8 European Investment Bank projects
outside the EU
| (34964)
10272/13
+ ADDs 1-2 COM(13) 293
| Draft Council Decision granting an EU guarantee to the European Investment Bank (EIB) against losses under financing operations supporting investment projects outside the Union
|
| Legal base | Articles 209 and 212 TFEU; co-decision; QMV
|
| Department | International Development
|
| Basis of consideration | Minister's letter of 28 November 2013
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| Previous Committee Reports | HC 83-xxii (2013-14), chapter 9 (6 November 2013) and HC 83-viii (2013-14), chapter 6 (3 July 2013)
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| Discussion in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
8.1 The proposal is to update the current EU budgetary guarantee
to the EIB that covers risks of sovereign and political nature
when financing operations outside the EU. This External Lending
Mandate (ELM) allows the EIB to use its Own Resources to operate
in more challenging investment climates outside the Union in support
of the EU's external policy objectives; provides both an overall
ceiling to loans covered under the Guarantee and an opportunity
to determine the strategic direction of the EIB in its external
operations; and, more broadly, safeguards its creditworthiness,
so as not to compromise its principal task of contributing to
the development of EU Member States.
8.2 The regions covered are the Neighbourhood
and Partnership Countries (including the Mediterranean, Eastern
Europe, Southern Caucasus and Russia); Asia, Central Asia and
Latin America, South Africa as well as EU Pre-accession countries
(the African, Caribbean and Pacific (ACP) region is covered separately
under the Cotonou Agreement and funded through the European Development
Fund, or EDF).
8.3 This proposed new Decision sets out the overall
scope and general conditions of the ELM for the period starting
1 January 2014 to 31 December 2020, in line with the Multiannual
Financial Framework (MFF). In drawing it up, the Commission examined
several options and objectives (see our previous Report for details).
They chose the option called FOCUS: to focus on less credit-worthy
beneficiaries while implementing an overall signature target on
climate change, which was judged as having the most impact.
8.4 In her Explanatory Memorandum of 23 June
2013, the Parliamentary Under-Secretary of State at the Department
for International Development (Lynne Featherstone) welcomed the
overall proposal and strongly endorsed the EIB's external role.
She also endorsed the proposal to replace the current separate
Climate Change Mandate with an overall climate change investment
target, and welcomed the idea of developing a method to establish
the use of the EU budget guarantee where it benefitted less creditworthy
clients and served harder-to-reach markets. She also supported
the Mandate continuing to cover all geographical areas, including
harder-to-reach markets in Asia (such as Burma, Bangladesh) which
were key DFID priorities (see paragraphs 6.8-6.9 of our first
previous Report for greater detail).[27]
8.5 Looking ahead, the Minister said that negotiations
in the Financial Counsellors (FINCO) working party in Brussels
would now centre on the regional sub-ceilings and broader strategic
directions of the EIB in its external lending; the draft proposal
would then move to the European Parliament in the autumn.
Our assessment
8.6 Given that the Minister would be seeking
at least some improvements to the draft mandate — establishing
a method to ensure that the guarantee was used where it added
most value and further clarification in terms of success criteria
with respect to the provision of a €3 billion "top up"
after a midterm review — we retained the Council Decision
under scrutiny, and asked the Minister to update the Committee
when discussions in the working party had been concluded.
8.7 We also drew this chapter of our Report to
the attention of the International Development Committee.[28]
8.8 The two updates provided thus far by the
Minister demonstrate very much what might be expected in this
type of negotiation: the Minister has not achieved all her objectives
— particularly with regard to Asia and Central Asia —
but notes that the proposal that has emerged from COREPER[29]
nonetheless contains a number of elements that should lead to
more effective spending (see paragraphs 9.8-9.12 of our most recent
previous Report).[30]
8.9 Most recently, we asked the Minister to write
to us again once the negotiations with the European Parliament
(EP) had made some progress, and in any event no later than 28
November.
8.10 We also drew these developments to the attention
of the International Development Committee.[31]
The Minister's letter of 28 November 2013
8.11 The Minister reports that in early November
the European Parliament's Budget Committee produced a first reading
position on the ELM.
8.12 She continues as follows:
"The EP's suggested amendments are in line with
what we expected and reflect three main EP priorities. These are
1) Allowing reflows from previous EIB activities to increase the
overall size of the ELM; 2) Increasing EIB's reporting requirements
and Parliamentary oversight of the EIB; and 3) Changing the focus
of the EIB's work to include new priority sectors and an increased
focus on climate change.
"On the first point, the EP has suggested that
reflows from previous EIB activities are used to increase the
overall ceiling of the External Lending Mandate from €25bn
(£21bn) to €27bn (£23bn). To take account of this
increase, the regional ceilings within the ELM have all been revised
upwards by 8%. The UK does not support this amendment. We support
the overall size of the guarantee ceiling in the original Commission
proposal (£21bn) which is consistent with our position on
discipline in the EU budget overall. Furthermore the UK believes
that reflows should go back to the "general budget"
of the EU, thereby reducing the contributions required from Member
States. We will continue to strongly oppose this amendment.
"On point 2), the EP has inserted clauses increasing
the reporting requirements of the EIB to the EP and the Commission.
While the UK supports increased coherence of EU external policies,
we believe that the current level of reporting and oversight is
adequate and should be maintained. We are concerned that the increases
proposed would duplicate existing reporting requirements and place
undue administrative and reporting burdens on the EIB. We are
supportive however of amendments that would improve the quality
of existing EIB reporting. We therefore support EP proposals that
suggest greater inclusion of the Results Measurement (REM) Framework
in current reporting.
"The EP has been quite prescriptive in the sectors
in which the EIB should work and is pushing for an increase in
the priority given to climate change. We support the EIB's strong
focus on climate change mitigation but are keen that the EIB maintains
some flexibility in the areas in which it works. The UK supports
all three priorities of the EIB (social and economic infrastructure,
private sector and financial development, and climate change mitigation
and adaptation) and we want to give the EIB room to manage the
balance between these priorities. We are also keen to ensure that
the impact of the EIB in these sectors is not diluted by the addition
of competing priorities. There is room for negotiation on this
point however and the UK could support some additional and strengthened
reference to climate change in the ELM."
"Since the beginning of November, three informal
trialogues have taken place. These are set to continue until technical
agreements on the majority of the text have been reached. The
more contentious issues, such as reflows and regional ceilings,
will be reserved until other elements of the text have been settled.
The Presidency are likely to convene a COREPER discussion on the
issue of reflows and regional ceilings, but the exact timing of
this will depend on progress made with the rest of the text."
Conclusion
8.13 We are grateful to the Minister for this
further information, which we are again drawing to the attention
of the International Development Committee.
8.14 The Minister has made her position clear:
- no reflows from previous EIB
activities to increase the overall ceiling;
- no increase in European Parliament oversight;
and
- some additional and strengthened reference to
climate change in the ELM, but nothing else that would interfere
with the EIB properly balancing this with its other priorities
— social and economic infrastructure, private sector and
financial development — or risk diluting the impact of the
EIB in these sectors by the addition of competing priorities.
8.15 We rely upon the Minister to provide a
further update prior to any proposal to take a revised text to
the Council for adoption, and in good time for any questions that
might arise to be posed and answered beforehand.
8.16 In the meantime, we shall continue to retain
the Council Decision under scrutiny.
27 See HC 83-viii (2013-14), chapter 6 (3 July 2013). Back
28
See headnote: HC 83-viii (2013-14), chapter 6 (3 July 2013). Back
29
COREPER, from French Comité
des représentants permanents, is the
Committee of Permanent Representatives in the European Union,
made up of the head or deputy head of mission from the EU member
states in Brussels. Its job is to prepare the agenda for the
ministerial Council meetings; it may also take some procedural
decisions. It oversees and coordinates the work of some 250 committees
and working parties made up of civil servants from the member
states who work on issues at the technical level to be discussed
later by COREPER and the Council. It is chaired by the Presidency of the Council of the European Union.
There are in fact two committees: COREPER I consists of deputy
heads of mission and deals largely with social and economic issues;
COREPER II consists of heads of mission (Ambassador Extraordinary
and Plenipotentiary) and deals largely with political, financial
and foreign policy issues. Back
30
See HC 83-xxii (2013-14), chapter 9 (6 November 2013). Back
31
See headnote: HC 83-xxii (2013-14), chapter 9 (6 November 2013). Back
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