Proposal for a Council Decision granting a Community guarantee to the European Investment Bank 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) (Codified version)
Date: 2006-07-26
Institutions: European Commission
Subjects: Asia, Central and Eastern Europe, EIB loan, Latin America, Mediterranean third countries, South Africa, codification of EU law, credit guarantee, financial loss, investment abroad

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.7.2006 
COM(2006) 419 final 

2006/0139 (CNS) 

Proposal for a 

COUNCIL DECISION 

granting a Community guarantee to the European Investment Bank 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) 

(Codified version) 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

In  the  context  of  a  people’s  Europe,  the  Commission  attaches  great  importance  to 
simplifying  and  clarifying  Community  law  so  as  to  make  it  clearer  and  more 
accessible to the ordinary citizen, thus giving him new opportunities and the chance 
to make use of the specific rights it gives him. 

This aim cannot be achieved so long as numerous provisions that have been amended 
several times, often quite substantially, remain scattered, so that they must be sought 
partly  in  the  original  instrument  and  partly  in  later  amending  ones.  Considerable 
research work, comparing many different instruments, is thus needed to identify the 
current rules. 

For  this  reason  a  codification  of  rules  that  have  frequently  been  amended  is  also 
essential if Community law is to be clear and transparent. 

On  1  April  1987  the  Commission  therefore  decided1  to  instruct  its  staff  that  all 
legislative acts should be codified after no more than ten amendments, stressing that 
this  is  a  minimum  requirement  and  that  departments  should  endeavour  to  codify  at 
even  shorter  intervals  the  texts  for  which  they  are  responsible,  to  ensure  that  the 
Community rules are clear and readily understandable. 

The  Conclusions  of 
the  Edinburgh  European  Council 
(December 1992) confirmed this2, stressing the importance of codification as it offers 
certainty as to the law applicable to a given matter at a given time. 

the  Presidency  of 

Codification  must  be  undertaken  in  full  compliance  with  the  normal  Community 
legislative procedure. 

Given  that  no  changes  of  substance  may  be  made  to  the  instruments  affected  by 
codification, the European Parliament, the Council and the Commission have agreed, 
by  an  interinstitutional  agreement  dated  20  December  1994,  that  an  accelerated 
procedure may be used for the fast-track adoption of codification instruments. 

is 

this  proposal 

to  undertake  a  codification  of  Council 
The  purpose  of 
Decision 2000/24/EC of 22 December 1999 granting a Community guarantee to the 
European  Investment  Bank  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)3. The new  Decision will supersede  the 
various acts incorporated in it4; this proposal fully preserves the content of the acts 
being  codified  and  hence  does  no  more  than  bring  them  together  with  only  such 
formal amendments as are required by the codification exercise itself. 

The codification proposal was drawn up on the basis of a preliminary consolidation, 
in  all  official  languages,  of  Decision  2000/24/EC  and  the  instruments  amending  it, 

COM(87) 868 PV. 
See Annex 3 to Part A of the Conclusions. 
Carried out pursuant to the Communication from the Commission to the European Parliament and the 
Council - Codification of the Acquis communautaire, COM(2001) 645 final. 
See Annex I to this proposal. 

1. 

2. 

3. 

4. 

5. 

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carried out by the Office for Official Publications of the European Communities, by 
means  of  a  data-processing  system.  Where  the  Articles  have  been  given  new 
numbers, the correlation between the old and the new numbers is shown in a table set 
out in Annex II to the codified Decision. 

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(cid:208) 2000/24/EC (adapted) 

2006/0139 (CNS) 

Proposal for a 

COUNCIL DECISION 

granting a Community guarantee to the European Investment Bank 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) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
⌦ 181a ⌫ thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Parliament5, 

Having regard to the opinion of the European Economic and Social Committee6, 

Whereas: 

(cid:208)  

Council Decision 2000/24/EC of 22 December 1999 granting a Community guarantee 
to  the  European  Investment  Bank  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)7  has  been  substantially  amended  several 
times8. In the interests of clarity and rationality the said Decision should be codified. 

(cid:208) 2000/24/EC Recital 1 

The European Council meeting in Madrid on 15 and 16 December 1995 confirmed the 
importance of the European Investment Bank, hereinafter referred to as ‘the EIB’, as 
an  instrument  of  cooperation  between  the  Community  and  Latin  America  and  called 
on the EIB to intensify its activities in the region. These projects should be of interest 
to both the Community and the countries concerned. 

OJ C […], […], p. […]. 
OJ C , , p. . 
OJ  L  9,  13.1.2000,  p.  24.  Decision  as  last  amended  by  Decision  2006/174/EC  (OJ  L  62,  3.3.2006, 
p. 26). 
See Annex I. 

(1) 

(2) 

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(3) 

The  European  Council  meeting  in  Florence  on  21  and  22  June  1996  welcomed  the 
results of the Asia-Europe summit, which marked a turning-point in relations between 
the two continents. 

(cid:208) 2000/24/EC Recital 2 

(4) 

The European Council meeting in Amsterdam on 16 and 17 June 1997 welcomed the 
conclusions adopted at the Second Euro-Mediterranean Conference, which was held at 
Valletta, Malta, on 15 and 16 April 1997 and reaffirmed the principles and objectives 
agreed at Barcelona in 1995. 

(cid:208) 2000/24/EC Recital 3 

(5) 

The  European  Council  meeting  in  Luxembourg  on  12  and  13  December  1997 
launched  the  enlargement  process  with  the  Central  and  Eastern  European  countries 
and Cyprus. 

(cid:208) 2000/24/EC Recital 4 

(6) 

The  European  Council  meeting  in  Cardiff  on  15  and  16  June  1998  welcomed  the 
efforts which the Republic of South Africa was making to modernise its economy and 
integrate it into the world trading system. 

(cid:208) 2000/24/EC Recital 5 

(cid:208) 2000/24/EC Recital 6 

(7) 

The EIB is completing the current loan programmes for Central and Eastern Europe, 
the Mediterranean region, Asia and Latin America and the Republic of South Africa 
pursuant to Council Decision 97/256/EC9, as well as the lending that is governed by 
the  Protocol  on  Financial  Cooperation  with  the  Former  Yugoslav  Republic  of 
Macedonia, according to Council Decision 98/348/EC10. 

(8) 

The Council has invited the EIB to start operations in Bosnia and Herzegovina. These 
operations may be continued, subject to a positive report being drawn up as stipulated 
in Council Decision 98/729/EC11. 

(cid:208) 2000/24/EC Recital 7 

(9) 

Although Bosnia and Herzegovina and the Former Yugoslav Republic of Macedonia 
have  been  included  in  the  Central  and  Eastern  Europe  region  since  the  adoption  of 

(cid:208) 2000/24/EC Recital 8 

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OJ  L 102,  19.4.1997, p. 33. Decision  as  last  amended  by  Regulation  (EC)  No 2666/2000 (OJ  L 306, 
7.12.2000, p. 1). 
OJ L 155, 29.5.1998, p. 53. 
OJ L 346, 22.12.1998, p. 54. 

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Decision  97/256/EC,  the  EIB's  total  lending  effort  to  applicant  countries  within  this 
region should increase given the importance of the pre-accession facility the EIB plans 
to create for EIB lending for projects in these countries without a guarantee from the 
Community budget or Member States. 

(10) 

In  these  circumstances,  the  EIB  should  ensure  that  its  guaranteed  lending  within  the 
Central  and  Eastern  Europe  mandate  will  finance  particularly  projects  in  those 
countries  which  have  fewer  projects  suitable  for  financing  from  the  pre-accession 
facility or projects in non-applicant countries. 

(cid:208) 2000/24/EC Recital 9 

(cid:208) 2000/24/EC Recital 10 

(11)  The Cooperation Agreements between the European Community and Nepal, between 
the European Community and the Lao People’s Democratic Republic and between the 
European  Community  and  Yemen  entered  into  force  on  1  June  1996,  1 December 
1997  and  on  1  July  1998  respectively.  The  Cooperation  Agreement  between  the 
European  Community  and  South  Korea  was  signed  on  28  October  1996.  Nepal, 
Yemen, Laos and South Korea should become beneficiaries of EIB funding under the 
EIB's mandate for Asia and Latin America. 

(12) 

It  is  appropriate  to  make  certain  improvements  in  the  programmes  of  operations  in 
respect  of  duration  and  country  coverage.  It  is  appropriate  to  adjust  the  blanket 
guarantee  rate  and  the  portion  of  lending  for  which  the  EIB  is  invited  to  cover  the 
commercial risk from non-sovereign guarantees. 

(cid:208) 2000/24/EC Recital 11 

(13)  The Council is calling on the EIB to continue its operations in support of investment 
projects carried out in those countries by offering it the guarantee provided for in this 
Decision. 

(cid:208) 2000/24/EC Recital 12 

(14) 

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. 

(cid:208) 2000/24/EC Recital 13 

(cid:208) 2000/24/EC Recital 14 
(adapted) and 2005/47/EC Recital 
5 (adapted) 

(15)  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 the regions and projects, is approved 
and a risk-sharing scheme accepted. Under the risk-sharing scheme ⌦ the budgetary 
guarantee should  cover ⌫  only  political  risks  arising  from  currency  non  transfer, 

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expropriation, war or civil disturbance ⌦ and denial of justice upon breach of certain 
contracts by the third country government or other authorities ⌫. 

(16)  Under the risk-sharing scheme, the EIB should secure commercial risks by means of 
non-sovereign third-party guarantees or by means of any other security or collateral as 
well  as  relying  on  the  financial  strength  of  the  debtor,  in  accordance  with  its  usual 
criteria. 

2005/47/EC Recital 6 

(17)  The guarantee arrangements should not affect the excellent credit standing of the EIB. 

(cid:208) 2000/24/EC Recital 15 

(18)  Council Regulation (EC, Euratom) No 1149/199912 revised the target amount and the 
provisioning rate for the Loan Guarantee Fund established by Council Regulation (EC, 
Euratom) No 2728/9413. 

(cid:208) 2000/24/EC Recital 16 

(cid:208) 2005/47/EC Recital 7 

(19)  The  financial  perspective  for 

the 
Interinstitutional  Agreement  of  6  May  1999  between  the  European  Parliament,  the 
Council  and  the  Commission  on  budgetary  discipline  and  improvement  of  the 
budgetary  procedure14  envisages  a  ceiling  for  the  loan  guarantee  reserve  in  the 
Community budget of EUR 200 million (at 1999 prices) per annum. 

to  2006  according 

the  period  2000 

to 

(cid:208) 2000/24/EC Recital 18 

(20)  EIB  financing  in  eligible  third  countries  should  be  managed,  in  accordance  with  the 
EIB's usual criteria and procedures, including appropriate control measures, as well as 
with the relevant rules and procedures concerning the Court of Auditors and OLAF, in 
such  a  way  as  to  support  Community  policies  and  to  enhance  coordination  with  the 
Community's  other  financial  instruments.  There  is  regular  consultation  between  the 
EIB  and  the  Commission  to  ensure  coordination  of  priorities  and  activities  in  these 
countries and to measure progress towards the fulfilment of the Community's relevant 
policy objectives. The setting and periodic review of the operation objectives and the 
measurement of their fulfilment are the responsibility of the EIB's Board of Directors. 
In  particular,  EIB  financing  in  the  candidate  countries  should  reflect  the  priorities 
established in the accession partnerships between the Community and those countries. 
Thus the transparency of the EIB lending under this Decision should be substantially 
enhanced. 

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OJ L 139, 2.6.1999, p. 1. 
OJ  L  293,  12.11.1994,  p.  1  Regulation  as  last  amended  by  Regulation  (EC,  Euratom)  No  2273/2004 
(OJ L 396, 31.12.2004, p. 28). 
OJ C 172, 18.6.1999, p. 1. 

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(21)  Close  cooperation  between  the  EIB  and  the  Commission  should  ensure  consistency 
and  synergy  with  the  European  Union's  geographical  cooperation  programmes  and 
ensure that the EIB loan operations complement and strengthen the European Union's 
policies for those regions. 

(cid:208) 2005/47/EC Recital 8 

(cid:208) 2000/24/EC Recital 19 

(22)  As  from  the  date  on  which  this  Decision  takes  effect,  the  Community  guarantee 
covering 
under  Council 
Decision 1999/786/EC15  shall  take  the  form  of  an  extension  of  the  global  guarantee 
under this Decision. 

for  Turkey 

earthquake 

facility 

special 

the 

(23)  The  EIB  and  the  Commission  will  adopt  the  procedures  for  granting  the  said 

guarantee, 

(cid:208) 2000/24/EC Recital 20 

(cid:208) 2000/24/EC 
(cid:206)1 2005/47/EC Art. 1 pt. 1(a)(i) 
(cid:206)2 2005/47/EC Art. 1 pt. 1(a)(ii) 

HAS DECIDED AS FOLLOWS: 

Article 1 

1. (cid:206)1 The Community shall grant the European Investment Bank (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, and in support of the Community’s relevant external policy objectives, 
for  investment  projects  carried  out  in  the  South-eastern  Neighbours,  the  Mediterranean 
countries, Latin America and Asia and the Republic of South Africa. (cid:205) 

This guarantee shall be restricted to 65% of the aggregate amount of the credits opened, plus 
all  related  sums.  (cid:206)2 The  overall  ceiling  of  the  credits  opened  shall  be  equivalent  to 
EUR 19 460 million, broken down as follows: (cid:205) 

(cid:208) 2005/47/EC Art. 1 pt. 1(a)(ii) 

– 

– 

South-eastern Neighbours: 

EUR 9 185 million, 

Mediterranean countries: 

EUR 6 520 million, 

15 

OJ L 308, 3.12.1999, p. 35. 

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– 

– 

– 

Latin America and Asia: 

EUR 2 480 million, 

Republic of South Africa: 

EUR 825 million, 

Special  action  supporting  the  consolidation  and  intensification  of  the  EC-Turkey 
Customs Union: 

EUR 450 million; 

and may be used by 31 January 2007 at the latest. The credits already signed shall be taken 
into account as a deduction from the regional ceilings. 

(cid:208) 2000/24/EC (adapted) 

The  Commission  shall  report  on  the  application  of  this  Decision  at  the  latest  six  months 
before any new accession treaties enter into force, and make proposals for amendments of this 
Decision if appropriate. The Council will discuss and act on any proposal with effect from the 
date of entry into force of any new accession treaty. 

If, on expiry of the guaranteed lending period on 31 January 2007, the loans granted by the 
EIB have not attained the overall amounts referred to in the second subparagraph, this period 
shall be automatically extended by six months. 

2. The countries covered by paragraph 1 are: 

South-eastern  Neighbours:  Albania,  Bosnia  and  Herzegovina,  Bulgaria,  Croatia, 
Former  Yugoslav  Republic  of  Macedonia,  Romania,  Serbia  and  Montenegro, 
Turkey; 

(cid:208) 2005/47/EC Art. 1 pt. 1(b)(i) 

(cid:208) 2000/24/EC 
(cid:206)1 2006/174/EC Art. 1  

Mediterranean  countries:  Algeria,  Egypt,  Israel,  Jordan,  Lebanon,  Morocco,  Syria, 
Tunisia and Gaza-West Bank; 

Latin  America:  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador, 
El Salvador,  Guatemala,  Honduras,  Mexico,  Nicaragua,  Panama,  Paraguay,  Peru, 
Uruguay and Venezuela; 

Asia:  Bangladesh,  Brunei,  China,  India,  Indonesia,  Laos,  Macao,  Malaysia, 
(cid:206)1 the Maldives, (cid:205)  Mongolia,  Nepal,  Pakistan,  Philippines,  Singapore,  South 
Korea, Sri Lanka, Thailand, Vietnam and Yemen; 

Republic of South Africa. 

– 

– 

– 

– 

– 

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3. The EIB is hereby invited to aim to cover the commercial risk on 30% of its lending under 
this  Decision  from  non-sovereign  guarantees  as  far  as  possible  on  an  individual  regional 
mandate  basis.  This  percentage  shall  be  expanded  upon  whenever  possible  insofar  as  the 
market permits. 

Article 2 

The Commission shall inform the European Parliament and the Council each year of the loan 
operations and progress made on risk-sharing under Article 1(3) and shall, at the same time, 
submit  an  assessment  of  the  operation  of  the  scheme  and  of  coordination  between  the 
financial  institutions  operating  in  that  area.  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  fulfilment  of  the  Community's  relevant  external  policy 
objectives,  taking  into  account  the  operational  objectives  and  appropriate  measurements  of 
their fulfilment to be established by the EIB for lending under this Decision. 

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

The Commission shall report on the application of this Decision by 31 July 2006 at the latest. 

(cid:208) 2005/47/EC Art. 1 pt. 2 

(cid:208) 2000/24/EC 

Article 3 

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

(cid:208)  

Article 4 

Decision 2000/24/EC is repealed. 

References to the repealed Decision shall be construed as references to this Decision and shall 
be read in accordance with the correlation table in Annex II. 

(cid:208) 2000/24/EC 

Article 5 

This  Decision  shall  take  effect  on  the  twentieth  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

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Done at Brussels,  

For the Council 
The President 

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(cid:207) 

ANNEX I 

Repealed Decision with its successive amendments 

Council Decision 2000/24/EC 

(OJ L 9, 13.1.2000, p. 24) 

Council Decision 2000/688/EC 

(OJ L 285, 10.11.2000, p. 20) 

Council Decision 2000/788/EC 

(OJ L 314, 14.12.2000, p. 27) 

Council Decision 2001/778/EC 

(OJ L 292, 9.11.2001, p. 43) 

Council Decision 2005/47/EC 

(OJ L 21, 25.1.2005, p. 9) 

Council Decision 2006/174/EC 

(OJ L 62, 3.3.2006, p. 26) 

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ANNEX II 

CORRELATION TABLE 

Decision 2000/24/EC 

This Decision 

Articles 1, 2 and 3 

Articles 1, 2 and 3 

- 

Article 4 

- 

- 

Article 4 

Article 5 

Annex I 

Annex II 

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