Proposal for a Council Decision on further exceptional financial assistance to Kosovo
Date: 2001-03-20
Institutions: European Commission
Subjects: EU aid, European Agency for Reconstruction, Kosovo, economic reconstruction, financial aid

C 180 E/260

EN

Official Journal of the European Communities

26.6.2001

Proposal for a Council Decision on further exceptional financial assistance to Kosovo

(2001/C 180 E/24)

COM(2001) 81 final (cid:151) 2001/0045(CNS)

(Submitted by the Commission on 20 March 2001)

THE COUNCIL OF THE EUROPEAN UNION,

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

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas:

(1) The Commission has

consulted the Economic
Financial Committee before submitting its proposal.

and

(2) The Security Council of

the United Nations adopted
Resolution 1244 (1999) on 10 June 1999 (1) aiming to
promote the establishment, pending a final settlement,
of substantial autonomy and self-government in Kosovo
within the Federal Republic of Yugoslavia.

(3) The International Community, based on the Resolution
1244 (1999), has
security
presence (KFOR) and an interim civil administration (cid:151)
the United Nations Interim Mission in Kosovo (UNMIK).

set up an international

(4) UNMIK consists of

four components ((cid:145)Pillars(cid:146)) and the
European Union (EU) has taken the lead role (2) for the
fourth Pillar responsible for economic reconstruction.

(5) UNMIK has taken steps to involve the main political
parties and ethnic communities of Kosovo in its activities
and is continuing to do so.

(6) UNMIK, and particularly its Pillar

IV, have achieved
substantial progress in setting up an institutional,
legal
and policy framework conducive to the creation of a
sound economy based on market principles.
It has
functioning banking and payments
provided for
system and promoted the development of
the private
sector. UNMIK has also made progress in developing the
revenue base and keeping expenditures under control.

a

(8) On the basis of estimates from UNMIK presented in
agreement with the International Monetary Fund (IMF),
Kosovo requires external support to further progress in
establishing a sound market economy and a civil adminis-
tration; it is estimated that exceptional external financial
assistance of some EUR 90 million would be needed until
end-2001.

(9) UNMIK has presented a request for exceptional financial
assistance; the international community considers that the
provision of external budgetary support,
fairly shared
among donors,
to help cover the residual
is essential
financing needs identified under the budget prepared for
Kosovo by UNMIK.

(10) Kosovo is not in a position to borrow either domestically
financial market and it is not
or on the international
eligible for membership of
the International Financial
Institutions and may therefore not benefit from financial
assistance associated to their programmes.

(11) Although

economic

resumed with
activity
considerable speed after the conflict, Kosovo is at a low
level of economic development and its GDP per capita is
estimated to be below other countries of the region and to
be one of the lowest in Europe.

has

(12) Kosovo’s current low level of economic development is
the result of a long term neglect as well as conflict-related
damages which can not be overcome quickly but require
reliable support over a significant period of time so as to
establish sustainable institutions and to achieve durable
economic growth.

(13) The Community found it an appropriate measure to help
ease Kosovo’s financial constraints in the exceptionally
difficult circumstances and already provided for financial
assistance in the form of
in 2000
amounting to EUR 35 million (3).

straight grants

(7) UNMIK established a Central Fiscal Authority providing
for transparent and accountable procedures to manage
the Kosovo budget.

(1) S/RES/1244 (1999) adopted by the UN Security Council at

its

4011th meeting on 10 June 1999.

(2) International civil presence in Kosovo: Report of

the Secretary-
General pursuant to Paragraph 10 of Security Council Resolution
1244 (1999), S/1999/672, 12 June 1999, II.5.

(14) Financial assistance from the Community, in liaison with
other donors, in the form of straight grants to be made
the Kosovo people
available to UNMIK in support of
continues to be the appropriate measure.

(3) Council Decision 2000/140/EC of 14 February 2000 (OJ L 47,

19.2.2000, pp. 28-29).

26.6.2001

EN

Official Journal of the European Communities

C 180 E/261

(15) Without prejudice to the powers of

the financial assistance will be part of

the budgetary
authority,
the
envelope of aid foreseen for Kosovo in 2001, and
therefore subject
to the funds being available in the
general budget.

(16) The exceptional financial assistance should be managed by

the European Commission.

(17) The Treaty does not provide, for the adoption of this

decision, powers other than those of Article 308,

HAS DECIDED AS FOLLOWS:

Article 1

(2000/140/CE) on 14 February 2000,

In addition to the financial assistance already decided by
1.
the
the Council
Community shall make available
to UNMIK exceptional
financial assistance in the form of straight grants of up to
EUR 30 million, with a view to alleviating the financial
situation in Kosovo,
and
facilitating
and
continuation
supporting the development of a sound economic framework.

establishment
functions

administrative

essential

the

of

conditions shall be consistent with any agreement referred to
in Article 1(2).

The Commission shall verify at

2.
in
consultation with the Economic and Financial Committee and
in liaison with the IMF and the World Bank, that economic
policies in Kosovo respect the objectives and economic policy
conditions of this assistance.

intervals,

regular

Article 3

1.
The assistance shall be made available to UNMIK in at
least two instalments. Subject to the provisions of Article 2, the
first instalment is to be released on the basis of a Memorandum
of Understanding between UNMIK and the Community.

2.
Subject to the provisions of Article 2, the second and any
possible further instalment shall be released on the basis of a
the economic policy conditions
successful completion of
referred to in Article 2(1) and not before three months after
the release of the previous instalment.

3.
The funds shall be made available to UNMIK through the
Central Fiscal Authority exclusively in support of Kosovo’s
budgetary needs.

2.
This assistance shall be managed by the Commission in
close consultation with the Economic and Financial Committee
and in a manner consistent with agreements or understandings
reached between the IMF and UNMIK or any other inter-
nationally recognised authorities of Kosovo.

Article 4

All related costs incurred by the Community in concluding and
carrying out the operation under this Decision shall be borne
by UNMIK if appropriate.

Article 2

Article 5

1.
The Commission is empowered to agree with UNMIK,
after consultation with the Economic and Financial Committee,
the economic conditions attached to this assistance. These

The Commission shall address to the European Parliament and
to the Council an annual
include an
evaluation on the implementation of this Decision.

report, which will