The European Parliament,

–   having regard to the report from the Commission to the European Parliament and Council on the implementation of macro-economic assistance to third countries in 2001 (COM(2002) 352),

–   having regard to the Communication from the Commission to the Council and the European Parliament on EC/Euratom lending and guarantee capacity for external actions (COM (2002) 20),

–   having regard to the report from the Commission to the Council and to the European Parliament on the borrowing and lending activities of the Community in 2001 (COM(2002) 685),

–   having regard to the report from the Commission on the stabilisation and Association process for South East Europe, Second Annual Report (COM(2003) 139),

–   having regard to the special Report No 1/2002 from the Court of Auditors concerning macro-financial assistance (MFA) to third countries and structural adjustment facilities (SAF) in the Mediterranean countries, together with the Commission's replies(1),

–   having regard to Rule 163 of its Rules of Procedure,

–   having regard to the report of the Committee on Industry, External Trade, Research and Energy and the opinions of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy and the Committee on Budgets (A5&nbhy;0192/2003),

A.   whereas after more than twelve years of implementing macro-financial assistance to third countries in an ad hoc manner, without a solid legal base, nor a well-defined framework, the time is now ripe to review its present status with the aim of proposing modifications to this Community instrument in an enlarged European Union;

B.   whereas until now the MFA has been an untied and undesignated balance-of-payments support from the European Community, usually in the form of either medium or long term loans, and combined with grants when considered necessary; noting with interest that the total MFA to third countries from 1990 to 2002, according to the Commission, amounted to EUR 5 313 million, of which EUR 4 134,5 million has been disbursed, EUR 1 048,5 million has not been disbursed, EUR 2 211 million repaid and EUR 1 457 outstanding;

C.   considering the fact that Community MFA has so far been granted on a case-by-case basis to a selective number of non-member States with which the EU has maintained close political, economic and commercial links, while taking into account their geographical proximity, and has helped recipient countries undertake economic reforms and structural changes consistent with the approach of the IMF and the World Bank;

D.   pointing out that the European Community is willing to contribute to the stability in the regions proximate to the European Union, for which macro-financial assistance has become an important emergency instrument; noting that lending operations to third countries can be an effective instrument with limited cost to the general budget of the Community, and that the amount of defaults has been relatively low in comparison to the overall lending capacity, while the provisional figures for the technical adjustment of the financial perspective project a ceiling of EUR 217 million in current prices;

E.   noting that, instead of a uniform framework for financial assistance, the EU has many different arrangements, i.e. macrofinancial assistance (for the Balkans and Eastern Europe), structural adjustment aid (third countries in the Mediterranean region), general financial aid (the ACP developing countries in Africa, the Caribbean and the Pacific), assistance with the budget of the Palestinian authority, which is a special case, and, according to the proposal for a new regulation governing EU cooperation with Asian and Latin American countries(2), currently under consideration by the Council and Parliament, a new framework will soon be established for them as well. Recalling, in this respect, the request to divide the framework for the cooperation with these two regions into two separate regulations, as established in Parliament's resolution of 15 November 2001(3);

F.   whereas Article 308 of TEC has been its legal base, implying ad hoc unanimous decisions by the Council on a Commission proposal and after consultation with the European Parliament;

G.   recalling that the Guarantee Fund mechanism has successfully fulfilled its role to shield the general budget of the Community from the risk relating to possible defaults; taking the view that it remains imperative to ensure that the shielding capacity of the Guarantee Fund is maintained;

H.   stressing that unilateral decisions from the Council on the use of the Guarantee Fund are not acceptable and that Parliament must be given a right of supervision;

I.   whereas the culmination of the choice of legal base together with the active involvement of the Economic and Financial Committee in the design of MFA, the selection of recipient countries and its assistance to the Commission implementing MFA, have all resulted in the relatively lengthy implementation of these decisions - the time which elapses from the date of the inception of MFA to the first disbursement is usually six months and the final disbursement may take up to two years;

J.   whereas the effort of the Council to attach eligibility and conditionality criteria, dating back to the first MFA in 1990, is worth noting; the so-called Genval principles do not take account of the evolving nature of the EU, in particular its new frontiers after enlargement, the implications of having twenty-five Member States deciding by unanimity and the work in progress of the European Convention in the field of international economic relations;

K.   whereas the European Parliament gave the Nice Treaty a guarded reception, in particular in relation to its Article 181a on Community economic, financial and technical cooperation measures with third countries, on the grounds, well-known to the Heads of State or Governments, that qualified majority voting (QMV) in the Council should be accompanied by codecision with the European Parliament, and not with consultation as the TEC Article 181a provides for;

L.   whereas the draft Article 13 and, in particular, its paragraph 4 of the Constitutional Treaty proposed to the European Convention (CONV 724/03) a 'shared competence' to be exercised by the Union and the Member States in the area of 'development cooperation and humanitarian aid';

M.   considering that financial assistance from the EU to third countries can perform an important function in certain circumstances, primarily in seeking to stabilise previously conflict-stricken areas and in promoting processes of economic and political change when there appear to be good opportunities to facilitate progress through the provision of additional resources;

N.   regretting the decision of the Intergovernmental Conference to attach Declaration No 10 to the Nice Treaty - irrespective of its legal status - which excludes MFA on grounds of balance of payments difficulties from the decision-making procedure under Article 181a EC, thus essentially maintaining MFA within the remit of Article 308 EC;

O.   whereas the draft Articles 216 and 217, Part III of the Constitutional Treaty (CONV 725/03), would provide the new legal base - if the Constitutional Treaty were to be endorsed by the next Intergovernmental Conference and ratified by the Member States - for 'economic, financial and technical cooperation measures' and for 'urgent financial aid'.

P.   emphasising that financial assistance is one of many instruments which the EU can employ to achieve the objectives mentioned in recital M; stressing that each choice of instrument must be properly considered and that financial assistance must be coordinated with aid and the political dialogue with the countries in question and subject to a strict conditionality so as to achieve maximum effect;

Q.   whereas the evolution of macro-financial assistance from the EC to a third country, in terms of the modalities of preparation, implementation of decisions, monitoring of assistance and accountability, has resembled 'budgetary support' practices rather than balance of payments assistance;

R.   whereas macro-economic assistance from the Union to third countries, as it has been implemented by the EU Institutions, under the terms of the Constitutional Treaty, would fall in the competence of Article 216 on economic, financial and technical cooperation measures intended to confront economic, financial or social crises ;

S.   emphasising the importance of a rational allocation of tasks between the International Monetary Fund, the EU and its Member States in the matter of macro-financial assistance to third countries;

T.   whereas the need for an evaluation of balance of payments support differs from the need for an evaluation of budgetary support; assistance to the balance of payments covers only existing deficits often caused by external factors, whereas budget support covers expenditures that are still to be effectuated and therefore need to be monitored and evaluated closely;

1.  Considers the current legal arrangement concerning the design, modalites of preparation, implementation of decisions, transparency and accountability of Community macro-financial assistance to third countries to be inefficient due to its lengthy decision procedure at the Council level, ineffective due to the fact that disbursement of funds may take up to two years and lacking a solid legal base owing to the insistence of the Council to use TEC Article 308 as its legal base;

2.  Calls upon the Commission, as the institution vested with the right to propose the appropriate legal instrument in the field of MFA, to consider submitting a legislative proposal which will take account of the suggestions made in this resolution;

3.  Stresses that each choice of instrument must be properly considered and that macro- financial assistance must be coordinated with other Community aid in the context of a political dialogue with the countries in question so that maximum effect can be achieved;

4.  Is aware of the fact that balance of payments difficulties are an important indicator and indispensable criterion for granting Community MFA; however, the objective goes beyond the macro-financial sphere, offering stimuli for economic and political stability in the recipient country;

5.  Believes, therefore, that MFA and other EC instruments, operational in the recipient country, should contribute, each in its own right, to the economic and political stability in the country concerned; being supplementary to resources of the IMF and other multilateral donors, the objective of the MFA instrument is to offer assistance to countries in crisis which are in close proximity to the EU, and should be considered as complementary to EC instruments for structural aid and prevention of economic, financial and socially-driven crises;

6.  Agrees with the ECOFIN Council that clearly-defined criteria are needed, which should be duly met prior to commencing the first phase of MFA; consequently the so-called Genval criteria of eligibility should be appropriately modified to take account of the recommendations by the Court of Auditors' Special Report N°1/2002, enabling efficient and effective scrutiny by the European Parliament and national parliaments;

7.  Stipulates that MFA must not degenerate into remuneration of poor policy pursued by the recipient country;

8.  Considers the Council's conclusions of 8 October 2002 on MFA to be useful and correct and is of the view that these conclusions could be stated as criteria for granting MFA to third countries in the forthcoming legal instrument called for in this resolution, paying attention to the following modifications:

9.  Believes that MFA, as evolved over the last twelve years and as implemented by the EU institutions, falls under the scope of the draft Article 216 on economic, financial and technical cooperation to be concluded between the EU and third countries, of the Constitutional Treaty as proposed to the Convention; recognises, however, that until ratification of the Constitutional Treaty is completed by Member States, a solution to the current ad hoc arrangement should be found; invites the Commission, therefore, to submit a proposal having a dual legal base meeting two criteria:

10.  Calls upon its committee responsible for the budget - and given the interinstitutional agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure(4) - to consider the possibility of deferring any approval of budgetary appropriations concerned with MFA until a proper proposal called for in the preceding paragraphs is submitted to the European Parliament and the Council by the end of October 2003;

11.  Reminds the Council and the Commission of the provisions of the Treaty concerning TEC Article 192; recalls that Rule 59 of its Rules of Procedures could be invoked by a subsequent resolution by Parliament in case of the Commission's failure to examine the need for an appropriate proposal in the field of MFA;

12.  Remains convinced that a reduction of the provisioning rate from 9% to 8% would not undermine the shielding capacity of the Guarantee Fund and would increase the lending capacity without having to change the ceiling of the financial perspective; is also in favour of reducing the blanket guarantee given to the European Investment Bank (EIB) from 65% to 50%; points out that a reduction of the blanket guarantee would have no negative consequences on the EIB, given that in practice the totality of each loan is guaranteed until 65% of the total portfolio is reached;

13.  Notes with concern that only an amount of EUR 170.4 million were used to provision the Guarantee Fund in 2002 and that, consequently, an amount of EUR 42.51 million remained unused; recalls that a much more ambitious use of the lending capacity was still envisaged for 2002 at the end of the 2001 exercise; regrets that the EIB adopted a scaled-down programming for 2002 which further delayed the implementation of some facilities into the future;

14.  Calls on the Commission, therefore, to submit a formal proposal that includes revised parameters for the use of the Guarantee Fund, which on the one hand do not reduce the shielding capacity of the Fund for the Community Budget, but on the other hand increase the lending capacity of the Community;

15.  Instructs its President to forward this resolution to the Council, the Commission and the parliaments of the Member States.

(1) OJ C 121, 23.5.2002, p. 1. (2) OJ C 331 E, 31.12.2002, p. 12. (3) OJ C 140 E, 13.6.2002, p. 569. (4) OJ C 172, 18.6.1999, p. 1.