REPORT on the proposal for a Council decision granting a Community guarantee to the European Investment Bank against losses under loans and guarantees for projects outside the Community

    21.11.2006 - (COM(2006)0324 – C6‑0275/2006 – 2006/0107(CNS)) - *

    Committee on Budgets
    Rapporteur: Esko Seppänen

    Procedure : 2006/0107(CNS)
    Document stages in plenary
    Document selected :  
    A6-0394/2006
    Texts tabled :
    A6-0394/2006
    Debates :
    Texts adopted :

    DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

    on the proposal for a Council decision granting a Community guarantee to the European Investment Bank against losses under loans and guarantees for projects outside the Community

    (COM(2006)0324 – C6‑0275/2006 – 2006/0107(CNS))

    (Consultation procedure)

    The European Parliament,

    –   having regard to the Commission proposal to the Council (COM(2006)0324)[1],

    –   having regard to Article 181a of the EC Treaty, pursuant to which the Council consulted Parliament (C6‑0275/2006),

    –   having regard to the opinion of the Committee on Legal Affairs on the proposed legal basis,

    –   having regard to Rules 51 and 35 of its Rules of Procedure,

    –   having regard to the report of the Committee on Budgets and the opinion of the Committee on International Trade (A6‑0394/2006),

    1.  Approves the Commission proposal as amended;

    2.  Calls on the Commission to alter its proposal accordingly, pursuant to Article 250(2) of the EC Treaty;

    3.  Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

    4.  Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;

    5.  Instructs its President to forward its position to the Council and Commission.

    Text proposed by the CommissionAmendments by Parliament

    Amendment 1

    Citation 1

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

    Having regard to the Treaty establishing the European Community, and in particular Articles 179 and 181a thereof,

    Justification

    Amendment 2

    Recital 6

    (6) From 2007, the EU’s external relations will also be supported by the new financial instruments, i.e. the IPA, the ENPI, the DCECI and by the Instrument for Stability,

    (6) From 2007, the EU’s external relations will also be supported by the new financial instruments, i.e. the IPA, the ENPI, the DCECI, the Instrument for Stability and the Instrument for Democracy and Human Rights,

    Justification

    Amendment 3

    Recital 7

    (7) EIB Financing Operations should be consistent with and support EU external policies including specific regional objectives. EIB Financing Operations should take place in countries complying with appropriate conditionality consistent with EU high level agreements on political and macro-economic aspects,

    (7) EIB Financing Operations should be consistent with and support EU external policies including specific regional objectives and should contribute to the general objective of developing and consolidating democracy and the rule of law, the objective of respecting human rights and fundamental freedoms, and the observance of international environmental agreements to which the European Community or its Member States are parties. EIB Financing Operations should take place in countries complying with appropriate conditionality consistent with EU high level agreements on political and macro-economic aspects; the EIB, in conjunction with the Commission, should consider setting up an ex-post control mechanism to ensure that actions financed by the EIB outside the Community uphold the values of the EU,

    Justification

    To align with Article 181a of the Treaty, which provides the legal base for this proposal, and with the pertinent international environmental agreements signed by the EC or its Member States. It is important that the EIB’s overall strategy, and individual projects, are assessed against clear criteria reflecting European values, in order to ensure transparency in connection with the use of public funds for the sake of both European citizens and the citizens of non-Community countries.

    Amendment 4

    Recital 8 a (new)

     

    (8a) The focus sectors indicated for each region under recitals 9 to 12 are not exclusive and must not hinder the efforts to ensure better overall coherence with the other external financing instruments as specified above,

    Justification

    Amendment 5

    Recital 8 b (new)

     

     

    (8b) The information received by the European Parliament and the opportunities for scrutiny should also be strengthened, including by the transmission of strategic programming documents prepared by the Commission or by the EIB,

    Justification

    Enhanced cooperation between the Commission and the EIB should be complemented by increased involvement of the European Parliament which would contribute towards greater openness and transparency regarding the use of loan guarantees which ultimately represent a risk for the European taxpayer.

    Amendment 6

    Recital 8 c (new)

     

    (8c) The EIB should ensure that its lending activities fully support the policy goals of the European Union and the goals of international agreements on sustainable development to which the Union and its Member States are signatories. The EIB should give attention to projects which contribute to the achievement of the Millennium Development Goals of the United Nations, and the achievement of the targets of the Kyoto Conference on Climate Change on the reduction of greenhouse gas emissions, through lending for energy saving, energy efficiency and development of renewable energy sources. The EIB should ensure that all lending decisions are based on the precautionary principle as formulated in the Convention on Biological Diversity.

    Justification

    The present act of the Community Guarantee for the EIB is the only document in which the Community can mandate the EIB to follow certain general policy lines in its lending activities. While recitals 9-12 on the different regions contain precise wordings on the kind of projects to be supported by the Bank, there is so far a complete lack of reference to the two basic international agreements on sustainable development (UN Millennium Development Goals; Kyoto Agreement on Climate Change) to which the European Union is signatory. Their core goals should be named. Reference to the "precautionary principle" follows standard practice in the World Bank.

    Amendment 7

    Recital 8 d (new)

     

    (8d) The EIB should ensure that individual projects are subject to a Sustainability Impact Assessment carried out independently of the project sponsors and the EIB,

    Justification

    EIB lending has been criticised for an excessive focus on large-scale hydro-electric projects which damage the environment and displace local residents. Individual projects, in all regions covered by this decision, should be subject to independent Sustainability Impact Assessments to identify the economic, social and environmental effects of the project and propose accompanying measures to maximise the positive impacts and minimise any negative effects. Such assessments should provide much greater transparency.

    Amendment 8

    Recital 9

    (9) With regard to pre-accession countries, EIB financing in those countries should reflect the priorities established in the Accession and European Partnerships, in the Stabilisation and Association agreements and in negotiations with the EU. The focus of EU action in the Western Balkans should continue to shift progressively from reconstruction to pre-accession support. In this context, the EIB activity should also seek to encourage the institution building aspect, where relevant, in cooperation with other International Financial Institutions (“IFIs”) active in the region. Over the period 2007-2013, financing to candidate countries (Croatia, Turkey and the Former Yugoslav Republic of Macedonia) should increasingly take place under the Pre-Accession Facility made available by the EIB, which should be extended over time to cover the potential candidate countries in the Western Balkans in line with the progress of their accession process,

    (9) With regard to pre-accession countries, EIB financing in those countries should reflect the priorities established in the Accession and European Partnerships, in the Stabilisation and Association agreements and in negotiations with the EU. The focus of EU action in the Western Balkans should continue to shift progressively from reconstruction to pre-accession support. In this context, the EIB activity should in addition seek to encourage the institution building aspect, where relevant, in cooperation with other International Financial Institutions (“IFIs”) active in the region. In addition, it is important to encourage trade in the Western Balkans since it is a vital tool for stressing the importance of switching from reconstruction to pre-accession support and thus becoming more integrated in the EU. Over the period 2007-2013, financing to candidate countries (Croatia, Turkey and the Former Yugoslav Republic of Macedonia) should increasingly take place under the Pre-Accession Facility made available by the EIB, which should be extended over time to cover the potential candidate countries in the Western Balkans in line with the progress of their accession process,

    Amendment 9

    Recital 11

    (11) With regard to countries covered by the DCECI, EIB financing in the Asian and Latin American countries will be progressively aligned with the EU cooperation strategy in those regions and be complementary to instruments financed by Community budgetary resources. The concept of “mutual interest”, so far limited in practice to the financing of projects involving EU companies, will be broadened to take into account the promotion of environmental sustainability and regional integration (such as transport, telecom and energy projects favouring interconnectivity). The EIB should endeavour to progressively expand its activities across a larger number of countries in those regions, including in the less prosperous countries. In Central Asia, the EIB should focus on major energy supply and energy transport projects with cross-border implications. EIB financing in Central Asia should be carried out in close cooperation with the EBRD, in particular according to the terms to be set out in a tripartite Memorandum of Understanding between the Commission, the EIB and the EBRD. To enhance visibility of EU intervention in Latin America, a specific amount should be identified for a Latin America facility,

    (11) With regard to countries covered by the DCECI, the EIB should continue and consolidate its activities with a focus on projects contributing to the achievement of the Millennium Development Goals, fostering sustainable development and enhancing environmental protection. EIB financing in the Asian and Latin American countries should be progressively aligned with the EU cooperation strategy in those regions and be complementary to instruments financed by Community budgetary resources. The concept of “mutual interest”, so far limited in practice to the financing of projects involving EU companies, should be broadened to take into account the promotion of environmental sustainability and regional integration (such as transport, telecom and energy projects favouring interconnectivity). The EIB should endeavour to progressively expand its activities across a larger number of countries in those regions, including in the less prosperous countries. In Central Asia, the EIB should focus on environmental infrastructure, sustainable energy supply and energy transport projects with cross-border implications. EIB financing in Central Asia should be carried out in close cooperation with the EBRD, in particular according to the terms to be set out in a tripartite Memorandum of Understanding between the Commission, the EIB and the EBRD. To enhance visibility of EU intervention in Latin America, a specific amount should be identified for a Latin America facility,

    Justification

    The need for environmental infrastructure projects is at least as great in Central Asia as in the Eastern Europe, the Southern Caucuses and Russia. This amendment ensures more consistent treatment between the countries covered by recital 10 and those by recital 11.

    Amendment 10

    Recital 16

    (16) Reporting by the EIB and the Commission on EIB Financing Operations should be strengthened. On the basis of the information received from the EIB, the Commission should report, on an annual basis, to the European Parliament and the Council on the EIB Financing Operations carried out under this Decision,

    (16) Reporting by the EIB and the Commission on EIB Financing Operations, as well as the EIB's own assessment capacities, should be strengthened. On the basis of the information received from the EIB, the Commission should produce its own assessment, drawing on independent, external expertise for major loan projects, and should report, on an annual basis, to the European Parliament and the Council on the EIB Financing Operations carried out under this Decision. This report should include an assessment of the contribution of the EIB Financing Operations to the achievement of the external policy objectives of the EU. The report should also list EIB supported loans according to their risk exposure as assessed by the EIB,

    The Commission should not rely exclusively on information from the EIB in drawing up its project assessments and the annual report but be ready to obtain information from independent, external experts including those based in the countries where EIB financing operations have taken place. The annual report should set out clearly how the EIB has contributed to fulfilling the objectives set out in recitals 10 and 11 (as amended).

    Amendment 11

    Recital 17

    (17) The Community guarantee established by this Decision should cover EIB Financing Operations signed during a seven-year period beginning on 1 January 2007. In order to be able to take stock of the developments during the first half of that period, the EIB and the Commission should prepare a mid‑term review of the Decision,

    (17) The Community guarantee established by this Decision should cover EIB Financing Operations signed during a seven-year period beginning on 1 January 2007. In order to be able to take stock of the developments during the first half of that period, the EIB and the Commission should prepare a mid‑term review of the Decision. This review should be undertaken on the basis of a broad consultation of stakeholders concerning the impact of the EIB’s operations,

    Public confidence in EIB operations and the use of European taxpayers’ funds to support them requires greater openness and transparency to ensure that the widest possible range of stakeholders are included in the review process.

    Amendment 12

    Recital 18

    (18) EIB Financing Operations should continue to be managed in accordance with the Bank’s own rules and procedures, including appropriate control measures, as well as with the relevant rules and procedures concerning the Court of Auditors and OLAF,

    (18) EIB Financing Operations should continue to be managed in accordance with the Bank’s own rules and procedures, including appropriate control measures, as well as with the relevant rules and procedures concerning the Court of Auditors and OLAF; the EIB should make sure, in accordance with Article 267 of the Treaty, which sets out its task, that the projects it finances cannot be entirely financed by the various means available in the individual Member States, and in particular that no distortion of competition with credit and investment institutions is generated,

    This amendment seeks to ensure that the Decision does not generate any distortion of competition with credit and investment institutions.

    Amendment 13

    Recital 20

    (20) The EIB should prepare, in consultation with the Commission, an indicative multi-annual programming of the volume of signatures of EIB Financing Operations so as to ensure an appropriate budgetary planning for the provisioning of the Guarantee Fund.

     

    (20) The EIB should prepare, in consultation with the Commission, an indicative multi-annual programming of the volume of signatures of EIB Financing Operations so as to ensure an appropriate budgetary planning for the provisioning of the Guarantee Fund. The Commission must take account of the estimated budgetary consequences of this in its regular budget programming transmitted to the European Parliament,

    Justification

    The accuracy of budget programming for the provisioning needs of the Guarantee Fund should be improved.

    Amendment 14

    Article 1, paragraph 2

    2. The Community guarantee shall be restricted to 65% of the aggregate amount of credits disbursed and guarantees provided under EIB Financing Operations, less amounts reimbursed, plus all related sums.

    2. The Community guarantee shall be restricted to 55% of the aggregate amount of credits disbursed and guarantees provided under EIB Financing Operations, less amounts reimbursed, plus all related sums.

    Justification

    Given the history and nature of this instrument it seems clear that an aggregate guarantee rate of 55% would almost certainly allow a 100% de facto coverage of any defaults. This amendment would therefore lower the budgetary cost in over the next financial perspective with little practical increase of the risk. The EIB's access to capital on most favourable terms or its credit rating should not be affected by this.

    Amendment 15

    Article 2, paragraph 2

    2. Individual countries shall become eligible under the regional ceilings and sub-ceilings as and when they fulfil appropriate conditionality consistent with EU high level agreements with the country in question on political and macro-economic aspects. The Commission, in consultation with the EIB, shall determine when an individual country has fulfilled the appropriate conditionality and shall notify the EIB thereof.

    2. Individual countries shall become eligible under the regional ceilings and sub-ceilings as and when they fulfil appropriate conditionality consistent with European Union policies and high level agreements with the country in question on political and macro-economic aspects. The Commission, in consultation with the EIB, shall determine when an individual country has fulfilled the appropriate conditionality and shall notify the EIB thereof after having informed the European Parliament and the Council and stated its reasons.

    Justification

    Position taken by the Parliament in previous reports on the EIB mandate, which needs to be repeated.

    Amendment 16

    Article 2, paragraph 4

    4. In the event of serious concerns over the political or economic situation in a specific country, the Commission and the EIB may decide to suspend EIB Financing Operations in such country.

     

    4. In the event of serious concerns over the political or economic situation in a specific country, the Commission and the EIB may decide to suspend EIB Financing Operations in such country. In such cases the Commission shall inform the European Parliament and the Council and state its reasons.

    Justification

    See previous amendment.

    Amendment 17

    Article 3, paragraph 2

    2. The Commission and the EIB shall decide jointly on the use of the Reserve Mandate. The Commission and the EIB shall be assisted by the Economic and Financial Committee set up by Article 114(2) of the Treaty.

     

    2. The Commission and the EIB shall decide jointly on the use of the Reserve Mandate. The provisions concerning appropriate conditionality and the obligation to inform the European Parliament, as laid down in Article 2, shall apply. The Commission and the EIB shall be assisted by the Economic and Financial Committee set up by Article 114(2) of the Treaty.

    Justification

    The deployment of this part of the mandate, perhaps especially in the case of "developments in strategically important countries" should be subject to scrutiny.

    Amendment 18

    Article 4, paragraph 4

    4. The consistency of EIB Financing Operations with the external policies and objectives of the European Union shall be monitored in accordance with Article 7.

     

    4. The consistency of EIB Financing Operations with the external policies and objectives of the European Union shall be monitored in accordance with Article 7 and shall also be addressed by the Commission in the structured dialogue with the European Parliament established in the new external financing instruments for 2007-2013.

    Justification

    In some countries EIB loan financing may be well as important as grant assistance. It is therefore necessary to have a full picture of the assistance/cooperation given in the context of the external programmes financed by the EU.

    Amendment 19

    Article 6, paragraph 2 a (new)

     

    2a. If a Head of State, a government member, a member of a Member State's parliament, a member of the Commission or a Member of the European Parliament is directly or indirectly associated with an entity benefiting from EIB activity covered by the Community guarantee, the Community guarantee decision shall be the subject of a special report drawn up by the bank's verification committee. This paragraph shall not apply to current Community guarantee agreements concluded on normal terms which, by virtue of their subject or their financial implications, are of no significance to any of the parties involved.

    The EIB is a means of exercising political influence and the way it operates must fulfil all the transparency requirements which are based on the values, and are essential prerequisites for the credibility, of the European Union and its satellite organisations. The proposed provision already exists in the domestic law of some Member States, establishing transparency requirements for the management of enterprises in the private sector and, in some cases, the public sector. The provision meets the requirements of good governance. In view of the complex technical, financial and political links which can arise, it is appropriate for a safeguard of this kind to be introduced.

    Amendment 20

    Article 7, paragraph 1 a (new)

     

    1a. The annual report shall include a general evaluation of the main concerns raised in the Sustainability Impact Assessments of loan projects referred to in recital (8d) and the recommendations made by the Commission to the EIB for the mitigation of such concerns.

    Justification

    This will contribute an independent element to the assessment process as well as contribute to greater openness and transparency.

    Amendment 21

    Article 7, paragraph 2 a (new)

     

    2a. The Commission shall also obtain whatever outside expertise is required to enable it to make an independent assessment of the contribution of the EIB Financing Operations.

    Justification

    This will also contribute an independent element to the assessment process as well as contribute to greater openness and transparency.

    • [1]  Not yet published in OJ.

    EXPLANATORY STATEMENT

    Introduction

    This proposal deals with the renewal of the Community budget guarantee to the European Investment Bank (EIB) for its financing operations in third countries (the "lending mandate"). This guarantee from the Community is an important and substantial instrument in support for European development, economic and trade policy goals.

    The rapporteur wishes to underline from the start that a decision on what kind of lending capacity and guarantees the Community should have is a political question. The role of lending operations in third countries should be mutually reinforcing with the new set of legal instruments foreseen for 2007-2013 (Neighbourhood, Pre-accession, Development, Stability, Human Rights and Democracy).

    The proposal has been presented under article 181a of the Treaty (economic, financial and technical cooperation with third countries). Since many countries included as eligible (annex 1 to the proposal) are in fact developing countries, the rapporteur wonders if there should not be a double legal base, i.e. also article 179 (development cooperation). This is especially the case since it is very clear from the proposal that EIB operations should be supporting the relevant external policy objectives of the Union. In line with the general responsibility of every parliament committee to verify the legal base, the Legal Affairs Committee has been consulted on this issue according to Rule 35 of Parliament's Rules of Procedure and the relevant amendments have been introduced.

    Summary of proposal and comments

    · The new overall ceiling proposed for EIB lending that would be covered by a Community guarantee, is EUR 33 billion. This is a large increase from the current ceiling of EUR 20,7 billion (+59%), which is, however, in line with the position of the Parliament in the current FP arguing that there is scope for a higher volume of lending without increasing significantly the potential risk to the EU budget.

    · A uniform "blanket" guarantee coverage of 65% would apply to the whole mandate. In practice this would mean that if a loan is not repaid, the Guarantee Fund would be called on to repay the EIB (at a de facto rate of 100% for each individual loan) as long as the total amount(s) called would not exceed 65% of the value of the total loan portfolio.[1] The rapporteur considers that, in practice, a blanket guarantee rate of 65% is exaggerated. He has introduced a lower rate of 55% which in all likelyhood would be sufficient to shelter the Community's finances from the risk of defaults.

    · It should be noted that, especially for loans to the private sector, the EIB also operates a so-called "risk-sharing scheme" by which it aims to obtain third-party guarantees for the commercial risks associated with the loans. In such cases, the blanket guarantee would nevertheless still cover "political risks" such as unrest, civil war, expropriation etc.

    · The rapporteur recalls that when a loan is signed, the amount to be paid in to the Guarantee Fund from the EU budget currently stands at 9% of the loan value. This rate is not covered in this proposal but is contained in the Regulation on the "provisioning mechanism" on which the Parliament delivered its report in February 2006.

    · Basically, the new provisioning mechanism would work on an "ex-post" basis, i.e. on the basis of loans actually paid out. Currently, the mechanism works on an "ex-ante" basis, i.e. based on forecasts of loans which are expected to be signed. This should lead to a more rational use of the budget as the target amount of the Guarantee Fund can be kept more accurately. The amount necessary for the following year will be budgeted in the PDB, in reserve. There would be one annual transfer proposal to consider its transfer to the Fund.

    · Wording aiming to strengthen the linkage between EIB loans and the EU external programmes has been introduced in the Commission's proposal. In the rapporteur's view, there is still room for some improvement here and an amendment on coherence has been introduced.

    · The proposal also seeks to establish a definition of main areas of activity for the EIB in different regions. The rapporteur notes that these priority sectors have developed over time and not necessarily as a result of consistent policy objectives but, rather, as a result of the EIB's available expertise. He would again underline that the EIB activities should be adapted to follow and support the general external policy goals of the EU and be implemented where they can add most value. This would imply "similar operations for similar countries". He asks the Commission to further clarify which steps have been taken in this direction.

    · A new geographical breakdown of the mandate is introduced. The shares between the current countries are slightly modified but, also, some new countries are included. This relates to the inclusion of the Southern Caucasus and Central Asia countries, which the Parliament has called for in the past. The rapporteur considers that the proposed balance between different areas can now be supported.

    · Also, a "reserve mandate" of EUR 1,5 billion is introduced. This is to be used mainly following natural disasters and/or other urgent crises. Reconstruction in Lebanon could be an example. In short, this limited "thematic mandate" would be used to involve the EIB more quickly following such emergencies without being attached to any specific a geographical region. The rapporteur can support this approach.

    The Commission suggests ceilings for EIB financing operations as follows:

    Table 1: Proposed ceilings for EIB financing operations and comparison with 2000-2006

    EU POLICY/MANDATE

    2000-2006

    2007-2013

    € bn

    %

    € bn

    %

    Pre-accession

    Pre-accession countries

    - of which pre-accession countries 2007-2013

     

    Sub-total

     

    10,2

    5,2

     

    10,2

     

    49,5

    25,2

     

    49,5

     

    9,0

     

     

    9,0

     

    28,6

     

     

    28,6

    Neighbourhood

    Mediterranean countries[2]

    Eastern Europe, Southern Caucasus and Russia

     

    Sub-total

     

    6,5

    0,6

     

    7,1

     

    31,6

    2,9

     

    34,5

     

    10,0

    5,0

     

    15,0

     

    31,7

    15,9

     

    47,6

    Development Cooperation/Economic Cooperation

     

     

     

     

    Asia and Latin America

    Asia

    Latin America

     

    Sub-total

     

     

     

     

    2,5

     

     

     

     

    12,0

     

    2,0

    4,0

     

    6,0

     

    6,3

    12,7

     

    19,0

    ACP - South Africa

    South Africa

     

    Sub-total

     

    0,8

     

     

    0,8

     

    4,0

     

     

    4,0

     

    1,5

     

     

    1,5

     

    4,8

     

     

    4,8

    Total regional mandates

    20,7

    100

    31,5

    100

    Reserve mandate

    0,0

     

    1,5

     

    Total

    20,7

     

    33,0

     

    Budgetary impact

    · The rapporteur recalls that the MFF 2007-2013 establishes an overall amount for provisioning the Guarantee Fund of EUR 1 244 million (2004 prices), or 1 400 million in current prices.

    · The rapporteur notes that the Commission, for its financial programming, is currently using a flat profile of EUR 200 million per year, which will not correspond to real budget flows. In the beginning of the period, practically no budget outlays will occur as a result of switching to the new provisioning system. But, in a worst case scenario, as much as EUR 300 million per year is theoretically possible for the later years of the FP.

    The rapporteur concludes that the projected flows, within any reasonable assumptions, are compatible with the MFF 2007-2013 as signed up to by the Parliament and are to be covered in heading 4.

    Table 2: projected budget flows. source: financial statement to Commission proposal

    EUR Million

    2007

    2008

    2009

    2010

    2011

    2012

    2013

    Total

    Budgetary revenues

    0

    157

    2

    0

    0

    0

    0

    159

    Budgetary needs for normal provisioning

    0

    0

    0

    129

    153

    160

    165

    607

    Possible adjustments in the market valuation of the assets of the Guarantee Fund

    0

    0

    37

    42

    49

    56

    64

    248

    Potential impact of possible calls

    0

    0

    100

    100

    100

    100

    100

    500

    Maximum budgetary needs (worst-case scenario)

    0

    0

    135

    271

    302

    316

    329

    1353

    • [1]  In practice, the Guarantee Fund has only been called on twice since its start in 1994 and even in these two cases the money was eventually repaid. In practical terms, any defaults are therefore covered to 100%. Based on experience, even a lower blanket guarantee rate of 55% would continue to achieve this.
    • [2]  Following the restructuring of the mandates after the mid-term review of 2003, the ceiling for Mediterranean countries was de facto increased, since Turkey was excluded from the Mediterranean mandate and included in the South Eastern Neighbours' one.

    OPINION OF THE COMMITTEE ON LEGAL AFFAIRS ON THE LEGAL BASIS

    Mr Janusz Lewandowski

    Chairman

    Committee on Budgets

    BRUSSELS

    Subject:           Opinion on the legal basis of the Proposal for a Council decision granting a Community guarantee to the European Investment Bank against losses under loans and guarantees for projects outside the Community COM(2006)324 – C6-0275/2006 - 2006/0107(CNS))

    Dear Mr Lewandowski,

    By letter of 27 September 2006 you asked the Committee on Legal Affairs, pursuant to Rule 35(2), to consider whether the legal basis of the above Commission proposal was valid and appropriate.

    The committee considered the above question at its meeting of 2 October 2006.

    As Chairman of the Committee for Budgets, you sent me, as Chairman of the Legal Affairs Committee, a letter on 27 September 2006 in the following terms:

    "The Commission proposes Article 181a (economic, financial and technical cooperation with third countries) as a single legal basis, covering the different regions/countries included. The eligible countries are listed in annex 1 of the proposal.

    It should be noted that several of the countries listed under this regulation are in fact classified as developing countries according to the definitions in force, notably OECD classification. As, normally, the legal basis should reflect the aim and content of the measure at issue, there seems to be a question mark over whether Article 179 of the Treaty -Development Cooperation- should not also be used as a legal basis.

    I have been informed that our rapporteur, Mr Seppänen, may present an amendment to the proposal introducing also Article 179, so that there would be a dual legal base. As the Treaty provisions are different, i.e. consultation for 181a and co-decision for 179, this could have implications for the powers of the Parliament."

    An appraisal of the proper legal basis for the proposal in question is set out hereinafter.

    The relevant provisions of the EC Treaty

    The original sole legal basis selected by the Commission is Article 181a:

    Article 181a

    1. Without prejudice to the other provisions of this Treaty, and in particular those of Title XX, the Community shall carry out, within its spheres of competence, economic, financial and technical cooperation measures with third countries. Such measures shall be complementary to those carried out by the Member States and consistent with the development policy of the Community.

    Community policy in this area shall contribute to the general objective of developing and consolidating democracy and the rule of law, and to the objective of respecting human rights and fundamental freedoms.

    2. The Council, acting by a qualified majority on a proposal from the Commission and after consulting the European Parliament, shall adopt the measures necessary for the implementation of paragraph 1. The Council shall act unanimously for the association agreements referred to in Article 310 and for the agreements to be concluded with the States which are candidates for accession to the Union.

    3. Within their respective spheres of competence, the Community and the Member States shall cooperate with third countries and the competent international organisations. The arrangements for Community cooperation may be the subject of agreements between the Community and the third parties concerned, which shall be negotiated and concluded in accordance with Article 300.

    The first subparagraph shall be without prejudice to the Member States' competence to negotiate in international bodies and to conclude international agreements.

    Article 181a comes within Title XXI of the EC Treaty, Economic, financial and technical cooperation with third countries.

    The additional legal basis contemplated by the Budgets Committee's rapporteur is Article 179, which comes under Title XX of the EC Treaty, Development Cooperation:

    Article 179

    1. Without prejudice to the other provisions of this Treaty, the Council, acting in accordance with the procedure referred to in Article 251, shall adopt the measures necessary to further the objectives referred to in Article 177. Such measures may take the form of multiannual programmes.

    2. The European Investment Bank shall contribute, under the terms laid down in its Statute, to the implementation of the measures referred to in paragraph 1.

    3. The provisions of this Article shall not affect cooperation with the African, Caribbean and Pacific countries in the framework of the ACP-EC Convention.

    Article 177, to which Article 179 refers, is worded as follows:

    Article 177

    1. Community policy in the sphere of development cooperation, which shall be complementary to the policies pursued by the Member States, shall foster:

    — the sustainable economic and social development of the developing countries, and more particularly the most disadvantaged among them,

    — the smooth and gradual integration of the developing countries into the world economy,

    — the campaign against poverty in the developing countries.

    2. Community policy in this area shall contribute to the general objective of developing and consolidating democracy and the rule of law, and to that of respecting human rights and fundamental freedoms.

    3. The Community and the Member States shall comply with the commitments and take account of the objectives they have approved in the context of the United Nations and other competent international organisations.

    The content of the proposed measure

    The proposal has to do with the EIB's role as lender in the context of the EU's foreign policy. In order not to have an adverse effect on the EIB's credit rating, the Community gives a guarantee to cover any losses resulting from lending outside the Community.

    The present general decision was adopted in 2000 on the basis of Article 308 of the EC Treaty. It has been amended and supplemented on various occasions (most recently on the basis of Article 181a) in order to introduce supplementary guarantees covering new countries.

    Article 1 mentions that the Community guarantee will cover EIB financing operations up to a global amount of EUR 33 billion, including a reserve of EUR 1.5 billion, over the period 2007-2013. The guarantee is to be restricted to 65% of the aggregate amount of the financing operations plus related sums. The overall ceiling is to be broken down by region with the following binding regional ceilings:

    A) Pre-accession countries: EUR 9 billion

    B) Neighbourhood and Partnership countries: EUR 15 billion. This is broken down into two indicative sub-ceilings, i.e. Mediterranean countries: EUR 10 billion, and Eastern Europe, Southern Caucasus and Russia: EUR 5 billion.

    C) Development and Economic Cooperation countries: EUR 7.5 billion, broken down into three indicative sub-ceilings, i.e. Latin America: EUR 4 billion, Asia: EUR 2 billion, and Republic of South Africa: EUR 1.5 billion.

    D) Reserve Mandate: EUR 1.5 billion.

    Article 2 deals with the list of countries concerned by the legal act and their eligibility.

    Article 3 specifies that the Reserve Mandate is not allocated to any single region and will be activated in cases of natural disasters, post-conflict reconstruction or developments in strategically important countries. The activation will be decided jointly by the Commission and the EIB, following consultation with the EFC. The European Parliament will be informed about the activation of the Reserve Mandate.

    Article 4 details the requirements relating to the linkage of EIB external activities with EU policies, through reinforced cooperation between the Commission and the EIB and enhanced reporting. Furthermore, an EIB Financing Operation will not be included under the cover of the Community guarantee in case the Commission delivers a negative opinion on such operation within the framework of the procedure provided for in Article 21 of the Statutes of the EIB.

    Article 5 details the modalities of the enhanced cooperation with other International Financial Institutions.

    Article 6 clarifies the nature of the Community guarantee which will cover risks of a political or sovereign nature for financing operations entered into by the EIB.

    Article 7 includes enhanced reporting and accounting information requirements for both the EIB and the Commission.

    Article 8 specifies the responsibility of the EIB to pursue possible recovery claims on behalf of the Commission.

    Article 9 mentions that the detailed provisions and procedures relating to the Community guarantee shall be laid down in a guarantee agreement between the Commission and the EIB.

    Article 10 mentions that a mid-term review of the mandate would be carried out in 2010 by the Commission on the basis, inter alia, of an activity report from the EIB as well as an evaluation prepared by the EIB's independent evaluation department.

    The preamble includes the political background to the proposal and the detailed scope of EIB operations in the different regions.

    Conclusion

    The Court of Justice has consistently held that "in the context of the organisation of the powers of the Community the choice of the legal basis for a measure must rest on objective factors which are amenable to judicial review. Those factors include in particular the aim and the content of the measure .... . In this connection, the fact that an institution wishes to participate more fully in the adoption of a given measure, the work carried out in other respects in the sphere of action covered by the measure and the context in which the measure was adopted are irrelevant"[1].

    Article 181a of the EC Treaty was introduced by the Treaty of Nice in order to get around the problem that no treaty article covered economic, financial and technical cooperation with third countries which were not developing countries. This meant having to adopt measures on the basis of Article 308, possibly in combination with the articles on the common commercial policy or development cooperation[2].

    Given the wording of Article 181a (which opens with the words "Without prejudice to the other provisions of this Treaty, and in particular those of Title XX") and the fact that it refers simply to third countries and not to developing countries, economic cooperation with developing countries falls outside the scope of Article 181a.

    Given that the proposed instrument is directed to both developing countries and non-developing third countries and that the procedures provided by the two articles are consistent (qualified majority vote in the Council), Article 181a could be used as legal basis in conjunction with Article 179 since the instrument in question pursues several contemporaneous objectives which are indissolubly linked with each other without one being secondary and indirect in respect of the others[3]. In this case the codecision procedure would apply to the whole instrument.

    At its meeting of 2 October 2006 the Committee on Legal Affairs accordingly decided, unanimously[4], to recommend that you that the proposed measure should be based on both Article 181a and Article 179 of the EC Treaty.

    Yours sincerely,

    Giuseppe Gargani

    • [1]  Case C-269/97 Commission v. Council [2000] ECR I-2257, paras 43 and 44.
    • [2]  See Lenaerts and Van Nuffel, Constitutional Law of the European Union, 2nd ed. 2005, at 20-029.
    • [3]  Case 165/87 Commission v. Council [1988] ECR 5545, para. 11.
    • [4]  The following were present for the vote Giuseppe Gargani (chairman), Enrico Speroni (draftsman), Maria Berger, Klaus-Heiner Lehne, Arlene McCarthy, Michel Rocard, Diana Wallis, Jaroslav Zvěřina.

    OPINION of the Committee on International Trade (23.10.2006)

    for the Committee on Budgets

    on the proposal for a Council decision granting a Community guarantee to the European Investment Bank against losses under loans and guarantees for projects outside the Community
    (COM(2006)0324 – C6‑0275/2006 – 2006/0107(CNS))

    Draftsperson: Alain Lipietz

    SHORT JUSTIFICATION

    Community guarantees to the EIB against losses under loans and guarantees for projects outside the Community are an important instrument to support European economic and trade policy objectives at the global level. A large proportion of EIB loans, especially in Latin America, support European firms’ overseas investments, which in turn contribute to increased trade. The European Parliament has been monitoring the overall activities of the EIB since 1999 through Annual Reports drawn up by the ECON Committee which have created an excellent spirit of cooperation with the Bank. On the specific topic of Community Guarantees to the EIB, the European Parliament has not so far expressed a detailed opinion.

    Guarantee cover can be granted to EIB loans extended to companies, financial institutions or non-member states. Under the so-called “risk-sharing scheme” with the EU, the EIB is able to adequately secure non-sovereign guarantees (loans to private borrowers) for commercial risks through diverse security measures or credit enhancements, complemented by the budgetary guarantee of the Community covering mainly political risks arising from currency non-transfer, expropriation, war and civil disturbance. In the case of loans with sovereign project guarantees, virtually all risks are covered by the Community guarantee.

    The fact that EIB loans are largely or even fully guaranteed by the Community’s Loan Guarantee Fund (LGF) allows the Bank to offer very attractive conditions, because it does not need to charge the normal risk premium. This subsidisation produces credit costs up to 1-2 percent below the LIBOR standard. Accordingly there is a high and increasing demand for EIB credits throughout the world.

    The draftsperson considers that the Community guarantee to the EIB deserves the full support of the European Parliament, as a means of employing public money to advance EU policy goals, on condition that these goals are indeed promoted coherently. At present, this is not assured:

    · the Bank may tend to judge loans in third countries profiting from Community guarantees mainly on the basis of their financial sustainability. This favours borrowers which least need reduced credit costs to the disadvantage of innovative private entrepreneurs and public projects. The "gift" of lower interest rates should instead accrue, in principle, to EIB loans for projects that have, as a priority, a high and measurable value in advancing EU policy objectives, since the budget of the guarantee fund is limited;

    · the list of objectives for Community guaranteed EIB loans to third countries does not consistently feature EU policy objectives and favours large scale projects, especially in the energy supply sector. This is to the detriment of the EU policy objective of diversification of energy sources and the Kyoto requirements and should be rectified;

    · in addition, the priority given to large-scale hydroelectric projects can have a negative effect on local residents and the environment;

    · present accounting, information and monitoring instruments fail, to a considerable extent, to specify the precise risk of EIB lending operations and the exact content of guarantee-supported EIB projects, making it difficult to establish which EU policy objectives are being advanced.

    The Commission proposal sets out to partially rectify some of these shortcomings:

    · the introduction of a Reserve Mandate, not allocated to any one region, which will be used in response to natural disasters, post-conflict reconstruction or developments in strategically important countries provides welcome additional flexibility, so long as the loans guaranteed meet the general requirement of promoting European policy objectives;

    · the potential eligibility of countries from the South Caucuses and Central Asia responds to a previous position of the European Parliament;

    · individual countries only become eligible once they meet the political and macroeconomic conditions set out in the high level agreements with the EU. However it is regrettable that in the Commission’s proposal the European Parliament is not given its due role in evaluating third countries’ respect for these conditions;

    · the Commission says that its proposal reinforces requirements linking EIB external activities with EU policies, through strengthened cooperation between the Commission and the EIB and enhanced reporting. Whilst sharing this objective, proposed amendments in this opinion seek to improve further the required levels of openness and transparency.

    More generally these proposals, although positive, remain limited to objectives of financial planning and financial security of guarantee operations.

    Presently the regional mandates for EIB lending operations are being revisited. It therefore seems appropriate to widen the scope of the Commission proposal in order to ensure that Community Guarantees are used coherently to provide tangible advances towards EU policy goals and to strengthen the indispensable evaluation and monitoring mechanisms.

    AMENDMENTS

    The Committee on International Trade calls on the Committee on Budgets, as the committee responsible, to incorporate the following amendments in its report:

    Text proposed by the Commission[1]Amendments by Parliament

    Amendment 1

    Recital 7

    (7) EIB Financing Operations should be consistent with and support EU external policies including specific regional objectives. EIB Financing Operations should take place in countries complying with appropriate conditionality consistent with EU high level agreements on political and macro-economic aspects,

    (7) EIB Financing Operations should be consistent with and support EU external policies including specific regional objectives and should contribute to the general objective of developing and consolidating democracy and the rule of law, the objective of respecting human rights and fundamental freedoms, and the observance of international environmental agreements to which the European Community or its Member States are parties. EIB Financing Operations should take place in countries complying with appropriate conditionality consistent with EU high level agreements on political and macro-economic aspects; the EIB, in conjunction with the Commission, should consider setting up an ex-post control mechanism to ensure that actions financed by the EIB outside the Community uphold the values of the EU,

    Justification

    To align with Article 181a of the Treaty, which provides the legal base for this proposal, and with the pertinent international environmental agreements signed by the EC or its Member States. It is important that the EIB’s overall strategy, and individual projects, are assessed against clear criteria reflecting European values, in order to ensure transparency in connection with the use of public funds for the sake of both European citizens and the citizens of non-Community countries.

    Amendment 2

    Recital 8 a (new)

     

     

    (8a) The information received by the European Parliament and the opportunities for scrutiny should also be strengthened, including by the transmission of strategic programming documents prepared by the Commission or by the EIB,

    Justification

    Enhanced cooperation between the Commission and the EIB should be complemented by increased involvement of the European Parliament which would contribute towards greater openness and transparency regarding the use of loan guarantees which ultimately represent a risk for the European taxpayer.

    Amendment 3

    Recital 8 b (new)

     

    (8b) The EIB should ensure that individual projects are subject to a Sustainability Impact Assessment carried out independently of the project sponsors and the EIB,

    Justification

    EIB lending has been criticised for an excessive focus on large-scale hydro-electric projects which damage the environment and displace local residents. Individual projects, in all regions covered by this decision, should be subject to independent Sustainability Impact Assessments to identify the economic, social and environmental effects of the project and propose accompanying measures to maximise the positive impacts and minimise any negative effects. Such assessments should provide much greater transparency.

    Amendment 4

    Recital 9

    (9) With regard to pre-accession countries, EIB financing in those countries should reflect the priorities established in the Accession and European Partnerships, in the Stabilisation and Association agreements and in negotiations with the EU. The focus of EU action in the Western Balkans should continue to shift progressively from reconstruction to pre-accession support. In this context, the EIB activity should also seek to encourage the institution building aspect, where relevant, in cooperation with other International Financial Institutions (“IFIs”) active in the region. Over the period 2007-2013, financing to candidate countries (Croatia, Turkey and the Former Yugoslav Republic of Macedonia) should increasingly take place under the Pre-Accession Facility made available by the EIB, which should be extended over time to cover the potential candidate countries in the Western Balkans in line with the progress of their accession process,

    (9) With regard to pre-accession countries, EIB financing in those countries should reflect the priorities established in the Accession and European Partnerships, in the Stabilisation and Association agreements and in negotiations with the EU. The focus of EU action in the Western Balkans should continue to shift progressively from reconstruction to pre-accession support. In this context, the EIB activity should in addition seek to encourage the institution building aspect, where relevant, in cooperation with other International Financial Institutions (“IFIs”) active in the region. In addition, it is important to encourage trade in the Western Balkans since it is a vital tool for stressing the importance of switching from reconstruction to pre-accession support and thus becoming more integrated in the EU. Over the period 2007-2013, financing to candidate countries (Croatia, Turkey and the Former Yugoslav Republic of Macedonia) should increasingly take place under the Pre-Accession Facility made available by the EIB, which should be extended over time to cover the potential candidate countries in the Western Balkans in line with the progress of their accession process,

    Amendment 5

    Recital 10

    (10) With regard to countries covered by the ENPI, the EIB should continue and consolidate its activities in the Mediterranean region with its focus on private sector development. As regards Eastern Europe, Southern Caucasus and Russia, the EIB should enhance its activities in Russia and Ukraine and prepare to enter other countries in the region as soon as they fulfil appropriate conditionality consistent with EU high level agreements with the country in question on political and macro-economic aspects. In this region, the EIB should finance projects of significant interest to the EU in transport, energy, telecommunications and environmental infrastructure. Priority should be given to projects on extended major Trans European Network axes, projects with cross-border implications for one or more Member States and major projects favouring regional integration through increased connectivity. In the environmental sector, the EIB should in Russia give particular priority to projects within the framework of the Northern Dimension Environmental Partnership. In the energy sector, strategic energy supply and energy transport projects are of particular importance. EIB Financing Operations in this region should be carried out in close cooperation with the European Bank for Reconstruction and Development (“the EBRD”), in particular according to the terms to be set out in a tripartite Memorandum of Understanding between the Commission, the EIB and the EBRD,

    (10) With regard to countries covered by the ENPI, the EIB should continue and consolidate its activities in the Mediterranean region with its focus on private sector development, on projects contributing to the achievement of the Millennium Development Goals, fostering sustainable development and enhancing environmental protection. As regards Eastern Europe, Southern Caucasus and Russia, the EIB should enhance its activities in Russia and Ukraine and prepare to enter other countries in the region as soon as they fulfil appropriate conditionality consistent with EU high level agreements with the country in question on political and macro-economic aspects. In this case also, activities should focus on private sector development. In this region, the EIB should finance projects of significant interest to the EU in transport, sustainable energy, telecommunications and environmental infrastructure. Priority should be given to projects favouring cross-border and regional integration through increased connectivity. In the environmental sector, the EIB should in Russia give particular priority to projects within the framework of the Northern Dimension Environmental Partnership. In the energy sector, sustainable energy supply projects are of particular importance. EIB Financing Operations in this region should be carried out in close cooperation with the European Bank for Reconstruction and Development (“the EBRD”), in particular according to the terms to be set out in a tripartite Memorandum of Understanding between the Commission, the EIB and the EBRD,

    Justification

    The EIB needs to be given direction with regard to the end objectives of its activities rather than just the means. In the energy sector, the emphasis should be on projects that offer long-term sustainable supply whilst pipeline projects need to be carefully evaluated so as to guard against negative environmental effects.

    Amendment 6

    Recital 11

    (11) With regard to countries covered by the DCECI, EIB financing in the Asian and Latin American countries will be progressively aligned with the EU cooperation strategy in those regions and be complementary to instruments financed by Community budgetary resources. The concept of “mutual interest”, so far limited in practice to the financing of projects involving EU companies, will be broadened to take into account the promotion of environmental sustainability and regional integration (such as transport, telecom and energy projects favouring interconnectivity). The EIB should endeavour to progressively expand its activities across a larger number of countries in those regions, including in the less prosperous countries. In Central Asia, the EIB should focus on major energy supply and energy transport projects with cross-border implications. EIB financing in Central Asia should be carried out in close cooperation with the EBRD, in particular according to the terms to be set out in a tripartite Memorandum of Understanding between the Commission, the EIB and the EBRD. To enhance visibility of EU intervention in Latin America, a specific amount should be identified for a Latin America facility,

    (11) With regard to countries covered by the DCECI, the EIB should continue and consolidate its activities with a focus on projects contributing to the achievement of the Millennium Development Goals, fostering sustainable development and enhancing environmental protection. EIB financing in the Asian and Latin American countries should be progressively aligned with the EU cooperation strategy in those regions and be complementary to instruments financed by Community budgetary resources. The concept of “mutual interest”, so far limited in practice to the financing of projects involving EU companies, should be broadened to take into account the promotion of environmental sustainability and regional integration (such as transport, telecom and energy projects favouring interconnectivity). The EIB should endeavour to progressively expand its activities across a larger number of countries in those regions, including in the less prosperous countries. In Central Asia, the EIB should focus on environmental infrastructure, sustainable energy supply and energy transport projects with cross-border implications. EIB financing in Central Asia should be carried out in close cooperation with the EBRD, in particular according to the terms to be set out in a tripartite Memorandum of Understanding between the Commission, the EIB and the EBRD. To enhance visibility of EU intervention in Latin America, a specific amount should be identified for a Latin America facility,

    Justification

    The need for environmental infrastructure projects is at least as great in Central Asia as in the Eastern Europe, the Southern Caucuses and Russia. This amendment ensures more consistent treatment between the countries covered by recital 10 and those by recital 11.

    Amendment 7

    Recital 16

    (16) Reporting by the EIB and the Commission on EIB Financing Operations should be strengthened. On the basis of the information received from the EIB, the Commission should report, on an annual basis, to the European Parliament and the Council on the EIB Financing Operations carried out under this Decision,

    (16) Reporting by the EIB and the Commission on EIB Financing Operations, as well as the EIB's own assessment capacities, should be strengthened. On the basis of the information received from the EIB, the Commission should produce its own assessment, drawing on independent, external expertise for major loan projects, and should report, on an annual basis, to the European Parliament and the Council on the EIB Financing Operations carried out under this Decision. This report should include an assessment of the contribution of the EIB Financing Operations to the achievement of the external policy objectives of the EU. The report should also list EIB supported loans according to their risk exposure as assessed by the EIB,

    Justification

    The Commission should not rely exclusively on information from the EIB in drawing up its project assessments and the annual report but be ready to obtain information from independent, external experts including those based in the countries where EIB financing operations have taken place. The annual report should set out clearly how the EIB has contributed to fulfilling the objectives set out in recitals 10 and 11 (as amended).

    Amendment 8

    Recital 17

    (17) The Community guarantee established by this Decision should cover EIB Financing Operations signed during a seven-year period beginning on 1 January 2007. In order to be able to take stock of the developments during the first half of that period, the EIB and the Commission should prepare a mid‑term review of the Decision,

    (17) The Community guarantee established by this Decision should cover EIB Financing Operations signed during a seven-year period beginning on 1 January 2007. In order to be able to take stock of the developments during the first half of that period, the EIB and the Commission should prepare a mid‑term review of the Decision. This review should be undertaken on the basis of a broad consultation of stakeholders concerning the impact of the EIB’s operations,

    Justification

    Public confidence in EIB operations and the use of European taxpayers’ funds to support them requires greater openness and transparency to ensure that the widest possible range of stakeholders are included in the review process.

    Amendment 9

    Recital 18

    (18) EIB Financing Operations should continue to be managed in accordance with the Bank’s own rules and procedures, including appropriate control measures, as well as with the relevant rules and procedures concerning the Court of Auditors and OLAF,

    (18) EIB Financing Operations should continue to be managed in accordance with the Bank’s own rules and procedures, including appropriate control measures, as well as with the relevant rules and procedures concerning the Court of Auditors and OLAF; the EIB should make sure, in accordance with Article 267 of the Treaty, which sets out its task, that the projects it finances cannot be entirely financed by the various means available in the individual Member States, and in particular that no distortion of competition with credit and investment institutions is generated,

    Justification

    This amendment seeks to ensure that the Decision does not generate any distortion of competition with credit and investment institutions.

    Amendment 10

    Recital 18 a (new)

     

    (18a) In the interests of transparency, which is a key value of the EU, the EIB should remunerate the EU's Community guarantee on financially reasonable terms laid down by the Commission. If, for any reason of a financial, technical or political nature, the cost of such remuneration is borne by the EU, it should be subject to a grant decision in line with the requirements of Community common law,

    Justification

    Transparency is a key value of the EU and there is no reason why an action of this kind should not be taken into account in the project value chain. Of course, there is nothing to stop the Union - whether for financial, technical or political reasons - from covering the cost of fair remuneration in respect of the guarantee by providing a grant for the same amount, but it must do so by means of budget decision in line with the provisions of Community common law on grants.

    Amendment 11

    Article 2, paragraph 2

    2. Individual countries shall become eligible under the regional ceilings and sub-ceilings as and when they fulfil appropriate conditionality consistent with EU high level agreements with the country in question on political and macro-economic aspects. The Commission, in consultation with the EIB, shall determine when an individual country has fulfilled the appropriate conditionality and shall notify the EIB thereof.

    2. Individual countries shall become eligible under the regional ceilings and sub-ceilings as and when they fulfil appropriate conditionality consistent with EU policies and high level agreements with the country in question on political and macro-economic aspects. The Commission, in consultation with the EIB, shall determine when an individual country has fulfilled the appropriate conditionality and shall notify the EIB thereof after having consulted the European Parliament on the basis of a clear statement of its reasons, it being understood that belonging to any European Partnership Agreement implies eligibility.

    Justification

    As we have seen in discussion of the interim trade agreement with Turkmenistan, political and economic conditionality is a highly debatable issue which cannot be regarded as merely a technical matter. Instead decisions about the eligibility of individual countries should be subject to genuine parliamentary scrutiny.

    Amendment 12

    Article 2, paragraph 4

    4. In the event of serious concerns over the political or economic situation in a specific country, the Commission and the EIB may decide to suspend EIB Financing Operations in such country.

    4. In the event of serious concerns over the political or economic situation in a specific country, the Commission and the EIB may decide to suspend EIB Financing Operations in such country after having consulted the European Parliament.

    Justification

    As with the previous amendment, the political nature of the decision to grant or deny access to EIB lending with a Community guarantee means that appropriate Parliamentary scrutiny is required.

    Amendment 13

    Article 4, paragraph 1 a (new)

     

    1a. The European Parliament shall be kept fully informed of this dialogue, including by means of transmission of Commission country and regional strategy papers and the EIB strategic planning documents and project pipelines.

    Justification

    Again an enhanced level of parliamentary involvement will contribute to greater openness and transparency of EIB activity and so to greater public confidence in the impact of the projects it is supporting.

    Amendment 14

    Article 6, paragraph 2 a (new)

     

    2a. In the interests of transparency, which is a key value of the EU, the EIB shall remunerate the EU's Community guarantee on financially reasonable terms laid down by the Commission. If, for any reason of a financial, technical or political nature, the cost of such remuneration is borne by the EU, it must be subject to a grant decision in accordance with the requirements of Community law.

    Justification

    Transparency is a key value of the EU and there is no reason why an action of this kind should not be taken into account in the project value chain. Of course, there is nothing to stop the Union - whether for financial, technical or political reasons - from covering the cost of fair remuneration in respect of the guarantee by providing a grant for the same amount, but it must do so by means of budget decision in line with the provisions of Community common law on grants.

    Amendment 15

    Article 6, paragraph 2 b (new)

     

    2b. If a Head of State, a government member, a member of a Member State's parliament, a member of the Commission or a Member of the European Parliament is directly or indirectly associated with an entity benefiting from EIB activity covered by the Community guarantee, the Community guarantee decision shall be the subject of a special report drawn up by the bank's verification committee. This paragraph shall not apply to current Community guarantee agreements concluded on normal terms which, by virtue of their subject or their financial implications, are of no significance to any of the parties involved.

    Justification

    The EIB is a means of exercising political influence and the way it operates must fulfil all the transparency requirements which are based on the values, and are essential prerequisites for the credibility, of the European Union and its satellite organisations. The proposed provision already exists in the domestic law of some Member States, establishing transparency requirements for the management of enterprises in the private sector and, in some cases, the public sector. The provision meets the requirements of good governance. In view of the complex technical, financial and political links which can arise, it is appropriate for a safeguard of this kind to be introduced.

    Amendment 16

    Article 7, paragraph 1

    1. The Commission shall report annually to the European Parliament and the Council on the EIB Financing Operations carried out under this Decision. The report shall include an assessment of the contribution of the EIB Financing Operations to the fulfilment of the external policy objectives of the European Union, taking into account the operational objectives of the EIB.

    1. The Commission shall report annually to the European Parliament and the Council on the EIB Financing Operations carried out under this Decision. The report shall include an assessment of the contribution of the EIB Financing Operations to the fulfilment of the external policy objectives of the European Union and in particular to the achievement of the Millennium Development Goals, and shall list EIB supported loans according to their risk exposure as assessed by the EIB.

    Justification

    The annual report should give priority to the contribution that is being made towards the fulfilment of the Millennium Development Goals, given that these are specific, internationally agreed targets.

    Amendment 17

    Article 7, paragraph 1 a (new)

     

    1a. The annual report shall include an evaluation of the main concerns raised in the Sustainability Impact Assessments of loan projects referred to in recital (8b) and the recommendations made by the Commission to the EIB for the mitigation of such concerns.

    Justification

    This will contribute an independent element to the assessment process as well as contribute to greater openness and transparency.

    Amendment 18

    Article 7, paragraph 2 a (new)

     

    2a. The Commission shall also obtain whatever outside expertise is required to enable it to make an independent assessment of the contribution of the EIB Financing Operations.

    Justification

    This will also contribute an independent element to the assessment process as well as contribute to greater openness and transparency.

    PROCEDURE

    Title

    Proposal for a Council decision granting a Community guarantee to the European Investment Bank against losses under loans and guarantees for projects outside the Community

    References

    COM(2006)0324 – C6-0275/2006 – 2006/0107(CNS)

    Committee responsible

    BUDG

    Opinion by
      Date announced in plenary

    INTA
    5.9.2006

    Draftsman
      Date appointed

    Alain Lipietz
    12.7.2006

    Discussed in committee

    11.7.2006

    11.9.2006

    3.10.2006

    23.10.2006

     

    Date adopted

    23.10.2006

    Result of final vote

    +:

    –:

    0:

    11

    0

    0

    Members present for the final vote

    Jean-Pierre Audy, Enrique Barón Crespo, Daniel Caspary, Christofer Fjellner, Georgios Papastamkos, Peter Šťastný, Johan Van Hecke, Zbigniew Zaleski

    Substitute(s) present for the final vote

    Elisa Ferreira, Małgorzata Handzlik, Margrietus van den Berg

    Substitute(s) under Rule 178(2) present for the final vote

     

    • [1]  Not yet published in OJ.

    PROCEDURE

    Title

    Proposal for a Council decision granting a Community guarantee to the European Investment Bank against losses under loans and guarantees for projects outside the Community

    References

    COM(2006)0324 – C6‑0275/2006 – 2006/0107(CNS)

    Date of consulting Parliament

    29.8.2006

    Committee responsible
      Date announced in plenary

    BUDG

    5.9.2006

    Committee(s) asked for opinion(s)
      Date announced in plenary

    AFET 5.9.2006

    DEVE
    5.9.2006

    CONT

    5.9.2006

    INTA
    5.9.2006

     

    Not delivering opinion(s)
      Date of decision

    AFET

    13.9.2006

    DEVE

    11.7.2006

    CONT

    13.7.2006

     

     

    Enhanced cooperation
      Date announced in plenary

     

     

     

     

     

    Rapporteur(s)
      Date appointed

    Esko Seppänen

    20.9.2006

     

    Previous rapporteur(s)

    Esko Seppänen

     

    Simplified procedure – date of decision  Date of decision

     

    Legal basis disputed
      Date of JURI opinion

    BUDG
    27.9.2006

    JURI
    11.10.2006

     

    Financial endowment amended
      Date of BUDG opinion

     

     

     

    Parliament to consult European Economic and Social Committee
    – date decided in plenary

     

    Parliament to consult Committee of the Regions – date decided in plenary

     

    Discussed in committee

    10.10.2006

    20.10.2006

     

     

     

    Date adopted

    21.11.2006

    Result of final vote

    +:

    –:

    0:

    24

    Members present for the final vote

    Reimer Böge, Simon Busuttil, Brigitte Douay, Bárbara Dührkop Dührkop, James Elles, Ingeborg Gräßle, Louis Grech, Nathalie Griesbeck, Catherine Guy-Quint, Anne E. Jensen, Alain Lamassoure, Janusz Lewandowski, Vladimír Maňka, Mario Mauro, Jan Mulder, Gérard Onesta, Giovanni Pittella, Wojciech Roszkowski, Antonis Samaras, Esko Seppänen, László Surján, Kyösti Virrankoski, Ralf Walter

    Substitute(s) present for the final vote

    Margarita Starkevičiūtė

    Substitute(s) under Rule 178(2) present for the final vote

     

    Date tabled

    21.11.2006

     

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