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  The Commision is examining ways in which the Community can
  support large-scale infrastructure projects of European interest.
  There are major European projects (Paris-Cologne TGV link, Milan-
  Ulm rail link via the Spluga tunnel, road and rail link with
  Scandinavia, broadband telecommuncations network, etc.) which are
  generally recognized as being beneficial but which have
  encountered numerous difficulties.  In the context of its
  financial engineering activities (see Memo P-96), the Commission
  recently submitted to the Council a Communication(1)in which it
  analyses this problem and presents a range of instruments which
  the Community could use in order to get these major projects off
  the ground.  The Commission is proposing that the Council should
  adopt a Decision setting out the broad lines for Community action
  in this sphere.
  Large-scale infrastructure projects offer numerous benefits for
  the Community.  They help to contribute to the consolidation of
  the internal market, the integration of the peripheral regions
  and, as a result of the snowball effect which they have on the
  development of these regions, they help to make the Community
  more cohesive.
  However, these projects run up against difficulties as a result
  of the diversity of interests at stake, the high costs and the
  substantial risks involved.  In view of the financial situation
  in Europe where the national authorities are concerned to limit
  their budgetary commitments and where private capital is
  comparatively abundant, efforts are being made to rethink the way
  in which such projects are financed, and to make greater recourse
  to the private sector than has been usual hitherto.
  In this context, with the support it has received from the Member
  States' Transport Ministers, the European Parliament and both
  sides of industry, the Commission intends to facilitate the
  financing of large-scale infrastructure projects of European
  interest.  In so doing, it is responding to the needs expressed
  by the various parties involved in carrying out such projects.
  (1) COM(86)722
                                - 2 -

  The Commission considers that the Community can and must play an
  important role, and is proposing measures primarily designed :
        1. to create the right environment for major projects;
        2. to give the Community new ways of intervening.
  1. Creating the right environment for major projects
  Three aspects are involved :
  a) Contributing to the preparatory phase of projects
  This phase, which will demonstrate through appropriate studies
  whether a project is viable, will determine whether or not the
  private sector becomes involved, and is therefore essential to
  the success of the operation.  It is unlikely that the private
  sector will wish to pay for this phase completely because of
  uncertainties which may lead to the abandonment of the project.
  Through a grant, albeit small, the Community can play a seeding
  role and act as a level for private finance.
  The infrastructure concerned may be in the transport,
  telecommunications, energy or environment sectors.
  b) Contributing to the financial launching of projects
  Once a project's viability has been demonstrated, and a decision
  has been taken to carry it out, the right financial package must
  be arranged before the work is started.
  There are many advantages in raising a large volume of equity
  capital.  This signals a project's viability to the banking and
  financial markets.
  An equity contribution by the Community, reserved for projects
  declared to be of European interest, would have a seeding role
  and act as a lever.
  c) Publicly demonstrating their benefits : Declaration of
  European interest
  A declaration of European interest would give the project
  concerned, whose viability has been demonstrated, a special
  character and access to:
  -     a Community contribution to the financial launching of
        projects, as mentioned above;
                                - 3 -
  -     an improved financial environment.  There should be freedom
  of movement within the Community for securities issued by
  promoters of major infrastructure projects, in order to make the
  securities more attractive to the public.  (The Directive adopted
  by the Council on 17 November 1986 liberalizes such operations in
  Community law);
  -     specific assistance, in particular from the EIB.
  This declaration would be made by the Commission after examining
  projects submitted to it either directly or through a Member
  State.  Only projects having substantial recourse to private
  funds and complying with the objectives and criteria laid down by
  the Community programmes for the areas which they concern would
  qualify for such a declaration.
  2. Giving the Community new ways of intervening
  EIB, NCI and ECSC loans require first-class guarantees which
  neither Member States nor promoters are willing or able to
  provide in certain cases.  The Commission is therefore proposing
  that the Community should have new ways of intervening in the
  case of projects declared to be of European interest.  It is
  suggesting in particular that an appropriate guarantee should be
  given under the Community budget to specific EIB loans in order
  to enable the Community to provide assistance towards
  infrastructure projects using a technique partly akin to "project
  The EIB would be asked to offer non-recourse of limited-recourse
  loans to the promoters of projects declared to be of European
  interest.  Repayment of the loans would be backed solely by the
  revenue from the project.
  The budget guarantee would be limited and conditional.  It would
  be granted case by case  by the Commission up to an overall
  ceiling set by the Council, which would decide to raise it on a
  proposal from the Commission.
  A "European Infrastructure Agency"
  Even if all the proposed measures were adopted, this would not
  fully overcome the difficulties of coordinating the various
  parties involved, particularly when a project concerns more than
  one State.  Consequently, it might be necessary to establish an
  Infrastructure Agency (or Agencies), modelled on the American
  "Authorities", e.g. the New York and New Jersey Port Authority,
  responsible for joint decision-making, and for owning and
  financing major projects.
  The Commission is not yet proposing an operational arrangement.
  By putting forward in its paper the idea of a European Agency (or
  Agencies), it hopes to spark off a wide-ranging debate about the
  feasibility and advisibility of this.  Only once the discussions
  have taken place and in the light of the initial action in this
  sphere will it submit, where appropriate, the necessary
  implementation measures.

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