CONFIDENTIAL
References A: Commission Proposal
B: UKREP telno 3861 reporting Coreper 10 April.
BACKGROUND
1. Likely discussion is (likely to start from the Commission
proposal to improve offer on financial protocol to include Budget
funds. There will be considerable support for this idea.
2. Yugoslav Prime Minister, Mikulic, recently wrote to all EC Ministers asking for Supoprt for more concessions on trade and
financial protocols. The Prime Minister has replied along lines
agreed in Community, stressing close EC/Yugoslav bonds, pointing out
that EC already offers a lot to Yugoslavia and that we cannot do
more.
3. At resumption of negotiations on 2nd EC/Yugoslavia Financial Protocol on 23 March, Commission offered 380 MECU EIB loans. This
is considerably higher increase than the 60% increase recently
agreed for Maghed and Mashraq protocols. EIB's 7% rate of interest
rather better than elsewhere and 2% lower than under first protocol. Yugoslavs responded with request for 600 MECU EIB loand and 110 MECU aid from budget, in form of interest rate subsidies for loans for work on transport infrastructure. Commission originally poured cold water on these figures, but after discussion at EPC Ministerial (at which Sir Geoffrey Howe said we could consider marginal increase in
EIB lending) have now produced revised proposal. This offers 520
MECU EIB and 40 MECU of budget funds to be used on interest rate
subsidy on 200 MECU worth of loans.
4. UK is opposed to provision of budget aid to Yugoslavia since it GDP per capita is too high to qualify under usual criteria. Very important to avoid setting precedent for other "better off" countries. Foreign Affairs Council on 16 March agreed not to give any aid from budget to Israel within Mediterranean financial
CONFIDENTIAL
No comments yet.
Private notes are available after approval.