Proposal for a Council Decision granting a Community guarantee to the European Investment Bank against losses under a special lending action for selected environmental projects in the Baltic Sea basin of Russia under the Northern Dimension
Date: 2001-06-05
Institutions: European Commission
Subjects: Baltic Sea, EIB loan, European Investment Bank, Russia, credit guarantee, environmental protection, financial loss, investment abroad, regional development

28.8.2001

EN

Official Journal of the European Communities

C 240 E/295

Proposal for a Council Decision granting a Community guarantee to the European Investment
Bank against losses under a special lending action for selected environmental projects in the Baltic
Sea basin of Russia under the Northern Dimension

(2001/C 240 E/35)

COM(2001) 297 final (cid:151) 2001/0121(CNS)

(Submitted by the Commission on 6 June 2001)

THE COUNCIL OF THE EUROPEAN UNION,

dumpsites of
water.

toxic waste are threatening the ground

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 Northern Dimension was launched by the Helsinki
Council of 10-11 December 1999, which invited the
the
forward an Action Plan for
Commission to put
Northern Dimension. The Feira European Council
in
June 2000 adopted the Action Plan in the external and
cross-border policies of the EU during 2000-2003. The
Northern Dimension covers the geographical area from
Iceland to the west across to North-West Russia, from
the Norwegian, Barents and Kara Seas in the North to
the Southern coast of the Baltic Sea.

(2) The Northern Dimension aims at addressing the special
in northern Europe.
regional development challenges
These include harsh climatic conditions,
long distances,
particularly wide living standard disparities, environmental
challenges including problems with nuclear waste and
waste water management,
insufficient
transport and cross border facilities. It aims to intensify
cross border co-operation between the EU and its neigh-
bouring countries and regions in northern Europe.

as well

as

(3) The

environmental

situation in North-West Russia
remains very difficult. There is a large heritage of environ-
mental degradation, which is difficult to handle financially
by the present government of Russia, or by the users of
utilities through tariffs in view of the still relatively poor
the population. Thus
level of purchasing power of
dangerous transboundary environmental black spots orig-
inating in North-West Russia have not yet been addressed.
Sewage from 3.5 million people in the St. Petersburg area
is still discharged only partially treated into the Baltic Sea,
with a similar situation around Kaliningrad. Some huge

further

(4) The Union already supports some environmental projects
in North-West Russia with grants from TACIS. Given the
need to urgently strengthen the environmental protection
transboundary
in the area to prevent major
damage, it is justified for the Community to strengthen
its support through limited EIB loans. The involvement of
the EIB would reinforce the impact of Community actions,
not only by multiplying the funds available, but also
the Bank’s
through the professional
project teams. Community support would be extended
in a form that
the cash generation
capacity of projects and which is recoverable.

takes account of

involvement of

for

action

projects

environmental

(5) At the initiative of the presidency, the Ecofin Council of
12 March 2001 considered a set of criteria for a limited
in
EIB special
North-West Russia, notably in the St Petersburg and Kalin-
ingrad areas. It was underlined that (a) projects shall be
assessed by the EIB and the loans authorised on a case-
by-case basis by its Board of Governors. It is thus not a
(b)
question of a general
projects shall have a strong environmental objective and
be of
(c) EIB shall
co-operate and co-finance with other IFIs in order to
ensure reasonable risk-sharing and appropriate project
loans shall
conditionality;
be subject to an indicative ceiling of EUR 100 million;
(e) Russia must honour its international
financial obli-
gations, including those to the Paris Club.

lending mandate for Russia;

the aggregate volume of

significant

the EU;

interest

for

(d)

(6) The Stockholm European Council of 23-24 March 2001
concluded (cid:145)that the Union should open up EIB lending for
selected environmental projects [in Russia], according to
the specific criteria decided by the Council(cid:146).

(7) It is therefore appropriate to provide a guarantee to the
EIB to allow it to sign loan operations under this special
lending action for selected environmental projects in the
Baltic Sea rim of Russia, notably in the St. Petersburg and
Kaliningrad areas. The guarantee under this special action
is of exceptional nature and is not to be considered a
precedent for any future actions. The EIB has indicated
its ability and willingness to extend loans from its own
resources in North-West Russia,
in accordance with its
Statute.

C 240 E/296

EN

Official Journal of the European Communities

28.8.2001

(8) The Community guarantee under

the present action
should have a ceiling of EUR 100 million. In order to
strengthen the impact of this comparatively small action,
it should be focused on projects located in the Baltic rim
area of Russia.

in accordance with its usual criteria,

respect of all payments not received by it but due in respect of
for
credits opened,
investment projects carried out under
lending
action in the Baltic Sea basin of Russia under Northern
Dimension. Eligible projects shall have a strong environmental
objective and be of significant interest to the EU.

this special

(9) The Northern Dimension Environmental Partnership
(NDEP) will provide a framework for priority setting
involving the Commission, bilateral and multilateral
donors, the IFIs and the transition countries concerned.

Article 2

Ceiling and conditions

(10) Council Decision 2000/24/EC (1) grants the EIB a global
65 % Community guarantee against losses under loans for
projects outside the Community (central and eastern
Europe, Mediterranean countries, Latin America and
Asia and the Republic of South Africa).

(11) On 2 December 1996, the Council approved conclusions
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,
scheme
and
accepted. Under the risk-sharing scheme the EIB should
secure adequate non-sovereign third-party guarantees for
commercial risks, with the budgetary guarantee covering
only political risks.

risk-sharing

approved

is

a

(12) The global guarantee covering the general EIB external
lending mandate laid down in Decision 2000/24/EC
should also apply to the special EIB lending action in
Russia under the Northern Dimension. Credits opened
from the global
under
guarantee as governed by Decision 2000/24/EC. In view
of
this action, Article 1(3) of
Decision 2000/24/EC should not apply to it.

this Decision should benefit

the special nature of

(13) Time is of

the essence in the implementation of

Decision. There
investment in the Baltic Sea rim of Russia.

is urgent need for

this
environmental

(14) For the purpose of adopting this Decision,

the only
powers provided for by the Treaty are those set out in
Article 308,

HAS DECIDED AS FOLLOWS:

Article 1

Objective

The Community shall grant the European Investment Bank
(hereinafter referred to as (cid:145)the EIB(cid:146)) a global guarantee in

The overall ceiling of

1.
EUR 100 million or the equivalent thereof.

the credits opened shall be

The Community guarantee with respect to credits opened
2.
by the EIB under this Decision shall
take the form of an
extension of the 65 % global Community guarantee granted
lending mandate, as
to the EIB under the general external
laid down in Decision 2000/24/EC.

Projects financed by loans to be covered by the guarantee

3.
shall satisfy the following criteria:

(cid:151) The eligibility in accordance with Article 1;

(cid:151) Co-operation and co-financing by EIB with other Inter-
national Financial Institutions in order to ensure reasonable
risk-sharing and appropriate project conditionality.

The EIB shall only present projects for approval if Russia
financial obligations,

4.
is deemed to honour its international
including obligations for its Paris Club debt.

5.
The Board of Governors of the EIB, under Article 18 of
the Statute of the Bank, shall approve on a case-by-case basis
each loan to be covered by the Community guarantee.

For the purposes of this Decision, Article 1(3) of Decision

6.
2000/24/EC does not apply.

Article 3

Reporting

the implementation of

The Commission, in the framework of reporting under Council
Decision 2000/24/EC, 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
this Decision and of
assessment of
co-ordination between the International Financial Institutions
involved in the projects. The Commission information
submitted to the European Parliament and to the Council
the
shall
the
lending under
Community’s objectives under Northern Dimension.

the contribution of
fulfilment of

include an assessment of

this Decision to the

(1) OJ L 9, 13.1.2000, p. 24.

For the purposes referred to in the first subparagraph, the EIB
shall transmit to the Commission the appropriate information.

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Official Journal of the European Communities

C 240 E/297

Article 4

Duration

Article 5

Final provisions

The 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.

This Decision shall take effect on the day of its publi-

1.
cation in the Official Journal of the European Communities.

The EIB and the Commission shall fix the terms on which

2.
the guarantee is to be given.