Brussels, 24 October 2006
The FEMIP was created in October 2002 within the EIB, following the Barcelona European Union Council, to stimulate economic growth and private sector development in the Mediterranean region. The countries concerned are Morocco, Algeria, Tunisia, Egypt, Gaza-West Bank, Israel, Lebanon, Syria and Jordan .
The EIB is the largest provider of loans to the region and its activities in the Mediterranean have grown substantially since the creation of FEMIP. Since the start of FEMIP until the end of 2005, it granted €7.2 billion in loans for a total project volume of more than €25 billion. Around 60% of the loans finance infrastructure projects such as the light rail transit system in Tunis, the Amman ring road, or the windmill park in Tangiers.
Loans to private companies and SMEs, mostly through local intermediaries, have trebled in the last three years. In addition, risk capital financed with EU budget resources has enabled the participation in private equity funds, microfinance institutions and SME loan guarantee schemes. A Special FEMIP Envelope was created in 2003 for loans with a higher risk profile. However, support to the private sector has not yet reached its full potential.
Following discussions with the Mediterranean partner countries during the Tunis ministerial meeting in June this year and consultation of FEMIP stakeholders, the Commission concludes that the Facility can do more to foster private sector development and especially SMEs, which represent more than 95% of all businesses and 50-70% of employment in many Mediterranean countries. To increase substantially operations with private companies, the Mediterranean governments must provide the adequate framework and the EIB must diversify its range of instruments.
Among the options regarding the future of FEMIP in the context of the European Neighbourhood Policy, the one proposed by the Commission and the EIB foresees the strengthening of FEMIP to (i) better match private sector and SME needs by adjusting the range of FEMIP instruments, (ii) increase ownership by introducing a permanent advisory committee with Mediterranean partner countries and EU-member states to discuss operational priorities and results, and (iii) better identify, and respond to, the needs of Mediterranean countries by strengthening FEMIP's presence at local level.
The Commission considers that this option of further adapting FEMIP within the current institutional setting – i.e. maintaining it as a facility within the EIB -- by introducing sizeable improvements in financial instruments, local interaction and strategic focus, is today the most cost- and time-efficient option.
In November 2003, the European Council reinforced FEMIP after a first review of its activities. It requested the ECOFIN Council to evaluate the Facility in 2006, considering among others the feasibility to create a EIB majority-owned subsidiary dedicated to the Mediterranean region. The Commission assessment was carried out in cooperation with the EIB.
Recent economic growth in the Mediterranean region is good (4.8% in 2005), but has lagged behind the average of comparable middle income countries. It has also proved insufficient to reduce unemployment with officially reported rates from 9% to 23%.
 Turkey was covered until December 2004 but is now considered a candidate country in EIB operations, hence no longer covered by FEMIP.