A3-0214/94

Resolution on an assessment of Western aid to the CIS

The European Parliament,

-having regard to the decisions taken at the G7 Summits in Houston (1991), Munich (1992) and Tokyo (1993) on a multilateral aid package for Russia,

-having regard to the decisions taken by the European Councils of Rome (December 1990), Dublin (April 1991), Maastricht (December 1991) and Edinburgh (December 1992) on EC aid for Russia,

-having regard to its resolution of 17 January 1992 on food aid for Moscow and St Petersburg,

-having regard to its resolution of 9 July 1992 on emergency assistance to the New Independent States of the former Soviet Union,

-having regard to its resolution of 9 July 1992 on economic cooperation between the European Community and the Commonwealth of Independent States,

-having regard to its resolution of 18 January 1994 on the European Bank for Reconstruction and Development (EBRD),

-having regard to its resolution of 9 February 1994 on Kaliningrad, a Russian exclave in the Baltic region,

-having regard to its resolution of 14 July 1993 on the revision of the basic regulation for the TACIS programme,

-having regard to the new basic regulation for the TACIS programme, as adopted by the Council in July 1993 despite its rejection by the EP,

-having regard to the current negotiations on the conclusion of a partnership agreement with Russia and, subsequently, with other CIS republics,

-having regard to the motion for a resolution by Mr Robles Piquer on an assessment of Western aid to the CIS (B3-0136/93),

-having regard to Rule 45 of its Rules of Procedure,

-having regard to the report of the Committee on External Economic Relations (A3-0214/94),

A.whereas the bilateral and multilateral aid projects to implement the decisions taken at the various G7 Summits must take into account both the political and economic imperatives in each CIS republic and the interests and aid capacities of the respective donor countries,

B.whereas the CIS republics are themselves responsible for the success of the moves to transform the political and economic systems, which must be backed by the consolidation of democratic institutions, determined economic reforms and measures to combat corruption and crime,

1.Stresses that the EU and the other Western industrialized countries have a vital interest in the success of the reform process in the CIS republics and, by extension, in the internal and external stability which would be seriously jeopardized by the failure of that process;

2.Regards the opening-up of Western markets as very important, calls, with a view to making the Western aid granted in support of the reforms more effective, for a negotiated liberalization of trade with Western countries, and in particular the opening-up of EU markets, and stresses that measures to promote trade among the CIS republics with safeguards provided by an intra-regional clearing system are fundamental;

3.Regards political stability and improved macroeconomic conditions as fundamental to the success of the reforms and to the effectiveness of cooperation and Western aid measures;

4.Expresses concern at the overall economic situation in the CIS republics and, in particular, Russia, which is at a stage of the transition from a central command economy to a market economy at which the old system no longer works properly and not all the conditions vital to the functioning of the new system have been established;

5.Draws attention to the imbalances in state budgets, the lack of a stable monetary system, effective economic and tax administration and a reliable judicial system, lengthy approval procedures and increasing corruption, points out that there are still many obstacles to investment, and calls on the CIS republics to take independent steps to remove these obstacles;

6.Points out that the CIS republics have major scientific and technological potential, that they are not developing countries, but countries which are undergoing economic restructuring;

7.Notes that the EU aid granted hitherto represents 78% of the Western aid, but that Western aid is too limited in absolute terms;

8.Points out that the Western aid granted hitherto, which totals ECU 85.5 billion, is similar, at today's prices, to the aid provided under the Marshall Plan after the Second World War, but that, unlike the Marshall Plan, that aid does not include enough investment capital;

9.Hopes that, alongside the macro-economic programmes, the G7 countries will encourage programmes which have a direct impact on the population;

10.Advocates decentralized forms of cooperation, designed to help people help themselves, via East-West partnerships at local and regional level in selected regions;

11.Regards it as politically and socially dangerous, despite the unfavourable political, institutional and overall economic context, the lack of internal security and state control and the lamentable flight of capital, to call into question the Western aid to the CIS republics; insists, however, that aid agreements must commit the CIS republics to binding reform policies;

12.Urges that Western aid channelled via the IMF and the World Bank should be geared to the conditions created by the transformation process and that more generous systematic transformation facilities should be granted over a timescale long enough to enable the necessary structural adjustment programmes to be launched and implemented and the IMF quotas to be exhausted;

13.Calls for disaster aid to be continued and stresses the exceptional nature of food aid for specific regions;

14.Regards technical aid for marketing and distribution as useful in the agricultural sphere but points out that adequate supplies cannot be guaranteed on a long term basis until the economy has been stabilized;

15.Regards the continued provision of medical aid in the form of shipments of goods and advice as essential, but calls for such aid to be converted from loans into grants;

16.Calls for increased funding, in the form of non-repayable grants, for improvements in reactor safety, support for the development of alternative energy sources and the abandonment, in the long term, of civil nuclear energy, energy saving programmes, enhanced environmental protection and measures to prevent the transfer of nuclear weapons and equipment with potential applications as weapons;

17.Calls for changes to the credit policy of the international financial institutions and a new concept for long-term debt repayment, and urges the EU to exert greater influence with a view to creating a stable monetary system and a functioning banking and financial system in the CIS republics, primarily in order to encourage the small and medium-sized undertakings and craft industries which would give fresh impetus to the transformation process;

18.Regards the G7 venture capital fund to support small businesses and new firms as an appropriate aid instrument, provided that the resources are allocated to specific regions on easy terms and with minimal collateral requirements;

19.Regards the SMU fund ($300 m) made available to Russia by the G7 countries as an important contribution to the development of the private sector, regards it as important, in that connection, to concentrate funding on pilot projects in specific regions, with working capital loans being granted in rubles or hard currencies to offset exchange rate risks, and calls for similar funds to be set up for other CIS republics;

20.Regrets the fact that the $3 bn promised to Russia by the G7 countries has not yet been channelled into a private sector development fund;

21.Regards the establishment of decentralized business development banks in Russia as important and calls for similar measures to be taken in other republics;

22.Urges the EU to set up an investment guarantee fund to offer Western investments partial protection against the risk of war and disaster and against political risks in the CIS; the EU Member States should be involved in the fund, which should also draw resources from the EU budget and should be coupled with the privatization fund set up at the Tokyo G7 Summit;

23.Calls for a standard EU public export credit insurance scheme to be set up to provide guarantees in respect of shipments and services from the EU;

24.Criticizes European industry for concentrating its efforts on export markets and calls for greater willingness to invest in order to foster ecologically sound industrial development;

25.Regards the provision of venture capital, primarily by the EBRD through the acquisition of shareholdings in companies, as a very promising approach to encouraging business start-ups, welcomes the establishment of the Russian project financing bank and advocates that, with its help, large-scale private investments, the use of the resources provided by the EBRD and injections of foreign capital can finally be encouraged and put into practice quickly; calls for similar banks to be established in other CIS republics;

26.Urges that TACIS funding for feasibility studies in connection with the granting of loans by the EBRD should not be allocated on a piecemeal basis, but instead concentrated on a few regions with differing economic structures (conurbations, rural regions, mixed regions);

27.Welcomes the measures taken to develop transport and telecommunications infrastructure by linking the trans-European networks with the PHARE and TACIS programmes as a prerequisite for the expansion of economic relations between the EU and the CIS republics;

28.Acknowledges that most of the criteria laid down by the EP for the release of the appropriations entered in the contingency reserve of the 1994 EU budget for the 1994 TACIS programme have now been met by the Commission, e.g. funding geared to environmental protection and energy saving, the inclusion of some aspects of nuclear safety and arms conversion, the drafting of multi- annual programmes, transparent tender procedures, regular on-the-spot coordination among the donor countries and six-monthly reports; advocates, therefore the release of the appropriations;

29.Attaches particular importance to the following points in connection with the use of the appropriations released for the TACIS programme, in particular with regard to the 1995 budget:

(a)urges that budgetary resources should no longer be used to fund short-term contracts for Western experts with no follow-up potential, since this may undermine the effectiveness and credibility of Western aid,

(b)calls for projects to be implemented at the appropriate governmental or non-governmental level and rejects the centralization of aid on the grounds that it is inefficient; calls, however, for the centralized pooling of information and the greatest possible degree of coordination,

(c)calls for investments or support for new businesses to be linked with consultancy schemes in the public and private sector and insists on better coordination between the EBRD and the TACIS programme,

(d)emphasizes the important role which SMUs can play in the economic conversion process and in guaranteeing jobs; calls, also, for the establishment of an efficient civil service, covering in particular the economy, the tax system, the judiciary and monetary affairs, and the development of a private business banking system and the build-up of a private economic system by means of targeted measures to encourage small and medium-sized undertakings, an enhanced production-related infrastructure, and improved vocational training,

(e)calls for an expansion of the TACIS Democracy Programme, in coordination with other donor states, at the same time welcoming its current objectives and flexible approach to the development of a civil society, in particular via support for non-governmental organizations, and stresses, in this connection, the importance of independent trade unions and a free press, whose development warrants greater support than it has hitherto been given,

(f)advocates programmes to foster equality of opportunity in the new society,

(g)regards the stipulation that at least two partners from the EU should be involved as counterproductive, because the CIS republics will be deprived of resources swallowed up by coordination, administrative and travel costs in the West, and calls for this stipulation to be relaxed,

(h)stresses the need for generous support to be given to private projects in the CIS republics and for their practical know-how and contacts on the spot to be exploited,

(i)calls for the partnership philosophy to be extended from regions and municipalities to cover branches and sectors of the economy, as already decided at the Munich G7 Summit, and to associations and the two sides of industry,

(j)calls for more practical projects to encourage EU and CIS partnerships between local and regional authorities designed to improve the administrative efficiency,

(k)calls for closer links to be established between the TACIS programme and the TEMPUS programme on the promotion of vocational training and the strengthening of human resources in the CIS republics and the other programmes and facilities, such as advice to governments, partnerships, co-financing, 'Bistro' and the senior experts service; calls for participatory coordinating bodies to be set up at regional level,

(l)stresses the need for all programmes and facilities to include environmental protection and energy saving measures wherever this is required,

(m)advocates the establishment of a youth organization linking the EU and the CIS republics in order to encourage youth exchanges;

30.Calls on the Commission to submit to it, prior to the presentation of the preliminary draft budget for 1995, a proposal for the further revision of the TACIS regulation due in 1995 which takes proper account of Parliament's demands;

31.Calls for support to be given to the establishment of development corporations bringing together regional authorities, state and private sector companies, kolkhozy and sovkhozy, associations and other legal and natural persons inside and outside the CIS republics;

32.Points out that these development corporations can not only implement housing and business promotion schemes, but can also carry out the restructuring of important areas of public and welfare services, and that they can often draw up organizational models for self-help projects which allow scope for regional and ethnic particularities and foreign and public involvement:

33.Regards the staffing levels in the Commission units involved in implementing the TACIS programme as inadequate by comparison with other administrative tasks and calls on the Commission, once all the available reserves have been exhausted, to submit to the budgetary authority suitable proposals for an increase in and improved structuring of the staff complement;

34.Advocates closer coordination of Western aid, in particular between the IMF, the World Bank, the EBRD and the EU, above all on-the-spot coordination by the representatives responsible for the bilateral and multilateral aid programmes and the exchange of information on reports and findings, so that the duplication of efforts and delays can be avoided;

35.Instructs its President to forward this resolution to the Commission, the Council, the governments of the Member States and the governments of the CIS republics.