10 Banking measures in the context of
the MEDA programme
| (30509) 8051/09— |
Special Report No. 1/2009 concerning the Banking measures in the Mediterranean area in the context of the MEDA programme and the previous protocols together with the Commission's replies
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| Legal base | Art 284(4) EC; —
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| Deposited in Parliament | 26 March 2009
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| Department | International Development
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| Basis of consideration | EM of 9 April 2009
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| Previous Committee Report | None; but see (30361) 5444/09: HC 19-xiii (2008-09) chapter 7 (1 April 2009) and HC 19-vii (2008-09) chapter 3 (11 February 2009); also see (27643) 11003/06 and (27645) 11006/06: HC-xxxvii (2005-06), chapter 8 (11 October 2006) and HC 41-v (2006-07), chapter 10 (10 January 2007); and (27924) 13558/06: HC 41-v (2006-07), chapter 9 (10 January 2007)
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| To be discussed in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
10.1 The Court of Auditors' job is to check that EU funds, which
come from taxpayers, are properly collected and that they are
spent legally, economically and for the intended purpose. Its
aim is to ensure that the taxpayers get maximum value for their
money, and it has the right to audit any person or organisation
handling EU funds. The Court's main role is to check that the
EU budget is correctly implemented. In addition, it may also produce
Special Reports on other programmes that involve EC funding.[40]
10.2 Co-operation between the EU and non-member Mediterranean
countries started some 30 years ago and has gradually developed
over the years. The framework for financial and technical measures
(Mésures d'Accompagnement, or MEDA) aimed
to reinforce political stability and democracy, create a Euro-Med
free-trade area and develop economic and social co-operation in
the Mediterranean region.[41]
The MEDA programme lasted from 1996 until 2006 and amounted to
€8.7 billion (£8.09 billion). The European Commission's
EuropeAid office manages it. MEDA was replaced by the new European
Neighbourhood and Partnership Instrument (ENPI) in 2007, which
is the financing instrument for the new European Neighbourhood
Policy (ENP).
10.3 The ENP involves 17 partner countries (ten Mediterranean
and six Eastern European countries, plus Russia). The ENPI also
replaces the TACIS co-operation programmes for the Eastern European
countries. The Commission describes the ENPI as "the strategic
continuity with enlarged objectives of the former TACIS and MEDA
programmes", whose "main purpose is to create an area
of shared values, stability and prosperity, enhanced co-operation
and deeper economic and regional integration by covering a wide
range of co-operation areas." The overall allocation for
the ENPI instrument amounts to almost €12 billion for the
seven-year period 2007-2013 — an increase of 32%, in real
terms, compared with the amount available over the period 2000-2006
for the MEDA and TACIS programmes.[42]
10.4 The European Investment Bank (EIB) also provides
loans, investment capital and grant aid to the partner countries.
In October 2002, it grouped its operations in this region under
the Euro-Mediterranean Investment and Partnership (FEMIP). It
funds the development of small and medium sized enterprises, improves
infrastructures, supports training and economic development and
promotes environmental protection schemes. It lends some €
2billion per year to the region.
10.5 The banking measures within the MEDA programme
consisted of technical assistance, interest free subsidies for
environmental loans from EIB and risk capital operations amounting
to €388 million (£361 million).
The Court of Auditors' Special Report
10.6 As the Report Summary notes, three types of
banking measures are financed under the MEDA Regulations or the
previous protocols from the EU budget and implemented by the EIB:
technical assistance through the FEMIP Support Fund, interest
rate subsidies for certain EIB loans and risk capital operations.
10.7 The Court audited the banking measures under
the MEDA programme and the previous protocols to determine whether
the ongoing projects were being adequately monitored by the Commission
and the EIB and whether the projects had achieved their objectives.
Regarding monitoring by the Commission and the EIB, the Court
found that:
— the
Commission relied entirely on the work performed by the EIB and
did not carry out any monitoring of its own;
— until 2005, the level of monitoring by
the EIB was not adequate;
— there was a lack of coordination between
the EIB's activities and the Commission's, especially at the local
level;
— not enough emphasis was put on environmental
monitoring.
10.8 Regarding the achievement of project objectives,
the Court found that technical assistance projects had broadly
achieved their objectives. For interest rate subsidies and risk
capital operations projects, the situation was more diverse as
they only partially achieved their objectives.
10.9 With regard to the new ENPI, the Court recommended
that the Commission should:
— set
up a tailor-made evaluation and monitoring programme for banking
measures;
— ensure the effective coordination of
the assistance work undertaken by the Community, the EIB and other
international/local partners in order to increase the consistency
and complementarity of their actions;
— negotiate adequate management conventions
that ensure appropriate monitoring, cover the environmental aspects
and safeguard the Community's financial interests;
— ensure that monitoring by the EIB provides
that all projects are adequately executed and that the financial
and reporting obligations of the intermediaries/promoters are
met;
— for risk capital operations, define an
overall strategy at the Commission level and choose the best implementation
process, involving either direct management or management by international/local
partners.
10.10 The Commission's reply to the report acknowledges
that monitoring had initially been inadequate but confirmed the
Court's observation that it had subsequently improved. It notes
that many of the examples used in the report were from the earlier
MEDA period, when standards were lower. It also notes that most
of the Court's recommendations have already been implemented and
any remaining recommendations will be taken into account within
a new management agreement currently being negotiated between
the Commission and the EIB.
The Government's view
10.11 In his Explanatory Memorandum of 9 April 2009,
the Parliamentary Secretary at the Department for International
Development (Mr Michael Foster) welcomes the Court of Auditors'
report and the Commission's response. The report, he says, "reinforces
the importance the UK attaches to monitoring and evaluation [and]
also highlights the progress on this agenda that has been made,
and is continuing to be made, in the Commission and the EIB."
10.12 The Minister also welcomes the improvements
made since the beginning of the MEDA programme and particularly
since 2005, and "appreciates the additional information on
the timeframe and context in the Commission's replies to some
of the examples raised." He is:
"pleased that there is additional monitoring
and new safeguards stipulated in the ENPI, along the lines of
those recommended in the Court's report. Having already learnt
lessons from the MEDA programme, the ENPI now needs to ensure
it implements them.
"The UK will follow progress on this matter
through its monitoring of EIB. The UK has raised the issue of
monitoring with EIB at an institutional level and also at FEMIP
Trust Fund meetings. The UK will continue to monitor the EIB's
monitoring through examining FEMIP Trust Fund documents and EIB
Monitoring and Evaluation systems more generally."
10.13 Finally, the Minister notes that this report
and the response from the European Commission is due to be published
shortly in the Official Journal of the European Union, having
been adopted by the Court of Auditors on 21 and 22 January 2009.
Conclusion
10.14 Our earlier Reports[43]
consider the examination of EIB performance under the FEMIP and
its External Lending Mandate. As we note in our most recent Report,
outside the Union, EIB lending is governed by a series of mandates
from the European Union in support of EU development and cooperation
policies in partner countries — 13% of overall EIB lending
amounting to €6.4 billion in 2007, of which €3.7 billion
was under Community guarantee. The most recent such report drew
attention to the concern the Committee shared with the Minister
that a proposal by the European Parliament for a new EIB External
Lending Mandate should be informed by a proper review of both
the present ELM mandate and the FEMIP, which would be forestalled
by the rushed process envisaged by the European Parliament. We
accordingly endorsed the Minister's endeavours to rein in the
Parliament's enthusiasm, and asked that he write to us in due
course about the outcome of these discussions and his views on
the implications for his and our concerns.
10.15 We are drawing this Report to the attention
of the House because of the correlation between these issues and
those highlighted by the Court of Auditors' Report. We share the
importance that the Minister attaches to monitoring and evaluation,
and of the necessity of ensuring that the new ENPI — almost
€12 billion of EU taxpayers' money in 2007-2013 — implements
effectively the Court's recommendations. We look to him to report
on this when, in due course, he submits any ENPI evaluation reports
for scrutiny.
10.16 In the meantime, we clear the document.
40 See http://europa.eu/institutions/inst/auditors/index_en.htm
for further information on the Court of Auditors. Back
41
Partner countries were Morocco, Algeria, Tunisia, Egypt, Israel,
Jordan, the Palestinian Authority, Lebanon, Syria, Turkey, Cyprus
and Malta. Back
42
See http://ec.europa.eu/europeaid/where/neighbourhood/overview/index_en.htm
for further information on the ENP and ENPI. Back
43
See headnote. Back
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