The European Investment Bank (EIB), the European Union's long-term lending institution, is providing a total of EUR 125 million(1) to the Turkish Government to support the private sector in Turkey, with special emphasis in the regions devastated by the recent earthquakes in Turkey, as part of the priority rehabilitation and reconstruction works. The EIB funds are provided as follows:

EUR 75 million is for the replacement, reconstruction and rehabilitation of industrial installations affected by the earthquake in Turkey in August 1999, and its aftershocks. The EIB loan is part of a larger facility of up to EUR 150 million. It goes to the Republic of Turkey, which will onlend the funds to three major Turkish Banks: Türkiye Sinai Kalkinma Bankasi (TSKB), Industrial Investment Bank (SYB) and Vakifbank.

The EIB's support is part of a larger framework, the "Turkish Earthquake Rehabilitation and Reconstruction Assistance" (TERRA), approved by the EIB for the provinces of Kocaeli (Izmit), Sakarya (Adapazari), Yalova, and Bolu. The facility provides for a total of EUR 600 million in the form of loans to be engaged over a three-year period. A first EIB loan of EUR 150 million signed in February 2000 was mainly for restoring housing and all essential economic and social infrastructure, including environment, transport, energy, health and education.

EUR 50 million, is provided to the Turkish government for on lending to two intermediary banks - Türkiye Sinai Kalkinma Bankasi (TSKB) and Sinai Yatirim ve Kredi Bankasi (SYKB) - for the granting of medium and long-term sub-loans to SMEs in the areas of industry, agro-industry, services and tourism. This is a follow up loan of a previous EIB EUR 50 million loan having the same structure, granted 1997.

The European Investment Bank (EIB) was set up in 1958 under the Treaty of Rome to provide loan finance for capital investment furthering European Union objectives. It participates in the implementation of EU co-operation policies towards third countries that have co-operation or association agreements with the Union. In the Mediterranean region, the EIB operates in the context and support of the Euro-Mediterranean Partnership, adopted in Barcelona in 1995, and which complements the EU Member States' own bilateral co-operation policies.Under the Euro-Med Partnership arrangements, the EIB is committed to lend EUR 6 425 million between 2000 and 2006 for investment projects in 12 non EU-Member Mediterranean countries. In 1999 some EUR 1 billion was committed by the Bank in support of a broad range of investments in the Mediterranean Region.Turkey is eligible to apply for EIB financing from this facility. Since 1995, the EIB has contributed with more than EUR 550 million towards projects of key importance for the Turkish economy. The EIB has also contributed this year with EUR 150 million to the Turkish Earthquake Rehabilitation and Reconstruction efforts.

(1) Conversion rates: EUR 1 = 0.613400 GBP; 0.971400 USD; 566.017 TRL.