This report from the Commission concerns financial instruments supported by the general budget according to Article 140(8) of the Financial Regulation as at 31 December 2013. The report focuses on all centrally-managed Financial Instruments for internal and external Union policies supported by the general budget according to Article 140(8) of the Financial Regulation as of 31 December 2013. To recall, financial instruments, including loans or guarantees with greater risk capacity, represent a smart way to finance the real economy, and boost growth and employment. They can achieve financial leverage (multiplying scarce budgetary resources by attracting private and public funds to support EU policy objectives), policy leverage (incentivising entrusted entities and financial intermediaries to pursue EU policy objectives through alignment of interest), and institutional leverage (benefiting from the expertise of the actors involved in the implementation chain). This report is the first to be prepared under the new requirements of the Financial Regulation . It is intended to provide an informative overview of how the taxpayer's money has been used and of the progress made in the implementation of the Financial Instruments as of 31 December 2013. The report is complemented by a Commission Staff Working Document which provides specific information on individual financial instruments, their progress made in implementation and their environment in which they operate. The report highlights that important outcomes have been achieved through the use of Financial Instruments in the years 2007-2013 , and they will play an even more significant role in the 2014-2020 Multi-annual Financial Framework (MFF). The budgetary authorities have expressed their political commitment and increased the necessary resources . Furthermore, the Financial Regulation has been extended with a dedicated chapter, setting up the appropriate regulatory framework for Financial Instruments' design, management and reporting. The main conclusions of the report are : (1) The implementation of the 2007-2013 centrally-managed financial instruments has been instrumental in helping to alleviate financial market failures and leverage the positive effects of EU-wide actions . For example, in the 2007-2013 period, the main EU-level financial instruments dedicated to SME support (CIP-GIF, CIP-SMEG 07 and RSI) and micro-SME support (EPMF) with an overall contribution (EU commitments) of more than EUR 1.6 billion, mobilised lending of nearly EUR 17.9 billion and also supported equity investments of about EUR 2.8 billion, thus enhancing access to finance for more than 336 000 SMEs. (2) The achieved leverage is equal to 5 for Equity Instruments, and ranges from 4.8 to 31 for Guarantee instruments, from 10 to 259 for Risk-sharing instruments, from 1.54 to 158 for Dedicated Investment Vehicles, from 5 to 7 for Financial Instruments in the Enlargement Countries, from 5 to 27.6 for Financial Instruments in Neighbourhood Countries and Countries covered by the Development Cooperation Instrument. With the experience gained in the course of implementation during the 2007-2013 period, and in the context of programme evaluations and audits, several lessons have been learned on how to further improve the design and management of financial instruments:

best practices have been capitalised on the design and the management of the new generation of financial instruments; further, Financial Instruments will now cover all main types of final recipients over the full funding cycle and will include offer of both pro- and counter-cyclical instruments to respond flexibly to market needs, based on demand-driven implementation; effectiveness and efficiency have been enhanced through fewer instruments with larger volumes, ensuring critical mass in full consistency with State aid rules; alignment of interest with entrusted entities and financial intermediaries will be further achieved through fees and incentives, and risk sharing.

Since 2013 is the last year of commitment for the 2007-2013 programming period for a number of instruments, a final evaluation assessing the extent to which objectives have been achieved has not been finalised. More qualitative and in-depth feedback on the attainment of objectives will be available within one year and will be duly reported upon.

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EUR-Lex

This Staff Working Document (SWD) constitutes an Annex to the report of the Commission to the European Parliament and the Council on financial instruments supported by the general budget according to Article 140(8) of the Financial Regulation as at 31 December 2013. It provides specific information on individual financial instruments, their progress made in implementation and their environment in which they operate.

Financial instruments are a proven way to achieve EU policy objectives. They use EU funds to support economically viable projects and attract very significant volumes of public and private financing. By injecting money into the real economy, financial instruments contribute to the achievement of the EU policy objectives enshrined in the Europe 2020 Strategy, notably in terms of employment, innovation, climate change and energy sustainability, education and social inclusion.

The report gives detailed information on each financial instrument.

Investment Facility for Central Asia (IFCA) and Asian Investment Facility (AIF)

Based on the first results from the NIF (Neighbourhood Investment Facility), the Commission proposed to set up investment facilities targeting countries under the Development Cooperation Instrument (DCI) Regulation, initially in Central Asia, Asia, and Latin America.

Two facilities were set up for Asia : the Investment Facility for Central Asia (IFCA) in 2010 and the Asian Investment Facility (AIF) in 2011.

These two facilities have been modelled on the NIF and have the same types of objectives and scope as those defined in the NIF General Framework.

The IFCA's main purpose is to promote additional investments and key infrastructures with a priority focus in the first implementation period on energy and environment.

The AIF's main purpose is to promote additional investments and key infrastructure with a priority focus on climate change and ‘green’ investments in the areas of environment and energy as well as in SME's and social infrastructure.

The IFCA and the AIF were established for the duration of the Financial Instrument, i.e., until 31 December 2013 and may be extended further following decisions on the next Multiannual Financial Framework. The initial budgetary breakdown was EUR 50 million between the two.

By the end of 2013, the EU decided to allocate an additional budget of EUR 30 million to the AIF, of which EUR 15 million from the Multi-Annual Indicative Programme 2011-2013 for Pakistan, and EUR 15 million from the Multi-Annual Indicative Programme 2011-2013.

Commission approval was given by the end of 2013 on a EUR 20.56 million of reinforcement, which will serve to cover eventual approvals of the IFCA Board, and the associated estimated fees.

Multilateral finance institutions such as the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) are eligible for both Facilities.

In general terms the IFCA and the AIF have proven to be effective instruments , in particular by leveraging significant financial resources through the Union contributions under both Facilities.

The Latin American Investment Facility (LAIF)

The LAIF was officially launched by the Commission and the Spanish Presidency of the European Union in 2010.

The LAIF's main purpose is to promote additional investments and infrastructures in the transport, energy, and environment sectors and to support social sector such as health and education, and private sector development in the Latin American countries.

LAIF was established until 31 December 2013 and the budget envelope amounts to EUR 196.65 million. The Facility may be extended further following decisions on the new Multiannual Financial Framework (2014-2020).

In general terms, the Latin American Investment Facility (LAIF) has proven to be an effective instrument within the European External Policy.

The G lobal Energy Efficiency and Renewable Energy Fund (GEEREF)

This Fund aims to promote energy efficiency and renewable energy in developing countries and economies in transition. The Union contribution was raised to EUR 101 million (Union budget + EDF).

EUR-Lex
SWD(2014)0335

PURPOSE: the establishment of a financing instrument for development co-operation.

LEGISLATIVE ACT: Regulation (EC) No 1905 of the European Parliament and of the Council establishing a financing instrument for development cooperation.

BACKGROUND: with the adoption of the financial perspectives for 2007 -2013 , a new framework for planning and delivering external assistance to third countries has been adopted the purpose of which is to make the Community’s assistance more effective and streamlined. This new framework repeals a plethora of existing legislative acts and replaces them with more concise, focused legislation. The other recently approved Instruments are:

An Instrument for Pre-Accession The European Neighbourhood and Partnership Instrument An Instrument for development co-operation An Instrument for Stability An Instrument for the promotion of democracy and human rights world-wide An Instrument for co-operation with industrialised and other high income countries and territories

To recall, in September 2004, the Commission tabled a proposal for a Regulation of the European Parliament and of the Council establishing a financing instrument for development cooperation and economic cooperation. After trilateral consultations between the Commission, the European Parliament and the Council, however, it was decided to split that proposal into three separate texts: i) the present Regulation establishing a financing instrument for development co-operation; ii) a Regulation establishing a financing instrument for the promotion of democracy and human rights world wide ; and iii) a Regulation establishing a financing instrument for cooperation with industrialised and other high-income countries and territories based on Article 181 of the TEU.

CONTENT: the purpose of this Regulation is the establishment of a financing instrument specifically for development co-operation. Total financing will amount to EUR 16 897 million between 2007 and 2013. The Community’s policy in the field of development is based on a number of objectives namely, poverty reduction, sustainable economic and social development, the general integration of developing countries into the world economy and political dialogue. One major plank of this policy is guided by the Millennium Development Goals (MDGs) (such as the eradication of extreme poverty and huger) adopted by the United Nations in September 2000. The Regulation specifies and emphasises in its opening recitals that a political environment which guarantees peace and stability, respect for human rights, fundamental freedoms, democratic principles, the rule of law, good governance and gender equality is fundamental to long-term development.

Based on the above the overall purpose of this Regulation is to offer Community financial assistance that supports cooperation with the developing countries, territories and regions. These countries and regions will be defined as the list of aid recipients of the OECD/DAC. The exact list of partner countries and regions can be found in Annex to the Regulation. The following countries and regions have been listed:

Latin America (Brazil, Bolivia, Uruguay etc.) Asia: (Afghanistan, Bangladesh, China, Vietnam etc) Central Asia: (Mostly ex-Soviet States such as Kazakhstan, Tajikistan etc.) Middle East (Iran, Iraq Yemen, Saudi Arabia etc.) and South Africa .

Under the objectives and general principles heading of the Regulation, the overarching objective of cooperation will be the eradication of poverty in partner countries and regions as well as the promotion of democracy. Cooperation will, therefore, focus on consolidating and supporting democracy, the rule of law, human rights and fundamental freedoms, good governance and gender equality; it will foster sustainable development; encourage developing countries integration into the world economy; preserve and improve the quality of the environment; and lastly seek to strengthen the relationship between the Community and partner countries/regions.

In implementing the Regulation, a differentiated approach will be adopted depending on the development contexts and needs to be pursued so that partner countries or regions are provided with specific, tailor-made cooperation, based on their own needs, strategies, priorities and assets. Least developed countries and low income countries will be given priority in terms of overall resource allocation. The actual financial assistance will be channelled through geographic and thematic programmes. In brief they can be described as follows:

Geographic programmes : Cooperation will be determined on a geographical basis and will be given to the countries of Latin America, Asia, Central Asia, the Middle East and South Africa. The types of actions foreseen under geographic programmes include: poverty eradication; achieving the Millennium Development Goals; addressing population needs in the field of health and education; social cohesion and employment; governance, democracy, human rights and institutional support; trade and regional integration; environmental sustainable development; water and energy development; infrastructure and transport; and post crisis situations in fragile states. The Regulation then singles out each of the regions (South America, Asia etc) focusing on their unique pace of development.

Implementation of the geographic programmes will be based on strategy papers and a multiannual indicative programme for each partner country or region drawn up by the Commission. These strategy papers form the basis for annual action programmes.

Thematic programmes : The thematic programmes will be subsidiary to the geographic programme and more specific in nature. For example, they will focus on activities that could be of interest to a group of partner countries but which is not determined by geography (such fighting HIV/Aids). Actions will be of a multi-regional nature or could be cross-cutting actions such as pilot project or actions where there is no geographic programme. The Regulation goes on to list a number of specific actions that could apply to thematic programmes such as: Investing in people (gender mainstreaming; good health, culture); Environmental and sustainable management of natural resources including energy; non-State actors and local authorities; food security; migration and asylum; and ACP Sugar Protocol countries. (A list of countries eligible to benefit from the ACP Sugar Protocol can be found in Annex III to the Regulation)

In the case of thematic programmes the Commission will be responsible for drawing up thematic strategy papers and to adopt action programmes accordingly. Provisions are also foreseen for exceptional circumstances, in which case the Community may offer support in the form of special measures not covered by the strategy papers or multiannual indicative programmes.

For implementation purposes the following entities will be eligible for funding: the partner countries, regions and their institutions; decentralised bodies such as municipalities, provinces etc.: international organisations; EU agencies; Community bodies; local authorities; companies, firms and private organisations; financial institutions that promote private investment; non-State actors and natural persons; NGO’s; and scientific organisations. The type of funding foreseen includes projects and programmes though funding will also be given in the form of sectoral support. Funds will also be made available to the EIB or other financial intermediaries and could take the form of interest-rate subsidies or debt-relief.

To conclude, the Commission will be responsible for evaluating the development cooperation instrument and will be expected to monitor and review the programmes regularly. It will also be responsible for preparing annual reports.

ENTRY INTO FORCE: 28 December 2006.

APPLY: 1 January 2007 – 31 December 2013.

REPEALED: With the adoption of this Regulation some thirteen legislative acts will be repealed.

Regulation 2006/1905
OJ L 378 27.12.2006, p. 0041

03663/2006

Debate in Parliament

The European Parliament adopted a resolution drafted by Gay MITCHELL (EPP-ED, IE) approving the Council's common position on the proposed regulation establishing a financing instrument for development cooperation.

T6-0544/2006

A6-0448/2006

A6-0448/2006

The committee adopted the report by Gay MITCHELL (EPP-ED, IE) approving unamended - under the 2nd reading of the codecision procedure - the Council's common position on the proposed regulation establishing a financing instrument for development cooperation.

PE380.770

03593/2006

The Commission supports the negotiated common position which is the outcome of intensive negotiations between the three institutions. It is in line with the essential objectives and the underlying approach of the Commission’s initial proposal.

The Commission makes it clear that it wanted an overall agreement on the package of external instruments: first reading agreement on the European Neighbourhood and Partnership Instrument (ENPI), the Instrument for Stability (IfS) and an agreement on the Instrument for Pre-Accession Assistance (IPA) on the condition of a separate Human Rights Instrument and a new architecture involving a maximum of three instruments out of the DCECI (Industrialised Countries Instrument (ICI), a geographic Development Cooperation Instrument (DCI) and possibly a thematic DCI). The Commission could accept splitting the DCECI, provided that a broad definition of development cooperation was ensured. It agreed to the changes related to the structure of the DCI in order to achieve a global compromise on the overall architecture of the external action instruments.

After intensive tripartite discussions between the Parliament, the Presidency and the Commission, an agreement was reached on a negotiated common position. In particular, a compromise was reached on the outstanding issues, which had previously been defined by Parliament as ‘breaking points’ and relate to eligibility of assistance as Official Development Assistance (ODA), sectoral spending targets, the structure of the thematic programmes and the dialogue with the Parliament on the draft programming documents. The following issues were the subject of protracted negotiations which resulted in finely balanced compromises between the three institutions:

- structure and scope of the thematic programmes : a percentage was introduced in the Thematic programme ‘Non-state actors and local authorities’, according to which at least 85% of the funding foreseen under this thematic programme will be allocated to non-state actors. It was agreed not to include percentages in the thematic programmes ‘Investing in people’, since the Commission introduced a benchmark on health and education in its declaration concerning Article 5;

- spending targets/ benchmarking : Council and Commission made clear that spending targets were not acceptable for them (against the principle of ownership and donor coordination), whilst the favoured spending targets to encourage increased allocations to social sectors with a particular focus on basic health and education. It was agreed that Parliament would no longer insist on spending targets in the legal text if the Commission proposed in a declaration an enlarged benchmark of 20% for basic and secondary education and basic health in relation to country programmes covered by the DCI as a whole. The existing 35% benchmark on social infrastructure and services would be dropped. In the declaration, the Commission also prioritises basic health and education, and social cohesion as a whole in its programming and implementation role for country programmes. It will also include an MDG profile in the programming document, and will encourage partner countries to prioritise social sectors in their development strategies. Finally, the Commission will ensure increased monitoring, evaluation and reporting on these objectives, with particular attention to social sectors and MDGs.

- ODA-eligibility and non-developing ENPI countries : the text now specifies the percentage of the thematic programmes which would be reported as Official Development Assistance (ODA), namely 90%. The non-developing ENPI countries (Russia and Israel) will be excluded ex officio, i.e. financial assistance to these countries will not count against the 10% which is not ODA. The margin of 10% gives the Commission the necessary flexibility to implement the Thematic Programmes on migration and environment, which provide for actions that are not reportable as ODA. Consequently, the current text strikes a fine balance between full ODA eligibility and the necessary margin of flexibility.

The Commission, in a declaration attached to the Regulation, will confirm its commitment that all the geographic measures and the overwhelming majority of thematic actions financed under the DCI will be eligible for ODA and that it does not intend to derogate from this practice;

- dialogue with Parliament on draft programming documents : a number of amendments related to Parliament’s participation in the programming process, which were not compatible with the Comitology Decisions (Council Decision 1999/468/EC as amended by Council Decision 2006/512/EC). The Commission will confirm by letter its commitment to enter into a regular dialogue with Parliament as laid down in the declarations on democratic scrutiny attached to the Interinstitutional Agreement. In addition, the text makes clear that the Commission shall inform and have regular exchanges of views with the Parliament.

This approach will allow for the entry into force of the DCI in January 2007, thereby avoiding any gap in the legal framework for the delivery of assistance.

COM(2006)0628
EUR-Lex

The Council’s common position recalls that Parliament’s amendments sought to reduce the scope of the legislation to developing countries and base it on a single Treaty provision (Article 179). Parliament also wished to transform the proposed Regulation into a procedural instrument and favoured policy priorities being established by separate co-decided Regulations. (Please see the summary dated 18/05/2006.)

The Council felt that transforming the proposed Regulation into a procedural instrument requiring several new Commission proposals was not acceptable. Council and Commission both believed that such an approach would be incompatible with the stated aim of simplifying the structure of the Community’s external financing instruments. After intensive discussions between the Council, the European Parliament and the Commission, an understanding on the architecture of the Regulation was reached within the framework of an overall agreement on the package of external financing instruments. Further to this understanding, a proposal for a Regulation on cooperation with industrialised countries was separated from the initial Commission proposal. The common position, reflecting this understanding between all Institutions involved, now provides for a Regulation establishing a financing instrument for development cooperation, based solely on Article 179 of the EC Treaty and is a response to a large number of the concerns voiced in the European Parliament's first-reading amendments.

Accordingly, the main points of the common position are as follows:

- a separate instrument for democracy and human rights : the thematic programme on human rights and democracy is no longer included in the instrument for development cooperation (DCI). A new Commission proposal for a Regulation on establishing a financing instrument for the promotion of

democracy and human rights was adopted on 26 June 2006 (please see COD/2006/0116 );

- a single legal base: this change made it possible to delete the reference to Article 181a(1) of the EC Treaty, and to base the Regulation solely on Article 179(1);

- a separate instrument for cooperation with industrialised countries : the Presidency proposal for a Regulation on cooperation with industrialised countries was presented in the Council COASI working group for the first time on 19 July 2006 and has been forwarded to Parliament for its opinion;

- increased focus on development of objectives and principles : the text lays down the general objectives of development cooperation in line with Title XX of the Treaty establishing the European Community and the European Consensus on Development. It refers to the mainstreaming of cross-cutting issues and policy coherence and reflects the most recent commitments on aid effectiveness, such as donor coordination. The Commission must have regular exchanges of views with Parliament;

- geographical and thematic programmes: the Council, very much like the European Parliament in its opinion at first reading, was concerned at the lack of policy content in the initial Commission proposal. The latter had merely stated that measures should be financed under geographical or thematic programmes, which would be drawn up by the Commission. The Council felt that it would be more appropriate to introduce policy content in the provisions of the Regulation. Therefore, Articles 5 to 10 of the common position set the policy for geographical programmes, while Articles 11 to 16 provide for the content of thematic programmes. In particular, the horizontal Article 5 applies to all geographic articles and outlines actions in areas of cooperation which correspond to the areas for Community action in the European Consensus on Development. The other articles on geographic cooperation focus on the specific situation in the geographical region/country. The different regions/countries are: Latin America, Asia, Central Asia, Middle East and South Africa . Each article on specific cooperation has a cross reference to the horizontal Article 5, making it clear that the actions mentioned in Article 5 apply to all regions while others mentioned under Articles 6 to 10 are additional.

A similar approach was followed for thematic programmes. Horizontal Article 11 sets out the principles applying to all thematic programmes. Specific content is laid down in the following provisions, detailing the content of the various thematic programmes: investing in people, environment and sustainable management of natural resources including energy, non State actors and local authorities in development, food security, and migration and asylum;

- sugar Protocol ACP countries : following up on Regulation 266/2006/EC, provision was made for Community assistance to ACP Sugar Protocol countries aimed at supporting their adjustment process due to the reform of the common organization of the market in sugar;

- financial provisions: the financial reference amount for the DCI, over the period 2007-2013, is EUR 16 897 million as indicated in the common position. This corresponds to the amount for the earlier DCECI (EUR 17 053 million) from which the reference amounts for the new Human Rights Instrument (EUR 449 million) and for the new Instrument on Cooperation with Industrialised Countries (EUR 172 million) have been deducted. The indicative amount of EUR 465 million, which in the initial proposal was included in ENPI, has now been added in the total for thematic programmes, to finance activities that benefit ENPI countries. The indicative amounts allocated to each geographical region and to each thematic programme are laid down in Annex 4, which forms an integral part of the Regulation. It should be noted that the Commission has made a declaration on Article 38. A percentage was introduced in the Thematic Programme ‘Non-state actors and local authorities’, according to which at least 85% of the funding foreseen under the thematic programme will be allocated to non state actors;

- review, entry into force and application: the common position provides that the regulation will apply from 1 January 2007 to 31 December 2013. Moreover, there is an obligation upon the Commission to present a report to the European Parliament and the Council evaluating the implementation of the Regulation, including the indicative financial allocations set out in Annex IV, not later than 31 December 2010.

In conclusion, the Council considers that its common position, which is the result of extensive preparatory work and negotiations since 2005 and which is supported by the Commission, addresses the concerns expressed by the European Parliament. As a result of frequent and intensive contacts and exchanges of views between the respective Presidencies of the Council and key players of the European Parliament, a significant convergence of positions between the two Institutions emerged during the process. This convergence has finally led to compromise solutions, reflected in the Common Position, for all outstanding issues.

11944/2/2006
OJ C 301 12.12.2006, p. 0051-0084 E

The Council’s common position recalls that Parliament’s amendments sought to reduce the scope of the legislation to developing countries and base it on a single Treaty provision (Article 179). Parliament also wished to transform the proposed Regulation into a procedural instrument and favoured policy priorities being established by separate co-decided Regulations. (Please see the summary dated 18/05/2006.)

The Council felt that transforming the proposed Regulation into a procedural instrument requiring several new Commission proposals was not acceptable. Council and Commission both believed that such an approach would be incompatible with the stated aim of simplifying the structure of the Community’s external financing instruments. After intensive discussions between the Council, the European Parliament and the Commission, an understanding on the architecture of the Regulation was reached within the framework of an overall agreement on the package of external financing instruments. Further to this understanding, a proposal for a Regulation on cooperation with industrialised countries was separated from the initial Commission proposal. The common position, reflecting this understanding between all Institutions involved, now provides for a Regulation establishing a financing instrument for development cooperation, based solely on Article 179 of the EC Treaty and is a response to a large number of the concerns voiced in the European Parliament's first-reading amendments.

Accordingly, the main points of the common position are as follows:

- a separate instrument for democracy and human rights : the thematic programme on human rights and democracy is no longer included in the instrument for development cooperation (DCI). A new Commission proposal for a Regulation on establishing a financing instrument for the promotion of

democracy and human rights was adopted on 26 June 2006 (please see COD/2006/0116 );

- a single legal base: this change made it possible to delete the reference to Article 181a(1) of the EC Treaty, and to base the Regulation solely on Article 179(1);

- a separate instrument for cooperation with industrialised countries : the Presidency proposal for a Regulation on cooperation with industrialised countries was presented in the Council COASI working group for the first time on 19 July 2006 and has been forwarded to Parliament for its opinion;

- increased focus on development of objectives and principles : the text lays down the general objectives of development cooperation in line with Title XX of the Treaty establishing the European Community and the European Consensus on Development. It refers to the mainstreaming of cross-cutting issues and policy coherence and reflects the most recent commitments on aid effectiveness, such as donor coordination. The Commission must have regular exchanges of views with Parliament;

- geographical and thematic programmes: the Council, very much like the European Parliament in its opinion at first reading, was concerned at the lack of policy content in the initial Commission proposal. The latter had merely stated that measures should be financed under geographical or thematic programmes, which would be drawn up by the Commission. The Council felt that it would be more appropriate to introduce policy content in the provisions of the Regulation. Therefore, Articles 5 to 10 of the common position set the policy for geographical programmes, while Articles 11 to 16 provide for the content of thematic programmes. In particular, the horizontal Article 5 applies to all geographic articles and outlines actions in areas of cooperation which correspond to the areas for Community action in the European Consensus on Development. The other articles on geographic cooperation focus on the specific situation in the geographical region/country. The different regions/countries are: Latin America, Asia, Central Asia, Middle East and South Africa . Each article on specific cooperation has a cross reference to the horizontal Article 5, making it clear that the actions mentioned in Article 5 apply to all regions while others mentioned under Articles 6 to 10 are additional.

A similar approach was followed for thematic programmes. Horizontal Article 11 sets out the principles applying to all thematic programmes. Specific content is laid down in the following provisions, detailing the content of the various thematic programmes: investing in people, environment and sustainable management of natural resources including energy, non State actors and local authorities in development, food security, and migration and asylum;

- sugar Protocol ACP countries : following up on Regulation 266/2006/EC, provision was made for Community assistance to ACP Sugar Protocol countries aimed at supporting their adjustment process due to the reform of the common organization of the market in sugar;

- financial provisions: the financial reference amount for the DCI, over the period 2007-2013, is EUR 16 897 million as indicated in the common position. This corresponds to the amount for the earlier DCECI (EUR 17 053 million) from which the reference amounts for the new Human Rights Instrument (EUR 449 million) and for the new Instrument on Cooperation with Industrialised Countries (EUR 172 million) have been deducted. The indicative amount of EUR 465 million, which in the initial proposal was included in ENPI, has now been added in the total for thematic programmes, to finance activities that benefit ENPI countries. The indicative amounts allocated to each geographical region and to each thematic programme are laid down in Annex 4, which forms an integral part of the Regulation. It should be noted that the Commission has made a declaration on Article 38. A percentage was introduced in the Thematic Programme ‘Non-state actors and local authorities’, according to which at least 85% of the funding foreseen under the thematic programme will be allocated to non state actors;

- review, entry into force and application: the common position provides that the regulation will apply from 1 January 2007 to 31 December 2013. Moreover, there is an obligation upon the Commission to present a report to the European Parliament and the Council evaluating the implementation of the Regulation, including the indicative financial allocations set out in Annex IV, not later than 31 December 2010.

In conclusion, the Council considers that its common position, which is the result of extensive preparatory work and negotiations since 2005 and which is supported by the Commission, addresses the concerns expressed by the European Parliament. As a result of frequent and intensive contacts and exchanges of views between the respective Presidencies of the Council and key players of the European Parliament, a significant convergence of positions between the two Institutions emerged during the process. This convergence has finally led to compromise solutions, reflected in the Common Position, for all outstanding issues.

11944/2/2006

SP(2006)2902

Package of legislative proposals following the Interinstitutional Agreement on

budgetary discipline and sound financial management

The conclusion on 17 May 2006 by the Commission, the Council and the European Parliament of the agreement on the 2007-2013 financial framework (Interinstitutional Agreement on budgetary discipline and sound financial management – please refer to procedure ACI/2004/2099 ) marks a real success for Europe, providing a stable financial framework for the political priorities of the enlarged Union for the next seven years. It is now up to the institutions and Member States to ensure that the financial resources available are used and implemented as well as possible. Action at European level must contribute true added value to that taken at national, regional or local level and must have an optimum impact on each European player. The Commission is ready to play a full role in all these areas.

The agreement marks a decisive step forward towards the ultimate objective of providing the Union with operational programmes by the beginning of 2007. Work must now be continued on each legislative act. To this end, the Commission intends to continue to provide momentum and act as a facilitator, as it has been doing since the start of the negotiations.

As part of the negotiations on the 2007-2013 financial framework, in October 2005 the European Parliament, the Council and the Commission adopted a joint declaration in which they undertook to continue work on the legislative proposals currently being discussed and then, once the interinstitutional agreement had been adopted and on the basis of amended proposals by the Commission, to reach agreement on each of these proposals. Thus, in accordance with Article 250(2) of the EC Treaty and in order to facilitate this phase for each legislative act, the Commission has adopted a total of 30 proposals, 26 of which are amended and 4 new.

The proposals amended as a result of the IIA are as follows:

Programmes concerning the external policy of the Union and development cooperation:

Ø COD/2004/0219 ( European Neighbourhood and Partnership Instrument )

Ø COD/2004/0220 ( development co-operation and economic co-operation instrument )

Solidarity and Management of Migration Flows Programme (JHA):

Ø COD/2005/0046 ( European Refugee Fund )

Ø COD/2005/0047 ( External borders fund, 2007-2013 )

Ø COD/2005/0049 ( European Return Fund )

Fundamental Rights and Justice Programme (JHA):

Ø COD/2005/0037/A (DAPHNE )

Ø COD/2005/0037/B ( drugs prevention and information )

RDT Framework Programme and specific programmes :

Ø COD/2005/0043 ( RDT Framework Programme )

Ø CNS/2005/0044 (Nuclear Research Programme )

Ø CNS/2005/0184 ( Joint Research Centre - JRC )

Ø CNS/2005/0185 ( Transnational cooperation specific programme )

Ø CNS/2005/0186 ( Specific programme Ideas, frontier research )

Ø CNS/2005/0187 (S pecific programme supporting researchers )

Ø CNS/2005/0188 (RDT Capacities specific programme )

Ø CNS/2005/0189 ( specific programme direct actions by the Joint Research Centre JRC )

Ø CNS/2005/0190 ( fusion energy, nuclear fission and radiation protection specific programme)

Employment and social cohesion Programme: COD/2004/0158

Programmes in the fields of youth and education:

Ø COD/2004/0152 ( Youth )

Ø COD/2004/0153 ( Education – lifelong learning )

Consumer Protection and Public Health Framework programme:

Ø COD/2005/0042/A ( Public health )

Ø COD/2005/0042/B ( Consumers )

Programme in the fields of energy, environment and transport :

Ø COD/2004/0218 ( LIFE+)

Ø COD/2004/0154 ( TransEuropean networks in the areas of energy and transport )

Ø CNS/2004/0221 ( Decommissioning of the Bohunice nuclear plant )

GALILEO ( radio-navigation by satellite ): COD/2004/0156

In terms of new proposals , the Commission has already submitted three in the area of agriculture and rural development policy and fisheries and aquaculture policy:

Ø CNS/2006/0081 ( fisheries and aquaculture )

Ø CNS/2006/0082 ( rural development )

Ø CNS/2006/0083 ( common agricultural policy ).

Certain legislative acts do not form part of this package of measures, in particular those on which political agreement has been reached since 17 May. For these measures, the Commission has played a full part in helping to bring about agreement between the arms of the legislative authority. The same applies to the acts for which conclusion of the interinstitutional agreement does not modify the Commission’s original proposal. For all the others, which are included in the package presented, the changes proposed by the Commission take account of the content of the interinstitutional agreement adopted, either in a simplified form, where the financial resources allocated to each programme must be adapted, or in a more detailed form where the structure or even the content of the act must be revised. It should also be noted that four of the amended proposals contain amendments already voted on by the European Parliament at first reading and that one proposal has been divided into two amended proposals in response to a request by the Council and the European Parliament, although Parliament has not yet proceeded to a first reading of this proposal.

Based on these amended proposals, the Commission calls on the European Parliament and the Council to continue their discussions of these proposals and conclude them as soon as possible in order to ensure that all the legal instruments are available in time for the effective launch of the programmes in January 2007.

COM(2006)0239
EUR-Lex

On 1 October 2004, the Commission published a proposal for a European Parliament and Council Regulation establishing a financing instrument for development cooperation and economic cooperation for the period 2007-2013. This Regulation would cover all the EU’s development cooperation policy with the exception of neighbourhood and pre-accession policy: refer to the Commission’s initial proposal ( see résumé of 01/10/2004 ).

At the time, the planned allocation for this instrument for the period in question amounted to EUR 44.229 billion covering both development cooperation with the ACP countries, third countries in Asia, Latin America and some of the countries in the Mediterranean area (Iraq, Iran, Gulf States and Yemen), some of the Caucasus countries (Kazakhstan, Kirghizstan, Uzbekistan, Tajikistan and Turkmenistan), other cross-cutting cooperation policies (thematic programmes), cooperation with industrialized countries (OECD countries that are not EU members) and actions in the area of democracy and human rights (formerly the European initiative for democracy and human rights).

Following the signature, on 17 May 2006, of the interinstitutional agreement (IIA) concerning the financial perspectives for the period 2007-2013, the Commission adopted new proposals concerning new financial instruments in the area of external policy taking into account, in particular, of the revised amounts for each of the envisaged programmes in light of the IIA.

In parallel, the European Council decided, on 16 December 2005, not to budgetize the European Development Fund (EDF), excluding, as a result, the ACP area from the current financial instrument. The ACP countries (Sub-Saharan Africa, the Caribbean, Pacific and Indian Ocean) will however benefit from funding in the context of thematic and complementary geographic programmes.

Regarding financial resources, the new allocation of the amounts for the development and economic cooperation instrument for the period will be EUR 17.053 billion, taking into account both the new geographical coverage of this instrument and the IIA (for more details, see financial statement).

It should be noted that on the European Parliament’s request, this instrument has itself been split into 3 distinct proposals:

a Regulation establishing a new financing instrument to promote democracy and human rights worldwide ( COD/2006/0116 ); a Regulation establishing a financing instrument for development cooperation and economic cooperation based on Article 179 of the TEC (this proposal); and a Regulation establishing a financial instrument for cooperation with industrialised and other high-income countries and territories (2007-2013), based on Article 181A of the TEC ( CNS/2006/0807 ).

These complementary financial instruments will share the amounts initially planned for the cooperation instrument: i.e. EUR 17.053 billion.

COM(2004)0629/2
EUR-Lex

On 1 October 2004, the Commission published a proposal for a European Parliament and Council Regulation establishing a financing instrument for development cooperation and economic cooperation for the period 2007-2013. This Regulation would cover all the EU’s development cooperation policy with the exception of neighbourhood and pre-accession policy: refer to the Commission’s initial proposal ( see résumé of 01/10/2004 ).

At the time, the planned allocation for this instrument for the period in question amounted to EUR 44.229 billion covering both development cooperation with the ACP countries, third countries in Asia, Latin America and some of the countries in the Mediterranean area (Iraq, Iran, Gulf States and Yemen), some of the Caucasus countries (Kazakhstan, Kirghizstan, Uzbekistan, Tajikistan and Turkmenistan), other cross-cutting cooperation policies (thematic programmes), cooperation with industrialized countries (OECD countries that are not EU members) and actions in the area of democracy and human rights (formerly the European initiative for democracy and human rights).

Following the signature, on 17 May 2006, of the interinstitutional agreement (IIA) concerning the financial perspectives for the period 2007-2013, the Commission adopted new proposals concerning new financial instruments in the area of external policy taking into account, in particular, of the revised amounts for each of the envisaged programmes in light of the IIA.

In parallel, the European Council decided, on 16 December 2005, not to budgetize the European Development Fund (EDF), excluding, as a result, the ACP area from the current financial instrument. The ACP countries (Sub-Saharan Africa, the Caribbean, Pacific and Indian Ocean) will however benefit from funding in the context of thematic and complementary geographic programmes.

Regarding financial resources, the new allocation of the amounts for the development and economic cooperation instrument for the period will be EUR 17.053 billion, taking into account both the new geographical coverage of this instrument and the IIA (for more details, see financial statement).

It should be noted that on the European Parliament’s request, this instrument has itself been split into 3 distinct proposals:

a Regulation establishing a new financing instrument to promote democracy and human rights worldwide ( COD/2006/0116 ); a Regulation establishing a financing instrument for development cooperation and economic cooperation based on Article 179 of the TEC (this proposal); and a Regulation establishing a financial instrument for cooperation with industrialised and other high-income countries and territories (2007-2013), based on Article 181A of the TEC ( CNS/2006/0807 ).

These complementary financial instruments will share the amounts initially planned for the cooperation instrument: i.e. EUR 17.053 billion.

COM(2004)0629/2
EUR-Lex

Results of vote in Parliament

The European Parliament adopted a resolution drafted by Gay Mitchell (EPP-ED, IE), and amended the Commission’s proposal. It voted for the Development Committee’s proposal and split the Commission’s original proposal for a single instrument, which combined the EU’s cooperation with both developing and industrialised countries, into two separate and distinct instruments. Accordingly, cooperation with industrialised countries will be dealt with in a separate instrument. Parliament deleted all references to economic cooperation in the report. The text states that a new instrument, on Community assistance to third countries for the promotion and protection of democracy and human rights, is to be proposed.

Parliament also proposed separate policy regulations setting out the EU’s thematic and geographical priorities in its development cooperation. It did so because it was determined to maintain its powers as co-legislator in strategic priorities, geographical and thematic aid programmes. The Commission wanted these to be determined by the comitology procedure. Without restructuring the Commission's proposition, Parliament would have lost its co-decision power in 16 existing areas of regulation on 1 January 2007. The text states that a crucial objective is to pursue a differentiated approach depending on development contexts and needs, providing partner countries or regions with specific, tailor-made programmes, based on their own needs, strategies, priorities and assets.

The Commission must propose a multiannual financial framework allocating funds by global thematic and by regional geographical programmes. The multiannual financial framework must be adopted in accordance with the procedure set out in Article 251 of the Treaty. Spending targets shall be set by the legislative authority within those thematic and regional geographical programmes, and shall be adhered to in the implementation of the programmes. Policy priorities for thematic programmes, global initiatives or geographical programmes at regional or continental level shall be established by separate regulations, each of which shall be specific to a broad thematic programme and/or global initiative, or to a geographical programme at regional or continental level. Each regulation shall set down details of the policy to be applied for the broad thematic programme and/or global initiative or geographical programme to which it relates. Each regulation shall be adopted in accordance with the procedure set out in Article 251 of the Treaty (the co-decision procedure.)

Parliament went on to state that the primary objective of Community development cooperation shall be to reduce and, eventually, eradicate poverty in partner countries and regions, within the framework of the Millennium Declaration adopted by the UN General Assembly in 2000, and particularly the achievement of the Millennium Development Goals. The Commission had previously proposed that the MDGs should only guide development cooperation.

The financial reference amount for implementation of this Regulation over the period 2007-2013 is EUR 47 122 000 000. The Regulation will apply until 31 December 2013. Not later than 31 December 2010, the Commission must submit a report evaluating the implementation of the Regulation in the first three years, together with a proposal for any necessary modification.

The multiannual financial framework shall be established for an initial period of four years. Before the expiry of this period, a second multiannual financial framework shall be established, based on the mid-term review and covering the remaining period of validity of the Regulation. Any allocation established in the multiannual financial framework may be increased or decreased by a maximum of 5%. Any increase or decrease in allocations by more than 5% shall be subject to the agreement of the European Parliament and the Council.

Further new clauses are as follows:

- All measures financed under the Regulation shall be subject to an ex-ante development impact assessment, including an assessment of their impact in the fields of human rights, the environment, gender equality, children's rights and effects on other vulnerable or excluded groups.

- Priority shall be given to the poorest among partner countries, especially the least developed countries, and to the poorest sectors of society within all partner countries.

- The Community's cooperation activities shall promote effective cooperation modalities and instruments, adapted to the particular circumstances of each partner country or region, with a focus on programme-based approaches using budgetary support in specific and clearly justified cases, subject to strict monitoring and conditionality, on delivery of predictable aid funding, and the development and use of country systems based on the MDG targets and indicators.

T6-0217/2006

Debate in Parliament

A6-0109/2006

A6-0109/2006

PE368.000

PE369.938

PE370.278

PE367.810

PE362.411

A6-0060/2005

A6-0060/2005

PE355.357

The committee unanimously adopted the report by Gay MITCHELL (EPP-ED, IE) rejecting the proposed regulation under the 1st reading of the codecision procedure.

MEPs argued that the EU's development policy should preserve its independence and not become part of economic cooperation. The "umbrella regulation" would, however , result in the merger of two policy areas with quite separate goals and working methods, to the detriment of development cooperation. MEPs also believed that the regulation would undermine Parliament's powers, since it would give extensive powers of implementation to the Commission and Council, at the expense of the Parliament's legislative and budgetary powers.

PE355.376

PE355.334

PURPOSE: to propose a new financing instrument for development co-operation and economic co-operation in the framework of the forthcoming financial perspectives 2007-2013.

PROPOSED ACT: Regulation of the European Parliament and of the Council.

CONTENT: in the context of the forthcoming financial perspectives 2007-2013, the Commission is proposing a new financial instrument with a reference amount of EUR 44.229 billion over a 7 year period which aims to provide support for both development policy and all forms of cooperation with developing countries, countries in transition and industrialised countries.

In addition, the new Regulation serves as a consolidated legal basis for pursuing internal policy objectives at international, multilateral and global levels.

As far its remit is concerned it covers all of the world’s countries, territories and regions except:

The Member States of the Community. The Overseas Countries and Territories associated with the Community. Countries eligible for the pre-accession instrument (Albania, Former Yugoslav Republic of Macedonia, Bosnia-Herzegovina, Croatia, Serbia and Montenegro and Turkey ). Countries eligible for the new European Neighbourhood and Partnership Instrument (Algeria, Armenia, the Palestinian Authority of the West Bank and the Gaza Strip, Azerbaijan, Byelorussia, Egypt, the Russian Federation, Georgia, Israel, Jordan, Lebanon, Libya, Morocco, Moldavia, Syria, Tunisia and Ukraine).

A number of general principles guide the Regulation, namely, consistency, co-ordination of co-operation policies, co-ordination with other bi-lateral or multi-lateral donors, redirection of Community assistance towards forms of sectoral and budgetary support and respect for human rights and fundamental freedoms, democratic principles and the rule of law. Concerning the latter principles a suspension clause if foreseen in the case of breeches.

In terms of programming and allocating funds, the Community’s external assistance will be delivered via large-scale geographical programmes. Money has also been put aside for thematic programmes aimed at financing global and horizontal initiatives, as well as for specific thematic programmes with industrialised countries in mind. Thematic strategies will be established for periods up to seven years. The strategic documents will set out the European Union’s vision and priorities of its assistance within each priority theme and initiative.

Member States will play a close role in deciding on multi-annual geographical programmes and thematic programmes. Actual adoption of the multi-annual programming papers will be adopted in accordance with the opinion of a management committee. Adoption of the action programmes (financing of which will be decided on either one per country or region), will not, however, be put through the committee procedure. This may prove useful should the Commission wish to mobilise financing speedily before an action programme has been fully finalised. Adoption of special measures not provided for in strategy papers and multi-annual indicative programmes will be decided upon by a procedure where the opinion a Member State advisory committee is sought. Spending exceeding EUR 15 million will be decided on based on the consultation procedure. The financing of special measures is being proposed in a bid to finance strategy papers or multi-annual indicative programmes in cases of unforeseen circumstances. Where measures have been given financial approval the proposed Regulation allows for co-financing in the form of joint or parallel financing.

Other provisions listed in the Regulation include budgetary commitments, protection of the Community’s financial interests, participation in public tenders, pre-financing, funds made available to the European Investment Bank and other financial intermediaries, participation by a third countries not eligible under this Regulation, suspending assistance, financial provisions for ACP countries and for a review of the Regulation by 31 December 2011.

For more details concerning the financial implications of this measure, please refer to the financial statement.

COM(2004)0629
EUR-Lex

On 1 October 2004, the Commission published a draft Regulation of the European Parliament and of the Council aiming to establish a new financing instrument for development co-operation and economic co-operation in the framework of the forthcoming financial perspectives 2007-2013: please refer to the Commission’s initial proposal (COD/2004/0220, summary dated 01/10/2004) .

As far its remit is concerned, it covers all of the world’s countries, territories and regions except:

- The Member States of the Community.

- The Overseas Countries and Territories associated with the Community.

- Countries eligible for the pre-accession instrument (Albania, Former Yugoslav Republic of Macedonia, Bosnia-Herzegovina, Croatia, Serbia and Montenegro and Turkey )

- Countries eligible for the new European Neighbourhood and Partnership Instrument (Algeria, Armenia, the Palestinian Authority of the West Bank and the Gaza Strip, Azerbaijan, Byelorussia, Egypt, the Russian Federation, Georgia, Israel, Jordan, Lebanon, Libya, Morocco, Moldavia, Syria, Tunisia and Ukraine).

Moreover, a number of general principles guide the Regulation, namely, consistency, co-ordination of co-operation policies, co-ordination with other bi-lateral or multi-lateral donors, redirection of Community assistance towards forms of sectoral and budgetary support and respect for human rights and fundamental freedoms, democratic principles and the rule of law.

After trilateral consultations between the Commission, the European Parliament and the Council, it was decided, in July 2006, to split that proposal into three separate texts:

i) a Regulation establishing a financing instrument for the promotion of democracy and human rights world wide (see COD/2006/0116);

ii) a Regulation establishing a financing instrument for development cooperation based on Article 179 TEC (COD/2004/0220);

iii) a Regulation establishing a financing instrument for cooperation with industrialised and other high-income countries and territories based on Article 181 a TEC (for the present proposal, refer to the initial proposal dated 24 July 2006).

These complementary proposals will breakdown the initial amounts provided by the cooperation instrument: that is EUR 17.053 billion .

For details concerning the financial implications of this proposal, please refer to the financial statement.

COM(2004)0629
EUR-Lex