Macro-financial assistance for Lebanon (debate) 
President
The next item is the report by Kader Arif, on behalf of the Committee on International Trade, on the proposal for a Council decision providing Community macro-financial assistance to Lebanon - C6-0290/2007 -.
Günter Verheugen
Member of the Commission. - (DE) Madam President, ladies and gentlemen, I would like to thank Parliament for giving its support to the Commission proposal from last August. As the rapporteur, Mr Arif, emphasises in his report, Lebanon is in a very difficult situation both politically and economically. Its need for funding is acute. With this macro-financial assistance, the European Union is acting on the pledge it made at the international donor conference last January in Paris, when we agreed to give financial support to Lebanon.
As you know, the operationalisation of the financial assistance is beset by considerable uncertainties due to the political and constitutional crisis which has not yet been overcome. Nonetheless, the Commission is keeping to its pledge to complete all the necessary internal procedures so that the assistance can come on-stream as soon as circumstances permit.
Our talks with the Lebanese authorities on the political conditions to be linked with the programme are nearing a conclusion and I can assure you that these conditions will be in full conformity with the EU-Lebanon Action Plan established within the framework of the European Neighbourhood Policy and with the Lebanese authorities' medium-term economic reform programme. We will of course be utilising all available means in order to minimise, as far as possible, the risk of fraud, corruption and financial abuse, as called for in the draft report.
I note that the rapporteur is proposing various amendments to the Commission proposal. We will look at these amendments very carefully and give our opinion to the Council. However, I can already tell you that we will not be raising any objections to most of the amendments on the legal provisions themselves.
The Commission is aware that, at the hearings about new financial assistance, Parliament had to react to very short deadlines. The timetable for all the institutions involved has been tight, due to the specific nature of this financial assistance as a crisis instrument.
However, in order to ease the situation and improve cooperation with the Committee on International Trade (INTA), the Commission pledges in future to inform the INTA Secretariat systematically, and in advance, of any new financial assistance transactions; this will be done by means of an information memorandum as soon as new financial assistance is in prospect.
Kader Arif
rapporteur. - (FR) Madam President, Commissioner, ladies and gentlemen, I am pleased to present this report to you today on the allocation of macro-financial assistance (MFA) to Lebanon. This is testimony to the EU pledge to help the country recover from successive crises.
Lebanon is currently one of the world's most debt-ridden countries, with a debt-to-GDP ratio of 180%. The impact of the civil war between 1975 and 1990, the 2006 summer crisis with Israel, chronic political instability and an economic policy set adrift have caused a serious economic, financial and social crisis. The reality of this situation calls for urgent action to be taken.
It transpires that funds in connection with the adoption in January 2007 of the EU-Lebanon Action Plan as part of the European Neighbourhood Policy will not be available until 2009. The exceptional MFA we are set to adopt will bridge that gap and will have an immediate impact on public finances and the balance of payments in Lebanon, provided it is implemented immediately. The MFA will consist of a donation of 30 million euros and a loan of 50 million euros to help the Lebanese Government take on post-war reconstruction and continue its economic revival.
My report fully approves the need to secure this financial assistance for Lebanon. It does, however, introduce a number of amendments to the Council's proposal for the sake of clarity and transparency.
First and foremost, we ought to bear in mind that the assistance must be strictly complementary to the finance agreed by the Bretton Woods institutions, the Paris Club, bilateral donors and the EU under other programmes. It must be coherent with EU external action or policies and guarantee the added value of the Community undertaking.
The Council will also need to explicitly and publicly take up Parliament's recommendations as to the conditions and criteria attached to the assistance, in other words improved transparency and increased sustainability of public finances, application of the budgetary and macro-economic priorities defined, implementation of specific measures to prevent any risk of fraud, corruption and misuse of funds, distribution of assistance with a fair balance among post-conflict expenditure, reconstruction, excessive debt and the social needs of the population, and full compliance with international democratic and human rights standards and the fundamental principles of the rule of law. Provision of aid for Lebanon must be accompanied by real progress on the objectives mentioned, and this must be set out in a grant agreement drawn up jointly with the Lebanese authorities.
In addition to our basic work on this text, I also wish to mention some of the difficulties encountered while the report was being drawn up, given its urgent nature. It is for this reason that, for any future decision relating to the granting of MFA, the Commission and the Council must provide us with much more notice. For Parliament to carry out its work satisfactorily, it must have better-quality information in good time. In this regard, implementation of an early warning system by the Commission would ensure faster handling of the dossier by the competent committee in Parliament and avoid unnecessary delays which might have a serious negative impact on the final beneficiary of the financial aid. The quality and coherence of our work and the quality of our cooperation with the other institutions rely heavily on this factor.
In line with previous Parliament resolutions, I wish to stress that such a substantial instrument cannot be simply regarded as exceptional. It must have a regular legal basis and cannot be based on ad hoc Council decisions for each operation. A framework regulation on MFA, laid down under the codecision procedure, is necessary in order to enhance transparency, accountability, monitoring and reporting systems.
We must also make rapid arrangements for interinstitutional discussions as to the most suitable legal basis for this kind of instrument. In the case of MFA for Lebanon, one of the countries covered by the European Neighbourhood Policy and also classified as a developing country, we feel that the legal basis for this action should have been Article 179 of the EC Treaty instead of Article 308 of the EC Treaty.
It is precisely because Lebanon is a developing country that Parliament insists on not neglecting the social aspect of the reforms that the Lebanese Government might undertake. According to the United Nations Development Programme (UNDP), nearly 24% of Lebanese live in complete destitution, and 52% of Lebanese are considered underprivileged. Moreover, nearly 9% of the population are illiterate, less than one-third of the population reach primary school level, and only 13% of Lebanese reach university.
Despite this reality, it must be said that the social question is not currently at the centre of Lebanese political debate, and the social content of envisaged reform is extremely limited with respect to economic and financial concerns. It is, however, in the interests of Lebanon and its partners, as I have already said, to find a fair balance between the various items of expenditure, particularly funds for education and training. It must be borne in mind that persistent social inequalities may have serious economic and political consequences which could prolong the country's instability.
José Ignacio Salafranca Sánchez-Neyra
draftsman of the opinion of the Committee on Foreign Affairs. - (ES) Madam President, Lebanon is in an extremely serious and tense situation and it is clear that a way out from the institutional crisis in that country must be found. With this in mind, a working group from the Committee on Foreign Affairs will next week visit the country to do what this Parliament has always done: bear witness to the solidarity of our institution with the cause of peace, understanding, harmony, reconciliation and democratic consolidation in that country.
It was precisely with this aim in mind that Mr Arif produced his report on macro-financial assistance for Lebanon. I must say to him that, in the Committee on Foreign Affairs, we did not want to get too bogged down in technicalities given the extremely serious and tense situation in Lebanon, as I have said, following the succession of President Lahoud. However, we obviously did want to ensure full respect for the competence of Parliament as an arm of the budgetary authority, maximum clarity and transparency as the rapporteur was proposing, and therefore correct and effective use of the funding, thus avoiding any kind of corruption, as indicated by Commissioner Verheugen in his speech.
In this context, we believe that this macro-financial assistance falls within the spirit of the association agreement, or the association between the European Union and the Mediterranean countries, within the future framework of the European Neighbourhood Policy and, of course, within the obligations made in the agreements of the Paris III Conference on the reconstruction and recovery of Lebanon. It also falls within the spirit of the agreements made with the international institutions.
Esko Seppänen
draftsman of the opinion of the Committee on Budgets. - (FI) Madam President, as draftsman of the opinion of the Committee on Budgets, I note with satisfaction that the responsible committee has adopted the proposals we tabled. It was very courageous of the Committee to propose the new concept of 'the availability period of financial assistance' and interpret it in such a way that the validity of the legal act could be prolonged simply through comitology committee procedure. The Commission is just an executive body and cannot have the role of legislator. Such it would become if it should decide on how long financial assistance should last.
On the Committee on Budgets I note with satisfaction that the responsible committee has adopted a positive position regarding our proposal for an amendment to the legal basis, although that would only be done in respect of future proposals on macro-financial assistance. A more proper legal basis we feel is Article 179 of the EC Treaty and not the general Article 308 which has now been used. We hope that the Commission and the Council will in future take account of this message from Parliament.
Tokia Saïfi
on behalf of the PPE-DE Group. - (FR) Madam President, the current institutional vacuum in Lebanon constitutes a major threat to the country and the region in general. With a non-functional parliament, its members in fear of their lives, a destabilised government and a paralysed economy, Lebanon must now find a way out of this crisis. More than ever, the EU must also remain alert in support of its neighbour and ally.
The macro-financial assistance proposed today by the EU is more welcome than ever before. This exceptional assistance with a time limitation, aiming to rectify the budgetary situation of a country where agreed efforts to reduce the burden of debt were destroyed by the murderous conflict of the summer of 2006, falls fully within the European Neighbourhood Policy and the Euro-Mediterranean Partnership. It is not, therefore, a traditional form of assistance as this budgetary support will help enhance Lebanon's political and economic sovereignty and independence. Assistance must, of course, be subject to an anti-fraud mechanism for greater transparency in the administration and disbursement of funds.
We must also ensure better coordination of the financial institutions working to rebuild the country. We must, in fact, implement the neighbourhood instrument, IMF measures and FEMIP actions in a coherent fashion to guarantee effective and sustainable assistance. As the Annapolis Conference opens up a window of hope, Lebanon remains a key factor for peace and stability in the region.
David Martin
on behalf of the PSE Group. - Madam President, I welcome Mr Arif's report. It is, as you would expect from Mr Arif, a well-argued and well-balanced report.
However, I regret that, once again, the EU has to pick up the bill for Israel's propensity, in the Middle East, to drop bombs first and worry about the consequences later.
It is true that Lebanon had financial difficulties before the conflict with Israel in the summer of 2006, but that war was, perhaps, the straw that broke the camel's back. Lebanon, as Mr Arif has said, is now one of the most indebted countries in the world and, according to the UNDP, almost one in four Lebanese lives in complete destitution.
We have in Lebanon, despite the problems that it faces, a government determined to bring about economic stability. In such a situation, it is right that we should be prepared to provide macro-financial assistance to assist in that recovery. Mr Arif is right to argue for safeguards to ensure that we have appropriate policies for tackling corruption and to make sure that funding is not abused. The right mechanism for doing that is through absolute transparency in the granting and spending of the money, proper monitoring of expenditure and ex-post evaluation of the measures taken.
Lebanon, as the Commissioner has indicated, has become one of the EU's partner countries in the framework of the European Neighbourhood Policy. The money from that policy will not be available until 2009 or 2010, but when that funding does become available I look forward to the EU assisting in the social and economic reforms in Lebanon. In the interim, macro-financial assistance can make a big difference in helping Lebanon tackle its indebtedness and help bring stability to its government. I therefore welcome it.
Bogusław Sonik
(PL) Madam President, we are today debating macro-financial assistance for Lebanon. The latter is in the midst of the most serious economic and political crisis to befall it since the end of the war in 1990. The House has heard, from many independent experts on the problems of the Middle East, that the European Union should actively support the democratic authorities in Lebanon.
Lebanon is now at a particularly important juncture. It is at a stage when the last ghosts of war may finally be laid to rest. There is also a danger, however, that all the old conflicts will break out again. We should therefore use the instruments available to us and play an active mediating role helping to resolve Lebanon's internal conflicts. The conflict between Israel and Lebanon caused enormous damage in a country that had just managed, with great difficulty, to rebuild its infrastructure after 20 years of war. The conflict also had a negative impact on social relations in Lebanon. It led to a strengthening of radical forces, thus plunging Lebanon anew into internal cross-community conflict.
Lebanon needs time to stabilise again. It needs mediation between all parties. The financial assistance provided by the European Union and by other countries and institutions will provide an opportunity for the Lebanon to get back on course towards reform. Reform is bound to take time, but will result in the emergence of a country that is politically, socially and economically stable.
I welcome the Commission's initiative and the fact that Members of the House have taken the issue of macro-financial assistance on board. This allows us to send out a signal to the people of Lebanon assuring them that the European Union considers itself to be their partner. I should therefore also like to thank the rapporteur for so skilfully endeavouring to involve Parliament in the decision-making process regarding assistance to Lebanon. Finally, we must remember that rebuilding Lebanon is just as much in our interest as Europeans as it is in the interests of the people of Lebanon.
President
The debate is closed.
The vote will take place on Thursday, 29 November 2007.

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