12 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
|
| Department | HM Treasury |
| Basis of consideration | Minister's letter of 10 March 2006
|
| Previous Committee Report | HC 34-xiv (2005-06), para 7 (11 January 2006) and HC 34-xix (2005-06), para 5 (15 February 2006)
|
| Discussed in Council | 24 January 2006
|
| Committee's assessment | Legally important
|
| Committee's decision | Cleared
|
Background
12.1 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. In November 2005 the Commission proposed
this draft Decision, which was adopted on 24 January 2006, to
make MFA available to Georgia.
12.2 We have considered this matter twice. On the first occasion
we noted that the substance of the proposal was straightforward,
but that it was another example of Article 308 EC as the legal
base, on which we wanted to be satisfied the use was proper. Although
we accepted that the only EC Treaty provision available for the
draft Decision was Article 308, we wished to know how the proposal
attains one of the objectives of the Community in the course of
the operation of the common market. On the second occasion we
noted that the Economic Secretary to the Treasury (Mr Ivan Lewis)
had identified for us the objective of the Community which would
be addressed by the proposal (Article 3.1 (r) EC — "a
policy in the sphere of development cooperation"), but that
he had not made a connection to the operation of the common market.
12.3 We commented that in the last case of draft Decisions on
MFA, for Bosnia and Herzegovina and Serbia-Montenegro, the previous
Committee had understood the Government to be accepting that the
use of Article 308 can be justified only if there is no other
sufficient treaty provision and there is a link to the
operation of the common market.[39]
But the Minister now seemed to us to have blurred the issue by
not explaining to us, despite our earlier request, how "a
policy in the sphere of development cooperation" linked in
this case to the operation of the common market.
12.4 We said that as we and our predecessors had been over this
ground several times we now felt that further written exchanges
on the issue would not be fruitful. Therefore we asked the Minister
to appear before us to explain more fully the Government's contention
that it is appropriate to use Article 308 in support of this case
of MFA. Meanwhile we kept the document under scrutiny. [40]
The Minister's letter
12.5 The Minister, prompted by our decision to ask him to appear
before us, writes now to remind us that:
- it is the Government's view that every proposal using Article
308 as a legal base need not relate in a narrowly understood sense
to the operation of the common market; and
- the Government had noted that, whilst the previous Committee
accepted this, the Government realised our predecessors expected
that in every case some connection to the operation of
the common market was necessary.
12.6 The Minister then says that macro-financial assistance to
Georgia will serve to assist the operation of the common market
by contributing to the economic stability and development of a
near neighbour and the further development of the European Neighbourhood
Policy, which is expected to lead to deeper economic integration
with the Community. He continues that on this basis the proposal
is consistent with the operation of the common market and the
use of Article 308 is justified.
12.7 The Minister then goes on additionally to draw attention
to the Government's previous citation, in relation to the Bosnia
and Herzegovina and Serbia-Montenegro case, of the exercise of
wider external relations powers, noting both the European Neighbourhood
Policy as an illustration of this and a history of such programmes
going back at least as far as pre-accession aid for Portugal based
on Article 235, the predecessor of Article 308. The Minister says
the Portuguese instrument and many others like it remain on the
books for budget purposes. He asserts that it is therefore the
Government's view that using Article 308 as a legal base for MFA
to third countries is appropriate and in line with the Community's
historic exercise of its powers in external relations, and does
not represent an extension of Community competence.
Conclusion
12.8 The Minister now gives us what we asked for originally
— that is an explanation of how this proposal attains one
of the objectives of the Community in the course of the operation
of the common market. It was the omission of an explanation
in relation to the italicised phrase when we last considered this
matter which prompted us to ask for the Minister to give us an
oral exposition of the Government's position. The Minister's latest
letter now makes such an evidence session redundant and we therefore
rescind our request to him to appear before us.
12.9 However, we wish to emphasise that whilst, like the previous
Committee, we fully accept that external action by the Community
is not necessarily linked to the operation of the common market
and that there are external relations competences arising from
various treaty provisions which do not require such a link, Article
308, when used for any matter — including an external relations
issue — clearly does require such a link.
12.10 We have no further questions to ask on the proposal for
MFA for Georgia and now clear the document.
39 See (25989) 12885/04 (25991) 12886/04: HC 38-xv
(2004-05), para 15 (6 April 2005). Back
40
See headnote. Back
| 
