SP(2007)0054

PURPOSE: to grant a Community guarantee to the European Investment Bank (EIB) against losses for projects outside of the Community.

LEGISLATIVE ACT: 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

CONTENT: the Council adopted a Decision on renewal of the European Investment Bank’s external lending mandates for the 2007-13 period. The Decision renews the mandates given to the EIB, under guarantee from the EU budget, for lending to projects outside the EU. The current mandates consist of a general external lending mandate as well as specific mandates, established by Council decisions 2000/24/EC and 2005/48/EC, for projects in Russia, Ukraine, Moldova and Belarus. Activities outside the EU make up roughly 10% of the EIB's total activities, amounting to EUR 5.1 billion in 2005, of which 72.5% were under EU guarantee. The guarantee prevents the bank's operations, which often bear a significantly higher risk than its operations within the EU, from affecting the bank's credit standing. It thus allows the EIB to maintain attractive lending rates.

The decision will allow lending on a single legal basis for loans and guarantees in all regions. It provides for a new geographical breakdown aimed at ensuring better linkage with the EU's external relations policies and objectives.

The decision provides for a total volume of lending for the seven-year period amounting to EUR 27.8 billion, of which EUR 2 billion will be withheld until 2010, pending the results of a mid-term review. The main points are as follows:

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

- the maximum ceiling will not exceed EUR 27 800 million. This maximum ceiling shall be broken down into two parts: a basic ceiling of a fixed maximum amount of EUR 25 800 million, including its regional distribution, and an optional mandate of EUR 2 000 million;

- the basic ceiling will be broken down into the following binding regional ceilings: Pre-Accession countries: EUR 8 700 million; Neighbourhood and Partnership countries: EUR 12 400 million. These figures are broken down further into sub-ceilings;

- the Community guarantee will cover EIB Financing Operations signed during the period beginning on 1 February 2007 and ending on 31 December 2013.

- the list of countries eligible or potentially eligible for EIB financing under Community guarantee is laid down in Annex I;

- in the event of serious concerns over the political or economic situation in a specific country, the Council may decide to suspend new EIB financing under Community guarantee in that country in accordance with the procedure provided for in Article 181a(2) of the Treaty;

- there are provisions for strengthening the consistency of external actions with the external policy objectives of the EU with a view to maximising synergies of EIB financing and budgetary resources of the EU;

- the Commission must report annually to the European Parliament and the Council on the EIB Financing Operations carried out under this Decision. The report must include an assessment of impact and effectiveness of EIB Financing Operations at project, sector, country and regional level as well as the contribution of the EIB Financing Operations to the fulfilment of the external policy objectives of the European Union, taking into account the operational objectives of the EIB. It shall also include an assessment of the extent of cooperation between the EIB and the Commission and between the EIB and other IFIs and bilateral donors;

- the Commission must present to the European Parliament and the Council a mid-term report on the application of the Decision by 30 June 2010, accompanied, as appropriate, by a proposal for its amendment, drawing upon an external evaluation whose terms of reference are specified in Annex II of this Decision. The Commission must present a final report on the application of this Decision by 31 July 2013.

DATE OF EFFECT: 02/01/2007.

Decision 2006/1016
OJ L 414 30.12.2006, p. 0095

Results of vote in Parliament

The European Parliament adopted a resolution drafted by Esko SEPPÄNEN (EUL/NGL, FI) amending the proposal granting a Community guarantee to the EIB against losses under loans and guarantees for projects outside the Community. (For a summary of the main amendments, please see the document dated 20/11/2006.)

T6-0507/2006

2766

A6-0394/2006

A6-0394/2006

The committee adopted the report by Esko SEPPÄNEN (EUL/NGL, FI) amending, under the consultation procedure, the proposed decision granting a Community guarantee to the EIB against losses under loans and guarantees for projects outside the Community :

- as many of the countries eligible for assistance are developing countries, the proposal should have a dual legal base, consisting of Article 179 of the TEC (development cooperation) as well as Article 181a as proposed by the Commission;

- specific mention should be made of the Instrument for Democracy and Human Rights;

- EIB Financing Operations 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" (Recital 7). The committee also wanted to see an "ex-post control mechanism to ensure that actions financed by the EIB outside the Community uphold the values of the EU";

- the proposed "blanket" guarantee rate of 65% should be reduced to 55%. The committee argued that this should be sufficient to shelter the Community's finances from the risk of defaults;

- the European Parliament should be involved to a greater extent, inter alia by being given more information and more opportunities for scrutiny;

- there should be greater accuracy of budget programming for the provisioning needs of the Guarantee Fund;

- lastly, the committee tabled amendments aimed at improving the assessment process.

PE380.668

PE378.577

PE380.603

2753

PE378.759

2741

PURPOSE: to grant a Community guarantee to the European Investment Bank (EIB) against losses under loans and guarantees for projects outside of the Community.

PROPOSED ACT: Council Decision.

CONTENT: at the end of January 2007, the current EIB external lending mandate will expire. The purpose of this proposed Decision is to seek a renewed mandate from the Community budget for financing operations in third countries. The new mandate will cover the years 2007-2013. At the same time as seeking a renewal, the European Commission is proposing certain changes, which should streamline and improve upon current provisions.

Related legislative acts:

Currently, there are two Council Decisions which provide a Community guarantee to the EIB for extra-EU operations. They are:

Council Decision 2000/24/EC (please refer to CNS/1999/0080 ); and Council Decision 2005/48/EC (please refer to CNS/2004/0121 ).

Background

Originally, the EIB was set up to operate and offer financing to EU Member States only. The Statute setting up the EIB sets out strict conditions on its risk taking activities. In more recent years, the EIB’s mandate has been extended to cover non-EU countries, where its activities represent a crucial complement to limited EU budget funds as well as helping to increase the EU’s visibility in third countries. Operations undertaken outside of the EU in support of the EU’s external relations policies is based on formal mandates from the Council and traditionally take up around 10% of its total activities. EIB Financing operations complement the activities carried out under the new external assistance instruments.

The third countries covered by EIB operations have a greater risk profile than EU countries, hence the need to offer a Community guarantee from its own resources. Without a guarantee from the Community covering political risks the EIB would be limited to offering risks in investment grade countries only. A Community guarantee for extra-EU projects provides the EIB with the security needed to allow it to finance projects without them affecting the EIB’s AAA credit ratings.

Proposed new mandate

The Commission has prepared a report, which examines and summarises the results of EIB activities under its current mandate. (Please refer to CNS/1999/0080). The new mandate will build upon the existing one as well as broadening the geographical and sectoral focus of EIB operations in line with the new political priorities of the EU. The new Decision proposes:

- A single legal mandate to cover all different regions as well as a new Reserve Mandate. A blanket coverage of 65% will be applied to the whole mandate.

- The introduction of a new geographical breakdown of the ceilings to reflect the existing proposals for new EU external relations policies and instruments.

- Clearer definitions of the EU policy objectives in each region to be sought by EIB operations under the mandate.

- The introduction of a Reserve Mandate, not allocated to any single regions, for activation in cases of natural disasters, post conflict reconstruction or developments in strategically important countries.

- Clarifying the nature of the Community guarantee so as to cover risks of a political or sovereign nature. The guarantee coverage should be extended to both types of financing operations mentioned in the EIB Statute, namely loans and guarantees . Under the current mandates only loans are covered.

- The linkage of EIB external activity with EU policies will be strengthened via reinforced co-operation between the Commission and the EIB.

- Allowing selected individual countries to become eligible as and when they fulfil appropriate conditionality, consistent with EU high level agreements. This is in line with the practice established for Russia, the Ukraine, Moldova and Belarus.

In addition, the EIB will endeavour to further enhance co-operation with other International Financial Institutions (IFI’s) such as the EBRD and the World Bank.

The Community guarantee

The Community guarantee will cover EIB financing operations up to a global amount of EUR 33 billion, including a reserve of 1.5 billion over the period 2007-2013. The guarantee will be restricted to 65% of the aggregate amount of the financing operations plus related sums. The overall ceiling will be broken down by regions as follows:

- Pre-accession countries: EUR 9 billion;

- Neighbourhood and Partnership countries: EUR 15 billion;

- Development and Economic Cooperation countries: EUR 7.5 billion;

- Reserve mandate: EUR 1.5 billion.

For further information concerning the financial implications of this measure, please refer to the financial statement.

COM(2006)0324
EUR-Lex

PURPOSE: to grant a Community guarantee to the European Investment Bank (EIB) against losses under loans and guarantees for projects outside of the Community.

PROPOSED ACT: Council Decision.

CONTENT: at the end of January 2007, the current EIB external lending mandate will expire. The purpose of this proposed Decision is to seek a renewed mandate from the Community budget for financing operations in third countries. The new mandate will cover the years 2007-2013. At the same time as seeking a renewal, the European Commission is proposing certain changes, which should streamline and improve upon current provisions.

Related legislative acts:

Currently, there are two Council Decisions which provide a Community guarantee to the EIB for extra-EU operations. They are:

Council Decision 2000/24/EC (please refer to CNS/1999/0080 ); and Council Decision 2005/48/EC (please refer to CNS/2004/0121 ).

Background

Originally, the EIB was set up to operate and offer financing to EU Member States only. The Statute setting up the EIB sets out strict conditions on its risk taking activities. In more recent years, the EIB’s mandate has been extended to cover non-EU countries, where its activities represent a crucial complement to limited EU budget funds as well as helping to increase the EU’s visibility in third countries. Operations undertaken outside of the EU in support of the EU’s external relations policies is based on formal mandates from the Council and traditionally take up around 10% of its total activities. EIB Financing operations complement the activities carried out under the new external assistance instruments.

The third countries covered by EIB operations have a greater risk profile than EU countries, hence the need to offer a Community guarantee from its own resources. Without a guarantee from the Community covering political risks the EIB would be limited to offering risks in investment grade countries only. A Community guarantee for extra-EU projects provides the EIB with the security needed to allow it to finance projects without them affecting the EIB’s AAA credit ratings.

Proposed new mandate

The Commission has prepared a report, which examines and summarises the results of EIB activities under its current mandate. (Please refer to CNS/1999/0080). The new mandate will build upon the existing one as well as broadening the geographical and sectoral focus of EIB operations in line with the new political priorities of the EU. The new Decision proposes:

- A single legal mandate to cover all different regions as well as a new Reserve Mandate. A blanket coverage of 65% will be applied to the whole mandate.

- The introduction of a new geographical breakdown of the ceilings to reflect the existing proposals for new EU external relations policies and instruments.

- Clearer definitions of the EU policy objectives in each region to be sought by EIB operations under the mandate.

- The introduction of a Reserve Mandate, not allocated to any single regions, for activation in cases of natural disasters, post conflict reconstruction or developments in strategically important countries.

- Clarifying the nature of the Community guarantee so as to cover risks of a political or sovereign nature. The guarantee coverage should be extended to both types of financing operations mentioned in the EIB Statute, namely loans and guarantees . Under the current mandates only loans are covered.

- The linkage of EIB external activity with EU policies will be strengthened via reinforced co-operation between the Commission and the EIB.

- Allowing selected individual countries to become eligible as and when they fulfil appropriate conditionality, consistent with EU high level agreements. This is in line with the practice established for Russia, the Ukraine, Moldova and Belarus.

In addition, the EIB will endeavour to further enhance co-operation with other International Financial Institutions (IFI’s) such as the EBRD and the World Bank.

The Community guarantee

The Community guarantee will cover EIB financing operations up to a global amount of EUR 33 billion, including a reserve of 1.5 billion over the period 2007-2013. The guarantee will be restricted to 65% of the aggregate amount of the financing operations plus related sums. The overall ceiling will be broken down by regions as follows:

- Pre-accession countries: EUR 9 billion;

- Neighbourhood and Partnership countries: EUR 15 billion;

- Development and Economic Cooperation countries: EUR 7.5 billion;

- Reserve mandate: EUR 1.5 billion.

For further information concerning the financial implications of this measure, please refer to the financial statement.

COM(2006)0324
EUR-Lex