  the  Commission  on  behalf  of  the  Community 
pursuant to Article  105 (3) of the Financial Regulation of 21  December  1977  applicable to the 
general budget of the European Community. 

Article  10 

The Commission  shall be assisted  by a Committee  composed  of the  representatives  of 
1. 
the  Member  States  and chaired by the  representative  of  the  Commission  (hereinafter  referred 
to  as the 'Committee') to  be known  as the  "MED  Committee".  A  representative  of the Bank 
shall take part in the proceedings, without the right to vote. 

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 
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  EEC  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  weighed  in 
the manner set out in that Article.  The chairman shall not vote. 

^ 

3. 
The  Commission  shall  adopt  measures,  which  shall  apply  immediately.  However,  if 
these  measures  are  not  in  accordance  with  the  opinion  of  the  Committee,  they  shall  be 
communicated  by  the  Commission  to  the  Council  forthwith.  In  that  event,  the  Commission 
shall defer application of the measures which it has decided for a period of six weeks. 

The Council, acting by a qualified  majority, may take a different  decision within the period laid 
down in the first subparagraph. 

The Committee  may examine any other question  relating to  the implementation  of this 
4. 
Regulation which may be put to it by its chairman, possibly at the request of the representative 
of  a  Member  State  and,  in  particular,  any  question  relating  to  general  implementation,  the 
administration of the programme, co-financing  and the co-ordination referred to in Article 4. 

5. 

The Committee shall adopt its rules of procedure by qualified majority. 

The  Commission  shall  keep  the  Committee  regularly  informed  and  will  supply 

6. 
information on the implementation of measures under this regulation. 

The European Parliament  shall be kept regularly informed  of the implementation  of this 

7. 
regulation. 

Article 11 

As regards the projects to be financed by subsidised loans in the field of the 
1. 
environment, the Bank shall draw up the financing proposal in accordance with its Statute. 
The Bank shall seek the opinion of the Commission, in accordance with Article 21 of the 
Statute, and of the Committee referred to in Article  13. 

2. 
That Committee shall issue an opinion on the Bank's proposal.  The Commission 
representative shall convey to the Committee the position of his Institution on the project 
concerned, and in particular on its conformity with the objectives of this Regulation and with 
the general guidelines adopted by the Council.  In addition, the Committee shall be informed by 
the Bank of the non-subsidised loans which the Bank envisages granting from its own 
resources. 

On the basis of that consultation, the Bank shall ask the Commission to take a  financing 

3. 
decision to grant the interest-rate subsidy for the project concerned. 

The Commission shall submit to the MED Committee a draft decision authorising or, if 

4. 
appropriate, refusing the financing of the interest-rate subsidy. 

The Commission shall forward the decision referred to in paragraph 4 to the Bank, 

5. 
which, where the decision grants the subsidy, may grant the loan. 

Article 12 

The Bank shall submit to the Committee referred to in Article  13, for its opinion, 

1. 
projects concerning risk-capital operations.  The Commission representative shall convey to 
the Committee the position of his Institution on the project concerned and in particular on its 
conformity with the objectives of this Regulation and with the general guidelines adopted by 
the Council. 

Af> 

2. 

On the basis of this consultation, the Bank shall forward the project to the Commission. 

The Commission  shall take the financing decision within a period appropriate to the 

3. 
characteristics of the project. 

The Commission shall forward the decision referred to in paragraph 3 to the Bank, 

4. 
which shall take the appropriate measures. 

Article 13 

A Committee consisting of the representatives of the Member States,  hereinafter 

1. 
referred to as the 'Article  13 Committee*, shall be set up at the Bank. 

The Committee shall be chaired by the representative of the Member State currently holding 
the presidency of the Board of Governors of the Bank; its secretariat shall be provided by the 
Bank.  A representative of the Commission shall take part in its proceedings. 

2. 
Council. 

The rules of procedure of the Committee shall be adopted unanimously by the 

3. 
the Treaty. 

The Committee shall act by a qualified majority in accordance with Article  148 (2)  of 

4. 
weighted in accordance with Article  148 (2) of the Treaty. 

Within the Committee, the votes of the representatives of the Member States shall be 

Article  14 

The Commission shall, together with the Bank, examine progress achieved in 

1. 
implementing the measures undertaken pursuant to this Regulation and shall submit to the 
European Parliament and the Council an annual report, no later than 30 April.  The report shall 
contain information on the measures that have been financed during the year, with due regard 
for confidentiality,  and provide an assessment of the results obtained. 

The Commission and the Bank shall evaluate the  projects that concern each of them, in 

2. 
order to determine whether the objectives have been achieved and to establish guidelines for 
stepping up the effectiveness  of future activities.  The evaluation reports shall be made 
available to the Council and the European Parliament. 

Article 15 

Council  Regulation  (EEC)  N°  1763/92  and Council  Regulation  (EEC)  N°  1734/94 

1. 
are repealed as from 31 December  1996. 

2. 
As from 31  December  1996  Council  Regulation  (EEC)  N°  1762/92  shall  apply  for 
the  management  of  the  protocols  still  in. force  at  this  date  and  for  the  commitment  of  funds 
remaining under the expired protocols. 

^/ 

Article 16 

This  Regulation  shall  enter into  force  on  the third day  following  that  of  its publication  in the 
Official  Journal of the European Communities. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

ANNEX 1 

Partner countries and territories referred to in Article 1 

The People's Democratic Republic of Algeria 
The Republic of Cyprus 
The Arab Republic of Egypt 
The State of Israel 
The Kingdom of Jordan 
The Republic of Lebanon 
The Republic of Malta 
The Kingdom of Morocco 
The Arab Republic of Syria 
The Republic of Tunisia 
The Republic of Turkey 
The Occupied Territories of Gaza and the West Bank of the River Jordan 

J°> 

FINANCIAL  STATEMENT 

l  TITLE OF OPERATION 

Measures  to  back  up  the  reform  of  economic  and  social  structures  in 
Mediterranean non-member countries. 

2 BUDGET HEADING  INVOLVED 

B7-410 

3 LEGAL  BASIS 

Provisionally and until the new Regulation is approved: 

Council  Regulation  (EEC)  No  1763/92  of  29  June  1992  concerning financial 
cooperation  in  respect  of  all  Mediterranean  non-member  countries  (OJ  L  181, 
1.7.1992,  p.5.),  as  amended  by  Regulation  (EC)  No  1735/94  (OJ  L  182, 
16.7.1994, p.6). 

Proposal  for  a  Council  Regulation,  put  forward  by  the  Commission  on  8  July 
1994,  regarding  employment  creation  and  support  to  small  and  micro-enterprises 
in the Maghreb countries (OJ C 214,4.8.1994, p.26). 

Council Resolution of 8 February  1977 on Euro-Arab dialogue, providing also for 
the establishment of a Euro-Arab university. 

4  DESCRIPTION OF  OPERATION 

The MEDA  budget  heading  is intended to  become  the  only  basis for  Community 
activities in the Mediterranean non-member countries. 
It  should  as  a  result  bring  a  more  flexible  and  rational  way  of  operating  which 
would  make  implementation  of  the  projects  and  programmes  financed  more 
efficient.  This  approach  is  in  line  with  the  experience  of  other  areas  of  the 
European Union's external relations policy. 

Activities  to  prepare for  the  implementation  of  MEDA  are under way,  using  the 
balance of the financial protocols with the Maghreb and Mashreq countries. 

4.1 

General  objective 

Assistance  for  economic  transition  (establishment  of  a  Euro-
Mediterranean free-trade area, stimulation of the private sector and 
European private investment, updating of economic infrastructure); 

ALf 

Assistance  with  achieving  a  better  socio-economic  balance  (by 
improving  social  services  -  particularly  in  towns  -,  promoting 
harmonious  and 
integrated  rural  development,  stepping  up 
cooperation  on  fisheries  matters,  protecting  the  environment, 
involving  civil  society  in  development,  bringing  about  integrated 
development in human resources, bolstering democracy and respect 
for  human rights, supporting  cultural  exchanges,  cooperation  and 
technical  assistance  in  order  to  reduce  illegal  immigration,  drug-
trafficking, terrorism and international crime); 

Backing for regional and cross-border cooperation (by establishing 
regional  cooperation, 
a  framework  and 
establishing  the  infrastructure  needed  for  regional  trade,  through 
cooperation  with  the  Arab  League  and  its  agencies  and  through 
other pan-Arab and regional activities). 

infrastructure 

for 

4.2 

Period covered and arrangements for renewal or extension 

The activities cover the period  1995 to 1999. 

5 CLASSIFICATION OF EXPENDITURE OR REVENUE 

5.1 

Non-compulsory expenditure 

5.2 

Differentiated  appropriations 

5.3 

Type of revenue involved 

None,  except  in  the  case  of  risk  capital  (if  the  operation financed is  a 
success). 

6 TYPE OF EXPENDITURE OR REVENUE 

100% subsidy: in the case of the major  portion  of the  measures planned, 
the  operational  expenditure  of  a  project  or  programme  is  covered  by  a 
100% grant. 

Subsidy for joint financing with other sources in the public and/or private 
sector: provision has been made for co-financing with other donors, NGOs 
and the private sector. 

Interest-rate  subsidies:  interest-rate  subsidies  on  EIB  loans  may  be 
possible in certain cases. 

Should the operation prove an economic success,  is there provision for all 
or  part  of  the  Community contribution to  be  reimbursed? Yes,  if 
operations using risk capital prove a success. 

A<Z 

Will the  proposed  operation  cause any change  in the level of revenue? 
No. 

Reuse: None. 

7 FINANCIAL  IMPACT 

7.1 

Method of calculating total cost of operation 

The sums indicated take into account the policy guidelines put forward by 
the Commission in communication  COM(94)427 of  19 October  1994, the 
conclusions  of the  Essen  European  Council  of 9  and  10 December  1994 
relating to  strengthening  the  European  Union's Mediterranean  policy  and 
Commission  communication  COM(95)72  of  8  March  1995,  regarding 
proposals for the implementation of a Euro-Mediterranean partnership. 

The  indicative  total  allocation  for  Mediterranean  non-member  countries 
and  territories  is ECU 5.160 million.  If  account  is taken  of the  protocols 
(some  of  which  are  expiring  at  the  end  of  1996)  and  of  certain  specific 
activities (cooperation  in Turkey, UNRWA,  assistance  for  the Kurds, the 
total  of  commitment 
Middle  East  peace  process),  the  estimated 
is 
1995 
for 
appropriations 
ECU 3 899.5 million. 

for  MEDA 

available 

1999 

to 

Chapter B7 heading 
4031, 4050, 4051, 
401,  404 
4033 

financial 

Title 
1 st, 2nd, 3rd and 4th 

million ECU 

protocols 
Cooperation with 
Turkey 
UNRWA 
Kurds 
Peace process 
MEDA 

407 
406 
711 
410 

4091,4092 

former Yugoslavia in 
1995 

804.00 

21.00 

160.00 
12.00 
254.00 
3 899.50 

9.5 

5 160.00" 

1 TOTAL 

L.  i • — •! 

i

i

. —— 

.—  in  — — -

-

•

•

.

•

•

•

I. 

.- 

—•• 

i.  m 

..m. 

.n.i.iT.ii|.  i. ..•••••• 

^ ' " • ^ • ' • • • ^ • ^ - " • • ^ ^ « • ^ ^ « ^ ^ ^ w *" 

7.2 

Itemised breakdown of cost 

The precise breakdown will be determined by detailed proposals submitted 
by the Commission as time goes on. The following can be taken as a rough 
indication of the distribution by broad area of activity, however: 

Assistance for economic transition 
Assistance with achieving 

ECU 1.63 billion 

AG 

a better socio-economic balance 
Backing for regional integration 

ECU 1.76 billion 
ECU 0.50 billion 
ECU 3.89 billion 

7.3 

Operational  expenditure  on  studies,  meetings  of  experts,  etc.  falling 
under Part B 
(see  Annex  Ilia  to  the  Commission  communication  of  22 April  1992, 
attached as Annex VIII) 

95 budget 
r s s s a a B B B SB 

commitment appropriations in million  ecus 
var % 
96 PDB 

Breakdown 
-studies 
-meetings of experts 
-conferences 
-information and publications 
TOTAL 

7.4 

Indicative schedule of appropriations 

Accumulated 
position 
end 1994 

1995 
Budget* 

1996 
PDB 

commitment appropriations in million  ecus 

INDICATIVE PLAN 

1997 

1998 

1999 

172.9 

412.0 

833.6 

1098.0 

1383.0 

2000 and 
subs, yrs 
p.m. 

TOTAL 

3899.5 

Including ECU  10 million proposed in the supplementary amending budget (1/95) 

Implementation: 1995-1999 

8 

FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN 

The projects and programmes financed as part of cooperation with the MNC will 
be regularly followed up and audited by the Commission (or agents appointed by 
it) and by the Court of Auditors. 

9 

ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 

9.1  Specific and quantified objectives; target population 

Specific  objectives:  links  with  general  objective:  Against  the 
background of the general objective described in paragraph 4.1, the 
action  taken  under  this  Chapter  will  seek  to finance (wholly  or 
partly) programmes with the following main aims: 

• 

to  help  economic 
the 
establishment  of a free trade area between  and among the 

transition  by  encouraging 

/ty 

countries  of  the  Mediterranean  by  2010,  and  by  backing 
economic  and  social  reform  for  the  modernization  of firms 
(promotion of the private sector), with the accent on: 
- 
-  support for SME and job-creation; 
-  encouraging private investment; 
- 

improving competitiveness; 

infrastructure 

(primarily 

improving 
communications networks); 

economic 

-  establishing a suitable regulatory  framework; 
-  modernizing  the  way  in  which  economic  institutions 
operate (particularly the financial and taxation systems); 

to  bring about a better socio-economic  balance, with  action 
focusing  on  the  following,  in  the  interests  of  coping  with 
new challenges: 
- 

improving  social  services 
(education,  health  care, 
government housing, water supplies, etc.), particularly in 
towns,  and  particularly  for  the  most  underprivileged 
(especially young people and women); 

-  promoting harmonious and integrated  rural  development 
(going  beyond  agricultural  development 
to  cover 
improvement  of  services  (e.g.  health  care,  education, 
water 
the 
(sanitation), 
development of associated activities such as tourism); 
-  consolidation  of  democracy  and  respect  for  human 

electricity 

supplies 

and 

- 

rights; 
involving 
in  development 
society 
decentralized MED cooperation programmes; 

civil 

through 

-  support 

for 

education 

secondary  and 
vocational),  with  the  emphasis  on  integration  into  the 
world of employment; 

(primary, 

-  promotion  of  cultural  exchanges,  encouraging  dialogue 

at all levels; 

-  protection  of  the  environment  by  promoting  investment 
for  that  purpose  (long-term  loans  with  interest-rate 
subsidies)  and  by  encouraging  transfers  of  know-how 
(dialogue  with  the  countries'  environmental  agencies 
aimed  at  the  introduction  of  appropriate  legislation  and 
backing  the  development  of  alternative  sources  of 
energy). 

To  back  regional  integration  using  projects  and  activities 
which are of interest to  several Mediterranean countries and 
cooperation  with  contiguous  areas  of  both  sides  of  the 
Mediterranean,  and  by  supporting  the  Middle  East  peace 
process. 

Final  beneficiaries: 

M 

The  final  beneficiaries  of  assistance  for  the  MNC  will  be  the 
inhabitants  of  the  recipient  countries.  The  people  involved  will 
obviously vary according to the project or programme. 
The  recipients  may  be  SME,  private  entrepreneurs  (risk  capital), 
business  centres, 
institutes,  parts  of  civil  society 
(municipalities,  universities,  researchers,  directors  and  cultural 
associations and networks (Media) ). Assistance will be financial or 
in the form of know-how 

training 

9.2  Grounds for the operation 

Need for Community financial aid 

The Corfu  and  Essen  European  Councils  emphasized  the  need  to 
strengthen the European Union's Mediterranean  policy in order  to 
promote  peace  and  stability  in  a  region  which  is  of  strategic 
importance to it. 
Because the MNC need to  devote  substantial  energy to  economic 
reform,  substantial  extra  assistance  from  the European  Union will 
be needed to ensure that a free trade area is gradually established. 

Choice of ways and means 

The methods used in the programme of cooperation with the MNC 
will  vary  according  to  the  situation  of  each  country  and  sector. 
Detailed identification  and feasibility  studies will be carried  out  on 
the activities to be  financed. 

Main factors of uncertainty which could affect the specific remits 
of the operation 

The  process  of  economic  reform  due  to  be  implemented  or 
intensified  is unpredictable because of social risks and the course of 
the  world  economy.  Political  developments  in  the  region  will 
influence  the  progress  of  reform  and  the  extent  of  regional 
cooperation. 

9.3  Monitoring and evaluation of the operation 

Cooperation  with  the  MNC  is  closely  monitored  by  the  Commission 
departments in Brussels and the delegations in the countries themselves. 

A  computer  system  (RAP)  has  also  recently  been  installed  to  carry  out 
such monitoring. 

In addition, each programme is audited  on a regular basis by independent 
experts from the technical  and financial points  of  view  and from that  of 
impact on the target population or groups. 

Ai\ 

ISSN 0254-1475 

COM(95) 204  final 

DOCUMENTS 

EN 

11  13 

Catalogue number  : CB-CO-95-232-EN-C 

ISBN 92-77-89176-9 

Office for Official Publicatioas of the European Communities 

L-2985 Luxembourg