1999/786/EC: Council Decision of 29 November 1999 granting a Community guarantee to the European Investment Bank (EIB) against losses under loans for projects for the reconstruction of the earthquake-stricken areas of Turkey
Date: 1999-11-29
Institutions: Council of the European Union
Subjects: EIB loan, Türkiye, credit guarantee, disaster area, economic reconstruction, financial loss

3. 12. 1999

EN

Official Journal of the European Communities

L 308/35

COUNCIL DECISION

of 29 November 1999

granting a Community guarantee to the European Investment Bank (EIB) against losses under loans
for projects for the reconstruction of the earthquake-stricken areas of Turkey

(1999/786/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 308 thereof,

(4)

national Parliaments in the European Union, attached to
the Treaty of Amsterdam modifying the Treaty of the
European Union;

Therefore, loans extended under the special EIB lending
facility for the reconstruction of Turkey guaranteed by
this Decision are exclusively aimed at the replacement,
reconstruction or rehabilitation of damaged surface and
subsurface infrastructure,
installations and
SMEs, as well as urban infrastructure and housing
affected by the earthquake;

industrial

On 31 October 1994, the Council adopted Regulation
(EC, Euratom) No 2728/94 establishing a Guarantee
Fund for external actions (1);

The EIB is at present completing the loan programmes
for Central and Eastern Europe,
the Mediterranean
region, Asia and Latin America and the Republic of
lending
South Africa under the current EIB external
mandates pursuant to Decision 97/256/EC (2); on 23
April 1999, the Commission put forward its proposal
lending
on the renewal of
mandate for the period following the expiry of
the
current mandate; regarding the renewal of the general
mandate, the Council on 12 July 1999 agreed, subject to
the opinion of the European Parliament, to a guarantee
rate of 65 %,
amount of
EUR 2 630 million, and a duration for a new mandate
of seven years, with a review on first accession or at the
latest after four and a half years, whichever is the earlier;

the general EIB external

guaranteed annual

a

The EIB has established lending operations in Turkey
since 1965 and, through its existing operations, regular
contacts with the relevant Turkish authorities as well as
the international financial institutions active in Turkey;

In June 1996, the Commission, in agreement with the
EIB, presented to the Council a proposal for a new
guarantee system for EIB lending to third countries;

On 2 December 1996, the Council approved conclu-
sions on new guarantee arrangements for EIB lending to
third countries, according to which the approach of a
global guarantee, without distinguishing between regions
and projects,
is approved and a risk-sharing scheme
accepted; under the risk-sharing scheme the EIB should
secure adequate non-sovereign third-party guarantees for
commercial risks, with the budgetary guarantee in that
case covering only political risks;

(5)

(6)

(7)

(8)

(9)

(1) OJ L 293, 12.11.1994, p. 1. Regulation as amended by Regulation

(EC, Euratom) No 1149/1999 (OJ L 139, 2.6.1999, p. 1).

(2) Council Decision 97/256/EC of 14 April 1997 granting a Commu-
losses
nity guarantee to the European Investment Bank against
under loans for projects outside the Community (central and eastern
Europe an countries, Mediterranean countries, Latin American and
Asian countries, South Africa,
the former Yugoslav Republic of
Macedonia and Bosnia and Herzegovina) (OJ L 102, 19.4.1997, p.
33). Decision as last amended by Decision 98/729/EC (OJ L 346,
22.12.1998, p. 54).

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas:

(1)

(2)

(3)

The Turkish areas of Kocaeli, Sakarya, Bolu and Yalova
were seriously stricken by an earthquake in August
1999 and its recent aftershocks;

The General Affairs Council of 13 September 1999
concluded that: ‘it looks forward to early consideration
of new and substantial assistance for rehabilitation and
reconstruction to come from the EIB lending as well as
macrofinancial assistance and MEDA II,
from which
Turkey should benefit substantially’; the Council also
underlined the importance of mobilising assistance as
quickly as possible;

Further to the General Affairs Council of 13 September
1999, the Ecofin Council of 8 October 1999 concluded
that: ‘the Council invites the Commission to put forward
a timely proposal
for a Council Decision for a
Community guarantee to the EIB against losses under
loans for the reconstruction of the earthquake-affected
areas of Turkey to allow the adoption of the Decision by
the Council possibly by the end of November 1999,
along the following lines: an overall ceiling of EUR 600
million for the credits to be opened for reconstruction in
Turkey over three years, and the above ceiling to be
exclusively available for the financing of
investment
projects to be carried out for the replacement, rehabilita-
tion or reconstruction of
infrastructural or industrial
installations affected by the earthquake of August 1999
in Turkey’; on 8 November 1999 the Ecofin Council
confirmed the urgency of the adoption of this Decision;
for these reasons of urgency it has not been possible to
respect the normal time limit of six weeks for the full
information by Member States of their national Parlia-
ments in accordance with the Protocol on the role of

L 308/36

EN

Official Journal of the European Communities

3. 12. 1999

(10)

(11)

(12)

(13)

(14)

(15)

The global guarantee covering the general EIB external
lending mandate laid down in Decision 97/256/EC and
which is intended to be renewed by a successor decision
should also apply to the special EIB-lending facility for
the reconstruction of Turkey as laid down by the current
Decision; credits opened under the current Decision
should, as from the entry into force of the relevant
successor decision, benefit from the global guarantee
under that successor decision;

the special nature of

In view of
the projects to be
financed, the EIB under this Decision should not be
obliged to seek risk-sharing through non-governmental
guarantees;

The EIB in the selection of the investment projects to be
financed, should consult the appropriate Turkish author-
ities; the EIB should coordinate its investment priorities
and its individual operations with the other international
financial
institutions active in the affected regions of
Turkey and where appropriate, the EIB should arrange
co-financing with other international financial
institu-
tions;

EIB financing under this Decision should be managed, in
accordance with the EIB's usual criteria and procedures
including appropriate control measues as well as with
the relevant rules and procedures concerning audit by
the Court of Auditors and cooperation with the Euro-
pean Anti-Fraud Office (OLAF),
in such a way as to
support prompt and effective replacement, rehabilitation
or reconstruction of infrastructural and industrial instal-
there is regular
lations affected by the earthquake;
consultation between the EIB and the Commission to
ensure coordination of priorities and activities in this
part of Turkey and to measure progres towards the
fulfilment of the objective of this Decision; the setting
and periodic review of the operational objectives and the
measurement of their fulfilment are the responsibility of
the EIB's Board of Directors;

The EIB and the Commission should fix the terms on
which the guarantee is to be given;

The Treaty does not provide, for the adoption of this
Decision, powers other than those of Article 308,

HAS DECIDED AS FOLLOWS:

Article 1

Objective

The Community shall grant the European Investment Bank
(hereinafter referred to as ‘the EIB’) a global guarantee in
respect of all payments not received by it but due in respect of
credits opened, in accordance with its usual criteria, for invest-
ment projects carried out for the replacement, rehabilitation or
reconstruction of surface and subsurface infrastructure, indus-
trial installations and SMEs as well as urban infrastructure and

housing affected by the earthquake of August 1999 in Turkey
and its recent aftershocks.

Article 2

Ceiling and conditions

The overall ceiling of

1.
EUR 600 million or the equivalent thereof.

the credits opened shall be

2.
The Community guarantee with respect to credits opened
by the EIB under this Decision up to and until the entry into
force of the successor decision to Decision 97/256/EC shall
take the form of an extension of the global guarantee granted
to the EIB under the general external lending mandate, as laid
down in Decision 97/256/EC.

the entry into force of

the
As of
Community guarantee covering any subsequent and additional
credits opened by the EIB under this Decision shall form an
extension of the global guarantee granted in the successor
decision.

the successor decision,

The extension of the guarantee, whether under Decision 97/
256/EC or its successor decision, shall be restricted to 65 % of
the aggregate amount of credits opened under this Decision,
plus all related sums.

3.
For the purposes of lending under this Decision, the EIB
shall exceptionally not be obliged to seek non-governmental
guarantees to cover commercial risk.

Article 3

Reporting

The Commission shall inform the European Parliament and the
Council each year of the loan operations carried out under this
Decision and shall, at the same time, submit an assessment of
the implementation of
this Decision and of coordination
between the international financial institutions involved in the
reconstruction effort in Turkey. The Commission information
submitted to the European Parliament and the Council shall
include an assessment of the contribution of the lending under
this Decision to the replacement, rehabilitation or reconstruc-
tion of infrastructual and industrial installations affected by the
earthquake, taking into account the operational objectives and
appropriate measurements of their fulfilment to be established
by the EIB for lending under this Decision. For these purposes,
the EIB shall transmit to the Commission the appropriate infor-
mation.

Article 4

Duration

The present guarantee shall cover loans signed during a period
of three years from the date of adoption of this Decision. If, on
expiry of those three years, the loans signed by the EIB have
not attained the overall ceiling referred to in Article 2, this
period shall be automatically extended by six months.

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Official Journal of the European Communities

L 308/37

Article 5

Final provisions

1.

2.

The EIB and the Commission shall fix the terms on which the guarantee is to be given.

This Decision shall be published in the Official Journal of the European Communities.

It shall take effect on the day of its adoption.

Done at Brussels, 29 November 1999.

For the Council

The President

S. NIINISTÖ