7 MACRO-FINANCIAL ASSISTANCE FOR GEORGIA
(27013)
14435/05
+ ADD1
COM(05) 571
| Draft Decision providing macro-financial assistance to Georgia
|
| Legal base | Article 308 EC; consultation; unanimity
|
| Document originated | 14 November 2005
|
| Deposited in Parliament |
18 November 2005 |
| Department | HM Treasury
|
| Basis of consideration |
EM of 12 December 2005 |
| Previous Committee Report |
None |
| To be discussed in Council
| Not known |
| Committee's assessment | Legally important
|
| Committee's decision | Not cleared; further information requested
|
Background
7.1 Macro-financial assistance (MFA) is a form of exceptional
support for external financing needs which the Community provides
to countries in the "near neighbourhood" that have IMF
programmes. Financing is made available as loans and/or grants,
subject to evidence that the necessary domestic economic reforms
are being implemented.
The document
7.2 The Commission proposes a draft Decision to make MFA available
to Georgia in the form of grants, in at least two instalments
during 2006 and 2007, of €33.5 million (£23.62 million).
The sum proposed is the residue of a €65 million (£45.83
million) grant previously made available, but from which payments
have not been made since the end of 2004 because of the unsatisfactory
economic policy environment during the relevant period for implementation.
The new political regime in power since November 2003 has demonstrated
its commitment to economic stabilisation and structural reforms.
The assistance proposed would be subject to the normal requirements
of adherence to current IMF programmes and economic policy and
financial conditions in an agreed Memorandum of Understanding.
The Government's view
7.3 The Economic Secretary to the Treasury (Mr Ivan Lewis) says
that the Government supports this proposal as it aids its pursuit
of international financial stability, reinforces its support for
debt relief in Georgia and accords with its objective of poverty
reduction in the South Caucasus.
Conclusion
7.4 The substance of this proposal is straightforward and normally
we would not draw it specifically to the attention of the House.
However we continue to be concerned about the use of Article 308
EC as the legal base for such Decisions. In the most recent similar
case, relating to Bosnia and Herzegovina and Serbia-Montenegro
we accepted the Government's contention that Article 181a EC could
not be used for MFA. But we noted that the Government accepted
our contention that Article 308 EC could only be used if there
is no other sufficient treaty provision and if there is
a link to the operation of the common market.[27]
7.5 In the passage on legal issues in his Explanatory
Memorandum the Minister notes that there is no legal base other
than Article 308 for this proposal. But he does not say that there
is a link to the operation of the common market. Before we consider
this matter further we should like to hear an explanation from
the Government as to how this proposal attains one of the objectives
of the Community in the course of the operation of the common
market. Meanwhile we do not clear the document.
27 See (25989) 12885/04 (25991) 12886/04: HC 38-xv
(2004-05), para 15 (6 April 2005). Back
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