FEMIP Ministerial Conference, Cyprus, 13-14 May 2007: FEMIP and the European Neighbourhood Policy

Reference: 2007-039-EN

Date: 14/05/2007

The Facility for Euro-Mediterranean Investment and Partnership (FEMIP) is now the key player in the economic and financial partnership between Europe and the Mediterranean: in four years it has invested some EUR 6 billion in support of the economic development of the nine Mediterranean partner countries*. This has served to finance around one hundred large-scale infrastructure schemes and development programmes, 40 major private sector projects and over 1 600 SMEs, as well as 63 technical assistance operations.

Finance Ministers or their representatives of the 27 EU Member States and nine Mediterranean partner countries met in Cyprus on 13-14 May. Together they decided on FEMIP’s strategic framework and its place in the European Neighboured Policy in the years ahead, so taking forward the European Council’s decision of December 2006 to reinforce FEMIP.

2006: a successful year crowned by the reinforcement of FEMIP

2006 was an especially busy year for FEMIP: EUR 1.3 billion worth of new loans were granted in the nine partner countries, spanning a broad range of sectors, particularly energy (nearly 594 million), private sector development (Foreign Direct Investment, corporate and SME investment and microcredit – 380 million) and environmental protection (325 million), with the balance going to social sectors such as health.

FEMIP also fulfilled its role as a forum for Euro-Mediterranean institutional and economic dialogue by bringing together the 27 EU Member States and nine partner countries seven times in 2006 in both ministerial meetings and thematic conferences. It also launched a cooperation policy with Euro-Mediterranean universities.

Taking note of these results, at the end of 2006 the European Council endowed FEMIP with a lending/guarantee envelope of EUR 8.7 billion within the overall amount of EUR 12.4 billion allocated to the European Neighbourhood Policy. It also expanded FEMIP’s twofold mission: to foster private sector development and the creation of an investment-friendly environment.

2007: new financial products and enhancement of the Euro-Mediterranean dialogue

To meet this challenge, the FEMIP Finance Ministers have based their strategy for the years ahead on two pillars:

Supporting investment and job creation by broadening the range of financial instruments fostering private sector development: local currency loans and guarantee funds to mitigate the risks borne by SMEs; increased and diversified risk capital operations designed to boost the potential of high-tech or high-growth companies and encourage the emergence of “regional champions” in the partner countries; greater technical assistance with modernising the legal and financial systems in order to improve the business climate.
Continuing the policy of dialogue and involvement of all economic players in the process of discussing and raising awareness of the need for social and economic reforms, and enhancing the partner countries’ sense of ownership. To this end, FEMIP recently created a special committee bringing together representatives of the EU Member States, the partner countries and the European Commission. This committee will approve FEMIP’s annual report, prepare the three-year-FEMIP activity programme and give its opinion on sectoral strategies and the development of new financial products.

FEMIP and the European Neighbourhood Policy

FEMIP has been focusing its loan and guaranty activity on the development of partner countries’ private sector and foremost on that of the SMEs. These instruments have a strong leverage effect on the Community budgetary resources allocated to the Euro-Mediterranean Partnership.

Through its operations, FEMIP is transferring to the partner countries the experience gained in Europe by the EIB. In parallel, FEMIP will continue to closely cooperate with the international financial institutions active in the region, with which it co-financed almost one third of its operations in 2006.

With its role thus reaffirmed and enhanced, FEMIP is the financial instrument for implementing the European Neighbourhood Policy on the southern and eastern shores of the Mediterranean.

On the strength of its experience and success with fostering the modernisation of the emerging Mediterranean countries, FEMIP can even provide a model for the operations to be mounted in Europe’s new “eastern neighbours”, where the EIB is also active.

* Algeria, Gaza-West Bank, Egypt, Israel, Jordan, Lebanon, Morocco, Syria and Tunisia.