33 Loan guarantees
| (25705)
9886/04
COM(04) 385
| Draft Decision granting a Community guarantee to the European Investment Bank against losses under loans for certain types of projects in Russia and the Western New Independent States
|
| Legal base | Article 308 EC; consultation; unanimity
|
| Department | HM Treasury |
| Basis of consideration | Minister's letter of 20 December 2004
|
| Previous Committee Report | HC 42-xxxv (2003-04), para 3 (3 November 2004)
|
| To be discussed in Council | Not known
|
| Committee's assessment | Legally important
|
| Committee's decision | Cleared
|
Background
33.1 European Investment Bank (EIB) loans to various non-Member
States during the period 2000-2006 are guaranteed from the Community
general budget under Council Decision 2000/24/EC,[86]
as amended. The guarantee relates to credits up to a ceiling
of €20,060 million and is provided for in the general budget
reserve at a rate of 9% of credits. In November 2003, the ECOFIN
Council agreed that the EIB loan guarantee should be extended
to Russia and the "Western New Independent States" (WNIS).
This draft Decision would implement that agreement by guaranteeing
credits for Russia and the WNIS for the remainder of the 2000-2006
period up to a ceiling of €500 million.
33.2 When we considered this document in June 2004,
we did not clear it, not because of any concern about the substance
of the proposal, but because we were concerned about the supposed
justification given by the then Financial Secretary to the Treasury
(Ruth Kelly) for the use of Article 308 EC as the legal base for
the draft Decision. Article 308 states that it is for use "If
action by the Community should prove necessary to attain, in the
course of the operation of the common market, one of the objectives
of the Community and this Treaty has not provided the necessary
powers". It seemed to us that Article 181a EC was sufficient
for this purpose and we recalled our view that Article 308 EC
is sometimes used without proper justification. We asked the
Minister to explain why use of Article 181a was not more appropriate
in this case.[87] In
October 2004, the Financial Secretary to the Treasury (Mr Stephen
Timms) told us that the Government now accepted that Article 181a
was the correct legal basis for this measure and was arguing so
in discussions in Brussels. We kept the document under scrutiny
pending the outcome on this issue.[88]
The Minister's letter
33.3 The Minister tells us that it has now been accepted
by the Council and other Member States that Article 181a is a
more appropriate legal base than Article 308 and that the legal
base for the measure has been changed accordingly.
Conclusion
33.4 We are pleased that this issue has been brought
to a proper conclusion and now clear the document.
33.5 However, we urge the Government carefully
to monitor proposals to use Article 308 as a base for legislation
and, and as a matter of principle and in the interests of good
governance and the rule of law, to acquiesce in its use only when
properly justified.
86 OJ No. L 9, 13.1.2000, p.24. Back
87
See HC 42-xxv (2003-04), para 4 (30 June 2004). Back
88
See headnote. Back
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