REPORT on the proposal for a Council decision on the eligibility of Central Asian countries under Council Decision 2006/1016/EC granting a Community guarantee to the European Investment Bank against losses under loans and loan guarantees for projects outside the Community
16.7.2008 - (COM(2008)0172 – C6‑0182/2008 – 2008/0067(CNS)) - *
Committee on Budgets
Rapporteur: Esko Seppänen
DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
on the proposal for a Council decision on the eligibility of Central Asian countries under Council Decision 2006/1016/EC granting a Community guarantee to the European Investment Bank against losses under loans and loan guarantees for projects outside the Community
(COM(2008)0172 – C6‑0182/2008 – 2008/0067(CNS))
(Consultation procedure)
The European Parliament,
– having regard to the Commission proposal to the Council (COM(2008)0172),
– having regard to Article 181a of the EC Treaty, pursuant to which the Council consulted Parliament (C6‑0182/2008),
– having regard to its resolution of 20 February 2008 on an EU Strategy for Central Asia[1],
– having regard to the resolution on the EU Strategy for a new Partnership with Central Asia adopted by the European Council on 21-22 June 2007,
– having regard to case C-155/07 pending before the Court of Justice of the European Communities,
– having regard to Rule 51 of its Rules of Procedure,
– having regard to the report of the Committee on Budgets and the opinion of the Committee on International Trade (A6‑0317/2008),
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 the Parliament again if it intends to amend the Commission proposal substantially;
5. Asks the Commission to withdraw its proposal, should Decision 2006/1016/EC currently pending before the Court of Justice of the European Communities be annulled;
6. Instructs its President to forward its position to the Council and Commission.
Amendment 1 Proposal for a decision Recital 3 a (new) | |
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Text proposed by the Commission |
Amendment |
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(3a) There is an acknowledged need for EIB lending in Central Asia to focus on energy supply and energy transport projects which also serve EU energy interests. |
Amendment 2 Proposal for a decision Recital 3 b (new) | |
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Text proposed by the Commission |
Amendment |
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(3b) Regarding energy supply and transport projects, EIB financing operations in Central Asia should be consistent with and support the EU policy objectives of diversification of energy sources and the Kyoto requirements, and of enhancement of environmental protection. |
Justification | |
To align the decision with the climate and environmental policy goals of the EU and agreements signed by the EC or its Member States in the frame of the UNFCCC. It is important that the EIB’s regional strategy, and individual projects, are assessed against clear criteria reflecting European values and international commitments. | |
Amendment 3 Proposal for a decision Recital 3 c (new) | |
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Text proposed by the Commission |
Amendment |
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(3c) All EIB financing operations in Central Asia 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. |
Justification | |
To align with Article 181a of the Treaty, which provides one of the legal bases 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 regional strategy, and individual projects, are assessed against clear criteria reflecting European values. | |
Amendment 4 Proposal for a decision Recital 3 d (new) | |
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Text proposed by the Commission |
Amendment |
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(3d) 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 | |
Individual projects, especially in a region with high rates and serious environmental problems such as Central Asia, 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, including for those most directly affected. | |
Amendment 5 Proposal for a decision Recital 4 | |
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Text proposed by the Commission |
Amendment |
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The macro-economic conditions prevailing in the Central Asian countries, and in particular the situation of external finances and debt sustainability, have improved in the recent years as a result of strong economic growth and prudent macroeconomic policies, and they should therefore be allowed access to financing from the EIB; |
The macro-economic conditions prevailing in the Central Asian countries, and in particular the situation of external finances and debt sustainability, have improved in the recent years as a result of strong economic growth and prudent macroeconomic policies, and they should therefore be allowed access to financing from the EIB; there should nevertheless be pre-conditions for their eligibility for EIB loans : these countries must show clear progress in establishing the rule of law, freedom of speech and the media, and freedom of NGOs and in achieving the Millennium Development Goals as specified in the EU Partnership and Cooperation Agreements; they should not be subject to EU sanctions for human rights violations and they should have made real progress in terms of the human rights situation as required by the European Parliament's resolution of 20 February 2008 on an EU Strategy for Central Asia1. ___________________ 1 Texts Adopted, P6_TA(2008)0059. |
Amendment 6 Proposal for a decision Recital 5 a (new) | |
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Text proposed by the Commission |
Amendment |
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(5a) Lending activities should support the EU's policy objective to promote stability in the region. |
Amendment 7 Proposal for a decision Article 1 a (new) | |
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Text proposed by the Commission |
Amendment |
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Article 1a |
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The guarantee agreement between the Commission and the EIB, as foreseen in Article 8 of Council Decision 2006/1016/EC, shall lay down the detailed provisions and procedures relating to the Community guarantee and shall contain conditions with clear benchmarks regarding respect for human rights..
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Justification | |
It must be principally stated that EU policy goals with regard to human rights must not be undermined by Community guarantees for loans by the EIB in countries. An interim agreement of the EU with Turkmenistan on trade and trade-related matters is pending since 2006, due to accusations of systemic violations of fundamental rights of this country. EBRD operations in this country is focused on the promotion of private sector activities, particularly in the SME and micro-finance area provided that it can be shown that the proposed investments are not effectively controlled by the state. EIB loans should be based on the same principles. | |
Amendment 8 Proposal for a decision Article 1 b (new) | |
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Text proposed by the Commission |
Amendment |
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Article 1b |
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On the basis of the information received from the EIB, the Commission shall produces an assessment and a report, on an annual basis, to be forwarded to the European Parliament and the Council, on the EIB financing operations carried out under this Decision. The report should include an assessment of the contribution of the EIB financing operations to the achievement of the external policy objectives of the EU and especially the contribution 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. |
Justification | |
To align with Article 181a of the Treaty, which provides one of the legal bases 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 regional strategy, and individual projects, are assessed against clear criteria reflecting European values. | |
Amendment 9 Proposal for a decision Article 1 c (new) | |
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Text proposed by the Commission |
Amendment |
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Article 1c |
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The EIB shall ensure that framework agreements between the Bank and the countries concerned are made available to the public and that adequate and timely objective information is made available to enable them to play a full part in the decision making process. |
Justification | |
Framework agreements between the bank and the respective Central Asian countries should be subject to greater transparency standards order to promote democratic process and civil society participation in the decision making processes. This could be the real added value of the EIB investments for the democratisation process in Central Asia. | |
- [1] Texts Adopted, P6_TA(2008)0059.
EXPLANATORY STATEMENT
Introduction
This proposal deals with the eligibility of the five Central Asia countries for European Investment Bank (EIB) financing under Community guarantee, according to Council Decision 2006/1016/EC.
This proposal is the first one that modifies the list of countries eligible for EIB financing under Community guarantee since the Decision was adopted in 2006 by the Council.
Legal basis
The rapporteur wishes to recall that, in the course of the legislative procedure (2006/0107(CNS)) for the adoption of Council Decision 2006/1016/EC granting a Community guarantee to the EIB against losses under loans and loan guarantees for projects outside the Community, the issue of the legal basis was raised.
The European Parliament questioned the relevance of Article 181a of the Treaty as a legal basis and proposed a dual legal basis, Article 181a together with Article 179 (development cooperation, under the codecision procedure), since many countries eligible according to Annex 1 are developing countries under the OECD list.
As a consequence, Parliament challenged the choice of the legal basis in the Court of Justice (case C-155/07), invoking that, as developing countries, both articles should apply (Article 179 should at least apply when referring to those eligible countries that are developing ones). However, Parliament acknowledged that Decision 2006/1016/EC was valid until it has been annulled by the Court.
Case C-155/07 is still pending in the Court of Justice. The hearing was held on 14 May 2008. The opinion of the Advocate General, not binding but giving already an indication on Parliament's chances of winning the case, is scheduled for 26 June 2008, and judgment will arrive later.
The rapporteur believes that Parliament should not amend the legal basis of the proposal (Article 181, which is valid under the law as it stands) and, in the light of loyal cooperation between Institutions, wait for the judgment of the Court of Justice without trying to block, by any legal or procedural means, the adoption of the proposal.
Financial ceiling
The 2006 Council Decision provides for financial ceilings for EIB financing operations by broad regions. According to Article 1 (c) (ii), Asia is allocated a maximum amount of EUR 1 billion. This sub-ceiling for Asia cannot be modified without amending the Council Decision.
The EIB has been consulted on the proposal and did not raise any objection, especially as regards the ceiling.
Should it appear that the sub-ceiling for Asia is insufficient for financing operations in the region and especially in the five countries that would become eligible for EIB loans under Community guarantee, or should any other sub-ceiling appear not adapted to the specific needs in some other developing regions, the mid-term review of the Council Decision could create an opportunity for adjustment.
Actually, according to Article 9 of the Council Decision, the Commission shall present by 30 June 2010 at the latest a mid-term review on the implementation of the Decision and shall propose, if necessary, to modify it. The final report on the implementation of the Decision shall be presented by 31 July 2013 at the latest.
Appropriateness of granting eligibility to Central Asia countries:
The five Central Asia countries were already listed as eligible countries in the annex of the 2006 Council Decision, but were subject to the approval of the Council, according to Article 2 (2), following a political and macro-economic assessment.
At its meeting of 21-22 June 2007, the European Council adopted the EU Strategy for a new partnership with Central Asia, as a framework for increased and intensified cooperation with these countries. The European Council stressed, inter alia, that "the EIB should play an important role in financing projects of interest for the EU in Central Asia".
In its resolution adopted on 20 February 2008 (2007/2102(INI))[1], Parliament urged "the Council to authorise the EIB to extend its credit support to Central Asia, in cooperation with the European Bank for Reconstruction and Development, which is already active in the region".
In its proposal for a Council Decision and its Annex, the Commission develops further the reasons for granting eligibility to Central Asia for EIB financing under Community guarantee: high macro-economic performances of the region, despite some disparities between countries; improved investment climate, but with further efforts still needed; strategic and energetic importance of Central Asia for the EU which seeks better stability in the region, etc.
From a strategic point of view, the crucial alternative for energy supply routes that these countries would represent for the European Union shall be secured via a stabilisation process that this eligibility for loans under Community guarantee would favour.
Nevertheless, your rapporteur wishes to express his circumspection regarding the political appropriateness of granting this eligibility. At the moment, these countries do not fulfil even the basic requirements regarding democracy, the rule of law, political pluralism or media freedom, and recent developments in each of these countries give rise to serious concern. That being said, the eligibility of these five countries, to be granted as a group of countries in order to improve the stability of the region, should be approved.
- [1] P6_TA-PROV(2008)0059, A6- 0503/2007
OPINION of the Committee on International Trade (15.7.2008)
for the Committee on Budgets
on the proposal for a Council decision on the eligibility of Central Asian countries under Council Decision 2006/1016/EC granting a Community guarantee to the European Investment Bank against losses under loans and loan guarantees for projects outside the Community
(COM(2008)0172 – C6‑0182/2008 – 2008/0067(CNS))
Draftsman: 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 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 delivered a detailed opinion on 30 November 2006[1].
The Commission proposal for a Council decision on the eligibility of Central Asian for the Community guarantee scheme to the EIB extends the list of eligible countries in Council Decision 2006/1016/EC to Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, making available up to EUR 1 billion in EIB loan contracts. This follows a request of the European Parliament in its opinion on the Community Guarantees to the EIB. It is in line with the EU strategy for a new partnership with Central Asia, adopted by the European Council at its meeting of 21/22 June 2007, which states that the "European Investment Bank (EIB) should play an important role in financing projects of interest to the EU in Central Asia''.
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 market standard. Accordingly, a high demand for EIB credits in the region of Central Asia can be expected.
The draftsperson considers that the Community guarantee to the EIB for lending in Central Asia deserves the 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 in the Commission proposal for a Council decision:
· in four out of the five countries of Central Asia, the human rights situation is far below the standards laid down by the Organization for Security and Cooperation in Europe (OSCE). Uzbekistan and Turkmenistan in particular systematically violate fundamental rights and lack any democratic progress. The European Parliament on 20 February 2008 confirmed its support for the sanctions against Uzbekistan imposed by the EU. It further stressed that Turkmenistan must make progress in key human rights and democracy areas in order for the EU to be able to move ahead with the Interim Agreement on Trade and Trade-related matters, such as investment (2007/2102(INI)). Accordingly, it calls for the differentiation in the EU's policy regarding its approach to the countries of the region to be based in particular on the human rights situation in each country. Instead, the Commission proposal does not differentiate criteria for EIB lending among the Central Asia countries;
· on 20 February 2008, the European Parliament also called on both the Council and the Commission "to ensure that human rights issues should carry equal weight with the EU's robust approach to energy, security and trade". Instead, the Commission proposes a strong focus on energy supply;
· the "gift" of lower interest rates should, in principle, accrue only 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 the Central Asia countries does not consistently feature EU policy objectives and favours large scale projects, especially in the energy supply/transport sector. This is to the detriment of the EU policy objective of diversification of energy sources and the Kyoto requirements and should be rectified. It most probably also undermine the European Parliament's call for the "discontinuation of public support, via export credit agencies and public investment banks, for fossil fuel projects" and its demand that "the European Investment Bank take account of the climate change implications of the funded projects when making or guaranteeing loans and impose a moratorium on funding until sufficient data are available"[2];
· in addition, the strong focus on energy supply and transport for EIB lending operations in Central Asia neglects evidence by the World Bank and other financial institutions that, as a rule, extractive industry projects, under the condition of a lack of good governance principles in resource-rich but poor countries, lead to increasing poverty. The energy supply focus therefore undermines the EU Strategy for a new partnership with Central Asia of June 2007, in which poverty eradication is described as the main priority of European Community bilateral assistance for the period 2007-2013. Given that all Central Asia countries qualify for assistance delivered under the DCI, your draftsman is of the opinion that EIB loans must be consistent with the European Consensus on Development and its overarching objectives, i.e. poverty eradication and achievement of the Millennium Development Goals (MDGs).
It must be noted that the Commission proposes Article 181a of the EU Treaty as the legal basis for the Council decision on the eligibility of Central Asian countries under Council Decision 2006/1016/EC granting a Community guarantee to the EIB against losses under loans and guarantees for projects outside the Community. With regard to this Council Decision 2006/1016/EC the European Parliament contested the presentation of the proposal under Article 181a of the Treaty and proposed a double legal base, Article181a together with Article 179 (development cooperation, under codecision procedure), since many countries eligible according to Annex 1 are developing countries under the OECD list. The case is pending in the Court of Justice.
Your draftsman is not amending the legal base of the decision, conferring this issue to the rapporteur in the lead committee.
AMENDMENTS
The Committee on International Trade calls on the Committee on Budgets, as the committee responsible, to incorporate the following amendments in its report:
Amendment 1 Proposal for a decision Recital 3 a (new) | |
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Text proposed by the Commission |
Amendment |
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(3a) All EIB financing operations in Central Asia 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. |
Justification | |
To align with Article 181a of the Treaty, which provides one of the legal bases 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 regional strategy, and individual projects, are assessed against clear criteria reflecting European values. | |
Amendment 2 Proposal for a decision Recital 3 b (new) | |
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Text proposed by the Commission |
Amendment |
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(3b) All EIB financing operations in Central Asia should be consistent with and support the EU policy objective of contributing to the achievement of the Millennium Development Goals in Central Asian countries. |
Justification | |
To align the decision with the poverty eradication policy goals of the EU and declarations signed by the EC or its Member States in the frame of the UN. It is important that the EIB’s regional strategy, and individual projects, are assessed against clear criteria reflecting European values and international commitments. | |
Amendment 3 Proposal for a decision Recital 3 c (new) | |
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Text proposed by the Commission |
Amendment |
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(3c) Regarding energy supply and transport projects, all EIB financing operations in Central Asia should be consistent with and support the EU policy objectives of diversification of energy sources and compliance with the Kyoto requirements, and should enhance environmental protection. |
Justification | |
To align the decision with the climate and environmental policy goals of the EU and agreements signed by the EC or its Member States in the frame of the UNFCCC. It is important that the EIB’s regional strategy, and individual projects, are assessed against clear criteria reflecting European values and international commitments | |
Amendment 4 Proposal for a decision Recital 3 d (new) | |
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Text proposed by the Commission |
Amendment |
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(3d) The EIB should ensure that residents in the area concerned receive adequate and timely information so that they have the possibility of playing a full part in the decision making process. |
Justification | |
Individual projects, especially in a region with high rates and serious environmental problems such as Central Asia, 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, including for those most directly affected | |
Amendment 5 Proposal for a decision Recital 3 e (new) | |
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Text proposed by the Commission |
Amendment |
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(3e) On the basis of the information received from the EIB, the Commission should present an assessment and a 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 evaluation of the contribution of the EIB financing operations to the achievement of the external policy objectives of the EU. |
Justification | |
An annual report by the Commission should set out clearly how the EIB has contributed to fulfilling the objectives set out in recitals 3 a, b, c, d (as amended) | |
Amendment 6 Proposal for a decision Recital 4 | |
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Text proposed by the Commission |
Amendment |
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(4) The macro-economic conditions prevailing in the Central Asian countries, and in particular the situation of external finances and debt sustainability, have improved in the recent years as a result of strong economic growth and prudent macroeconomic policies, and they should therefore be allowed access to financing from the EIB. |
(4) The macro-economic conditions prevailing in the Central Asian countries, and in particular the situation of external finances and debt sustainability, have improved in the recent years as a result of strong economic growth and prudent macroeconomic policies, and they should therefore be allowed access to financing from the EIB, under the condition that they are not subject to EU sanctions for human rights violations, which would exclude access to EIB financing. |
Justification | |
It must be principally stated that EU policy goals with regard to human rights must not be undermined by Community guarantees for loans by the EIB in countries, on which the EU has imposed sanctions | |
PROCEDURE
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Title |
The eligibility of Central Asian countries under Council Decision 2006/1016/EC |
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References |
COM(2008)0172 – C6-0182/2008 – 2008/0067(CNS) |
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Committee responsible |
BUDG |
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Opinion by Date announced in plenary |
INTA 8.5.2008 |
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Drafts(wo)man Date appointed |
Alain Lipietz 5.5.2008 |
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Discussed in committee |
24.6.2008 |
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Date adopted |
15.7.2008 |
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Result of final vote |
+: –: 0: |
26 1 0 |
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Members present for the final vote |
Graham Booth, Daniel Caspary, Françoise Castex, Christofer Fjellner, Béla Glattfelder, Ignasi Guardans Cambó, Jacky Hénin, Syed Kamall, Caroline Lucas, Marusya Ivanova Lyubcheva, Erika Mann, Helmuth Markov, Georgios Papastamkos, Tokia Saïfi, Peter Šťastný, Robert Sturdy, Daniel Varela Suanzes-Carpegna, Iuliu Winkler, Corien Wortmann-Kool |
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Substitute(s) present for the final vote |
Jean-Pierre Audy, Eugenijus Maldeikis, Rovana Plumb, Salvador Domingo Sanz Palacio, Carl Schlyter, Zbigniew Zaleski |
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Substitute(s) under Rule 178(2) present for the final vote |
Emanuel Jardim Fernandes, Francesco Ferrari |
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- [1] OJ C 316E, 22.12.2006, p. 109
- [2] P6_TA-PROV(2007)0576 of 29.11.2007
PROCEDURE
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Title |
The eligibility of Central Asian countries under Council Decision 2006/1016/EC |
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References |
COM(2008)0172 – C6-0182/2008 – 2008/0067(CNS) |
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Date of consulting Parliament |
25.4.2008 |
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Committee responsible Date announced in plenary |
BUDG 8.5.2008 |
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Committee(s) asked for opinion(s) Date announced in plenary |
AFET 8.5.2008 |
INTA 8.5.2008 |
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Not delivering opinions Date of decision |
AFET 11.6.2008 |
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Rapporteur(s) Date appointed |
Esko Seppänen 20.9.2004 |
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Discussed in committee |
25.6.2008 |
16.7.2008 |
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Date adopted |
16.7.2008 |
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Result of final vote |
+: –: 0: |
37 0 0 |
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Members present for the final vote |
Laima Liucija Andrikienė, Richard James Ashworth, Reimer Böge, Herbert Bösch, Simon Busuttil, Daniel Dăianu, Valdis Dombrovskis, Brigitte Douay, James Elles, Hynek Fajmon, Vicente Miguel Garcés Ramón, Salvador Garriga Polledo, Ingeborg Gräßle, Louis Grech, Nathalie Griesbeck, Catherine Guy-Quint, Jutta Haug, Ville Itälä, Anne E. Jensen, Sergej Kozlík, Alain Lamassoure, Vladimír Maňka, Jan Mulder, Cătălin-Ioan Nechifor, Gianni Pittella, Margaritis Schinas, Esko Seppänen, László Surján, Gary Titley, Helga Trüpel, Kyösti Virrankoski, Ralf Walter |
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Substitute(s) present for the final vote |
Thijs Berman, Bárbara Dührkop Dührkop, Michael Gahler, Juan Andrés Naranjo Escobar, José Albino Silva Peneda |
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