The 2nd meeting of the Policy Dialogue and Coordination Committee (PDCC) of the new Facility for Euro-Mediterranean Investment and Partnership (FEMIP) took place in Istanbul on 3 April 2003. Its purpose was to evaluate progress and discuss FEMIP's future prospects, since the inaugural session of the PDCC, held on 18th October in Barcelona.

The meeting was opened by R. Erdogan, Prime Minister of Turkey and held at Ministerial level under the joint chairmanship of the Turkish Minister for the Economy, Mr. Ali Babacan and EIB President, Mr. Philippe MAYSTADT. It was attended also by representatives of the European Commission, the World Bank group (WB and IFC), African Development Bank (AfDB) and the European Central Bank (ECB).

This PDCC session underlined the strong commitment of 27 European and Mediterranean Finance and Economy Ministers to forge a closer economic partnership; it also noted with satisfaction the tangible progress being made on implementation of FEMIP, despite the on-going political tensions facing the Region.

1. Operational results on the ground

The year 2002 saw EIB lending in the region reaching EUR 1.8 billion in favour of a wide range of investments in the Mediterranean countries. Highlights included: the financing of the first private investments under FEMIP (a Toyota factory in Turkey, and cement plants in Algeria and Tunisia) and long term credit lines for some forty financial intermediaries in the Mediterranean Partner Countries to strengthen the equity base of small and medium size enterprises (SMEs) and support private investment projects. To name two examples of the efficiency of such mechanism, some EUR 180 million was disbursed to SMEs under EIB Global Lines of Credit in Turkey, which leveraged some EUR 600 million of new investment from other sources and led to the creation of more than 6 000 new jobs; in Tunisia, the Bank has disbursed 100 million to SMEs over the past years, helping to catalyse some 400 million of new investement and to create more than 3000 jobs.

Private-sector financing accounted for more than 30% of project approvals in 2002. Moreover, during the six months to end of March following the establishment of FEMIP, some EUR 1.5 billion were approved by the EIB's Board for cross-section investments in Human Capital Development (Jordan), substantial Support for private SMEs ( Tunisia, and Turkey), Urban Transport Development (Turkey), Risk Capital (Algeria), as well as a number of projects in the Energy, Transport Communications and the Environment (Morocco), and a large LNG project in the energy sector in Egypt. The FEMIP project pipe-line is available on EIB's website.

2. Development of ownership by the Mediterranean Partners

In the context of the current political tensions in the region, there is more than ever more work to do for a closer Euro-Med Partnership and the further development of the economies of the region. In this regard, FEMIP is serving as a key vehicle for close cooperation of all partners involved. The Istanbul PDCC meeting discussed factors affecting Access of the private sector to Finance, particularly SMEs, banking sector and institutional and legal aspects.

The Istanbul meeting decided that FEMIP would work towards facilitating access to finance by private sector firms, through:

  • Increased provision of long term credit directly to firms and/or by offering long term credit resources to banks for on lending (global loans).
  • Promotion of new financial products or arrangements with the aim of relaxing access to long term credit, such as financial leases and guarantee funds (with risk capital resources).
  • Development of new or little used financial products (and institutions providing them) for equity and quasi equity financing (e.g. participatory loans, subordinated and conditional loans).
  • Technical assistance to the banking sector in particular to improve use of credit risk management and so improve prospects for lending to SMEs.

3. Organisational changes

As part of its efforts to bolster FEMIP activities, the EIB is significantly reinforcing its staff resources and presence in the Region, having already established a special Private Sector Development Division and a Unit for operations in Turkey. Moreover, the Bank is in the process of opening its first Office in Cairo, covering the Middle East Region, for further strengthening the Bank's business development, technical assistance and monitoring activities.

The next meeting of the PDCC is scheduled to take place in November in Italy.

FEMIP was set up in response to the conclusions of the Barcelona European Council (15-16 March 2002) and Valencia Euro-Mediterranean Conference (22-23 April 2002). Its objective is to help the Mediterranean Partner Countries meet the challenges of economic and social modernisation and enhanced regional integration, with a view to the planned creation of a free-trade area between Europe and the MPC by 2010.

The Facility represents a major step forward in financial and economic cooperation between the Union and the MPC. Its new priorities are:

  • extensive involvement of the MPC in FEMIP policy with the creation of the PDCC and opening of regional offices in the Mashreq and Maghreb countries;
  • focus on development of the wealth- and job-creating private sector, South-South regional cooperation projects and investment in human capital;
  • greater technical assistance for the design of quality projects and the process of economic reform and privatisation in the MPC;
  • deployment of innovative financial products and risk capital; · gradual increase in the annual volume of EIB activities in the MPC from EUR 1.4 to 2 billion.

By 2006, the EIB plans to invest between EUR 8 and 10 billion in the MPC.

To this end, the EIB has at its disposal funds under the existing Euro-Mediterranean mandates, risk capital resources entrusted to it from the EU budget as well as technical assistance and investment aid funds provided by the Union in application of the decisions of the Barcelona European Council (March 2002).