TNAG-1748-FCO40-2467-Visit-by-Sir-Geoffrey-Howe--Secretary-of-State-for-Foreign-a-1988 — Page 264

CONFIDENTIAL

COUNCIL OF MINISTERS (FOREIGN AFFAIRS) LUXEMBOURG,

26 27 APRIL

BRIEF NO 3. EC/YUGOSLAVIA

OBJECTIVES

1. To confirm common position that EC should not offer budgetary

aid to Yugoslavia.

2. If necessary, to confirm that UK could agree to marginal increase in EIB lending.

POINTS TO MAKE

1.

Yugoslavia feels threatened by processes of economic integration

in rest of Europe. Agree that Twelve need to show they recognise

this anxiety, and continue to attach importance to fruitful and

dynamic relationship with Yugoslavia.

For Yugoslavia to put own house in order by implementing more of

own stabilisation programme.

2.

3. EC offer on financial Protocol very generous (90% increase on

First Protocol).

4. Cannot agree to any budgetary aid. Yugoslavia not aid worthy.

GDP per capita too high to qualify: exceeds that of one member

state. However special Yugoslavia's case, would set precedent for

eg Israel.

5. If Yugoslavs can accept World Bank loans, which are

unsubsidised, should surely be able to benefit from EIB loans,

which are at more favourable rates, without needing interest rate

subsidy.

CONFIDENTIAL