CELEX: 51989PC0431
Language: en
Date: 1989-10-06 00:00:00
Title: RECOMMENDATION FOR A COUNCIL DECISION ( EEC ) ON THE CONCLUSION OF A PROTOCOL ON FINANCIAL AND TECHNICAL COOPERATION BETWEEN THE EUROPEAN ECONOMIC COMMUNITY AND THE REPUBLIC OF CYPRUS

5. 3. 90                             Official Journal of the European Communities                                       No C 53/47
         Recommendation for a Council Decision (EEC) on the conclusion of a Protocol on financial and
         technical cooperation between the European Economic Community and the Republic of Cyprus
                                                      COM(89) 431 final
                                  (Submitted by the Commission on 12 October 1989)
                                                         (90/C 53/04)
         THE COUNCIL OF THE EUROPEAN COMMUNITIES,
         Having regard to the Treaty establishing the European Economic Community, and in particular
         Article 238 thereof,
         Having regard to the recommendation from the Commission,
         Having regard to the assent of the European Parliament,
         Whereas the Protocol of financial and technical cooperation between the European Economic
         Community and the Republic of Cyprus should be approved,
         HAS DECIDED AS FOLLOWS:
                                                           Article 1
         The Protocol on financial and technical cooperation between the European Economic Community
         and the Republic of Cyprus is hereby approved on behalf of the Community.
         The text of the Protocol is attached to this Decision.
                                                           Article 2
         The President of the Council shall give the notification provided for in Article 21 of the Protocol (1).
                                                           Article 3
         This Decision shall enter into force on the day following that of its publication in the Official
         Journal of the European Communities.
         (!) The date of the entry into force of the Protocol will be published in the Official Journal of the European
             Communities by the General Secretariat of the Council.
                                                         PROTOCOL
               on financial and technical cooperation between the European Economic Community
                                                 and the Republic of Cyprus
         THE COUNCIL OF THE EUROPEAN COMMUNITIES,
         of the one part, and
         THE GOVERNMENT OF THE REPUBLIC OF CYPRUS,
         of the other part,
         ANXIOUS to promote the development of the Cypriot economy and the objectives of the Agreement
         establishing an Association between the European Economic Community and the Republic of Cyprus;
 ---pagebreak---  No C 53/48                                Official Journal of the European Communities                                       5. 3. 90
               MINDFUL of the declaration of the European Economic Community concerning a third Financial Protocol
               contained in the Final Act annexed to the Protocol laying down the conditions and procedures for the
               implementation of the second stage of the Agreement establishing an Association between the European
               Economic Community and the Republic of Cyprus and adapting certain provisions of the Agreement and taking
               into account the newly established relationship between the Community and Cyprus as it results from the said
               Protocol;
               HAVE DECIDED to conclude this Protocol and to this end have designated as their Plenipotentiaries:
               THE COUNCIL OF THE EUROPEAN COMMUNITIES
               THE GOVERNMENT OF THE REPUBLIC OF CYPRUS
               WHO, having exchanged their full powers, found in a good and due form,
HAVE AGREED AS FOLLOWS:                                                  projects and to assist such undertakings in their starting-up
                                                                         period.
                            Article 1
                                                                         It shall be granted and administered by the Bank and may
                                                                         take the form of:
Within the framework of the financial and technical
cooperation provided for in the Agreement establishing an
                                                                         (a) subordinated loans, where repayment and payment of
Association between the European Economic Community
                                                                             any interest will not be made until other bank claims
and the Republic of Cyprus, the Community shall
                                                                             have been settled;
participate on the terms set out in this Protocol in the
financing of projects intended to contribute to the
economic and social development of Cyprus with special                   (b) conditional loans, where repayment or duration will
emphasis on the productive sectors of Cyprus' economy,                       depend on the fulfilment of conditions specified at the
thus facilitating their adjustment to the new competitive                    time when the loan is granted;
conditions.
                                                                         (c) acquisition of temporary minority holdings on behalf of
                                                                             the Community in the capital of undertakings es-
                            Article 2                                        tablished in Cyprus;
1. For the purposes specified in Article 1, and for a period             (d) finance for the acquisition of holdings, in the form of
expiring on 31 December 1993, an aggregate amount of                         conditional loans granted to Cyprus or, with the
ECU 62 million may be committed as follows:                                  Cypriot Government's agreement, to Cypriot undertak-
                                                                             ings, either directly or through the intermediary of
(a) ECU 44 million in the form of loans from the European                    Cypriot financial institutions.
    Investment Bank, hereinafter referred to as 'the Bank',
    made from its own resources;
(b)ECU 13 million from the Community's budgetary                                                   Article 3
    resources, in the form of grants;
(c) ECU 5 million from the Community's budgetary                         1. The total amount fixed in Article 2 shall be used
    resources, in the form of contributions to risk capital              primarily for the financing or part-financing of cooperation
    formation.                                                           projects or operations aimed at strengthening the economic
                                                                         links between the Community and Cyprus in their mutual
2. The loans referred to in point (a) of paragraph 1 shall               interest by developing cooperation in the fields of industry,
carry a 1,5 % interest rate subsidy financed by means of the             agriculture, training and research, technology, commerce
funds referred to in point (b) of paragraph 1.                           and other services in order to restructure and modernize the
                                                                         Cypriot economy and to increase its competitiveness.
3. The risk capital referred to in point (c) of paragraph 1              Economic infrastructure and capital projects which are
shall contribute to the cooperation objectives and oper-                 complementary to the above operations may also be
ations defined in Article 3, in particular those indicated in            financed.
the first indent of paragraph 2 of that Article.
                                                                         2. Priority shall be given to those of the eligible projects
It shall be used primarily to make equity capital or the like            and operations having the following aims:
available to Cypriot private undertakings, public undertak-
ings and undertakings with State participation, preferably
those with which natural or legal persons who are nationals              — in the industrial, agricultural and service sectors,
of a Community Member State are associated. It may be                        promotion of joint ventures between firms from the
used under the same conditions to finance specific studies                   Community Member States and Cypriot firms, direct
for the preparation and development of such undertakings'                    contacts, exchange of information, promotion of
 ---pagebreak---  5. 3. 90                                 Official Journal of the European Communities                                No C 53/49
     investment and private-sector capital flows, and                interest rate shall be determined in accordance with the
     support for small and medium-sized enterprises,                 Bank's practice at the time of signature of each loan
     including craft businesses, in order to promote employ-         contract, subject to the interest rate subsidy referred to in
     ment,                                                           Article 2 (2).
 — in the field of science and technology, expansion of              2. The terms and arrangements for contributions to risk
     Cypriot training and research capability and the                capital formation shall be determined on a case-by-case
     establishment or development of links between Cypriot           basis.
     and European private and public sector training and
                                                                     3. Aid from the Community's budget resources, other
     research institutions,
                                                                     than that intended for interest rate subsidies for loans from
                                                                     the Bank of that intended for risk capital operations shall
 — in the trade sector, diversification and promotion of             be granted and administered by the Commission.
     exports and organization of contacts between Cypriot
     firms and firms from the Community Member States,               4. The funds referred to in Article 2 may be granted
                                                                    through the intermediary of the State or appopriate Cypriot
 — in the priority areas referred to above, practical training       bodies, on condition that they allocate the amounts to the
     schemes linked to projects or operations in firms and          recipients on terms decided, by agreement with the
     research institutions.                                          Community, on the basis of the economic and financial
                                                                    characteristics of the projects and operations for which
 3. The Community's financial contributions shall be used           they are intended.
 to cover internal and external costs necessarily incurred in
 carrying out approved projects or schemes (including costs                                    Article 7
in respect of studies, consultants and technical assistance).
                                                                    Aid contributed by the Community for the execution of
They may not be used to cover current administrative,               certain projects may, with the agreement of Cyprus take the
 maintenance or operational expenditure.                            form of cofinancing in which, in particular, credit and
                                                                    development bodies and institutions of Cyprus, of Member
                                                                    States or of third States or international finance organiza-
                            Article 4                               tions would take part.
 1. Capital projects shall be eligible for financing either by                                Article 8
loans from the Bank, combined with interest rate subsidies
on the terms set out in Article 2 (2), or by risk capital, or by    The following shall be eligible for financial and technical
grants, or by a combination of these means.                         cooperation:
2. Technical and economic cooperation shall normally be             (a)in general:
financed by grants.
                                                                    — the State of Cyprus;
                                                                    (b) with the agreement of the Cypriot Government, for
                            Article 5                                   projects or operations approved by it:
                                                                        — official Cypriot development agencies,
 1. The amounts to be committed each year shall be as far
as possible distributed throughout the period of application            — private agencies working in Cyprus for economic
of this Protocol.                                                           and social development,
2. Any funds not committed at the end of the period                     — undertakings carrying on their activities in accord-
referred to in Article 2(1) shall be used until exhausted in                ance with industrial and business management
accordance with the arrangements laid down in this                          methods and set up as legal persons within the
Protocol.                                                                   meaning of Article 12,
                                                                        — groups of producers who are nationals of Cyprus
                                                                            and, exceptionally, where no such groups exist, the
                            Article 6                                       producers themselves,
                                                                        — scholarship holders and trainees sent by Cyprus and
1. Loans granted by the Bank from its own resources shall                   the training schemes referred to in Article 3.
be made in accordance with the arrangements, conditions
and procedures laid down in its statute. They shall, as
regards their duration, be subject to terms established on                                    Article 9
the basis of the economic and financial characteristics of
the projects for which these loans are intended, also taking        1. With a view to making optimum use of the instruments
into account the conditions obtaining on the capital                and means provided for in this Protocol and achieving the
markets on which the Bank procures its resources. The               objectives laid down in Article 3, the Community and
 ---pagebreak--- No C 53/50                               Official Journal of the European Communities                                     5. 3. 90
Cyprus shall, by mutual agreement on the basis of                   other procedures for the award of contracts likely to be
information provided by Cyprus draw up an indicative                financed. Any such legal person formed in accordance with
programme committing both parties and determining the               the law of a Member State of the European Economic
specific objectives of financial and technical cooperation,         Community or of Cyprus must have its registered office, its
the priority sectors for intervention and the action                administrative head office or its principal establishment in
programmes envisaged by reference to the priorities set out         the territories in which the EEC Treaty is applied or in
in Cyprus's development plan.                                       Cyprus; however, where only its registered office is in the
                                                                    said territories or in Cyprus the activities of such legal
2. The indicative programme may be reviewed by mutual               person must be effectively and continuously linked with the
agreement to take account of any changes in Cyprus's                economy of those territories or of Cyprus.
economic situation or in the objectives and priorities laid
down by its development plan.                                       2. In agreement with Cyprus, natural and legal persons
                                                                    who are nationals of developing countries associated with
3. The Community and Cyprus shall continue their                    the Community by comprehensive cooperation or associ-
exchanges of views within the appropriate bodies and shall,         ation agreements may exceptionally, on a case-by-case
at least once during the period of implementation of this           basis, be authorized by the Community to participate in the
Protocol and at the latest before the end of the third year         operations referred to in paragraph 1 which are financed by
following its entry into force, make an assessment of the           the Community. The eligibility of such natural or legal
implementation of the indicative programme.                         persons shall be assessed, mutatis mutandis, on the terms
                                                                    set out in paragraph 1.
                          Article 10
                                                                                               Article 13
1. Within the framework laid down in accordance with
Article 9, the State of Cyprus or, with the agreement of its
Government, the other possible beneficiaries referred to in        To promote participation by Cypriot undertakings in the
Article 8, shall submit their requests for financial aid to the    performance of contracts and to ensure the rapid and
Community.                                                         effective implementation of projects and operations
                                                                   financed from resources administered by the Commission:
2. The Community shall appraise the requests for
financing in collaboration with the competent Cypriot
                                                                    (a) an accelerated procedure for issuing invitations to
authorities and other beneficiaries, in accordance with the
                                                                        tender involving shorter time limits for the submission
objectives referred to in Article 9, and shall inform them of
                                                                        of tenders, may be used by Cyprus in agreement with the
the decisions taken on such requests.
                                                                        Commission for works contracts which, because of
                                                                        their scale, are mainly of interest to Cypriot undertak-
                                                                        ings.
                          Article 11
                                                                        The organization of this accelerated procedure shall not
1. The execution, management and maintenance of                         rule out the possibility of issuing an international
schemes that are the subject of financing under this                    invitation to tender where it appears that the nature of
Protocol shall be the responsibility of Cyprus or of the                the works to be carried out or the usefulness of widening
other beneficiaries referred to in Article 8.                           participation justifies recourse to international competi-
                                                                        tion;
The Community shall make sure that this financial aid is
expended in accordance with the agreed allocations and to
the best economic advantage.                                        (b) in urgent cases or where the nature, small scale or
                                                                        particular characteristics of certain works or supplies so
2. The projects and action programmes shall be the                      warrant, Cyprus may exceptionally, in agreement with
                                                                        the Commission, authorize the placing of contracts
subject of appropriate evaluation, the outcome of which
                                                                        following restricted invitations to tender, the conclusion
shall be communicated to both parties, which shall take
                                                                        of contracts by direct agreement and the performance of
appropriate measures by mutual agreement.
                                                                        contracts through public works departments.
3. Certain rules for administering the financial aid
granted by the Community shall be the subject of an                The procedures referred to in points 1 and 2 may be used
exchange of letters or a framework agreement between the           for operations with an estimated cost of less than ECU 3
Commission and Cyprus upon conclusion of this Protocol.            million.
                          Article 12                                                           Article 14
1. All natural and legal persons falling within the scope of
the Treaty establishing the European Economic Com-                  1. Cyprus shall apply to contracts awarded for the
munity and all natural and legal persons of Cyprus may             execution of projects or schemes financed by the Com-
participate on equal terms in tendering procedures and             munity fiscal and customs arrangements no less favourable
 ---pagebreak--- 5. 3. 90                                Official Journal of the European Communities                               No C 53/51
than those applied vis-a-vis the most favoured State or the                                 Article 18
most favoured international organization.
                                                                   The results of financial and technical cooperation may be
2. The content of arrangements referred to in paragraph            examined within the Association Council which shall
1 shall be established by means of an exchange of letters          establish, where appropriate, the general guidelines for
between the Parties.                                               such cooperation.
                          Article 15
                                                                                            Article 19
Cyprus shall take the necessary measures to ensure that
interest and all other payments due to the Bank in respect of      One year before the expiry of this Protocol, the Contracting
transactions concluded under this Protocol are exempted            Parties shall examine what arrangements could be made for
from any national or local tax or levy.                            financial and technical cooperation during a possible
                                                                   further period.
                          Article 16
                                                                                            Article 20
Where, as foreseen in Article 8 above, a loan is accorded
with the agreement of the Cyprus Government to a                   This Protocol shall be annexed to the Agreement
beneficiary other than the State, the provision for a              establishing an Association between the European Econ-
guarantee by the latter or other adequate guarantee shall be       omic Community and the Republic of Cyprus.
required by the Bank as a condition of the grant of the loan.
                          Article 17                                                        Article 21
Throughout the duration of the loans and risk capital              1. This Protocol shall be subject to approval in concor-
operations provided for in Article 2, Cyprus shall                 dance with the Contracting Parties' own procedures; the
undertake to:                                                      Contracting Parties shall notify each other that the
                                                                   procedures necessary to this end have been completed.
 (a) place at the disposal of the beneficiaries or of their
     guarantors the currency necessary for the payment of          2. This Protocol shall enter into force on the first day of
     interest and commission and amortization of loans and         the second month following the date on which the
     risk capital aid granted for the implementation of            notifications provided for in paragraph 1 have been given.
     operations on its territory;
 (b) make available to the Bank the foreign currency                                        Article 22
     necessary for the transfer of all sums received by it in
     national currency which represent the net revenue and         This Protocol is drawn in two original copies in the Danish,
     proceeds from transactions involving the acquisition by       Dutch, English, French, German, Greek, Italian, Por-
     the Community of holdings in the capital of companies         tuguese and Spanish languages, each of these texts being
     or firms.                                                     equally authentic.