In 2003, the first operational year since the launch of the EIB's Facility for Euro-Mediterranean Investment and Partnership (FEMIP), the European Investment Bank (EIB) lending in the Mediterranean Partner Countries (MPC) reached the record figure of EUR 2.1 billion ( EUR 1.8 billion in 2002). This confirms the position of the EU's financing institution as a major player in promoting the region's economic development and stability.

Focus on private sector and private-sector enabling infrastructure

EIB activity in the Mediterranean meets fully FEMIP's primary objectives: more than one third of the financing directly promoted the growth of private businesses, through Foreign Direct Investment - FDI (Turkey, Tunisia), joint ventures resulting from cooperation between MPC promoters (Algeria) and Small- & Medium-Sized Enterprises (SME) financing (Egypt, Syria, Tunisia, creation of a regional venture capital fund).

Lending also placed emphasis on infrastructure projects, including energy, human capital and environment, underpinning private sector development in Morocco, Algeria, Egypt, Lebanon and Syria.

Other EIB-financed projects included:

• Power and water supply and distribution in Egypt, Morocco and Tunisia;
• Improvement of health infrastructure in Syria and Tunisia;
• Remodelling of education systems in Jordan and Turkey;
• Assistance to populations stricken by natural disasters (Algeria).

Reinforced FEMIP: Stronger financing and partnership in the MPC

FEMIP's 3rd Ministerial Committee Meeting (Naples, November 2003) reaffirmed the strong commitment of 27 European and Mediterranean Finance and Economy Ministers to forge a closer economic partnership.

The Brussels European Council agreed in December 2003 to develop FEMIP further and to reinforce its position within the Bank with a number of features in support of private sector development:

• Up to EUR 200 million from the Bank's reserves dedicated to allow for extended risk-sharing operations of up to EUR 1 billion, and a new lending structure to mitigate private sector risks (special FEMIP envelope);
• Improved dialogue on the structural reform process to enhance the environment for private sector activity, project and donor co-ordination; development of new financial products through transforming the Policy Dialogue and Co-ordination Committee into a Ministerial Committee of Finance Ministers meeting once a year, to be complemented by a High-Level preparatory body of experts (FEMIP Experts Committee);
• Establishment of a trust fund of EUR 20-40 million, directing resources to projects in certain priority sector (water, transport, electricity, human capital) that can be made financially viable via a grant contribution or risk-capital participation.

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

• Extensive involvement of the MPCs in FEMIP policy with the creation of the Ministerial Committee Meetings and opening of regional offices in the Mashreq and Maghreb countries;
• Focus primarily on development of the wealth- and job-creating private sector;
• Develop investment in human capital;
• Greater technical assistance for the design of quality projects and the process of economic reform in the MPCs;
• 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.