CELEX: 51979DC0565
Language: en
Date: 1979-10-30
Title: AIDE-MEMOIRE ON THE FIXING OF THE ECSC LEVIES AND ON THE DRAWING UP OF THE OPERATIONAL BUDGET OF THE ECSC FOR 1980

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (79) 565
Vol. 1979/0196
 ---pagebreak--- Disclaimer
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 ---pagebreak---   COMMISSION OF THE EUROPEAN COMMUNITIES
                                                              COM(79)565 final
                                                              Brussels . 30th October 1979
                                  AIDE-MEMOIRE
           ON THE FIXING OF THE ECSC LEVIES AND ON THE DRAWING UP
               OF THE OPERATIONAL BUDGET OF THE ECSC FOR 1980
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 ---pagebreak---                                  - 2 -
                                                          Page
Preface                                                      a
I.   GENERAL INTRODUCTION                                    c
     A. ECONOMIC CONTEXT                                     5
         1.  The economic outlook for 1979 and 1980          5
         2.  Prospects in the coal sector                    8
         3.  Prospects in the iron and steel sector         11
     B.  POLICY CONTEXT                                   . 12
         1.  Coal policy                                    13
         2.  Iron and steel policy                    -     15
         3»  Social policy                              .   18
         4*  Borrowing and lending activity                 23
     C.  FINANCIAL CONTEXT                                  26
II . ANALYSIS OP REQUIREMENTS REPORTED AND RESOURCES       29
     AVAILABLE FOR THE FINANCIAL YEAR I98O
     A. REQUIREMENTS REPORTED FOR 1980                     30
         1.  Ordinary requirements                         30
         2 . Requirements not entered in the budget J      44
             loans for financing subsidized housing
         3.  Summary of requirements reported              46
 ---pagebreak---                                        J –
                                                              Pa^e
       B.   ORDINARY RESOURCES AVAILABLE                        46
             1 . Resources for the financial year               46
             2.  Covering of requirements not entered           50
                 in the budget
             3.  Summary of possible ordinary resources     •
                 available for 1980
III . DRAFT OPERATIOML BUDGET FOR 1980                          51
       A.    IRREDUCIBLE REQUIREMENTS        '                  52
       B.   BUDGET BALANCE                                      53
       C.    BRAFT BUDGET                                       54
AFiïï2XE3
A.   IMPLEMENTATION OP THE ECSC OPERATIONAL BUDGET FOR 1 978    55
B.    FOimiC AST OUT-TURN OF THE ECSC OPERATIONAL BUDGET        56
      FOR 1979
Go   BREAKDOWN OF LOANS ISSUED FOR THE FIRST SIX MONTHS         58
     OF 1979
D.   PROVISIONAL SITUATION OF THE ECSC AT 30 JUNE 1979          59
E.   DRAFT ECSC OPERATIONAL BUDGET FOR 1980               -    60
 ---pagebreak---                            AIDE-MEMOIRE
       on the fixing of the ECSC levies and on the
       drawing up of the operational budget of the ECSC for I98O
Following the usual practice , the views of the European Parliament are
sought "before the Commission takes a decision on the levies and the
operational "budget of the ECSC for the financial year I98O .
                                                           ♦
                           I                 . •          -
This aide-memoire forms the basis for the consultation of Parliament .
It is divided into the following chapters :
                  I.  General introduction :
                 II . Analysis of requirements reported and resources
                      available for the financial year I98O ;
                III . Draft operational budget .
The particular factors affeoting the covering of budgetary requirements
for I98O are described in Chapter III .
In its Resolution of 13 December 1978 (OJ No C 6 , 8 January 1979 » PP 43-44)
on the fixing of the ECSC levy and on the ECSC operational budget for 1979 »
Parliament (point 14 ) "asks the Commission "to submit to it after the
first half of next year an interim report on the situation in the coal
and steel sector t on the social measures necessary to overcome the
difficulties in these industries and on the financial implications ".
                                                 1
The information requested "by Parliament is contained in this aide-memoire :
in Part A, Economic Context f and in Part B, Policy Context , point 3 ,
Social Policy .
                                          /
                                   *    «
The aide-memoire ie also sent to the ECSC Consultative Committee for
 information .
 ---pagebreak--- T.    GENERAL INTRODUCTION
This chapter summarizes the information necessary for appreciating the
draft operational budget of the ECSC for I98O in its economic , political
and financial context .
A.    ECONOMIC CONTEXT
1.    The economic outlook for 1979 and 19&Q
Economic activity in the Community continued to pick up slowly in 1979-
The prospect which emerged a year ago of a certain upturn in demand
and production trends did not materialize . The sharp rise in oil prices
and its repercussions "both inside and outside the Community will probably
have prevented any improvement greater than the rather mediocre results
of 1978 . In addition , the employment situation is still unfavourable
and the labour market position will probably have considerably
deteriorated .
Internal expansion factors lost momentum in the course of the year .
The increase in the real disposable income of households was checked
try the faster rise in prices ; the drop in the level of savings ,
Bometimes the result of pre-emptive buying, did not always offset
the effects of this slowdown on private consumption . Although capital
investment on industry expanded a little faster than in 1978 , the
investment situation in the other sectors did not improve , or even
deteriorated .
 ---pagebreak---                                      - 6 -
  The net external stimulus on the Community economy in the short term will
  have been slightly negative in 1979 *  Admittedly , the volume of exports
  rose considerably, despite the repercussions of the crisis in Iran and the
  weakening of the North American economic situation* However , the volume
  of imports also increased substantially in several Member States , in
  response to the improvement in final demand and , at least in some cases ,
  the rebuilding of stocks of raw materials or an improved rate of exchange .
  Overall , taking into account the deterioration in the terms of trade , the
  Community 's trade balance has worsened over the year .
  The prices situation has deteriorated considerably in 1979 *   Consumer
  prices are expected to have risen by 9%t against 7*1% in 1978 . In
  conjunction with the increased cost of oil and other imported raw materials ,
• this rise also reflects the effects of seasonal factors and , in some
  countries , higher rents and heavier indirect taxation*
  Industrial production in 1979 continued to expand, though less strongly
  than in the second half of 1978 * As final demand outstripped production ,
  stocks of finished products were steadily reduced *   The slight improvement
  in the immediate economic situation hardly affected the trend on the labour
  market * Since the beginning of the year , the number of full-time unemployed,
  seasonally adjusted , still exceeded six million in the Community as a whole *
  The unemployment rate fluctuated around 5 * 5$* However , this overall rate
  masks a slight decline in male unemployment and the reverse tendency as
  regards female unemployment *
  The latest indicators suggest that the Community 's economic growth over the
  year will reach only 3*1$, comparable to that in 1978 (estimated at 2*6$ a
  year ago , but gradually increased to 3.1$) • Community demand and production
  may be expected to slack considerably in 1980 , as a result of the oil price
  rise and also the effect of cyclical factors *
 ---pagebreak---  The following table shows the trend in the Community's GDP by volume
 during the period 1977 to 1979 :
                   GROSS DOMESTIC PRODUCT IS VQUflB TERMS
                     (.% change over the previous year)
                                       1977           1978          1979
Denoark                                1.8             0.-9          1,8
Federal Republio of Germany        .   2,8             3.2           4.3
France                                 2,8             3.3
                              4                                      2.9
Ireland                                5,5             6.1           2.8
Italy                                . 2,0             2.6           4.3 *
Netherlands                            2,2             2.4           2.6
Belgium                                1,2             2.5S          3.α
Luxembourg                                             3.2-          2.5-
united Kingdom                         1,2                               r»
                                                       3.7           0.3
Community                              2,3              3,1 '        3,1
Souroe :  Commission departments *
 ---pagebreak---                                      - 8 -
  2*   Prospects in the eoal Bector
  Oil market trends in the first six months of 1979 were very favourable to
  the Community coal industry. Anxiety over the growth of stocks and
  pressure on prices gave way to concern about supplies , particularly in
  the United Kingdom* The coal industry in Germany increased production
  after two years of decline , while continuing its policy of reducing stocks
  in trading conditions which were generally more favourable than last year .
  In addition to the competitive advantages accruing to all types of coal
  from the rapid increase in oil prices , the pressure exerted on the prices
  of Community coal by coal imports from non-member countries was cushioned
  by the increase in freight charges for heavy dry cargo * This had a
  particularly marked effect on prices of steam coal , as freight charges
  represent a higher proportion of the delivery costs than they do for
  coking coal and the distance it is carried is generally feu* greater *
  However, the increase in Community coal prices has attenuated these
  advantages to a certain extent *
  Coal production is expeoted to reach some 240 million tonnes in 1979 * a,
. nazginal increase on 197&* This figure corresponds to some 212 million
  tonnes of coal equivalent at 7 000 kcal/kg*
     /
  The programme for closing uneconomic pits is continuing* It will probably
  affect a production capacity of some 2*5 million tonnes, about 60$ of it
  in France *
 ---pagebreak--- After remaining stable for two years , Community coal consumption in 1979
will probably increase by 10 million t to reach 297 million t .    Of this
total some 167-168 million t will be used for electricity generation and
some 86 million t for coke production - in both cases a substantial
increase over 1978 - while the amount of coal used for other purposes ,
44 million t , is slightly smaller than last year .
Despite the persistent difficulties of the i ron and steel industries ,
coke consumption in this sector is increasing and will probably reach
55-56 million t in 1979 * Because of the unsatisfactory prices obtained
for the large sales of German coke to the United States in 1978 , these
sales will probably be at a lower level in 1979 *
The volume of coal and coke traded in the Community in 1979 will probably
reach some 24 million t , i.e. very close to last year 's figure .  Coal
imports from non-member countries in 1979 are expected to increase by
5 million t to reach 50 million t .
Total Community coal production in 1980 will once again probably be
around 240 million t y with slight shifts from one Member State to another .
The drops in French and Belgian production of 3*5$ and 4»5/° respectively
are expected to be offset by further increases of around 0.8% in British
and German production.    However , if satisfactory outlets are available ,
tfre German coal industry could further increase its own production and
thus total Community production .
 ---pagebreak---                                  - 10 -
In 1980 Bome 177-178 million t of coal will probably be used for
electricity generation. This further increase will be due both to
the additional 7 CW of coal-fired capacity coming on stream in 1979
and 1980 - mainly as a result of conversions - and to more intensive
use of existing coal-fired capacity .
Accordingly, taking into account the 85 million t needed for coke
production if coke consumption is at the same level as in 1979 and
the 45 million t which will probably be used for other purposes ,
total consumption of coal in the Community in 1980 could be around
300-310 million t , the highest level since 1973 when it reached
310 million t .
   e
As total output will probably be around 240 million t , the shortfall
of 60-70 million t must be covered by imports and withdrawals from
stocks .   As no more than 10 million t of coal suitable for use in
power stations is likely to be obtained from stocks , imports from
non-member countries are expected to continue to increase .
nevertheless , in view of the uncertainty surrounding world economic
prospects , the forecasts for 1980 must be regarded as very tentative .
 ---pagebreak---                                     - 11 -
3.   • Prospects in the iron and Bteel sector
The increase in production which began , albeit slowly , in 1978 ,
gathered momentum in 1979 *     Most of this increase is due to the rise
in demand for capital goods and a building boom in some Community
countries .
                                      *
The riBe in demand on the world market also contributed greatly to
improving the situation.      Net exports will probably amount to at
least 21 million t equivalent of crude steel .      During the first
eight months of 1979 crude steel production was A% above that for
the Bame period last year .     If the programme for the fourth quarter
is followed , total output in 1979 will be around 140 million t .      For
an estimated production capacity of 203 . 5 million t , this means a
utilization rate of 68.8^ compared with 65.5$ in 1978 .
In 1979 there was a further improvement in both export and domestic
prices , although there were wide differences from one product to
another .    For instance , as in previous years , prices for flat rolled
products remained extremely unsatisfactory .      Because of the increase
in production , rising prices and further restructuring , a number of
steel undertakings are again working at a slight profit , although the
financial results for the Community iron and sieel industry as a
whole will still be unsatisfactory .
It is difficult at present to make any predictions for 1980 , as the
situation is developing very differently in the various Community
countries and it is too early to assess the effects of a possible
recession in the United States on export markets .      Nevertheless ,
it should prove possible to equal the 1979 production level .
 ---pagebreak--- Β    POLICY CONTEXT
The general objectives of the ECSC are permanently laid down in
Articles 1 to 5 of the Treaty of Paris .
          I           '
The Commission periodically formulates objectives or general guidelines
for the future development of the ECSC industries , in both the coal and
steel sectors .   The coal sector is a special case , as it is also
covered by general documents prepared by the Commission on Community
energy policy. ; The medium-term guidelines for these two sectors also
include a Bection on manpower problems in these industries ; this provides
the setting for the various social policy functions discharged by the
High Authority/CommiBsion under the Treaty.    Detailed information on
past and future investment trends and on the Community 's financial
activities to finance investment is published by the ECSC in its two
yearly reports , one on the results of the investment survey in the
Community coal and steel industries and the other the financial report '
dealing with ECSC borrowing and lending activity.
The remarks which follow are not intended to replace the policy
information given in the documents referred to above . , It should be
noted that in 1978 , after consulting the parties concerned , the
Commission drew up new general objectives for the iron and steel
industry for the period 1?80-90 (SEC(78)3205 final of 20 July 1978).
The ensuing remarks will thus be confined to certain key points or
recent events that the Commission feels should be highlighted in
drawing up the draft operational budget of the ECSC for 1980 . They
deal in turn with the industries , the social policy of the ECSC and
the borrowing and lending activities of the current year.
 ---pagebreak---                                - 13 -
1.   Coal policy
The events which affected the world energy market in the first six months of
1979 confirmed the soundness of the Commission 's coal policy since 1974 .
Thenthe Council meeting on energy of 27 March 1979 stressed the strategic •
importance of coal , and the European Council of 21 and 22 June 1979 came
out clearly in favour of increasing the use of coal in electricity generation
and in other industrial sectors , and stepping up the technological programme
for distilling liquid and gaseous hydrocarbons from coal .
In its basic document entitled "Energy objectives of the Community for 1990
and convergence of policies of Member States " ( C0M(79)316 final , 14 June 1979 ),
the Commission has redefined its coal policy conceptions in view of the
instability of energy supplies in the future .    The Commission regards it as
essential to increase the use of solid fuels and nuclear energy so that these
two sources cover at least JO to 75$ °f energy supplies .    To achieve this
result , each Member State must contribute in the following areas :
- regaining the 1973 level for the amount of coal extracted ( 270 million t ),
   and that under economically acceptable conditions ;
- doubling coeil imports ;
- creating new solid-fuel -fired capacities in the electricity and other
   industrial sectors ;
- stepping up MD in the field of coal gasification and liquefaction .
These guidelines and all the other provisions concerning energy adopted by
the Commission stem from the target which is of paramount importance for
all , namely to reduce our dependence on imported energy to 50$ and , in
 ---pagebreak---                                    -H*
particular, to maintain net oil imports at the 1978 level (470 million t ).
Of the objectives listed above , the creation of new coal-fired capacities
 should "be regarded as the most important , as this is a sine qua non for
 achieving the targets for increasing the supply .
 Over the last three years , the Commission has put up a number of proposals
primarily directed to achieving the 1974 targets , which were to maintain
 the Community 's coalmining industry at the 1973 production level .   The
proposals covered:
 (a) financial measures to promote the mining of coal for electricity
       production (1976 );
 (b ) the part-financing of coal producers' "buffer stocks (1977 )?
 (o ) financial aid for intrar-Community trade in power-station coal (1978);
 (d) improving the system introduced in 1967 on coking coal and coke for
       the iron and steel industry (1978).
     The Commission's efforts to obtain the Council 's agreement on these
proposals have so far been in vain.      The degree of interest in the future
 of European coal shown in discussions varied widely; so that all attempts to
 forge a compromise and achieve a measure of Community solidarity have failed.
 Nevertheless , stiffened in its resolve by the conclusions of the European
 Council , the Commission intends to stand by its proposals after making
any necessary charges .
 ---pagebreak---                                     - 15 -
        The Commission also proposes to grant the Community 's coalmining
undertakings Loans on advantageous terms to enable them to make certain
urgently needed investments ( first paragraph of Article 54 of the ECSC
Treaty ).
        Finally , in veiw of the growing importance of the technology for
obtaining liquid and gaseous hydrocarbons form solid fuels , the Commission
plans to step up the measures adopted by the Community , following a
Commission proposal , to promote demonstration projects in this field ,
which will be financed out of the General Budget under the Community 's
energy policy.   A sum of 50 million EUA has been earmarked for a five-year
programme ( cf . regulation 729 / 79 of the Council dated 9.4.1979 ).
2 . Iron and steel policy
The Commission s steel market measures
        The measures adopted by the Commission in 1978 to mitigate the
effects of the steel crisis on the profitability of undertakings and
to limit the pressure caused by imports were retained and improved in
1979 .
 ---pagebreak---                               16
  As a result , undertakings' earnings have continued to rise , and
  in addition the brighter production outlook for the various
                                      Ν
  undertakings and groups of undertakings has fac.i li ties more balanced
  utilization of capacity in the different Community undertakings
                                     m
  and Community regions (burden -sharing ), which in its turn has meant
  more balanced employment . At the end of this year the Commission
  will be reviewing these measures for 1980 bearing in mind the
  lessons of 1979 and the changes in the state o<f the market .
  Steel : external side
  As in 197o « the measures relating to the Community steel market
  were supplemented by understandings with the Community 's 17
- major supplier countries , designed to secure pricing by them
  compatible with the Community 's internal action while at the
  same time preserving traditional trade flows .
  The results obtained by this policy have again helped to improve
  the internal price level and thereby been conducive tb graduation
  restoration of undertakings' profitability .
  Continuance of this -external policy in 1980 will be dependent
  on what internal measures are taken and how much cooperation
  with non-member countries proves desirable and necessary in
  support of those measures .
 ---pagebreak---                                    - 17 -
  Community solution to structural problems
  The Council is expected to adopt the Code of Practice for coordinating State
  aids to the iron and steel industry "before the end of 1979 .
  Farther progress has been made in restructuring .    The 1979 investment
  survey showed that , for the first time t there had been no addition to
  capacity ; nevertheless , not enough has yet been done to eliminate excess
  capacity .
  It is regrettable that the difficult financial position of the undertakings
  has meant a further decline in capital expenditure on modernization , which
* ominously suggests that the technological gap between the Community 's iron
  and steel industiy and that of its biggest competitors may grow even wider.
  The Commission must therefore do everything in its power to encourage the
  industry to modernize and restructure , whether by granting interest relief
  on investments which serve the general objectives for steel , or by
  providing aid - in the form/of loans at a reduced rate of interest for
  investments which will create new jobs for former steel workers - to facilitate
  the redeployment of workers made redundant after modernization.
  This means that,in budgetary term$ /the form of Community intervention which
  would most effectively promote the common steel policy would be interest
  relief grants on loans for investments to restructure and redevelop the
  iron and steel industry .
 ---pagebreak---                                    - 18 -
3 . Social poney
         The main features of the Commission 's present social policy programme
under the ECSC Treaty are :
( a ) to finance occupational safety research projects under Article 55 of
      the ECSC Treaty ;
( b ) to grant reduced interest loans from own funds under Article 54 of the
      ECSC Treaty to help workers in ECSC industries find housing ;
( c ) to provide aid under Article 56 of the ECSC Treaty to help resettle
      workers in this sector . The Commission after consulting the ECSC
      Consultative Committee and the European Parliament , has requested the
      Council 's assent to a proposal to extend the system of aids temporarily
      under Article 56 and so to adapt it to the present state of the labour
      market .                                      -
         The social research and subsidized housing aid programme for 1980 will
follow the principles and policies already laid down by the Commission and
outlined in Chapter II . The developments described below consequently relate
only to the Commission 's ECSC resettlement policy guidelines and proposed
policy measures to tackle the problems caused by the present crisis in the
iron and steel industry .
         The measures taken by the ECSC in the social field to help resettle
workers in this sector who have been made redundant are similar to those
taken by the European Economic Community under the Social Fund . In contrast
 ---pagebreak---                                       -   19-
to redevelopment aid whose purpose is to promote investment in the creation
of new jobs in ECSC regions , ECSC resettlement aid provides the workers
in this sector with a system of individual aid , under bilateral agreements
  cofinanced by the Community between the Community and national Governments
which aim at facilitating irneir productive     re   - employment
 ( tideover allowances , resettlement costs and financing of vocational retrai -
ning ) on a basis agreed between the two parties in the light of certain
Community criteria * ,
            The effect of the legal differences between the ECSC and EEC
Treaties - and especially the fact that ECSC aid is financed by the industries
themselves – means that the aid provided is better . The ECSC resett lemen.t . scheme
 has    . evolved under the pressure of difficulties experienced in the past by
this sector ,    it is more fully developed and more comprehensive than the
comparable Social Fund oparations .     The Eigh Authority and the Special
Council of Ministers agreed in           tinder Article 95    "the ECSC Treaty ,
to .add    new , provisions  „    to Article 56 of the ECSC Treaty which is the
basis of the present resettlement scheme , so enabling the Community to tackle
the most pressing social problems in the coal industry at that time .
In "S 98O Similar efforts will have to be made in the iron and steel industry .
Steps will ne&d to be taken to cushion the harsher effects of the present
crisis on the workforce by facilitating the preservation of jobs which are
threatened or trying as far as possible to ensure that the circumstances in
which unavoidable job cuts are made are tolerable .
 ---pagebreak---                                         - 20 -
The effects of the crisis caused some Member States to introduce vast
restructuring programmes in 1978 which have had and will continue to have ,
even after 1980 , vey grave consequences for workers in the iron and steel
industry* Consequently the ECSC must extend its assistance to many more
workers than it has in the past *
Any measures to resettle redundant workers will be impeded by the present
problems on the labour market * " Current or planned restructuring programmes ,
of which most are in areas with only one industryf will find it very difficult
to resettle the workers concerned in the Bame geographical area*
According to information obtained , and in the light of the restructuring
programmes announced and of the broad policy lines of the General Objectives
for Steel , some 50      jobs were to be lost in 1979 a™* 30 000 in 1980*-
It has , however, become apparent in reoent months that the reductions in
manpower levels in 1979 and probably in 1980 will not be as high as expected,
because there has been an improvement in steel production and some of the
restructuring programmes have been staggered over a period of time .
 ---pagebreak---                                  - 21 -
Although these two new factors will not – in the medium term – alter
the minimum foreseeable mruipower level in the steel industry , they may reduce
the number of redundancies in this industry in 1979 and 198O; this
number will , even so, be higher than the average level of previous
years .    According to the latest estimates , all of the resettlement
appropriations in the 1979 budget will , however, be committed .
The new measures described above will be introduced in 1980 to
supplement aid granted under the present provisions of Artiole $6 .
In spite of the plans adopted by some Member States , and measures
to enc outrage a large number of workers affected by reductions in
manpower levels to take early retirement , total redundancies will
far exceed the number of possible temporary or permanent new jobs
which can be found .
The Commission has therefore – with the support of the
European Parliament and the ECSC Consultative Committee - presented
to the Council for its approval , under Artiole 95 of the
ECSC Treaty, a draft decision on ECSC financing of special temporary
measures to assist the steel industry ( COM( 79)436 final ).   These
measures will supplement the classic aid measures and will be
taken on an individual basis under Article 56(2 ) of the ECSC Treaty.
 ---pagebreak---                                      - 22  -
The Commission* B proposal makes it clear that these new forms of aid
may only be granted on condition that they do not encroach upon
management 's and labour's independence of decision-making, and that the
measures have a positive effect on employment without prejudicing the
competitiveness of firms .
These new measureSjto be finalized_after the unanimous assent of the . Council
( Art . 95 / ECSC ), will be stictly limited to particular areas and periods of
time ; their practical implementation will be   agreed upon by the Member States
and the Community
Provided the operations which benefit from this new aid are carried
out under the restructuring plans whose aims coincide with those of the
General Objectives for Steel , the following measures may be financed
by the ECSC:
( a) early retirement of workers of at least 55 years of age who are not
      yet entitled to the legal retirement pension when they lose their
      jobs, provided threatened jobs are therebywsafeguarded or the
      improvement in productivity required by restructuring is thereby ensured
(b) early retirement of workers who have not reached the age of 55
      but have been in particularly arduous jobs or are handicapped;
( c) financing of some of the loss of wageB suffered by workers as a
      result of measures to stagger manpower reductions caused by
      partial or complete closure of a works : •
 ---pagebreak---                                   , 23  _
( d) financing of some of the loss of wages suffered by lower-paid
      workers as a result of a ban on overtime;
( e ) payment of special allowances to cover some of the additional
      wage costs of firms which modify work cycles , provided these
      adjustments have a positive effect on employment .
Given the special nature of this aid and the general economic importance
of the problems in question, the Commission has proposed to the Council
that a contribution be transferred from the General Budget to the ECSC
to finance this aid ( see Chapter 54 of the Preliminary Draft General Budget
of the Communities for 1980).
4.    Borrowing and lending activity since 31 December 1978
ECSC Finanoial Report Ifo 24 summarizes the Community 's borrowing and
lending activity in the financial year 1978 and presents analytical
and cumulative statistics for the whole of this activity since 1954 .
The Community ^ balance sheet as at 31 December 1978 appears in
Annex D to the present aide-memoire .
The 51 loans contracted in 1978 totalled 1 069 m EUA, compared with
729 m EUA in 1977 , 956 m EUA in 1976 and 731 m EUA in 1975 .    On
loans paid out in the same periods totalled 798 m EUA compared with
742 m EUA and 1 064 m EUA and 805 m EUA.     Some sums ( in Swiss francs )
borrowed were not for on–lending but to repay previous sums borrowed
at higher rates , the benefit being passed on to the firms which had
received loans from these funds borrowed .
 ---pagebreak---                                 - 24 -
Industrial loans amounted to 667 ® EUA compared with 713 m EUA in 1977 ,
resettlement loans to 113 m EUA compared with 16 m EUA and subsidized
housing loans to 18 m EUA compared with 12 a EUA.
Total 'borrowing and lending since the inception of the ECSC is thus brought
up to 3 669 m EUA and 5 374 * EUA respectively ( including 210 m EUA in
loans from own funds ). The balance outstanding at 31 December 1978 was
4 416 m EUA of which 2 846 m EUA can be amortized between 1979 and I984.
In 1979 ECSC financial activity continued to satisfy the strong demand
from firms - not only in the steel industry but also to a large extent
in the coal industry which received loans totalling 263 m EUA in 1978
compared with 217 in 1977 a»d 180 in 1976 - wishing to modernize or
restructure their plant .   In the first half of the year , borrowings
totalled   441 m  EUA and loans disbursed 297 ® EUA.   The balance
outstanding at 30 June 1979 exceeded 4 600 m EUA.
The ECSC has continued to obtain favourable terms on the capital market
and has successively developed a policy of private loans (totalling
663 m EUA) when conditions en the open market were unfavourable .
The table in Annex C to this aide-memoire analyses the loans disbursed
in the first half of the financial year 1979 *
A statement of the provisional situation of the European Coal and Steel
Community as at 30 June 1979 Is given in Annex D.
It is clear from applications for resettlement and restructuring loans
in hand that ECSC borrowing and lending activity is likely to continue
at a high level in the ooming months .
 ---pagebreak---                                    - 25 -
        As far as 1980 is concerned , it is difficult at present to give an
exact estimate since borrowing operations are carried out solely in response
to loan applications which are not always submitted very far ahead . Also ,
some applications occasionally are long in awaiting settlement as a result
of particular conditions imposed by firms in respect of currency or exchange
rates .
        At 15 October 1979 , total loan applications approved by the Commission ,
but awaiting settlement , amounted to 1239 m EUA of which 231 m EUA are for
redevelopment . Applications in course of being processed amount to 2385 m EUA
of which 506 m EUA are for redevelopment . Applications received thus totalled
3624 m EUA of which 761 m EUA have been requested for after' 1980 . Applications
for substantial loans , in particular for restructuring and redevelopment
projects , have also been announced for the coming months .
        In broad terms , however , it may be said that the planned investment
in ECSC industries , merely for projects already approved by undertakings
before 1 January 1979 , was 2298 m EUA for 1980 ( thefinal figure will clearly
be higher ), compared with 3 167 m EUA for 1979 and 3 287 m EUA for 1978 .
        It can thus be envisaged that borrowings made by the ECSC could amount
to between 1 000 and 1 500 mEUA in 1980 , if market conditions are to the
advantage of firms and provided there is no further increase in applications .
 ---pagebreak---                                          ™ do   o.
c•   pzî^SCIAL CO^TF
All the budgetary t i^;rea ia this paper are in Europee.n Units of
Account ( SJA)j because since 1976 the ECSC operational budget has "been
expressed a&d i ispl evented is E;.IA S and the mass due and commitments
tmdgeted for aasd the contracts relating thereto have been expressed
and paid in SUA®
However , the Co:m:\«&ion fevils that , as a result of the entry into force
this year of the European Kcrne'savy. System "bassd on the ECU ( which is
determined "by a "basket of C^-xmir^ cs^rrerioies identical to that used
as the "basis for the Eui ), the tsnit of account to "be used for ECSC
purposes should "be changed free. E'"L to the ECU®            A draft Decision on
this matter vriil be precencii to the appropriate authorities shortly ,
and , s h uJi-X/..-?" that it is adapted "before the end of the year , the ECSC
 operational Jyad&ot <:.•:!        ?u-a"'„s of levies would then "be adopted in ECUs ,
Since the two t^ita of s'.ocw.i: are dt ^, svrd'icd "by the same "basket of
Coumwity curr^.sie *"!., it porr-- Id he                   thet it would "be unnecessary
to alter any of the it^rm iv th-'.s p-3.;eer a
As regards the aases^OTt of fh«* o;<raft &;•>.& r©t for 19 80, the rise in prices
is still a key factor xa                           the relationship between the
financial years 1979 twui 19 B0-, J. t a-.r "be &,sensed , in this respect ; that
the increase in costs fro>a 1979 to 19 80 ■will "be aro;znd 9%®
The main financial problem which arises concerning the ECSC draft Budget
for 1980 is again the problem of balancing the "budget, in the light of the
considerable difficulties now encountered "by industry , in particular the
iron and steel industry , in the Cosarmity®
Last year and the year before the Oosraission judged it inadvisable to make
use of the mechanism for "hale-aciw ? the 'budget, provided for in the Treaty of
Paris , i®e» aa appropriate adjus-uiaent of the rate of levy , because of the
financial difficulties of the firias®              Consequently , in 1978 and again in
1979 1 the budget was balanced ( a ) by a reduction in the estimates of
 expenditure which had been reg&rded a3 neoeasary in principle and (b ) by
a sxjeoial contribution frca the Jibber States®
 ---pagebreak--- The Commission would recall that its proposals hitherto for the
future balancing of the ECSC Budget have been for the Community to
be provided with additional Own Resources by the transfer to it
of the proceeds of customs duties on ECSC products –an idea
supported by the Parliament .
All that the Council deliberations on these proposals has produced in
1978 and 1979 . however , has been a special contribution of 28 million
EUA , in face of a reasoned application for 1979 for 60 million .
The Commission is obliged to record that the course of balancing the .
ECSC Budget by transferring the customs duties is strongly objected
to by several Member States , on both legal and budgetary grounds .
Its conclusion is that / from a practical point of view , unless the Member
States concerned alter their views , the additional means needed to go on
sustaining the level of traditional ECSC assistance without increasing the
levy must be sought elsewhere .
To return to the problem posed for the funding of 1979 assistance
 from the Budget by the Member States' granting 28 million by way of
special contribution instead of the 60 million applied for , this
has compelled the Commission to cut from 55 million EUA to 27 million
 the appropriation for interest subsidies in favour more particularly
 of investment projects relating to the restructuring and redevelop­
 ment of the steel sector . Alive to the all-importance of these aids
                                                   i
         »                                         \
 in the context of Community steel policy , it has contrived , by
                                                   r
 several exceptional measures detailed in Annex B to bring the funds
 for aids in the form of interest subsidies up to k7 million EOA
 ( instead of the 55 million originally planned ). The fact remains
 that by so doing it has-been obliged to put on ice eminently
 worth-while application^ for aid to a 'total of 18 million EUA,
 which thua remain to be met froa the 1980 appropriations .
 ---pagebreak---                           -     28
This is an important feature in the background to the draft 1980
                                                           1
Budget *
                                    «r
Mention should also be made of the Commission 's move for a
transfer from the General to the ECSC Budget to pay for the new
social measures described above ( see B.3 above , and Chapter
of the preliminary draft 1980 Budget ). ' It recently proposed
(Doc . COM(79)3*f5 ) that the Budgeting Authority approve another
measure to increase the ECSC Budget availabilities , viz . a
transfer from the General Budget of the Communities , for the
funding of new expenditure to be authorized by a Decision under
Article 95 ECSC to cover temporary social measures in connection
with the restructuring of the steel industry . Recourse to the
General Budget was felt to be justified in this instance in view
of the general economic interest of these measures . .
This new system of temporary ECSC aids , which is currently
under examination in the Council machinery , will when finally
approved necessitate correcting the ECSC Budget provisions
with respect to resettlement aids and to the revenues referred to
      1                                            •
above .                 .
There remains , then , for the financial year . 1980 the problem
of balancing the ECSC Budget as concerns the funding of other
assistance . This is' discussed in Chapter - III above .
 ---pagebreak---                                      - 29 ~
II .  ANALYSIS OF REQLTIRIMENTS REPORTED AND RESOURCES AVAILABLE FOR THE
      FINANCIAL YEAR 1980
This chapter first of all gives a detailed account of the two factors
traditionally taken into account "by the Commission in determining the
levy rate on which to "base the Draft Budget for the next financial year ,
namely expected requirements and the estimated yield from resources .
Article 49 of the ECSC Treaty empowers the Commission to procure the
funds needed to pursue the activities set out in that Treaty "by imposing
levies on the production of coal and steel .   These levies are assessed
annually on the various products according to their average value , "but ,
pursuant to Article 50 , the rate thereof may not exceed lfo unless
previously authorized by the Council .
To fix tMs rate it is first of all necessary to estimate requirements ,
then to consider how far these may be covered from "budgetary resources
other than the levies , namely the interest in investments and on loans
financed out of own funds and cancellations of provisions . The amount
which will have to be covered by the levies can then be determined.
Next , the likely yield from the levies is calculated on the basis of a
preliminary – and thus sometimes unavoidably inaccurate – estimate of
the average valuers of the various products , and in the light of the
estimates ( also somewhat tentative ) of the volume of output during the
year.   The probable levy yield is first expressed as the estimated yield
from a rate of 0.01$.
These are the two main elements described in this chapter.
 ---pagebreak---  The next stage is to determine the extent to which the Community must
 forego satisfying the requirements , which far exceed the resources
provided "by the present rate ;     or , conversely , how far the rate must
"be either raised or lowered *     This question is discussed in Chapter III * .
                   ι
The following presentation of requirements reported and foreseeable
resources is modelled on the systematic analysis of the data for' the
various budget headings in the General Budget , set out in Part II of
the General Introduction to the Preliminary Draft Budget *        As with the
General Budget , this presentation lists separately the main features of
 each heading ( legal basis and description of the operation, type and
breakdown of expenditure , explanation )* Three categories of expenditure ,
are unavoidable , in that they derive from decisions already taken
( administrative expenditure , aid to coking coal and coke for the steel
industry) or from framework agreements with the Member Stat-es ( on aids
to resettlement )* To give a clear picture , the explanations for
expenditure whioh is not unavoidable ( research and interest relief grants )
are more detailed than for the other chapters *
A*   REQUIREMENTS REPORTED FOR 1980
1*   Ordinary requirements
CHAPTER B 1 :   AIM NI STRA.TI VE EXPENDITORE
1*   Legal basis and description of operation
Legal basis :
– Article" 50 of the ECSC Treaty ;
– Article 20 of the Merger Treaty;
– Council Decision of 21 November 1977 ( OJ No L 306 , 30 November 1977 » P » 28)
– ECSC contribution to the Commission 's administrative expenditure *
2 * T^pe and breakdown of expenditure
Annual lump-sum payment in four equal quarterly instalments *
3 * Explanation
The Council has set the annual amount of the lump-sum payment at 5 n EUA *
 ---pagebreak--- CHAPTER B 2i        AIDS TO RESETTLEMENT
"l .     'ixigui baaar; am ueEcriptaou oï" "opération
 Legal basis :
 - Articles 50 and 56 of the ECSC Treaty ;
 - Bilateral agreements concluded between the High Authority/
     Commission and the Governments of the Member States .
 The High Authority/Commission provides non-repayable aid towards :
     (i ) the payment of tideover allowances to workers ;
   (ii ) the payment of resettlement allowances to workers ;
 (iii ) the financing of vocational retraining for workers having
           to change their employment .
 In some cases , the tideover allowance is replaced by a contribution
 corresponding to the cost of a bridging-pension scheme .
The grant of the aid is conditional upon payment by the State concerned
of a special contribution of not less than the amount of that aid ,
unless an exception is authorized by the Council , acting by a two-thirds
majority .
2.       Type and "breakdown of expenditure
Creation of a provision to subsidize , by means of a 5 0% reimbursement ,
expenditure incurred by the Governments within the scope of the
agreements signed .
 ---pagebreak---      !nie breakdown by industry and by country of the requirements as estimated
     from the data provided by the Governments is as follows :
                                                                               m EU A
I       Country    .             Coal
                                                     Steel and
                                                     iron–ore mines
                                                                         Total per country
  Germany               1        à                         1.5                   7.5
                        I                      ι
  Belgium                        5                         5                    10
                                                                                         /
  Denmark
  France                         A                         23 .                 27
  Ireland
  Italy                                              token entry ■           token entry
                                                                                  -•
  Luxembourg                                                                     1   *
  Netherlands                                      . token entry             token -entry • I
  United Kingdon                 7.5                      η                     21.5
                                                       i
  Total per induBtry           22.5                       4V. 5                 67
      The social repercussions of the present situation remain difficult to
      predict , of course , and the forward figures , which are in principle
      based on the policy now in force , are therefore no more than tentative .
      3.    Explanation   -
      The coal industry 's requirements are on a par with those estimated for
      1979 , mainly as a result of the progress being made in reorganizing
      the industry .   On the other hand , requirements in the iron and steel
      industry continue to be at a high level , owing to the gradual
      rationalizing and restructuring of the industry .      The reduction in
      employment in the iron and steel industry is estimated at several
      tens of thousands of workers .
 ---pagebreak---                                                     - 33 -
       CHAPTER 3 3 :      AID TO RESEARCH
        1 . Lega-£ bas -is and description of ope ration
        Legal basis ;       Articles 50 and 55        "the ECSG Treaty.
        The High Authority/Commission is required to encourage technical and
        economic research into the production and increased use of coal and
        steel and occupational s&fety in the coal and steel industries ,,               To
        this end it grants aid to finance research after receiving the Council 's
        assent .
        2.           arai brsàkdown or
        Creation of provisions to cover1 part -subsidies which take the form of
        the repayment of a proportion of the actual costs of research projects
        approved by the High Author! ty/Comraission in accordance with the
        procedures provided for in the Treaty ; these cover , in particular , the
        consultation of the ECSC Consultative Committee and the receipt of the
        Council 's assent®           In most cases , the aid granted amounts to 60$ of
        the estimated and substantiated costs®
        The applications can be broken down as follows ;
                                                                                        m EUÀ
                                                                                 !
       Heading
                            j      ' •           Sector                 • •     Jj  Aid requested
ΐ                         ίi    :      :
                            i
t^ " 8    3.1
           . .
                          I
                          Ii
                            s     Steel                                            1 '    48 a 5..
                                                                                 »
 j 8
 i •
          3.2                     Coal        -              ••                  I    •• 25'
 (   Β    3.3                 ■   Social and medical                            ¡     •   10'   .  *
 s             * • •
L.
                                                                          TOTAL           83.5
 ---pagebreak---                                  - 34 -
 3.  ExDla.nai.ion
 Steel research
In assessing the appropriations needed to finance the ECSC steel research
programme for 1980 account nrust be taken of the persistent crisis
situation in the Community iron and steel industry , the Commission 's
current strategy to aid its recovery and ensure its future viability
and of the contribution which a joint research and development effort
can make to this strategy*
The economic recession and the worldwide restructuring of the steel
industry are factors which continue to have profound repercussions on
the ECSC . They ajre the fundamental cause of a crisis which has racked
this industry since the end of 1975 and which has revealed major structural
weaknesses resulting from overcapacity and the deterioration in international
competitivity. There is evidence that , in a number of sectors , techological
progress has not been as rapid as among our main competitors , notably
Japan ; this situation is reflected in the large number of new technologies
now being imported under licence into the Community with the obvious
consequences for the industry and its future development .
It is clear that the recoveiyand future economic prosperity of the steel
industry will depend on its ability to attain the highest levels of
international competitivity through a programme of restructuring and
reorganization. Technology will play a decisive role in this effort ,
which aims to increase the efficiency and flexibility of the steel
companies' production activities and of their equipment , to devise measures
to rationalize the productive investments and to continue to achieve major '
energy savings . In Japan for example , the steelmakers – having cut their
energy consumption by 7% over the last five years – have set themselves a
target of a further 5 "to 7fc reduction in the next few years and thereafter
a substantial reduction in their production costs ( energy costs account
for nearly 30^> of total steel production costs ). In the equally important
product sector , the competitive challenge from foreign suppliers on
domestic markets must be taken up in respect of the entire range of steel
products ; on the export side emphasis should be placed on specialized
and sophisticated high–technology products .
To achieve these objectives , the ECSC steel programme nrust make a major
contribution to the joint research objectives by placing greater emphasis
on short– and medium–term needs .    This collaborative effort will thus
continue to provide techological information and know–how for the benefit
of all steel producers and users throughout the Community ; concurrently ,
this cooperative effort will provide a common core around which individual
steelmakers can organize their own research and development programmes ,
and which will enable them to free resources to tackle problems of a
more specific and commercial nature .
 ---pagebreak---                                     - 35 -
 The changes taking place in the industry mean that new guidelines must
"be worked out for this field of ECSC activity ; these guidelines are
now being drawn up following discussions which have taken place "between
producers and users * On the "basis of this analysis of requirements ,
 the main objectives of the prc^amme will bes
 (a) to reduce production costs ; improvedproductivity in the manufacture
       and processing of steel ; more efficient use of raw materials ,
       especially energy;
 (b ) to improve product quality? this improvement covers nearly all
       aspects of steel production , i e e» process control , quality
       assessment and reproducibility? •
 ( ° ) to improve the technical characteristics of the steel products and
       broaden the range of applications ;    ensuring a better understanding
       of the properties of steels with a view to more effective utilization
       of Bteel and steel products bearing in mind that new , more sophisticated
       products can be developed to meet existing requirements and new
       applications .
The projeots under consideration for the financial year 19 80 may be grouped
into two categories , i«e* those concerning processes (productivity , cost
reduction, energy problems ) which, make up 73$ of applications for aid and those
relating to products (product quality and sophistication, steel utilization )
which make up 24$ of applications 0 Gf the projects in the first category
almost half sure research–ori eat     and aimed at achieving energy savings
or finding alternative sources 6f energy* .          .<
The continuing high level of funds required for 1980 reflects not only
the increased effort needed to counter the growing technological challenge
from non-member countries , but also the ccxamitment of a steel industry
which is aware of .the value of cooperation in research and development#
Although the ECSC budget represents ICffo of total expenditure on steel
research in the Community , it must be remembered that the total amount of
aid given to research and development in the Japanese industry is three
times as high ( lo5$ of turnover)®
In this general climate , it is obvious that much greatfer importance must
be attached to the development and exploitation of new technologies in
the steel sector and that more resources must be released for this
purpose. Although ECSC spending on research is already a substantial
contribution to the Community effort , this sector will require even more
support if full benefit is to be obtained from these advantages of
restructuring#                                          ,
 ---pagebreak---                                    - 36 -
Coal research
Coal is destined, to play an increasingly important part in the new energy /
order of the 1980*s , given the prospect of steadily-rising prices for –
and the shortage of – petroleum products *
The European Council , meeting in Strasbourg on 21 and 22 June 1979» stressed
the vital need for an energy strategy geared principally to the pursuit oJF
an economic growth which no longer depends on increased oil consumption but
which was based on the development of other energy sources .
The European Council also made clear its views on coal *    With the prospect
of necessary reduction of oil imports , the use of coal in conventional power
stations must be stepped up immediately and its use by industry promoted#
The new research programmes aimed at developing new processes of coal
production) transport and conversion must be intensified#
The Commission, too , has frequently made its viewpoint clear, particularly
in its 1975-85 medium-term guidelines for coal which were published in the
Official Journal No C 22 of 30 January 1 975 5  these guidelines lay down
output and productivity targets .   Intensification of research is one way of
achieving these objectives .  The proposed aid to coal research of between 15
and 20 m EUA per year is intended to encourage research projects under
the 1975-80 medium-term coal research programme (0J No C 60 of 25 May 1975 )*
The Community coal industry continues to encounter many grave difficulties
for a number of major reasons such as the diversity of coal seams , the .
increasing depth of the workings , labour problems and labour skills , the
dangers inherent in mining etc .   ,
The winning of coal , roadway drivage , transport , outbye services and mining
hazards such as firedamp , mine climate and strata pressure are the major -
subjects for research on which efforts should be concentrated .    Of particular
importance are the problems of operations control and radio communication .
 ---pagebreak---                                    - 37 -
Coke is still a key outlet for the coal industry , since it is the basic
element in the manufacture of iron end steel products . For "both the coal
and steel industry it is vital to continue and step up research to
improve the quality of Community coke , increase the yield and capacity of
coking plants and extend the range of coals which can be used for coke
productions Improved coal preparation and product treatment techniques ,
the modernization end automation of preparation plants will help increase
productivity and reduce costs *
Product upgrading and basic research ©n co&l–to-hydrocarbon conversion aimed
at improving the cost-effect ivenesR of existing processes or at finding less
costly ones is highly relevant iv, the present energy situation .
The 1980 ECSC ooal research programs® will cover the following topics :
                         «
Mining techniques
– Preparatory work
– Firedamp , mine climate and strata pressure
- Winning and working
– General services underground.
Upgrading
– Preparation of coal
– Coking
– Upgrading processes .
 ---pagebreak---                                      - 38 -
                             ι
Social research                                  ■  . .  ~
" Social Research" covers , research designed to improve working conditions,
occupational safety and industrial health in the ECSC industries .
The work of social research in 1979 may be summarized as follows :
In the mining sector, the programmes relating to health and occupational
safety will continue .
                                 t '  -               "    '         *
In the steel industry , a fourth research programme was launched by the
Commission on the teohnical control of pollution at the place of work
and in the environment of iron and steel works ( 22 May 1979 )*    A total
of 15 million EUA has been earmarked for this programme over a five-year
period . This programme follows on from earlier programmes concerned
with pollution control in the steel industry .     The priorities of this
programme are :                '
– campaign against air pollution ,
– campaign against water pollution,
– waste treatment ,
- noise and vibrations .
Special importance has been attached to the problems of nuisances at
the workplace .
ECSC medical research is centred on the , biological effects of dusts and
suspended particulates on the respiratory tract and specifically on
methods for the early detection of deterioration of the bronchopulmonary
parenchyma.     This research will lead to the development of preventive
medical treatment and to an improvement in the techniques of investigating
the respiratory functions and its links with the cardiovascular system.
In 1980 , the majority of the research projects in progress will near
completion an4 the findings will be published and scrutinized by scientific
committees and groups and by the appropriate Commission departments .     A
new programme is now in preparation.      The main topics will be decided in
the light of the results of the current work .      .
 ---pagebreak---                                    - 39 -
Kith a view to improving working conditions , a nev: programme of basic
and applied research is to be launched in research institutes and the
ECSC industries .      The main topics v?ill be the noise environment and
its effects on the human body , the physical and mental , strain resulting
from multiple stress jobs and the general working environment .
The cost of this programme is estimated at 4 million EUA for 1980 .
Work will continue over four years and will help in the framing of
standards to reduce stress , priority being given to noise and to the
mental strain at the workplace o
To sum up , the projects to be financed in 1980 concern the following
fields :
    ( i ) Industrial health and mine safety
  ( ii ) Pollution control in the Bteel industry*
( iii ) Chronio respiratory diseases
  ( iv) Improvement of working conditions .
                                                                     *
 ---pagebreak---                                     - 4Q _
   CHAPTER B 4 :  AIDS IN THE FORM OF INTEREST RELIEF GRANTS
   1.   Legal basis and description of the operation
   Legal basis : Articles 54 ( investment ) and 56 ( redevelopment ) of the ECSG
                  Treaty, and Decisions of the High Authority/Commission.
  The ECSC may use its own resources to provide interest relief on certain
       i                                      I
  types of loan.     The relief is calculated in EUA at a rate and for a term
   fixed by the Commission. It currently stands at 3$ over five years .
   2.  Type and breakdown of requirements
  Provision for offsetting part of the interest due on loans disbursed by the
  ECSC , in accordance with the contracts drawn up between the Commission and
   the beneficiaries .
  The following is the . breakdown of applications for interest relief grants
  already registered :                      . /              >
                                                          m EUA
                                      Sector         Aids applied
                    Heading                              for
                     B.4.1        InveBtment               64
                     B.4.2 '      Conversion               52
                                          TOTAL           116
  Erplanation
  ECSC loans with interest relief are the principal financial instruments
   for promoting priority investments , particularly those connected with
   that part of Community energy policy Which relates to coal as well as
. the Community policies for restructuring and. converting the' coal and steel
 • industries set out in Chapter I,B of this paper . The technical information
   given below supplements the policy reasons for these requi rements , set out
   in that Chapter .
 ---pagebreak---                                       - 41  -
Investments
In the investment field , the chief aim of loans with interest relief is
the structural improvement and rationalization of the ECSC industries .
The criteria for granting relief are as follows :
    ( i ) environment : interest relief only for exceptionally heavy
            capital expenditure on existing plant , and for pilot schemes
            in new plant ( OJ No C 146 , 25 November 1974 );
  ( ii ) research and training centres , and the elimination of
           "bottlenecks :   relief in the latter sector has "been limited
           to investment to remedy the shortage of coking coal
            ( OJ No C 73 , 18 June 1970) 5
( iii ) stabilization of coal production: this is a new category of
           aid and allocation criteria will be announced shortly . Relief
           is limited to investment in shafts , underground workings
           and haulage and winding equipment . When assessing the merits
           of such investment , the Commission pays particular attention
           to the size of the project ( lead time ), its location ( importance
           of the coalfield concerned ), its purpose and its effect on
           employment ;
  ( iv) restructurings interest relief may be granted for those
            investments that are of greatest value for restructuring the
           Community iron and steel industry and re-establishing its
         ' long-term competitiveness ( OJ No C 174 , 22 July 1977 )* The
           Community attaches special importance to this category of
           intervention in its iron and steel policy .
 ---pagebreak--- Redevelopment
Redevelopment Loans are granted to firms or public bodies which encourage
investments creating new jobs in regions hit "fay declining employment
in the coal and steel industries .  The guidelines drawn up by the     - /
Commission for granting these loans are published in OJ No C 178 ,
27 July 1977 , They have since been . changed slightly ( see page 8 of
OJ No C 82 , 29 March 1979) to tighten up the rules for global loans ,
which have proved a very effective job creation instrument .
The maximum size of loan eligible for interest relief at the moment
is 20 000 EUA per new job. When recruiting, the recipients give
priority to former ECSC workers .
For obvious reasons , in 1980 priority will still have to be given
to the redevelopment needs of the steel industry . Nevertheless ,
applications relating to projects in mining areas will still be
considered , on the grounds of the advantages they offer at the time
of submission .
Job losses in the Community steel industry are still high. This
trend is likely to continue for several more years . As a result ,
but subject to the limited effectiveness in the short term of
reconversion, it is possible , where job creation is concerned , to
arrive at orders of magnitude suggested by the scale of the problem :
if the ECSC were to use its redevelopoent policy in 1980 to help create
employment to replace all the 25 000 jobs likely to be lost in the ^
steel industry alone , then loans with interest relief totalling
500 m EUA would have to be granted , together with non-repayable
interest relief amounting to 75 m EUA .
 ---pagebreak---                                   _ A3
However , the continuing paucity of projects which are eligible for
ECSC financing , notwithstanding a considerable increase in 1979 »
 suggests that the 198O budgetary requirements for redevelopment aid
 correspond to some 17.000 jobs , or 52 m EUA in interest relief .
 It should be said that , in the most optimistic view , these jobs
 will be created over the next three to four years and will not
 therefore be immediately available to replace job losses in 1980 .
 CHAPTER B - AXIS UNDER ARTICLE 95 OF THE ECSC TREATY ( COKING COAL
AM) COKE FOR THE STEEL INDUSTRY )
 1 ) Legal basis and description of the operation .
Legal basis :
   ( i ) Article 95 of the ECSC Treaty;
 ( ii ) High Authority/Commission Decision 73/287/ECSC of 15 July 1973
         (OJ No L 259 » 15 September 1973 ), as last amended by
         Decision 1613/77/ECSC of 15 July 1977 ( OJ No L 180 , 20 July 1977 ).
The ECSC makes a lump-sum contribution to a special fund , administered
by the Commission , for subsidizing intra-Community sales of Community
coking coal intended for the iron and steel industry .      Under
Decision 73/187/ECSC of 15 July 1973 , "^he fund is financed by the
Community , the Member States and the iron and steel industry.
2) Type and breakdown of requirements
Provision for a lump-sum contribution to the fund , estimated at 6 m EUA.
The subsidies due are determined in relation to the tonnages delivered ,
and aid may be granted for up to 15 000 000 t per annum.. As it stands ,
however , the Decision provides for aid only up to 1979 * Nevertheless ,
the Commission proposal for renewing the fund ( and increasing total
resources ), now being examined by the Council ( C0M(78)516 final of
19 October 1978 ) and which Parliament has already approved in its
Resolution of 25 April 1979 » provides for the continuation in 190O
of the ECSC annual contribution of 6 a EUA . This figure should therefore
be retained for the purposes of the draft Budget .
 ---pagebreak---                                    - 44 -
  3 ) Explanation
  The aim of the special system of aid to coking coal and coke , set up
  pursuant to Decision 73/287/ECSC of 15 July 1973 f is to help maintain
  production of "blast-furnace coal for the Comm'-nity's iron end steel
  industry, and also to enable the coal and the coke derived therefrom
  to be sold at prices reflecting world market prices ..
  The Commission feels that certain production capacities should be
  maintained in this Bector , as well as the requisite labour force to
  work them as efficiently as possible , and that it is therefore necessary
  to have an aid system which takes account of the fact that the question
  of Community coking coal production concerns, all the Member States .
  Under the aid system , aids to production and sales in the producer
  country are financed by that country ; aids to intra-Community sales
  are financed at Community level , the cost being shared by the steel
  industry , the Member States and the ECSC .
  2.  Requirements not entered in the budget :   loans for financing
      subsidized housing
  In addition to the requirements to be financed by non-repayable grants
  from the year 's resources , there is the ECSC housing subsidy scheme ,
  financed 'below the line' , which has been in operation since 1955 *
  Forecasts for this programme are included in this aide-memoire to complete
  the picture of all ECSC interventions for Parliament and the Consultative
  Committee . For ease of understanding , the presentation follows the
  same analytical format as for the requirements already described .
  1 ) Legal basis and description of the operation
  Legal basis : Article 54 and Decisions of the High Authority/Commission
  assigning to the housing programmes the funds from the "special
  reserve " constituted by interest from investments and from loans
V against own funds .                                                   .
  ECSC intervention takes the form of reduced-interest loans , and
  eases the . cost of financing housing by adding the funds lent by the
  Community to resources provided nationally .
 ---pagebreak--- 2)      Type and breakdown of requirements
Grant of long-term 1 /^> interest–rate loans to the responsible national
bodies .
The Commission Decision of 29 June 1979 on 'the ninth subsidized,
housing programme ( 1979-1983 ) allocates the bud of 30 m EUA for
the first phase of the programme ( 1979– 19®0 ) « which averages out at
10 m EUA a year , against the 15 m EUA allocated previously .     This
is due to the fact that the Commission was obliged to cut back its
contributions in this area because of pressing financial commitments
in respect of intervention directly related to tackling the steel crisis .
3 ) Explanation
This scheme is intended to subsidize the following projects :
    ( i ) housing linked with industrial restructuring in the traditional
           steel centres and in those coalfields where production is
           to be increased ;
  ( ii )   housing for labour transferred to the new coastal steelworks ;
( iii )    specific solutions for migrant workers , employees with special
           skills and persons employed in arduous tasks ;
  ( iv ) housing to be modernized as part of urban renewal in steel
           and mining districts .
The scheme is both in the interest of workers , since it alleviates
the effects of price increases and high interest rates , and of
benefit to the industry , since it facilitates restructuring .
The number of dwellings subsidized by means of ECS C loans at
1 January 1979 was 160 177 *
 ---pagebreak---                                     - 46 -
 3.  Summary of requirements reported
 Total requirements reported therefore amount to 246*5 m EUA to "be financed,
 under the operational "budget t plus < m EUA in the form of "below-the-line
 loans at low interest rates for the "building of subsidized housing. The
 figures for requirements reported are summarized in Annex E , in the
 "applications" column#
                                     s
                              m            m
 B.  ORDINARY RESOURCES AVAILABLE
 1.  Resources for the financial year
 CHAPTER R 1 :  GENERAL RESOURCES
 TITLE R 1.1 ;  Levy
 1,  Legal "basis and description
 Legal "basis ;
 - Articles 49 and 50 of the ECSC Treaty                          /
 – Decisions 2/52 and 3/ 52 of 23 December 1952* -
 The levies are calculated on the "basis of a fixed scale per tonne which is
                 /
 decided each financial year "by the High Authority/Commission and published
 in the Official Journal#
 2.  Type and "breakdown
 Levy resources are the sums owing, and duly established, in the form of
 levies payable on output in the 1980 financial year and calculated on the
"basis of the production declarations made "by the undertakings .
 3.  Explanation                                                    ' -
 The latest estimates of the average values which Berve as the "basis for
 calculating the levies suggest that the figures for the 1980 financial year,
 which relate to the reference period from 1 July 1978 to 30 June 1979 » will
"be some 9$ higher in the case of coal and roughly 10$ for steel them the
 figures for 1979*
It should "be noted that there is an appreciable margin of uncertainty in
 these figures ; this is "because the departments concerned are not yet in
 possession of all the requisite data , and forecasting production in .
 present economic conditions is very uncertain*
 ---pagebreak---     Tor*- • ,*. 3 subject to the levy , s:ad yie'M frora a rate of levy of 0,01%
                Γ_'
                                                   Prftfucsion on which       I One levy I
                                                   •;f] s levy is calculated    "point "
                                                         rcillion tonnes        in m EOA
   Br-r 'x.i           r~-:- luettes and
 b^-co.'/ e derived frosn "brom
 i
 I coal                                                        3.7               0.01
   H^rd cutil of all categories                              197.4           1   0.3.9     I
                          Coal – total                                           0*9
   Pig iron other than that used
    for naV "• b-j? iwgots                                     4*4               0.05
                                                             140                 2.19
                                                                                         i
I J?im. ssh nd prfso.act s                                   107                 0.76    1
!
j                         Steel total
!                         G'MED TCT'ilL                                          3.9
 !
    TI riiTi    p 7 •        Jr.*    "   o*th0T
    1»       L-vml .-.i.cxs and description
   B©6ew:«s*«3 dorivittg from income on i.^vtse-'Gaents and on loans against
   norr :L a.'/.'u-?ad f\maa will fca deiereixed vhen the Coaraisaion adopts the
   "balance sLi et at 31 December 1$79® Under its Decision of 30 April 1975 »
    the                       enters in the "budget the interest available fro© the previous
                      year .
    2# Tr,~pe asi "breakdown
   A ■breakdmm of forecast resources "based on the latest estimates is
    given lsej.ovj!
                                                                                             %
 ---pagebreak---                                    - 48-
   Titles                         Heading                   m EUA
                          «
 R 1.2          Interest on investments and loans
                against non–'borrowed funds                   23
R 1.3           Fines and late payment surcharges          token entry
R 1.4           Miscellaneous revenue                      token entry
3.  Explanation
The figure for interest revenue is "based on an estimate of the
resources which the Commission will be in a position to release when
it adopts the balance sheet at 31 December 1979 *
                                              'i
CHAPTER R 2 : CANCELLATIONS OF COMMITMENTS WHICH WILL PROBABLY NOT
BE IMPLEMENTED
1.  Légal basis and description
The provisions created in response to Commission aid decisions must be
given tangible form within a reasonable period of time by the contracting
of legal commitments.
The Commission 's Internal Rules for the drawing up and implementation
of the ECSC operational budget therefore provide that in the exceptional
event of undue delay at this stage the provisions will be cancelled.
The Rules also provide that once all parties have discharged their
obligations tinder the legal commitment , any remaining part of the provision
will likewise be cancelled.
 ---pagebreak---                                              - 49 -
  The amounts thus released become available again as resources for the
  ^ vis ., rent fir-uncial years
  j,i       Na"^i;r'■-:•» « nd breaMova
  Save in the exceptional cases where decisions on the ear-marking of funds
  are not followed v.p within a reasonable period of time "by legal
  ooaimitHi^ritSj e&y cancellation of earmarked funds normally indicates
  complete discharge of the contract ,               agreed with the contracting party
 concerned®
 'lie estimate of 5 ® E3JA shown in this chapter relates , in essence , to
 cancellations of allocations for resettlement aid . Only a token entry
vjould he ae 'de-d for the other items which might he involved ( cancellations
 of "balances remaining in respect of contracts which have "been performed in
 full , delayed legal commitments ,, etc®)®
 3®         Explanation
 It is difficult to estimate the rate of cancellation in respect of
 resettlement programmes , as it dm>ends on the negotiations to te held.
 ,/ith the governments concerned#                The estimated figure of 5 ® E0A is "based
 in an average rate for 19 80®
CHAPTER R 3' - REVALUATION Cffl ASSETS AND LIABILITIES
This chapter j showing a "token entry", is provided to record the net
 effect of changes in rates of conversion during the financial year *
 CHAPTER ft                   UMTSED RESOURCES FRCM THE FINANCIAL YEAR 1979
 .^his chapter , showing a " token entry", provides for any "balance
.■remaining from the fund 8 of $he previous financial year to "be entered as
 resources for the current financial year*
 ---pagebreak---                                       - 50 -
2m   Covering of requirements not entered in the budget
Provision has "been made for the following resources to cover
requirements for the construction of subsidized housing:
– repayments on earlier loans (7 m EUA );
- a part of the special reserve and of the former ECSC pension fund
   (3 m EUA).
The making available of the resources of the special reserve remains
to be confirmed when the Commission adopts the balance sheet on
31 December 1979 *
                                                                      1
3»   Summary of possible ordinary resources available for 1980
The estimates of traditional resources other than levies amount to
28 m EUA ( interest available – 23 m EUA ; cancellations – 5 m EUA ).
As the yield from a levy rate of 0,01fo has been estimated at 3*9 m EUA ,
the yield obtained from levies can be estimated at 113 mEUA on " the
basis of the current rate of 0.29$» The total ordinary resources
available for 1980, assuming that the levy rate remains unchanged ,
is estimated at 141 m EUA*
The estimated resources are summarised in Annex E in the Bection on
"resources" •
 ---pagebreak--- I 11 . DRAFT 1980 OPERATIONAL BUDGET
       Once again , for reasons already gone into , the draft 1980 ECSC
operational Budget shows a persisting J ^balance between requirements
and normal availabilities .
       As this is due in large part to the exceptionally high-level
of commitments called for by Community assistance towards the
reconstruction of the steel industry , the Commission would stress
that in principle the imbalance io a temporary one only .
       However , as explained in this paper , since the structural crisis
that developed in 1975 hit the Community "steel industry the Commission
has judged it necessary -– in which it is supported by all concerned –-
to evolve new assistance arrangements to cope with the exceptional
restructuring , redevelopment and social problems there .
       In addition , under the heading of energy policy , it plans in
1980 to launch a new schema of aid for investment in the coal industry
       It is the cost of these new policies that has led to an imbalance in
 the Budget .
       A distinction must be drawn here between financing requirements
in connection with assistance on the social side and financing
requirements in connection with investment ( in the form of interest
subsidies ).
       In the case of the social assistance ( resettlement  aid ) the
requirements are , by reason of the bilateral agreements between the
Community and the Member States , "automatic ," and so to be met
first and foremost from resources available .
 ---pagebreak---                                           52
              Consequently, it is in particular aid in the form of interest
    subsidies that has to be covered from non-regular funds , such as
   have been supplied in the last two years by the Member States .
                                                4
              There is thus a direct connection between these Community
    requirements for interest subsidisation and the case for seeking
i extraordinary receipts for 1980. However, to keep an overall
; picture of the ECSC Budget , it is necessary to 'view as a whole
    the sums to be regarded as the irreducible minimum for all the
 ' Budget chapters together .                        *
                                                       ».
                                                                           «
    A. IRREDUCIBLE REQUIREMENTS                             •<
              The Commission would recall that for 1979 it set the total
     it considered the minimum needed to carry on the various ECSC-
     financed policies at 180 million EUA .            For 1980 it considers the
     figure for irreducible requirements should be 211 million EUA .
                      ,        N      . •              ...
                          ' '                                                    /
              This figure , a breakdown of which is given in Annex IS, has
     been arrived at as follows :
       ( i ) the commitments in respect of adminiatratlve expenditure .
               ( five million EUA ), resettlement -• aid ^ ( 67 million ) and
              aid for coking coal ( six million , given , as we are assuming ,
              a new Decision on this ) must be rated as inescapable , and
              amount to ?8 million EUA 5
      (ii ) aid for research is in the case of steel research closely
            - bound up with the Community steel modernization drive and in
               the case of coal research with energy policy , while the
    '          ( limited ) assistance given for social research is a Community
               operation greatly appreciated by the two sides of industry
   ( 1 and backed up by the experts 'concerned in the fields of
               industrial health' and safety.
 ---pagebreak---                                        53
    »                              ....
          Notwithstanding , the Commission feels it should propose some
        . pruning of funds here , and is accordingly proposing , despite
          the expected inflation between the two financial years , that
          the appropriation for this chapter should remain at the 1979
          level of      million EUA . This would only be enough to. meet
          56% of valid applications received ;
(ill ) as for aid in the form of interest subsidies , applications *
          already in work out on the redevelopment side at 52 million |
          EUA ( to result , according to current criteria , in the
          creation of 17,000 jobs ), and on the investment side atC»
          million , i.e.116 million EUA 1n all . By applying very strict
       ' selection criteria the Commission proposes to bring down the
          figure for inclusion in the draft Budget to a minimum 26 million
          EUA- < 43 million EUA for coal And iteel Investment and 45 million EUA for
          redevelopment investments .
 B. BALANCING THE BUDGET
          As appears from the foregoing , there remains a gap of 70 millidn
 EUA between the aggregate requirements regarded by the Commission as
 the absolute minimum ( 211 million EUA ) and the expected regular
 revenue for 1980 ( 1*»1 million ).
          The Commission therefore deems the provision of extraordinary receipts
 of 70 million EUA to be indispensable . It may be noted in this
           •  ,                                      *               ■            •
  connection that were the Commission to make use of the traditional
  Budget-balancing machinery "this would mean , to raise 211 million
  EUA in 1980 , putting up the levy from 0.29$ to 0.47% .          ■ ■
      I                      •     . -              -              -    » ••
 ---pagebreak---                                  - 54 -
       The Commission will very shortly advise those concerned of its
proposals with regard to the method to be adopted for providing the
extraordinary receipts for which the need has been demonstrated .
       On the assumption that provision of these receipts can be assured
by the necessary date , the Commission proposes that the levy should
remain at 0 / 29 % .                                           .
C. DRAFT BUDGET
       The Commission 's draft 1980 Budget of 211 million EUA is set
out in Annex E.
                          '              /
                            \ '
 ---pagebreak---                                               H'PirVfNTATIO.'l CF THE ECSC OPCRATIONAL BUDGET FCR 1978                                             ( In i. EUA)
                                                BUDGET      –rm                                                            BUDGET         FINAL
                     REQUIREMENTS                                                              RESOURCES
                                             FIGURES          FIGURES                                                      FIGURES       FIGURES
  OPERATIONS TO BE FINANCED FROM                                              RESOURCES OF THE FINANCIAL YEAR
  CURRENT RESOURCES ( NON-REPAYABLE)
  1 , Administrative expenditure               5               5              1 . Current resource »
                                                                                    1.1 Levy yield ( at 0.2!#)                  100        100.78
                                                      /
                                                                                    1.2 Interest on Investments and on            18        18
                                                                                         loans from non-borrowed funds
                                                                                    1.3 Fines and surcharges for delayed       token
                                                                                                                                             0.H
                                                                                         payment                               entry
                                                                                    1.4 Miscellaneous                      token entry
I 2. Aid to resettleaent                                                     12 . Cancellation of commitments which will
       ( Article 56)                          60              60                    not now be Implemented                         2         2.88
  3. Aid to research                                                          3. Revaluation of assets and liabilities.        token
       ( Article 55)                          «               40.34                                                            entry
       3.1 steel                                   ( 16            ( 16
       3.2 coal                                    ( 16            ( 16
       3.3 social                                  ( 9             ( 8.34
   4. Interest relief grants                  40              36               4. Unused refturces carried over frot           token
       4.1 Article 54 - Invest sent                ( 15            ( 15(2 )         the financial year 1976                    entry
                                                                 - #    / -A
       4.2 Article 56 - Redevelopment s            ( 25(1 )        UH3J
  5. Aid to coking coal and netallurglcal                                     5. Drawing on contingency reserve              - token .    m
                                                                                                                                                 *
       coke ( Article 95)                       6              6                                                               entry
   6 . Effect In EUA of the changes In       token                             6. Special contribution                           32         28
                                                               1.09
       currency exchange rates on legal      entry                                  (Decisions of the Hember States of
       conml tments to be carried out In                                             21 December 1977 and 30 October 1978)
   7 currencies
   ' • Surplus                                                 QJ15
                                             152            149.8                                                               152    '  149.8
     OPERATIONS FINANCED WITH LOANS                                             ORIGIN OF NON-BORROWED FUNDS
     FROM NON-BORROWED FUfDS '
   8 . Social houslng                         15               5                 7. Repayments on loans for social housing         7.5       7.5
                                                                                 8 . Special reserve and part of the
                                                                                      former ECSC Pension Fund                     7.5       7.5
  0 ) Reduced to 21 n EUA following the Member States 1 Decision to reduce the special contribution from 32 to 28 a EUA.
  ( 2) 2.82 m EUA of this amount to be decided In 1979 ( appropriation carried over).
  ( 3) 2.94 n EUA of this amount to be decided In 1979 ( appropriation carried over).
 ---pagebreak---                                                         FORECAST OUTTURN OF THE
                                                     : ECSC OPERATIONAL' BUDGET FOR 1979                                    ■   ANNEX B
                                                             ESTIMATED REQUIREMENTS                                              ( in m EUA)
                                                                                                                                      .. .   ■ ■     i g M ■
                                                  Estimated                                                                         Estimated
                                        Budget                                             ■ RESOURCES                  Budget
                REQUIREMENTS                      raie of                                                                            rate of
                                        fi gure                                                                         flgure
                                                  implementation                                                                     Implementation
OPERATIONS TO BE FINANCED FROM CURRENT                                 RESOURCES FOR THE FINANCIAL YEAR
RESOURCES ( NON-REPAYABLE )
1 . Administrative expenditure             5            5              1 . Current resources
2. Aid to resettlement ( Article 56)      67           67 .                1.1 Levy yield at 0. 29%                       98                 103
3. Aid to research                                                             ( 0.01% - 3,9 m EUA)
    ( Article 55)                         47           46.5                1.2 Interest on Investments and on loans
    3.1 steel                                ( 20           ( 20               from non-borrowed funds                    18                    18 ;
    3.2 coal                                 ( 17           ( 17           1.3 Fines and surcharges for delayed payment         ti3ken     entry
    3.3 social                               ( 10           ( 9.5          1.4 Miscellaneous                                    tijken entry
                                                                       2 . Cancellation of commitments which will
4. Interest relief grants                 27           47
    4.1 Investment ( Article 54)                                           probably not be implemented                     4                ' 8.7    '
                                             ( 12           ( 20
                                                                       3. Revaluation of assets and liabilities                     oken entry
    4.2 redevelopment ( Article 56)          ( 15           < 27
                                                                       4. Unused resources carried over from the         token                               ι
5. Aid to coking coal and metallurgical                                                                                                          5.8
    coke ( Article 95)        '            6            6
                                                                            1978 financial year                           entry
                                                                                                                                                             o
                                                                       5. Special contribution under the Decision of
                                                                                                                                                             I
                                                                           the Member States of 9 April 1979               32                  28
                                                                       6. Drawing on contingency reserve _                                       4
                                                                       7 . Déficit                                                               4
                                        152         171.5                                                                 152
OPERATIONS FINANCED WITH LOANS FROM                                    ORIGIN OF NON-BORROWED FUNDS
NON-BORROWED FUNDS     '
6. Social housing                       17.5          10
                                                                       8 . Repayments on loans for social housing         7.5                    7
                                                                       9 . Special reserve and part of the former          10                    3
                                                                           ECSC Pension Fund
 ---pagebreak---                                - 57 -
Information relating to levies
The latest available information on production and the levy yield for
the current financial year is given below :
Lew yield for the period from January to June 1979
                                      Production serving
                                      as a basis for the    Levy yield
          Prodùot                     calculation of the
                                             levy            in m EUA
                                      in million tonnes
  Brown-ocal briquettes
  and semi–coke                              2.2               0.2
  Ail types of hard coal                    97.7              11.8
                    Total for coal                            12.0
  Pig iron other than that required
  for the manufacture of ingots        ■     2.2               0.7
  Steel ingots                             68.9               28.7
  Finished products                        53.1               10.1
                    Total for stael                           39-5
                    GRAND TOTAL                               51-5
 ---pagebreak---                                                                                                     ANNEX C
                                 BREAKDOWN OF LOANS FOR THE FIRST SIX MONTHS OF 1979
                                                                                                                      ( in m EUA )
                                         Fédéral
              Seotor                     Republic Belgium   Denmark  France
                                                                                     Nether­ Luxem­ Jnitttd
                                                                             Italy
                                         or
                                         Gernarnr
                                                                                     lands   bourg Kingdon  Ireland j  Community
!    I. Co&l industrr                                                          -   ;           •'  i 54.23               54.23
I.    " Iron or«            .          j
I  II» • Iron aod rteel IzxiuBtrT         39.25                     41.69   41.63            15.16   10.99             14". 72    .
                                            4.89   a»               18.82     1.98            3.04   16.30              45.03
   !»• Social housing                       2.28  0.19    ' 0.11     1.22     3.39            0.05    O.96                8.20   ■
    V# Thermal power stations .           12.21                     28.45                                               40.66
                                          58.63   0.19      0.11    90.18   47.0             18.25   82.48             296.84 •
 ---pagebreak---                                  PROVISIONAL SITUATION OF THE EC3C AT 30 JUNE 1979                       ANNEX D
                        ASSETS                                                 LIABILITIES          ( in m EUA )
I    77  Disbursed. loans                      4 689.9      I.  A. Borrowings                      4 600.8
                                                                B. Outstanding redemption premiums      1.0
    II . Cash and banks                                    II .    Short-term loans                     8.4
   III . Short- and medium-term invests* rft      77.1    III .    Reserves
                                                                A. Guarantee fund                    200.0
    IV . Portfolio                               120.4          B. Other funds                        138.5
     V.  Real estate                               0.3          C. Former pension fund                 41.1
                                                           IV .    Provisions           ■ ,
    VI . Recoverable issuing costs                76.9          A. Financial assistance              264.3
   VII . Miscellaneous                            98.6          B. Other provisions                    81.4
                                                            V.     Miscellaneous                       84.4       ι
  VIII . Accrued income                      i   113.7  |  VI .    Accrued liabilities                147.8      VI
                                                                                                                 <©
                                                          VII .    Unallocated balance                 47.2       I
                                               5 614.9                                             5 614.9
         Suspense account :                                        Suspense account !
         Enterprises' liabilities                                  ECSC'8 liabilities
         under guarantee                           5-5             under guarantee                      5.5
 ---pagebreak---                                        . DRAFT ECSC OFERATIONAL BUDGET FOR 1900
                                                                                                           ( in m EUA )
             REQUIREMENTS                APPLICATIONS    PROPOSALS                  RESOURCES            PROPOSALS
                                                                                1    '
OPERATIONS TO BE FINANCED FROM                                       RESOURCES FOR THE FINANCIAL
RESOURCES FOR THE FINANCIAL YEAR                                     YEAR              ^
( NON-REPAYABLE )
1.    Administrative expenditure           5                5        1.     Current resources
2 . Aid to resettlement (Article 56 ) 67                   67        1.1 Levy yield at 0.29$
                                                                                                              113
                                                                            ( 0.01$ - 3.9 m EUA )
3 « Aid to research (Article 55 )         83.5             47        1.2 Interest on investments
3*1 steel                                       (48.5         (20        .. and on loans from                  23
                                                                            non-borrowed funds
3*2 coal                                        ( 25          ( 17   1.3 Fines and late payment
                                                                            surcharges
3 » 3 social                                    ( 10 "     – ( 10                                      token entry
                                                                     1 .4 Miscellaneous                token entry
4*    Interest relief grants              116              86        2 . Cancellation of commitments
4.1 Investment (Article 54 )                    ( 64          ( 43          which will probably not be
4.2 Redevelopment (Article 56)                  ( 52          ( 43          implemented                         5
                                                                     3*     Revaluation of assets and
5.    Aid to coking coal and                                                                           token entry
                                                                            liabilities
      metallurgical coke (Article 95 )     6
                                                                     4*     extraordinary receipts             70
                                        I 277,5        | 211                                              -   211
OPERATIONS FINANCED WITH LOANS                                       ORIGIN OF NON-BORROWED FUNDS
6*    Social housing                      10               10        5.' Repayments on loans for
                                                                            social housing                      7
                                                                     6.     Special reserve and part
                                                                            of former ECSC Pension              3
                                                                           Fund