CELEX: 51977DC0558
Language: en
Date: 1977-11-08
Title: AIDE-MEMOIRE on the fixing of the ECSC levies and on the drawing-up of the operational budget for 1978

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (77) 558
Vol. 1977/0182
 ---pagebreak--- Disclaimer
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concernant l'ouverture au public des archives historiques de la Communauté économique
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
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 ---pagebreak---      COMMISSION OF THE EUROPEAN COMMUNITIES
                                                         COM(77)558 final.
                                                         Brussels , 10 November 1977
                                  AIDE-MEMOIRE
                     on the fixing of the ECSC levies and on
               the drawing-up of the operational "budget for 1978
                                           4
COM ( 77 ) 558 final .
 ---pagebreak---                                  _ 9 _
                             S U M M A B Y
                                                                 Page
Preface                                                             /
1 . GENERAL INTRODUCTION                                            5
A. ECONOMIC CONTEXT                                                 5
      1 . The economic outlook for 1977, and 1978                   5
      2.  Prospects in the coal sector                              8
     3 « Prospects in the steel sector                              9
B.    POLICY CONTEXT                                               X1
      1 . Coal policy                                              12
      2.   Iron and steel policy                                   ^
     3.    Social policy .
     4.   Borrowing and Vending -activity since 31 December 1976
C. FINANCIAL COBTEXT       5                                      20
II . AMLYSIS OF EXPECTED EXPENDITURE AND POSSIBLE
     RESOURCES IN THE FINANCIAL YEAR I978                         25
A , EXPECTED EXPENDITURE IN I978                                  26
     1 . Ordinary requirements                                    26
     2 . Requirements not included in the "budget
          –. loans for financing subsidized housing               39
     3 . Summary of requirements put forward                      41
 ---pagebreak---                                 - 3 -
                                                             Page
B.   POSSIBLE RESOURCES                                       41
     1.  Resources for the financial year                     41
     2.  Covering of requirements not included in the budget  45
     3.  Summary of possible resources for 1978               45
III . DRAFT OPERATIONAL BUDGET FOR 1978                       4°
A.   IRREDUCIBLE : REQUIREMENTS                               47
B.   COVERING OF REQUIREMENTS                                 50
C.   DRAîT BUDGET                                             52
ANNEXES
A.   Implementation of the ECSC operational "budget for 197°   53
B.   Forecast implementation of the ECSC operational
     budget for 1977                                           54
C.   Breakdown of loans for the first six months of 1977       5°
D.   Provisional situation of the ECSC at 30 June 1977         57
E. Draft ECSC operational budget for 1978                      58
 ---pagebreak---                                   - 4 -
                               AIDE-MEMO IRE
              on the fixing of tha ECSG levies and on "the
              drawing-up of the operational "budget for 1978
Following the visual practice , the views of the European Parliament are being
requested "before the Commission takes a decision on the levies and the
operational "budget of the ECSC for the financial year 1978 .
This aide-memoire forma the "basis for the consultation of Parliament .   It
is divided into the following sections :
I.    General introduction ;
II .  Analysis ox expected expenditure and possible resources in the
      financial year 1978 ;
III . Draft operational "budget .
In view of the favourable reception given to the way in which the document
was presented "by the Commission last year , there is to be only one slight
change this year , namely the inclusion at Annex D of a summary of the
provisional situation of the ECSC at . 30 June 19 77 .
The various factors affecting the determination of the levy rate for 1978
are described in Chapter III .
                                     *
                                  *     *
The aide-memoire has also been sent to the ECSC Consultative Committee for
information .
 ---pagebreak--- I. GENERAL INTRODUCTION
This Chapter summarizes the factors necessary for appreciating the economic ,
political and financial background to the draft operational budget of the
ECSC for 1978 .
A.  ECONOMIC ASPECTS
1 . The economic outlook for 1977 and 1978
The economic trend which the Community has been experiencing for some two
 years has been marked by alternating periods of expansion and contraction .
 The latter have tended to predominate since the' beginning of the year . As a
result of the constraining influence of inflationary pressures , excessive
balance of payments imbalances , and under-use of productive capacity - fac­
tors applying in differing degree to different Member countries - there is
still no sign of the appearance of a cumulative cyclical expansion of the
sort noted in earlier phases of economic recovery . A slight consolidation
of economic growth is forecast for the second half of 1977 on account of
the faster expansion of exports and, in some countries , of private consump­
tion . For the year as a whole , however , the rate of economic growth is not
 likely to be any higher than 2 1 / 2% 1n real terms of the entire Community
compared with 4 1 / 2% in 1976 . Initial estimates for 1978 suggest that eco­
nomic growth will pick up slightly in that year and overtake the 1977 level .
Utilization of productive capacity , however , is expected to stay at a fairly
 low level in many sectors of industry .
The progress made towards a return to full employment in the medium term
has been disappointing . There has been little inclination to make job-creating
 investments . Where a need for labour has arisen , it has basically been
met by increasing productivity or extending the working hours of those al­
 ready employed . Discounting seasonal variations , the rate of unemployment
 for the whole of the Community reached 5.6% by the summer . This is likely
to increase further in the autumn and into 1978 . The number of young people
 seeking their first job is likely to go on increasing and a growing number
 of women will be seeking employment .
 ---pagebreak---                         - 6 -
Although pressure of demand on overall real resources has not been exces­
sive , the rise in prices was brisk until the spring . This phenomenon can
be explained by the shortfall in the supply of agricultural products
following the 1976 drought in the Community and also by the adverse cli­
matic factors which have seriously affected the prices of some tropical
foodstuffs . There have been other contributory factors as well such as
the increase in public service tariffs and petroleum product prices .
On the other hand , the effect of wage costs on the prices of manufactured
products has generally remained moderate . Despite the slowdown forecast for
the second half on the year , the overall rise in consumer prices in 1977
is unlikely to abate in comparison with last year . The average rate of in­
crease is estimated at 9 1 / 2% . In 1978, however , the rate of inflation is
expected to slow down .
                                                        3
In the final analysis , it is only on the external side that the Community s
position has developed fairly satisfactorily after the marked deterioration
throughout 1976 . It should however be noted that this improvement in the
external position is essentially just the reflection of a continuing state
of depressed economic activity and under-use of productive capacity . Despite
the worsening in the terms of trade , the reduction in the volume of pur­
chases by the deficit states has , since the end of the previous year , re­
sulted in a significant improvement in the Community 's balance of trade .
If , as is probable, this recovery continues , it should lead to a nearr
balance situation in 1977, compared with the previous year 's deficit
of nearly 8 000 million dollars . There is even a possibility of a small
surplus in 1978, based on the increasing contribution of North Sea oil .
 ---pagebreak---                                    - 7 -
  The following "table shows the trend in the Community 's GDP during the
  period 1975 "to 1^77 s
                   GROSS NATIONAL PRODUCT IN VOLUME TERMS
                 variation as compared with the previous year )
                                              •I
                                       1975        1976          1977
                                                 I
  Denmark                             - 1.1         4,8              1
J Fed. Rep. of Germany                 - 2.6    !    5,7           . 3
                                                I
  France                                 0,1         5,2          - 2 3/ 4
I Ireland                                0,4        3.2              5
  Italy                                - 3,5         5.6             2
J Netherlands                          - 1,1         4.4             2 1/ 2
I Belgium -                      i     - 2.0         3,0             2 3/ 4
                                                     2,7             1 1/4
  Luxembourg                             M .
  United Kingdom                       - 1,7         1*6               1/2
  Community                            - 1,8         4.6     ! :     2 1/2 .
  Source :  Commission staff . '
 ---pagebreak---                                –8
2.    Prospects in the coal sector
As a result of the combined effect of various factors , the overall situation
on the coal market in 1978 should be "broadly similar to that in 1977-
As far as demand is concerned , there is no sign at the moment of any
development in the iron and steel industry pointing to major changes in
coal and coke consumption .    However , the measures taken by some Member
States may perhaps mean that greater use will be made of Community coal
resources to satisfy demand .
The exceptional increase in coal consumption in the electricity industry
in 1976 was followed by a levelling-off in 1977 "to a fairly constant level ;
consumption should remain around this level in 1978 unless any unforeseen
factors arise ( e.g. a serious drought which would reduce the level of
generation of electricity in hydro-electric stations below normal ).     The
reason * for this situation is that , although overall Community demand will
probably continue to rise at the present rate of 6$> and there will be a
substantial increase in the proportion of coal used in some Member States ,
these factors must be offset by a fall in consumption in the United Kingdom
( approximately 0>) caused by the commissioning of several large power stations
which do not use coal .
A degree of uncertainty surrounds coal production in 1978 owing to various
factors .    The most important of these are the decision which is likely to
be taken by the Federal Republic of Germany to introduce short-time working
in view of the gloomy prospects for coking coal and coke sales , the serious
strain put on the Belgian "budget by the subsidies which are being paid to
the coal industry to enable it to sell its products at competitive prices
and , thirdly , the productivity difficulties faced by the British coal
industry .
Bearing in mind these production factors , it may be assumed that total
Community coal production will be around 240 million tonnes in 1978 .
Similarly , some uncertainty clouds the financial prospects of the United
Kingdom coal industry which has had a healthy profit margin throughout the
 ---pagebreak---                               - 9 -
period, ending with the financial year which terminated in March 1977 *
Subsidies will , however , probably have to "be made available in other
Member States to boost production .    The need for such subsidies in the
case of the German coal industry is largely attributable to the under-
utilization of production capacities and to the     maintenance of large
stocks of coal and coke .
The large quantity of stocks put down by producers , particularly in the
Federal Republic of Germany , is due to the small volume of intra-Community
trade which is attributable in turn to the lower prices at which Member
States which have to import coal can buy it from non-Community countries .
If no solution is found , imports ^from non-Community countries will probably
approach 40 to 45 million tonnes , while the stocks of coal and coke put
down by Community producers may exceed the current high levels .
3.   Prospects in the steel sector
There was a severe slump in the Community iron and steel industry in the
first half of 1977 *   New orders failed to reach the levels attained in
the corresponding period of the previous year and are naturally well down
on those of 1974 » which was a peak year.
Crude steel production fell by approximately 5*4$ in "the first nine months
of 1977 compared with the same period in 1976 (a drop of YJ% compared with
the levels in the corresponding months of 1974 ) •      The rate of utilization
of Community production capacities is still low      ( not more than 64$ ).
The rhythm of production and supply has , however , more closely matched that
of market demand in the last few months .     The total volume of orders has
accordingly stabilized at an average of about one month 's full protection .
The decline in production is due largely to the sluggishness of internal
demand caused by the low level of investment and the excess stocks kept
by producers , dealers and users .   A further contributory factor is the
deterioration in the trade balance in steel products .      The net balance
 ---pagebreak---                               - 10 -
in the Community *s external trade in finished products with non-member
countries fell from 20.1 million tonnes in 1974 "to 14.7 million tonnes in
1975 and 6.5 million tonnes in 1976 .                    >
The Community steel industiy has thus not only suffered from an excess of
cheap non-member country products on to its own internal market , "but has
also lost a large number of its traditional outlets in non-Community
countries .,  The financial viability of the Community 's steel industry is
in serious danger "because the industry has had to bring down its prices
to compete with these imports .
This slump in production gives particular cause for concern , as it has
been accompanied by a catastrophic fall in the market prices of steel
products - varying from 15 to ^Cffo depending on the type of product .    The
effect of this price drop has been exacerbated by the sharp rise in the
cost of raw materials and labour .
The steady increase in production capacity due to investment projects
launched in the prosperous years of 1973 and 1974 has added to the steel
industry 's difficulties .      Investment programmes have , however , slowed
down as the crisis has' dragged on, although the effects will not be felt until
later .
The outlook is gloomy for the second half of the year. Community crude
steel production might reach a level of 128 to 129 million tonnes in 1977 ;
this is only slightly less than the 1976 level of 134»2 million tonnes but
far below the record of 155.6 million tonnes in I974 .
                                                                       /
The slight acceleration in economic growth expected in 1978 j usti fies pre­
dicting that Community crude steel production will reach a levy of approximately
135 million tons in 1978 , provided that imports are better matched to the
decline in internal demand .
 ---pagebreak---                                     - 11 -
B.    THE POLICY COFTEXT
The general objectives of "the ECSC are permanently laid down in Articles 1
to 5      "tk® Treaty ofv Paris .
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-tenn guidelines for these two sectors also include a section on
manpower problems in these industries ; this provides the setting for the
various social policy functions discharged by the High Authority /
Commission by virtue of the provisions of the Treaty .        Information on past
and future investment trends and the financial activities carried out by
the Community to finance investment is published by the ECSC in the
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 .
                                            J
The remarks which follow are not intended to replace the policy information
given    in     the documents referred to above .    It should be noted that the
general guidelines for steel – which were drawn up by the Commission in
I976 - are currently being revised in consultation with the parties
concerned .       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 1978*        They
 deal 1n     turn   with the industries , the social policies of the ECSC and the
borrowing and lending activities of the current year .
 ---pagebreak---                                   - 12 -
1.    Coal poli cy
The Community production -target of 250 million tee "by 19 °5 laid down in the
medium-term guidelines for coal 1975-85 (OJ No C 179 of 6 August 1975 ) also
appears in the second report on the achievement of Community energy policy
objectives for 1985 » which was forwarded to Parliament and the Council on
3 August .
The Council may "be called upon to decide on the draft resolution on the
1985 objectives proposed in the report in December.      It will wait for
Parliament ' s° Opinion on'the documents due to be drawn up in November .
On the subject of the individual instruments of coal policy , the Commission
recalls that it stated in its aide-memoire on the draft ECSC operational
budget for 1977 that it intended to present three coal policy measures in
the course of this year :    financial aid to enable producers to bear the
burden of stockpiling coal and coke , the extension of the present system
of subsidies for intra-Community sales of coking coal ( instead of a phased
redaction of the system ) , and investment aid for coal-fired power stations .
 ---pagebreak---                                   - 13 -
The second of these measures was adopted by the Council in mid-summer
although in a much more diluted form than that proposed by the Commission . The
two other proposals , although approved by Parliament and the Economic and
Social Committee , are still being discussed by Council working parties .
Because of the effects of recently-introduced Community measures       intended
to establish a better " balance in the steel market , the Commission was led
to decide on 5 October 1977 in the context of the Community system of aid
for coking coal and coke to introduce some flexibility in the long-term contract
 conditions ' which must be met by producers who wish to receive Community aid .
                                  /•
 Deliveries to the iron and steel industry during 1977 may be reduced in
direct proportion to the adjustment in pig iron production which firms have
 made under the Community measures .
In compliance with the decision      of the Council of Energy Ministers on
29 March to collect information on coal imports from non-Community countries ,
the Commission worked out a draft decision for an improved system of
information on coal imports to be used for its reports on the trend in
the Community coal market .     This draft decision has been submitted to the
government representatives of the Member States meeting in Council under
the ECSC procedure and is now being studied.
 ---pagebreak---                                      - 14 -
«  t
  2 . Iron   and steel policy
  The European iron and steel industry is now in the third year of a
  deep-seated crisis ; average utilization of capacity is now below 65 % ,
  traditional markets have been lost and almost all firms are making losses .
  Employment has also been badly hit by the crisis . Short-time working and re­
  dundancies have occurred throughout the industry . Further , more serious cuts
  affecting several tens of thousands of workers are planned for the years to
  come . In addition to the persistent cyclical depression , the crisis has also
  now assumed a structural character .
  The iron and steel policy which the Commission has in view      can be summarized
  against three main guidelines . A fourth vita I element of policy concerns the
                                       /•
  social implications of the    crisis . This is considered in Section 3 below .
  2.1 . First guideline : keeping the market unified and open
  The Community must do all that is needed to maintain market unity which
   is threatened through the establishment of cartels and through recourse to
  national safeguard measures . The Community also intends to stand by the ex­
  ternal trading policies hitherto pursued . This dual objective cannot be attained
  unless the iron and steel industry is restructured .
   2.2 .  Second guideline : Community approach to restructuring problems
   The objective of restructuring is to secure a modernized production capacity(this
  affects both plant and products ) of which the viability and hence the competitive­
   ness would be assured .
   Restructuring policy must be pursued in consultation with workers' organization ,
   firms , the Member States and the Community 's other institutions .
 ---pagebreak---                                  - 15 -
Several governments particularly interested in the restructuring of the in­
dustry have already made known their interest in tackling it on a Community
basis .
All   new investment in v the steel industry should be placed in this context .
To guarantee the requisite coordination between investment projects , it will
therefore be essential for Member States' restructuring programmes to be
examined as soon as possible to ensure compatibility with the Community
objectives , and for the investment projects to be communicated early enough
for an assessment to be made of their value in relation to these programmes .
With this purpose in mind , the Commission is now revising the General Objec­
tives for Steel in consultation with the parties concerned .
For the time being , and until precise restructuring objectives have been
established , any investment resulting in an increase in existing production
capacities can be allowed only if it is offset by a comparable reduction .
For this purpose , the Commission will invoke Article 54 . The grant of Community
finance ( loans and interest relief ) will be based on the contribution of the
investment in question to the restructuring objectives . In the meantime , it is
desirable for governments , authorities and firms involved in the restructu­
ring and redevelopment process to avoid taking concrete action until the restruc­
turing programmes have been defined .
The magnitude of the restructuring problems reflects the existing state of Com­
munity production capacity .
 ---pagebreak---                                     - lô -
The difficulties are attributable not only to the deterioration m the
conditions of competition -at world level resulting from national finalist
and other measures , but also *o the fact that part of the
Community iron and steel industry is ill adapted to modern production and
organization structures .
The latter drawback is due mainly to the unfavourable siting and dispersion
of certain iron- aad steelmaking establishments , a lack of coordination and s
in certain cases -, imbalances in the different stages of ' production. The
process of restructuring the Community iron and steel industry must be
accelerated so that the industry can face up to the present difficulties ,
and its competitiveness must be attuned to the future world market
 conditions by adjusting capacity to internal and external needs .
As regards competi vity , full use should be made of the capacity of technical
 research to improve product quality r and reduce costs .
 2.3 .  Third guideline : market action
 The proposed restructuring oannot be achieved unless market conditions are
 improved . In the short term , we cannot . look to a - recovery in the economy for &uch
 an    improvement : consequently , limited action aimed at certain market
 mechanisms must be pursued and reinforced , in compliance with the rules and
 objectives of the Treaty , as far as possible with the consensus of the
 parties concerned .
 This is why the Commission intends to continue with the plan for the voluntary
 limitation of internal market delivery quotas introduced at the end of 1975
 (OJ lib C 304 of 24 December 1976 )• However , as this action is not at present
 securing the desired hardening of internal prices , firms must also be
 encouraged to charge prices more in line with the realities of the situation .
 ---pagebreak---                                         - 17 -
  In consultation with the ECSG Consultative Committee , the Commission has
  therefore recommended voluntary observation "by firms of guidance prices
  for certain iron and steel products ( OJ Mb L 114 of 5 May 1977 )- In a
  communication published in OJ Ho C 174 of 22 July 1977 » the Commission
  adjusted the original guidance prices and extended the range of products
  concerned . These provisions have applied since 1 September 1977 * Under
  Article 61 of the ECSG Treaty , the Commission introduced minimum prices
  for concrete reinforcement bars (rebars ) by Decision 9^2/77/ECSG of
  4 May 1977 (OJ Kb L 114 of 5      3-977 ) » These prices will have to be
  reviewed by the Commission before 31 December 1977 *
  In addition , recommendations Eos 77/328, 329 and 330/ECSC of 15 April 1977
  (OJ No L 114 of 5 May 1977 ) introduced import documents to be issued
  automatically on presentation of purchase contracts ,- to make it easier
  to detect unfair commercial practices and with a view to taking action
  against them under the rules of the Treaties (anti–dumping) . Another
  aim of these recommendations is to establish a Community surveillance
_ system for imports into the Community of certain iron and steel products
  originating in non-member countries .
  Side by side with these autonomous decisions , the Community has already
  started and intends to continue , conversations with its major world partners
  in order that their conduct should not compromise the intended restruc­
  turing efforts . Appropriate contacts must be made to ensure that it is
  clearly understood that the iron and steel policy measures introduced are
  in the long-term interest of all concerned .
 ---pagebreak---                          n    46 A# 48
3.   Social policy
As a general rule , the social policies pursued under the Treaty of Pans are
similar to the policies developed subsequently by the European Economic
Community . ECSC resettlement aid has aims and methods broadly similar to
those of the Social Fund , while the purpose of ECSC redevelopment aid is
comparable to that of the Regional Fund , although the latter has a wider
range .
However , the effect of the legal differences and especially of the fact that
ECSC aid is financed by the industries concerned has enhanced the importance
of the aid provided . The ECSC resettlement regime is therefore more deve­
 loped and more comprehensive than comparable Social Fund operations , while
the redevelopment aid system also has a more specific purpose than the Regional
Fund 's present operations , since the operations concerned are designed to
create jobs intended primarily for workers from the ECSC industries . Further­
more , since 1955 the ECSC has pursued a policy of subsidizing housing for
workers in these industries .
 In the present circumstances , it is clear that in the realm of social policy
the ECSC must concentrate on solving the problems arising from the restruc­
turing of the iron and steel industry and the foreseeable reduction in its
 labour force , since in the final analysis this restructuring will be impossible
 without stepping up redevelopment efforts to create the new activities needed
 for the re-employment of workers made redundant by the restructuring
operations .
 If the restructuring of the iron and steel industry is to be acceptable
from the social and regional point of view , the inevitable redundancies
 must be attenuated and , if possible , offset by the creation of alternative
jobs and support provided , on a basis of Community solidarity , for the
 resettlement of the workers involved .
 ---pagebreak---                                         - 19 -
These essential resettlement and redevelopment aspects must therefore form
part and parcel of the restructuring programmes .      The Community 's task is
to apply all the . means at its disposal     in pursuit of these programmes includ­
ing particularly :
   (i )  assistance fronuthe EC§C , the Regional Fund and the European Investment
        Bank •  for -the creation of new jobs ;
( ii ) the manpower resettlement regime provided for in Article 56 of the ECSC
        Treaty for rehabilitating the workers .         . ;
4»      Borrowing and lending activity since 31 December 1976
ECSC Financial Report No 22 summarizes the Community 's "borrowing and. lending
activity in the financial year 1976 and presents analytical       and cumulative
statistics for the whole of this activity since 1954 *      The Community *s
balance sheet as at 31 December 1976 appears in Annex II to the report .
Loans contracted in 1976 totalled 956 m EUA compared with 731 m EUA in 1975 *
Loans disbursed , .in the same period totalled 1 O64 m-EUA compared with
 (
805' m EUA in 1 975 » bringing total" borrowing and lending since " the inception
of the ECSC to . 4 069 m EUA and 4 151 m EUA. ( including 157 e' EUA "in loans from
own' funds ) respectively . The balance outstanding as at 31 December 1976 was
3 475 m EUA.
In the financial year 1977 ECSC financial activity continued to satisfy the
demand from firms .
In the first half of the year , loans contracted totalled 283 m EUA and loans
disbursed 331 m EUA so that the balance outstanding exceeded 3 600 m EUA
as at 30 June 1977 •
The ECSC has continued to obtain favourable terms on the capital market .
The biggest loans contracted – $50 ■ million over 12 years and $100 million
over 20 years – on the international capital market were obtained under the
most favourable currently available .
 ---pagebreak---  It is clear , from applications in hand , that ECSC borrowing and lending
 activity is likely to continue at a high level in the coming months .
The table in Annex C to this aide-memoire analyses the loans disbursed in
the first half of the financial year 1977 •
 A statement of the provisional situation of the European Coal and Steel
 Community as at 30 June 1977 is given in Annex D.
      C.  FIHMCÏAL C0NTEXT
      As regards the financial background to the 1978 draft budget , the rise
      in prices continues to be - an important factor in assessing foreoasts
      and defining the relation between the 1977 and 1978 financial years .
      In this respect , it may be assumed that there will be an increase in
      costs of     between 1977 and- 1978, as compared with roughly 10%
      between 197 6 and 1 977 •
      It must be pointed out that the ECSC budget has been expressed in
      European units of account as from 1 January 1976.      Since that date ,
      budget commitments and the contracts relating thereto have been
      expressed and paid in EUA.      Initial problems were overcome without
      major difficulties despite the exceptionally heavy workload which
      Commission departments are having to bear in maintaining
      the accounts for budget commitments , since these accounts – for
      a transitional period – comprise both sums contracted in foreign
      currencies and commitments in EUA.      This problem, incidentally,
      has also attracted the attention of the Auditor.      Payment of
      levies during the 1976 financial year was based – during this
      transitional period – on conversion rates fixed every month ; but ,
      in 1 977# daily conversion rates came into effect .    The levies
      office, in cooperation with the undertakings and banks ooncerned,
      has applied itself to olarifying the methods of payment and to
 ---pagebreak---                              - 21 -
solving technical teething troubles .    The Commission is pleased
with the satisfactory way in which this has been done .
As regards the deadlines for payment of levies , the temporary
two-month lag for payment of steel levies , decided in 1976
( OJ No L 89 of 2 April 1976), ended, as scheduled, at the end
of this year .    However, this measure was replaced permanently
as from the second half of the current financial year "by a
one-month lag applicable not only to steel but also to coal
levies .   This adjustnent ' is based on the observation that the
period of time between the manufacture of products subject to
levies and the receipt of payment for these products is at
present two full months and     means that payment  of levies is
now      due      on the 25th of the second month following the
month in which the products were manufactured ( Decision No 1687/77/ECSC
of 22 July 1977 :   OJ Ho L 187 of 27 July 1977 ).
The Commission recalls , finally, that , in its resolution of
14 December 1976 on the ECSC operational budget for the 1977
financial year, the European Parliament expressed concern over
a certain stagnation and rigidity in the operational budget in
a particularly unstable economic and financial context and
requested the Commission to reflect seriously about the budget
 and its role .
 The Commission has been guided by this recommendation from Parliament
 in drawing up the draft 1978 ECSC .operational budget and has tried to
 show imagination and flexibility in facing up to the critical
 financial context in which next year 's budget will fall .
 ---pagebreak--- There has been no substantial reduction in the cyclical and. structural
difficulties which have beset the Community * s iron and steel industry
since 1975 .       In financial terms , these difficulties inevitably
take the form of an appreciable increase in budget requirements and
a shrinking of the "byre for the levies which consists ( self-evident Ly ) of
the quantities produced.
The Commissions thinking on this matter is founded on the following
principles :
     ~ the mechanism of the ECSC operational budget must retain the
        ability to adjust resources to financial requirements regarded
        as irreducible^;
     - if actions do not specifically fall within the scope of the
        SC3C , recourse to funds provided for certain Community policies
        under the Treaty of Rome should be considered:
        this approach is already being applied in the field of Community energy
        policy,     and has    made it possible to enter in Chapter 32
        of the Community budget ( expenditure under the energy policy)
        Article 322 covering " Aids to coal stocks ".    The same applies to the
        Regional Fund.
        Apart from the already existing possibility for the EREF to
        contribute to the cost of regional aid granted to reconversion
        projects , the Commission has proposed – as part of the
        reorganization of the EREF in 1 978 – that a system of inte.
 1
   In this context it would be appropriate to recall the opinion of
   the European Parliament 's Committee on Economic and Monetary
   Affairs in 1976, which stated in conclusion that 'the rule of" stability
    to which the Commission understandably wishes to adhere may not be used
    in future as a principle for making the rate of the levy unchangeable.'
 ---pagebreak---                                        23 -
         relief grants "be set up, outside national quotas , which would
         enable the Commission to make direct ERDF interest relief grants on
         certain loans ;
( iii ) great importance is attached to coordinated implementation of
         all the financing instruments which come tinder consideration:
         funds specifically available for the coal and steel sector,
         supplemented by actions falling under the General Budget and,
         as regards loans , by EIB intervention;
  ( iv) as regards the classic interventions of the operational budget
         ( research, resettlement , interest relief grants and loans
         for low-cost housing), the Commission naturally prefers to
         continue financing them by the means provided by the ECSC Treaty ;
    ( v) finally, the Commission takes the view that the exceptional
         character and the unprecedented importance of the crisis
         now affecting the ECSC – and, more particularly, the Community 's
         iron and steel industry – justify special measures in the
         financial sphere aimed at enabling the Community to carry
         out fully the tasks devolving upon it with regard to the
          restructuring and redevelopment of the industry and the
          resettlement of its workers , without excessive increase in
          the financial burden borne by the sectors in question .
 ---pagebreak---                                  - 24
This is -why, in June , the Commission suggested that the annual
contribution made by the ECSC to the General Budget in respect of
Community administrative expenditure be reduced from 18 to
5millionEUA thus    allowing the sum released to be used to
finance      increasing operational requirements .    This proposal
 was approved by COREPER on 26.10.77 for endorsement by the Council
 as an A point . A further proposal of . this nature is presented
 in pages 50-51 below .        .        '
'The above approach is fully reflected in the proposals which the
  Commission has set out in Chapter III of this aide-memoire .
 ---pagebreak---                                  - 25 -
11-   ANALYSIS OF EXPECTED EXPENDITURE AID POSSIBLE _ R? SOURCE 5 IN" TH3
      FINANCIAL YEAR 1978
Article 49     the Treaty establishing the European Coal and Steel
Community authorizes the Commission to procure the funds it requires
to carry out the activities laid down in that Treaty by imposing
levies on the production of coal and steel .     Pursuant to
Article 5 -> these levies are assessed, annually on the various products
according to their " average value ", but the " rate " may not exceed
*\% unless previously authorized by the Council .
For the purpose of fixing this rate , it is necessary first to
estimate the financing requirements and then to see how far they can
be met from resources other than the levies , in particular interest on
investments and on loans financed out of capital resources and
also provision cancellations .    In this way , the amount to be
covered by the levies can be determined .
In addition , on the basis of a preliminary     and thus sometimes
 unavoidably inaccurate assessment of the average value of the
various products , and    of the  likely volume of output during the year ,
 the probable levy yield is calculated :  first of all in tens of
the yield anticipated from a rate of 0.01 %.      The calculation ,
therefore , hinges on an estimate of production which is difficult
to make owing to the extreme sensitivity of the industries concerned
to any sudden change in market conditions .
 These are the two elements set out in this Chapter .     It is then
necessary to determine to what extent the Community should forego
satisfying the requirements reported, which considerably exceed
the resources provided by the present rate , or to what extent the
rate should be revised upwards or downwards .     This matter is
dealt with in Chapter III .
 ---pagebreak---                                  - 26 -
The following presentation of expected expenditure and foreseeable
resources is modelled on the systematic analysis of the data on the
various budget headings in the General Budget , as shown 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 chapter ( legal basis and description of operation,
type and breakdown of expenditure, explanation). To permit a better
assessment , the explanations given for non-c ompul s ory expenditure
( research and interest relief grants) are more detailed than for
the other chapters .                               ..
A. , EXPECTED EXPENDITURE Iff 1978
1.   Ordinary requirements
CHAPTER B 1    - RUNNING COSTS
1.    Legal basis and description of operation   ,
Legal basis ;
- Article 50 of the EC SO Treaty;
– Article 20 of the Merger Treaty.
ECSC contribution to the Commission's operating expenditure .
 2.  Type and breakdown of expenditure
Annual lump-sum payment made in 12 equal monthly instalments .
3.   Explanation
In its Communication C0M(77)280 final of 16 June 1977 , supplemented
on 11 October 1977 by COM(77)511 final , the Commission proposed that
the sum of 18 million EUA fixed by the Merger Treaty be reduced to
5 million EUA so as to make additional money available for increased
operational requirements .
 A decision on this proposal is a matter for the Council under Article
  20 of the Merger Treaty , and COREPER decided on 26.10.77 to propose that
 it be agreed as an A point at a forthcoming Council meeting .
 ---pagebreak--- CHAPTER B 2      - AID TO RESETTLEMEOT
1•     Legal "basis and description of operation.
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 training of workers having to
         change their employment .
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
Earmarking of funds intended to subsidize, by means of a 5 Vf°
reimbursement , expenditure incurred by the governments within the
scope of the agreements signed.
 ---pagebreak---                                        - 28 -
      The breakdown by sector and by country of "the expenditure estimates
      made by "the governments , "taking into account the "budgetary necessity
       of delaying until 1978 the contracting of certain commitments
                                              (1)
      belonging to the 1 977 financial year, is as follows :
                                                                   m EUA
    Country            Coal              Iron and steel ,      Total per country
                                         iron–ore mines
 Germany                    6                 3                       9
 Belgium                    2              .  6.5                     8.5
 Prance                     9-5      1       22,5                    32
 Italy              |                         5
 Luxembourg                                   2                       2
 Netherlands                                  3                       3
 United Kingdom          T7 .                 5                      22
Total per industry       . 34,5              47             0        81,5
                                                                >
                                                                                   1
      The social repercussions of the present situation remain difficult
      to predict and it is to be noted that the forward figures are
      highly unreliable .
      3.   Explanation
      The coal industry's foreseeable expenditure is down on 1 977 * mainly
      as a result of the progress made in rationalizing the industry in
      Germany and Prance' though the fall in pig iron production has also
       led to the closing of a number of coke plants .- On the other hand ,
       foreseeable expenditure in the iron and steel industry is rising owing
       to the gradual rationali zation and restructuration of the industry .   The
       reduction in employment in the iron and steel industry is estimated at
       several tens of thousands of workers .
     The cases concerned are chiefly applications from nationalised coal industries
     which are generally submitted only at the end of the year .
 ---pagebreak---                                  - 29 -
CHAPTER B 3 - AID TO RESEARCH
1.  Legal "basis and description of the operation
Legal basis :  Articles 50 and- 55 of the ECSC Treaty .
                         \
The High Authority/ Commission grants non–repayable aid to finance technical
and economic research into the production and increased use of coal and
steel and occupational . safety in the coal and steel industries ,
2.  Type and breakdown of expenditure
Earmarking of the amounts intended for part subsidies which take the form
of the repayment of a proportion of the actual costs of research projects
approved by the High Authority/Commission 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 6ofo of the estimated and justified
costs .
The applications can be broken down as follows :
                                                             m EUA
   Heading                      Sector                       Aid requested
Β 3.1                           Steel                            40.5
Β 3.2                           Coal                             32.2
Β 3.3                           Social and medical                 9.8
                                TOTAL                            82.5
 ---pagebreak--- 3.   Explanation
Steel research.
                                                                      _ /
Th9 general orientation of ECSC research in the steel sector for the         . sent
decade is outlined in the "General Objectives for Steel 1975-1980" and
indicates the direct link "between the programme and the medium-term
technological requirements within the Community 's industry .    In assessing
the specific resources needed and the priorities to he allocated for th s
collaborative effort , consideration must "be given to the following
developments which are having profound consequences for the ECSC :
– the steel industry of the Community remains in depression with reduced
   demand causing capacity utilization to fall to below 65$ of production
   potential ;    in the resulting economic and financial climate , considerable
   pressures are being exerted on the funds available from within the industry
   for research ;
– the rising cost of raw materials and , particularly , of energy is having
   obvious repercussions on production costs while the industry 's heavy
   dependence on external sources of supply raises also the problem of
   availability;
 – the establishment of steel manufacturing industries in the ore-rich and
   oil–rich countries of the developing world will have important consequences
   on international trade and on the sharing of the world market .
 One certain outcome from the present situation is that internationa.1 competition
 will become increasingly severe and it will be vital for the European iron
 and steel industry to successfully meet this challenge in a changing pattern
 of world trade .    An essential requirement will be to maintain the Ut. -,t advanced
 standards cf technology in all aspects of steel production and proceasing and
 to ensure that our technical expertise is reflected in the quality and
 sophistication and the price of our steel products . This will only be achieved ,
however , if the necessary research programmes are undertaken so that they form
part of an integrated and coherent strategy aimed at improving the competitivity
 of the Community 's industry.
 ---pagebreak---                                 - 31 -
To meet current requirements within the Community , priority will be given to
the following areas of research in the allocation of resources for 1978s
  (i ) Process–oriented research
                       s
       - process technology (optimization and. automation of production processes
         to improve efficiency and reduce costs ;    development of alternative
         processing routes )
       – energy utilization ( conservation and increased flexibility in the use
         of different forms of energy )
       - rolling mill technology and quality assessment of mill products
         ( improved mill operation , quantitative evaluation of surface and
         internal quality of steel products ).
( ii ) Product-related research
       – service properties of steel ( properties of welded joints , formability
         and magnetic properties of sheet material )
       – utilization of steel ( application of steel in "building and bridge
         construction )
       - basic research ( to generate the necessary scientific understanding
         for the development of steels with improved properties such as
         strength , toughness and high temperature deformation resistance ).
 ---pagebreak---                                     - 22 -
Coal research
Th.e coal re soaroh. requirements are close?Ly allied to the Community s ener^
policy objectives j part i cula,rly "the objective of maintaining' the production lev .
at 250 m tee per year up to 1935®
One ineans   to achieving these productivity and production targets is to inter*;- *y
research .     The quantified research targets published "by the Commission on
30 January    1975 ( OJ Ho C 22 ) specified the grant of annual aid totalling
 from 15 'to  20 m SUA , to promote research projects in the extraction and
upgrading of coal ; :    these projects form part of the medium-term coal research
aid programme ( 1975 to 1980 ) published on 2.5 May 1974 ( OJ Ho C 60 ) and supplemented
"by the Communication published on 30 December 1974 ( OJ No C 160 ).
In view of the present energy crisis and the particular difficulties facing the
 coal arid steel industries , it is vital that research efforts be concentrated
 in those areas specifically referred to "below , which consider coal as both
 a source of energy and as a raw material in the production of metallurgical coke .
Attention should be devoted to the area of " Coal-face working " and its allied
 areas , i.e. , "Automation and mining problems " ( firedamp , mine climate , strata
 pressure ) and this is the first area to which research effort should be directed .
 In view of the inadequate coking coal reserves in the Gommunity and the high
 price thereof , research must also centre on improving output and capacity
  from traditional coking plants to render coke more economic and on developing
 alternatives 5 such as formed coke, which will have helpful results for the
  metallurgical industry .
  Finally , under the energy policy aiming    at making Europe less dependent on
  imports of petroleum products , aid must    be given to certain fundamental scientific
 research projects in the field of coal       gasification and liquefaction ixi order
  to improve existing and known processes     and determine which are most proi it.ble .
 ---pagebreak---                               - 33 -
The applications which have already been submitted, or notified concern
the following research headings. :
Underground      v            – preparatory work
                              – firedamp , mine climate and strata pressure
                              – winning and working
                              – général services underground
                              – remote control and automation
Upgrading
upgrading                     – coking
                              – coal preparation
Conversion into hydrocarbons  – gasifi cati on
                              – coal liquefaction
 ---pagebreak---                                      - 34 -
                                             )
Social research
The heading "Social research " covers research designed, "to improve working
conditions , "the safety and health of workers and the protection of worker 's
health in the ECSC industries .
During 1977 "the demand for research in these fields has not abated , which
is proof enough of the practical usefulness of this form of intervention .
The year 1977 saw the launching of two multi-annual research programmes ,
namely :
– "Chronic respiratory diseases " ( Third programme )
– "Mine safety".
These two programmes are part of a series of measures to promote safety at
the workplace and improve the prevention and treatment of occupational
diseases ;    these measures have operated continuously since 1955 »   when
the original decisions on social research were taken "by the ECSC High Authority ,
The new programme on "Mine safety" effectively got under way in 1977 with the
granting of substantial aid to 15 research projects .     A number of these
correspond to the research proposals put forward "by the Mines Safety and
Health Commission .
The fight against pneumoconiosis is still the major problem facing the
mining industry in 1 977 • la spite of the progress made in prevention and
treatment which has reduced the likelihood of the disease and checked its
progression to the stage of invalidity , considerable efforts are still
required .
The aim is to guarantee miners a normal working life and thus facilitate
the recruitment of manpower to sustain the basic output level planned for
the Community.     The problems of reduoing atmospheric dust are the principal
concern of the "Fourth Health in Mines Programme " proposed to the Commission
in 1977 for implementation in 1978 .
 ---pagebreak---                                      - 35 -
To this , must "be added the research projects relating to the improvement of
mine climate , measures against noxious emissions of nitrous vapours and
the reduction of noise in underground workings *
Under the "Ergonomics and retraining programme ", work is continuing in
relation to worker comfort , job-matching and the search for a "better balance
between man , machine and the environment .    The significant research aid
planned for 1978 reflects the industry * s concern to improve working conditions
by ergonomic methods , especially in workshop design and production techniques .
Lastly , the steel industry has actively continued to seek ways of reducing
the pollution it generates and of attenuating emissions at the work place .
The major five–year research programme decided by the Commission in 1974
will finish in 1978 .     The distinguishing feature has been its greater
emphasis than in earlier programmes on the treatment of the problem of
industrial nuisances ..    Apart from atmospheric pollution , the programme
has investigated the problems of water pollution ( chiefly in coke ovens ),
waste treatment or recycling and noise from sure furnaces .
A new programme is to be devised in 1978 which will take account of the
foreseeable development in steel production techniques .
The projects to be financed in 1978 chiefly concern the following fields :
    ( i ) mine safety;
  ( ii ) pollution control in the steel industry :
( iii ) industrial health in mines :
  ( iv ) chronic respiratory diseases ;
    ( v) ergonomics and retraining.
 ---pagebreak--- CHAPTER B 4 - AID IB" THE FORM OP . INTEREST RELIEF
1.   Legal "basis arid description of operation
Legal basis : Articles 54 (investment ) and 56 (reconversion) of the
                 ECSC Treaty , and Decisions of the High Authority/Commission .
The ECSC may use its own funds to offer reduced interest rates for certain
types of loan .     The »relief is calculated in HJA on the "basis of criteria
set "by the Commission .     Calculations are at present "based on interest
relief of 3% over 5 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 details of requests received are as follows :
                                                         Aids
                   Title              Sector
                                                      requested
                                                       3
                 Β 4-1          Investment                50
                 Β 4.2          Redevelopment             35
                               TOTAL                      85
 3.   Exrplanation
Investment
In the investment field , the chief aim of loans at reduced interest rates
 is the structural improvement and rationalization of the ECSC industries .
 The criteria for granting relief are as follows :
 (i ) Environment : relief only for exceptionally expensive investment on
      existing plants and investment of       innovatory character
      (OJ No C 146 of 25 November 1974 ):
 ---pagebreak---                                    - 37 -
  (ii ) Research and training centres , and the elimination of "bottlenecks :
        relief in the latter sector has "been limited to investment intended
        to remedy the shortage of coking coal (OJ Jfo C 73 of 18 June 1970);
(iii ) Restructuring : relief may he granted for those investments that
        are of greatest interest for restructuring and re-establishing the Long-term
        competitiveness of the Community's iron and steel industry ^
         (OJ No C 174 of 22 July 1977 ). The Commission attaches special
        importance to this category of intervention in its iron and steel
        policy (see pages 14 to 16 above ).
Redevelopment
Reconversion loans granted at reduced interest rates help maintain
employment in regions hit by the decline or cessation of activity in
industries covered by the ECSC Treaty . The Commission grants these
loans to firms which either absorb redundant workers from the coal
industry or the iron and steel industry or maintain the level of
employment in these two industries in the regions concerned by establishing
economically sound activities . The firms concerned obtain reduced
interest rates if they undertake to create new jobs in these regions and
give priority to former employees of the ECSC industries as regards
 recruitment •
 Requests for this type of aid are still on the increase , mainly because
 of the structural problems of the iron and steel industry . Restructuring
  can only proceed on a socially acceptable basis if steps are taken to provide
  continuing employment for the employees directly affected ( see also pages 18
  and 19 above ).
 ---pagebreak---                                    - 38 -
The criteria and procedures for granting interest relief on reconversion
Joans ware published in QJ Bo C 1?8 of 27 July 1977 . These loans can be
wade to firms directly , or indirectly through. financial intermediaries
in the form of global loans .     Reconversion loans may also be granted for
 investment in services or in the establishment of industrial estates and
advance factories ; these do not , however , enjcy interest relief . The
 Commission attaches special importance to reconversion activities in its
 iron and steel policy .
CHAPTER B 5 - AID BASED Off ARTICLE 95 OF -THE ECSG .TREATY ( COKING. COAL
AIID COKE FOR THE IRON AND STEEL INDUSTRY )
1.    Lep;al basis and description of operation
Legal basis :
  (i ) Article 95 of the ECSC Treaty ;
(ii ) High Authority/Commission Decision 73/287/ECSC of 15 July 1973
       (OJ Ho L 259 of 15 September 1973 ), as last amended by
       Decision 1613/77/ECSC of 15 July 1977 (OJ No L 160 of 20 July 1977 ).
The ECSC contributes to a special fund , administered by the Commission ,
for subsidizing intra-Community sale of Community coking coke intended
for the iron and steel industry .      Under Decision 73/287/ECSC of
15 July 1973 the fund is financed by the Community , the Member States
and the iron and steel industry .
2.    Type of breakdown of requirements
Provision for a lump-sum contribution to the fund , estimated at 6 m MJA .
The subsidies due are determined in relation to the tonnages delivered
and aid may be granted for no more than 15 000 000 t per annum .
 ---pagebreak---                                      - 39 -
   3.   Explanation
   The aim of the special system' of aid to coking ooal and ooke set up
   pursuant to Decision 73/287/ECSC of 15 July 1973 is to help maintain
   production of blast-furnace coal intended for the Community's iron and
   steel industry and j-tlso to enable coal and coke to be sold at prices
   reflecting world market prices .
   The Commission feels that certain production capacities should be
  maintained in this sector, as well as the requisite labour force to
  wor& them as efficiently as possible , and that it is therefore appropriate
 to have an aid system taking account of the fact that the question of
  Community coking coal production concerns all the Member States ,
 particularly since only coking coal is the subject of significant
 intra-Community trade .
       Requirements not included in the budget -- loans for financing subsidized housing
 'In addition to the requirements to be financed by grants from the year 's
   resources , account should be taken of the ECSC social   housing subsidy scheme ,
   financed 'below the line'^ which has been in operation since 1956.    Forecasts
   for this programme are included in this aid£-memoire to complete the picture
 of overall ECSC interventions provided to Parliament and the        Consultative
   Committee .  For ease of understanding , the presentation follows the same
  "analytical format as for the requirements already described .
                            *
   ••  Legal basis and description of 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 on investments and loans from own funds .
 ECSC intervention takes the form of reduced interest loans , and helps
 to ease the cost of financing housing by combining the funds made, available
by the Community with resources provided nationally .             . .
 ---pagebreak---       ?ype and breakdown of expenditure
 Grant of long-term lf0 interest rate loans to the responsible national
 bodies .
 The saoond phase of the eighth subsidised housing building programme
 ( 1975~78 ) « covering 1977 and 1973s envisages a sum of 30 m EUA spread
 over the financial 2 ears 1977 and          depending on funds available .,
Allocations to the various interested parties in the nine countries wore
decided by- the Commission after all due prior consultation on 29 July 1977 .
 3.   Explanation
The main reason for proposing to set aside 30 m EUA for the second phase
 ( 1977-78) as cor:; pared with the 25 m EUA for phase one ( 1975-76 ) is the
increase in construction costs . Moreover , the requirements put forward
continue tc be far in excess of the amount of aid available .
This scheme is intended to subsidize the following projects ;
   "       ( i ) housing for labour employed in the new coastal steelworks ;
          (ii ) housing linked with industrial restrueturation in the
                 traditional steel centres and in those coal fields whore     »
                 production is to be increased ;
        (iii ) specific solutions for immigrant workers ;
          (iv) housing to be modernized as part of the move to renovate
                 urban centres in steel and mining districts .
The scheme is thus both , in the interest of workers , since it
alleviates the effects of price increases and high interest rates , and " also
of benefit to tne industry since it indirectly facilitates restrueturation^
The number of dwellings subsidized by means of ECSC loans as at - 1 January 1977
was 147 327 .             -             ■■
 ---pagebreak---                                        - 41 -
 3»    Summary of requirements put forward
 Total requirements put forward therefore amount to 273 m EUA to be financed
 under the operational budget , plus 15 m EUA in the form of below-the-line
 loans at low interest rates for the "building of subsidized housing* The
 figures for requirements put forward are summarized in Annex Ef' in the
 "''applications " column .
 B°    POSSIBLE RESOURCES
 1.    Resources for the financial .year
 CHAPTER R 1 - CUR5E HT RESOURCES
 1.    Legal basis and description
 Legal basis ?
– Articles 49 and 50 of the ECSC Treaty
– Decisions Ho 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 try the High Authority/Commission and published
in the Official Journal .
Resources from interest on investments and loans from non-borrowed funds will be
finally determined when the Commission closes the accounts at 31 December 1977 .
Pursuant to the decision it adopted on 30 April 1975 , the Commission will enter
the interest available from the previous financial year in the budget of the
current - year .
2.    IVps and breakdotra
Levy resources represent claims identified in respect of levies due on
production in the 1978 financial- year and calculated on the basis of the
production declarations made by undertakings .
Interest vi.il be credited in accordance with the allocations decided by the
Commission khes ; It J.oSes the accounts on 31 December
A bresMovn c.f          -sgt r^eur-ees  V-sed on tha latest estiu&Us       r en
 ---pagebreak---                                        - 42 -
Title R 1.1 :   Levy
Tonnage subject to the lew , &nd yield, from a rate of levy of ._P.-P_!jg
                                           Production serving          One levy
                                           as basis for calculating    "point "
            Product                             the levy
                                             million tonnes            in m EUA j
  Brown–coal "bricruettes and
  semi-coke                                       4.0                     0.01
  Hard coal – all types             i           208.4                     0.08
     Coal – total                                                         0.81
  Pig iron other than that        j
  required for the manufacture
                                                   5-5                    0.07
  of ingots
  Steel in ingots                               133                       1.94
J Finished products                              95-8                     0.63
     Steel - total                                                        2.64
            GRAHD TOTAL                                                   3-45
 Other titles
    Titles                            Heading                          m EUA
   Β 1.2                 Interest on investments and loans
                         from non–borrowed funds                          18
   R 1.3                 Fines and late payment surcharges          token entry
   H 1.4                 Miscellaneous revenue                      token entry
 ---pagebreak---                                      - 43 -
3 o Explanation •
The latest estimates of the average values which serve as the basis for
calculating the levies show    that the figures for the 1978 financial
year which relate t\0 the reference period from 1 July 1976 to 30 June 1977
will be some $fc higher in the case of coal and at least 10^ for steely • as
compared to those for 1977 •
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.
The figure for interest revenue is based on an advance estimate of
the resources which the Commission will be in a position to allocate when
it closes the accounts on 31 December 1977 •
CHAPTER E 2 - CAUCELLAT TONS OF COMMEPMESTS WHICH WILL PROBABLY KDT BE
1.  Legal basis and description
The allocation of funds earmarked on the strength of Commission aid
decisions must be made firm within a reasonable period of time by the contracting
of legal commitments .
The Commission 's internal rules on the drawing-up and implementation of
the ECSC operational budget therefore provide that in the exceptional event
of undue delay at this stage , the earmarked funds will be cancelled .
They also provide that once all parties have discharged their obligations
under a legal contract , any remaining unused allocation will likewise "be
cancelled ,-.
 ---pagebreak---                                        - 44 -
The amounts thus released "become available again as resources for the
current financial year .
2.  Nature and "breakdown
Save in the exceptional cases where decisions on the earmarking of funds
are not followed up within a reasonable period of time by legal commitments ,
any cancellation of earmarked funds normally indicates complete discharge
of the contract , agreed with the contracting party concerned .
The estimate of 2 m EUA shown in this chapter relates , in essence , to
cancellations of allocations for resettlement aid .    Only a token entry would
be needed for the other items which might be 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 depends on the negotiations to be held
with the governments concerned . The estimated figure of 2 m EUA is based
on an average rate for 1978 in view of the exceptional efforts allowed for in
1977 "to release funds amounting to 6 m EUA .
CHAPTER R 3 - REVALUATION OP ASSETS AM) LIABILITIES
This chapter , showinga"token entry'^is provided to record the net effect of
changes in rates of conversion during the financial year .
CHAPTER R 4 - UNUSED RESOURCES FROM THE FINANCIAL YEAR 1977
This chapter , showing V'token entry", provides for any balance remaining from the
funds of the previous financial year to be entered as resources for the
current financial year .
 ---pagebreak---                                       - 45
   " ^P.veri"g of requirements not include d In ; the budget
 Provision has been made for the following resources to cover requirements
 for the construction of, subsidized housing:
                   \
 - repayments on earlier loans (7.5 m SUA);
 - a part of the special reserve and of the former ECSC pension fund
    (7-5 m EUA ).
      ^P^ary °f possible resources for 1978
The estimates of reso-urces other than levies amount to 20 m EUA
(interest available - 18 m EUA; cancellations - 2 m EUA). As the yield
from a leyy rate of 0*01% has been estimated at 3,45 m EUA , the yield obtained
from levies can be estimated at 100 m EUA on the basis of the current rate
of 0„29fo .- The estimated resources are summarized in Annex E in the section
on " resources ".
 ---pagebreak--- III .  DRAFT OFERATIOKAL BUDGET FOR 1978
Before examining the problems arising in respect of 1973 , it should be
remembered that the situation in 1977 is already complicated by the
increased requirements established by the Commission for restructuring
and redevelopment in the iron and steel industry which already led , in
April 1977 , to an additional allocation of funds to the Chapter " interest
su.bsid.ies". To finance this priority measure , the Commission was forced to
reduce the research allocation from 42 m EUA to 38.4 m SUA and to provide for
the entry on the revenue side of the contingency reserve constituted in the
balance sheet as at 31 December 1976 . If the research appropriations were
again reduced in this way , it might jeopardize the Community 's capacity to
take the measures necessary in this sector to ensure the competitivity of
Community products .
 ---pagebreak--- A»   IRREDUCIBLE REQUIREMENTS
The Commission is faced by even more difficult conditions than normal in
drawing up its proposals on the draft ECSC operational budget for 1978 *
The Commission wishes to stress from the very outset that , given the extent
of the problems facing the coal and steel industry , it is determined to
propose and pursue a policy matching tip to the extent of the difficulties ;
at a time when the steel industry is passing through a serious crisis , it
considers that the ECSC must increase its aids and not resign itself to
reducing them - It is with, this in mind that the Commission will assess the
various financing requirements to determine the minimum amount «    It is aware
of the serious problems this will raise on the revenue side .
These exceptional difficulties are accompanied by the normal difficulties
linked with the uncertainty of proposals , which is only to be expected in economic
conditions    susceptible to unforeseen changes in the short term.
The information set out    above and summarized in Annex E shows that total
requirements for the financial year 1978 amount to 273 m EUA, compared with
 163.3 m EUA for the financial year 1977 *  To cover all the requirements
totalling 273 m EUA , the rate of levy would have to be fixed at 0.73/o«   The budget 's
  total should therefore be adjusted to the requirements deemed irreducible .
In the Commission 's view , it is necessary to exclude the possibility of
fixing irreducible requirements at such a low level as in last year 's
 initial budget as this amount would mean that only 44% of applications could be
met compared with 68% in 1977       78% in 1976®
 ---pagebreak---  It should also "as recognized that the sharp rise in applications submitted
by   Governments for resettlement aid faeces the EGSG with a difficult
financing problem in view of the mandatory        nature of the expenditure .
 In the light of past experience and provided that the negotiations which
will have to "be conducted with the Member States to this end are concluded
 satisfactorily , the Commission considers that it will be able to limit
the requirements which have to be financed in 1978 to a figure of 60 m EUA
deferring the contraction of commitments for the remaining applications until
later *  Such a carry-over of applications to future years could be regarded
as an expedient offering only short-term advantages , but it appears possible at
present that the level of applications for resettlement aid may drop somewhat
from 1979 onwards .   The Commission has therefore decided to take a basic figure
of 60 m EUA as a working assumption for the 1978 resettlement aid allocation .
 The other headings of expenditure which are of a mandatory nature relate to aids to
 coking coal in pursuance of Decision 73/ 287 ECSC , estimated at 6 m EUA , and
 administrative expenditure , fi xed at 5 m EUA .
 This leaves for consideration the two Chapters involving discretionary expenditure
 aid to research and interest subsidies .
 As regards research , the Commission considers an allocation of 41 m EUA ,
 distributed as set out in Annex E , to be the absolute minimum in view of
 the fact that these measures are meant to ensure the competitivity of
 Community products .  In real terms , this figure is still 10% lower than the
 initial allocation for the current financial year .
 ---pagebreak---                                - 49 -
As noted above ( see pages 15 and 18 ), interest subsidies which started off as
an operation of secondary importance whose scope depended on the amount
                                   j                                         • *
 of finance available , now play a key Dart in ECSC
industrial policy because of the vitally important character of the restructur­
ing and redevelopment operations proved necessary , notably in order to re­
establish the competiti vity of the Community steel industry . Already well
in advance of the publication of the overall plan to be drawn up as part of
the revision of the general objectives for steel , a growing number of
applications are reaching the Commission .   The minimum figure which the
Commission deems it necessary to enter in the draft budget for this item is
40 m EUA .  Although this allocation will only allow under half the applications
for subsidies to be granted , it should enable the Commission to play an active
role in collaboration with all the interested parties , in promoting the re­
structuring and redevelopment operations which the Commission considers to
be indispensable and urgent in the interests of the industry .
The preceding analysis shows that the financing needs for 1978 judged as
irreducible by the Commission and set out in the second column of Annex
come   to a total of 152 m EUA .
 ---pagebreak--- Bo   COVERING OF REQUIREMENTS
To finance the requirements discussed above and amounting in all to 152 m EUA
it would be necessary in addition to the use of expected non-levy income of . .
20 m EUA to make a substantial increase in the levy rate .
In view of the financial situation of the industries which pay the levies ,
the Commission considers that everything should he done to avoid imposing
this additional burden on ECSC undertakings . .
On the other hand , for the reasons set out above", the Commission does not
consider that it is in a position to recommend a policy which consists merely
of adjusting the volume of requirements to the level of resources normally
available ( 120 m EUA at the current rate of 0.29%) •  A budget of this type
 just would not match up to the problems needing to be tackled .
In these circumstances the Commission has looked for other possibilities for
balancing the budget without resorting to an increase in the levy rate .
                               o
Tne Commission has accordingly studied the possibility of finding a new source
of income able to make up the shortfall of 32 m EUA .   This could be done by
allocating to the ECSC some or all of the customs duties on ECSC products .
Prom 1 January 1971 onwards , under the Decision of 21 April 1970 relating to
the Communities' own resources , provided for the duties from the common customs tariff
to be - allocated to the Communities as direct Community revenue .
This does not extend to customs duties on coal and steel products governed by the
ECSC Treaty, as the common customs tariff adopted in accordance with Article 9
of the EEC Treaty does not cover the products coming under the ECSC Treaty .
The customs duties on ECSC products       have been standardized as a result     v
of decisions taken in accordance with Article 72 of the Treaty of Paris , but
they still accrue to the individual Member States which collect the dues con­
cerned when the relevant products are imported into their territory .
 ---pagebreak---                                             Ί
   Tne Comraission will therefore propose to the Council that the necessary
   procedures be set in operation for allocating the ECSC customs duties to
   the ECSC operational budget as soon as possible . In the meantime , and in
   anticipation of a decision along these lines , the Commission considers
   that the exceptional financial requirements of the ECSC sector in 1978
   and the major economic and social interest attached to pursuing an
   effective Community policy for the restructuring and redevelopment of
  the iron and steel sector and the resettlement of redundant workers fully
  justify an. ad hoc decision by the Member States to make a special
   9rant        of 32 m EUA t0 the ECSG operational budget to assist the implement­
   ation of the financial aid policies envisaged in the draft budget .
 The transfer of 32 m EUA. could be made in accordance with Article 49(2) of
  the ECSC Treaty and    classified' as a donation by the Member States to the
  Community .
 The Commission will keep Parliament informed of the development of Council
 discussions on this subject . The Commission hopes that the special Council
 meeting on the steel industry's problems at the end of November will be able
 to pronounce favourably on the principle of what is proposed.
The Commission wishes to make it clear that , if the proposal meets with
insurmountable difficulties , it will not be able to accept a drop in the
volume of the ECSC operational budget to a level corresponding to a levy
rate of 0,29$, since this amount does not represent an adequate financial
basis for a rational and effective policy. In this case , the Commission
vouM immediately submit a new draft budget replacing Annex E and involving
an increase in the levy to balance the budget .
 ---pagebreak---                                      - 52 -
C.  DRAFT BUDGET
Tne draft budget drawn up "by the Commission for the financial year 1977 and
amounting to 152 m EUA is contained in Annex E.
 ---pagebreak---                                                                                                                              ANNEX A
                                      IMPLEMENTATION OP THE ECSC OPERATIONAL BUDGET FOR 197 6
                                                                                                           '                         ( in m EUA )
                                               BUDGET      FINAL                                                          BUDGET1       !     FINAL
                   REQUIREMENTS                                                               RESOURCES
                                             • FIGURES     FIGURES                                                        FIGURES i           FIGURAS
  OPERATIONS TO BE FINANCED FROM CURRENT                                    . CURRENT RESOURCES
                                                                                                                                        I
  RESOURCES (NON-REPAYABLE)                                                                                                             i
                                                                                                                                        i
I 1 » Administrative expenditure               18          18                  1 . Levy yield                           I     93                9 ?. - 61
  2 . Aid to resettlement                      25          25.12               2 . Interest on investments and on loans
      (Art . 56 )                                                                  from non-borrowed funds                    14                14 , ~
  3. Aid to research (Art . 55 )               A3 . 5   •  42.67               3 . Miscellaneous                             token                0,37
                                                                                                                             entry
      Îa)b ) coal
             steel                               ( 17,4
                                                 ( 17
                                                                  ( 17 . AC
                                                                  ( 17.27
      (c ) social                          I     ( 9              ( 8 .-
  4 . Aid to coking coal                        6            6 .-              4 . Cancellation of commitments which
      (Art . 95 )                                                                                                              3.6               4,32
                                                                             '     will not now be implemented
  5 . Interest subsidies                       14          10.01
                                                                                                                                            I
                                                                               5 « Unused resources carried over from
      (a ) Article 54 - Investment               ( 6              ( 3.35           the financial year 1975
                                                                                                                                         !
      (b ) Article 56 – Redevelopment            ( 8              ( 6*. 66                                                               !
                                                                                                                                          !
                                                                                                                                          j
  6 . Aid to Friuli victims                     6          î6 .-
                                                                               6 . Drawing of allocation for budgetary
      (allocation to reserves )                                                    contingencies                               3          !
  7 . Deficit from 1975 financial year          1,2         1.2
  8 . Surplus allocated to the reserves
      and funds •                                           5.5
                                             113.6        114.50                                                            113.6              114,50
                                                                                                                                   *
                                                                                                                                          I
  OPERATIONS FINANCED WITH LOANS FROM                                          ORIGIN OF NON-BORROWED FUNDS                               j
                                                                                                                                          i
  NON–BORROWED FUNDS
  9 . Social housing                           12.5        12,5
                                                                               7 . Repayments on loans for social              6,4               6Α
                                                                                   housing
                                                                               8 . Special reserve and part of the             6.1               6,1
                                                                                   former ECSC Pension Fund
 ---pagebreak---                                                                                                                                   AWNEX B
                                FORECAST IMPLEMENTATION OP THE ECSC OPERATIONAL BUDGET FOR 1977
                                                                                                                                          ( in m EUA)
                REQUIREMENTS ".                   1f             ESTIMATES          I            RESOURCES
                                                                                                                                          ESTIMATES
  .                                               I   initial        I amended      I                                         initial              amended
OPÉRATIONS TO B£ FINANCED f ROM                                                        RESOURCES FOR THE FINANCIAL YEAR
    CUKRENT-RESOURCES ( NON REPAYABLE )
1 „ Adnimstrat ive expenditure .                      18                               1 . Current resources
2 . Aid to resettlement ( Article 56 )                25                25                 1.1 levy yield at 0,29%?             89                   81 . 5
3 . Aid to research ( Article 55 )                    42                38 Λ               1.2 Interest on investments and
                                                                                                  on loans from non-borrowed     16                   16
       3.1 stfrel                                         ( 16.5 |           ( 12 5
                                                                                                  funds
       3.2 coal                                           < 16.5             ( 16 2
       3.3 social                                         < 9      j
                                                                   ■
                                                                             ( 9 7         1.3 Fines and surcharges for        tcken entry token entry
4 . Interest subsidie »                               15                                          delayed pay ~vnt
                                                                        21.8
       4.1 Investment ( Article 54 )                      ( 6                ( 8 5
                                                                                           1.4 Miscellaneous                   token entry     tôken çntry
       4.2 Redevelopment ( Article 56 )                   ( 9                ( 13 3    2 . Cancellation of coramitaents
5 . Aid to coking coal and metall­                                                          which will probably not be
                                                                                            implemented
         urgical coke ( Article 95 )                    6   *            6
                                                                                       3 . Revaluation of assets and           token entry      token entry
6 . Aid to. Friuli victims                                    «
                                                                                                                                                    J --
                                                                                            liabi lities
         ( allocation to reserves )                     5                5„'
                                                                                       4 . Unused resources carried
                                                                                                                                                 *
                                                               ψ
                                                                                            over from the 1976 finan­        ( token
                                                                                            cial year                        ( entry                    0.7
                                                                                    =i
                                                      «
                                                                                       5 . Drawing on the contingency
                                                                                   J        reserve                                                   10
       *
                                                     111                                                                       111                  114.2
                                   •            »
OPERATIONS FINANCED WITH LOANS FROM                                                    ORIGIN OF NON-BORROWED FUNDS
  NON-DOHROWCO FUNDS
                                                                                       6 . Repayments on loans for
7 . Social housing                         '^         15                15                  social housing
                                     >■ ■„   *•
     •                   •- " * %
                                                                                       7 . Spécial reserve and part
                                                                                            of the former tCSC pension
                                                                                            FUN£>                                 8
 ---pagebreak---  imorsa-tion re latina; to levios
The latest avallaole information on production and the levy yield for
the current financial year is given 'below s
Levy yield for the period from January to June 1 977 '
                                                 1 '■ 1 '' 1 aemm _ υιιυιιι·ι······ι··ι·»ιι ■ ■■■■■« ■> .
                                         Production
                                         serving ao a                           1/5^7 yielö                   ji
                                         basis for the
               Produeta
                                         calculation of
                                         the lo\y
          _
                                         i n ml 1 1 i on t onne bi                   IfLJEESA^.           – j
  Brovn–oo&l trlcraettas ani esroi–ooke             1.8                                  0.1
  Ail type * of hard ooal                      102.8                                  10 .
I                         Total for coal                                               10.6
  Pig iron other than that required
  for the oanufacture of ingots                     2.3                                  0.8
  Steel ingots                                   62.8                                  24.1
{ Piniehed produots                              48.7                                    8.5
       %
                        Total for ateei                                                33.4
                             GRA5D TOTAL                                              44.0
  1
    Information available 24 October 1977 .
 ---pagebreak---                                                 BREAKDOWN OF LOANS ,^R THE FIRST SIX MONTHS OF 1977
                                                                                                                                    ( in m EUA )
                                                                                                                                                               i
                                            Fédéral                                                  Nether­                  United                           I
        Sector                                                                                                   Luxembourg
                                          itepublic
                                          .lermany
                                                        Belgium "   Denmark '     France     Italy   lands                   Kingdom     Ireland
                                                                                                                                                   Community|  I
                                                                                                                                                            1
                                                                                                                                                               ί
   I .. Coal industry                       . 42,68                                41,10                                      26,42                 110 a20   }
                                                                                                                                                              >
        Iron and. steel industry                                                                                                                 i
                                                                                                                                                    210,29 I
                                        ι
                                                     i
                                                          0 , 60              I
                                                                              l
                                                                                   15.61
                                                                                             47,58 |     "   I
                                                                                                             I
                                                                                                             I
                                                                                                                             146,49              i
                                                                                                                                                 i
                                                                                                                                                       :
                                                                                         I                                                       i
                                                                                                                                               - !            t
pi. Industrial redevelopment                                      t
                                                                                  ' 0.54      0.77                             0-22                   1.53 \
                                                      I                                                                                                      ί
                                                                                i
                                                                                           I
 IV ,* Social housing                          5.39                   0,45          0,72   !   1,65    0,07    I  0.56                                8.83   {
                                                                                                                                                             i
                                                                                                               I           I
                                                                                                                                                            i
                                                                                                                                                             i
                                                                                                                                 *
               GRAND TOTAL"' "- 1            48.07        0,60                                         0,07       0,56      173,13                 330,85   ί
                                                                      0.45        57,97      50.00
                                                                                                                                                            I
               ""                      L
                  able supplements the information given on pages 19-20 of the aide-memoire .
 ---pagebreak---                                                                                                                       ANNEX D
                                        PROVISIONAL SITUATION OP THE ECSC AT 30 JUNE 1977
                                                                                                  .   (in m EUA)„'
                         ASSETS                                                                LIABILITIES
    I.  Disbursed loans                       3 744*12                 I. A.    Borrowings                           3^671*13
                                                364,98                     B. . Outstanding redemption premiums          1.44
   II . Cash and banks       -
                                                                      II . Reserves
  ni .  Short and medium-term investments        52.16
                                                                           A.   Guarantee fund "                       160 .-
   IV . Portfolio                                78,06                     B.   Other funds                            122 ,-
    V.  Real estate                               0,33               III . Provisions
                                                                           A.   Financial assistance               .   210.70
   VI . Recoverable issuing costs                60.11
                                                                        •  B.   Other provisions                        76,69
  VII . Miscellaneous                            92,66
                                                                      IV . Former pension fund                          39.03
■ III . Accrued income                           94,79                 V. Miscellaneous                                 84^69
                                                                      VI . Accrued liabilities -       i .             114,37
                                                                     VII . Unallocated balance                           7,06
                                              4 487,21                                                             4 487,21
        Suspense account :                                                 Suspense account :
        Enterprises' liabilities                                           ECSC 's liabilities
        under guárante e                         18.40                     under guarantees                             18,40
 ---pagebreak---                                                                                                                              ( in m EUA)
I            REQUIRlOI-IEirrS             I APPLICATIONS          PROPOSALS                   KESCURCES                     PROPOSALS
   OPERATIONS TO BE FINANCED PROM                                                        RESOURCES FOR THE FINANCIAL
   RESOURCES FOR THE FINANCIAL YEAR                                                      YEAR
   (NON-RSPAYABLE )                                                       5
   1.   Administrative expenditure              - ^5
                                                                                         1.   Current resources
   2.   Aid to resettlement                       81 / 5            ■   60'
        (Article 56 )                                                                    1.1 Levy yield at 0.29?-                100 .
                                                                                              ( ©.0155 = 3.45 m EUA)
   3 . Aid to research (Article 55 )              82 , 5                41
                                                                                         1.2 Interest on investments
                                                                                              and on loans from non-              18
                                                         ( 40.5               ( 16            borrowed funds              »
        3.1 steel
        3.2 coal                                                              ( 16       1.3 Fines and late payment         token entry
                                                         ( 32,2
                                                                                            , surcharges
        3.3 social                                       ( 9,8                ( 9                                           token en ',rv
                                                                                       , 1.4 Miscellaneous
                                        t
                                                                                         2.   Cancellation of
   4.   Interest subsidies                        85                      40
                                                                                              commitments which will
        4.1 Investment (Article 54)                      ( 50                 ( 15            probably not be                      2
        4.2 Redevelopment (Article 56 )                  ( 35                 * 25            implemented
                                       i                              t
I                                      I                                                 3.   Revaluation of assets ard     token entry
                                                                            i
                                                                                              liabilities
   5.   Aid to coking coal and                                              6                                           '   token entry
                                                   6                                     4.   Unused resources carried
        metallurgical coke (Article 95 )
                                                                                              over from the 1976
                                                                                         5.
                                                                                              financial year
                                                                                              Special contribution in
                                                                                                                        I      ' 52        • i
                                       t
                                                                                              resoect of ECSC customs                     _]
                                                                                                                        1                    I1
                                                                                              duties
/
                                                       273      1        152.      I
                                                                                                                                    :
I OPERATIONS FINANCED WITH LOANS                                                     :   ORIGIN OF NOH^BORROWED FUNDS
                                                                                         6.   Repayments on loans for
1 6.   Social housing                             15                      15
                                                                                              social housing                     7.5         I
                                                                                                                                             I
                                                                                     ;   7.   Special reserve and part                       I
                                                                                              of former ECSC Pension             7.5
                                                                                              Fund