The European Investment Bank (EIB), the European Union's long-term financing institution, is providing a loan of EUR 150 million to Toyota Otomotiv Sanayi Türkiye A.Ş. for the modernisation of an existing vehicle manufacturing plant in Adapazari in the Eastern Marmara region, some 120 km east of Istanbul. The investment will increase the plant's capacity to accommodate the production of selected models of the new Toyota Corolla model family.

The project will provide an important, economic impulse to the eastern Marmara region of Turkey, which has not yet recovered from the economic effects of the disastrous earthquake of August 1999.

The project will directly create new jobs with the number of employees expected to double from about 1150 last year to nearly 2500 by the year 2005 in the plant itself. In addition, it can be expected that for each new job another indirect job will be created at suppliers and related services. Once operational in 2004, the project would contribute between EUR 1.1-1.4 billion per year to the country's domestic product. As some of these local suppliers are subsidiaries of EU and Japanese company's, this results in additional employment and foreign direct investments.

This is the first EIB loan in Turkey under the Pre-Accession Facility, following Turkey's inclusion into the list of eligible countries under the Facility by the Council of Governors in April 2001. As a major private sector operation, the project is also fully in-line with the Euro-Mediterranean Investment Partnership Facility (FEMIP), reflecting the recent decisions of the European Council of Barcelona to provide financial assistance to the private sector's efforts in the Mediterranean region.

With the new Facility for Euro-Mediterranean Investment and Partnership (FEMIP), in the wake of the Barcelona European Council (15 and 16 March 2002), the EIB has reinforced its cooperation with the Mediterranean Partner Countries by setting up the new Facility for Euro-Mediterranean Investment and Partnership (FEMIP) underpinned by operational offices in the region. This Facility, launched by the Ministers of Economy and Finance of the 27 Barcelona Process countries on 18th October 2002 in Barcelona, is endowed with increased financial resources. This will enable the EIB gradually to scale up its annual lending activity in the region from EUR 1.5 billion to EUR 2 billion.

The new Facility will accord priority to financing private-sector projects with the dual aim of liberalising the Mediterranean Partner Countries' economies and expanding their potential in the run-up to the EU-MPC Customs Union in 2010. In this connection, the EIB's objective is to bolster the proportion of financing it devotes to private-sector projects to 33%.

Qualitatively, the Facility places emphasis on FDI and private sector activity, as well as on social-sector projects, particularly health, education and environmental protection, in the belief that this will make for social stability and encourage productive investment.

In Turkey, EIB has contributed todate with some EUR 2 billion towards projects of key importance for the Turkish economy. EIB funds in Turkey are made available under the second Euro-Med financing mandate, the "Special Action Programme" and EIB's "pre-accession Facility". The "Special Action Programme" makes available financing for up to EUR 450m during 2001-2004, in favour of a key Investment in Turkey's Energy Sector. EIB's current "pre-accession Facility" of EUR 8.5 billion runs up to the year 2003. Pre-accession facility lending is aimed at projects that will support the integration of Candidate Countries with the EU. A particular emphasis is being given to environmental protection, as well as communications infrastructure, industrial competitiveness and regional development.

EIB finance for infrastructure went mainly for environmental projects and the earthquake reconstruction effort. Among the projects financed in Turkey are: the wastewater and effluent treatment systems in Adana, Diyarbakir, Izmit and Tarsus; the desulphurisation equipment at the Yeniköy power station on the Aegean coast and the construction of more environment-friendly power and heating plants. The EIB has also promoted SMEs through global loans to local commercial banks.