I beg to move,
That the draft European Communities (Definition of Treaties) (European Investment Fund) order 1993, which was laid before this House on 18th November, be approved.
The order's provenance will be well known to the House. It has been commented upon on a number of occasions, and the House will recall that the Edinburgh European Council in December last year at the conclusion of the British presidency agreed a package of measures to promote economic recovery in the European Community. One of those measures was a request that the Economic and Finance Council and the European investment bank
give urgent and sympathetic consideration to the establishment of a European Investment Fund".
Work has now been undertaken and substantially completed, with agreement being reached on the precise role of the fund and on the draft statute which sets out its rules of operation. The Brussels European Council on 29 October was able to commit itself to bringing the fund into existence by the new year.
The order provides for the small amendment necessary for the treaty of Rome to be regarded as one of the Community treaties as defined in section 1(2) of the European Communities Act 1972. The amendment would add a new article—article 30—to the protocol on the statute of the European investment bank. If the amendment is ratified by all member states, that article will enable the board of governors of the bank to create the European investment fund by unanimous decision.
I come now to the fund itself and how it would operate. The new fund has its origins within the European investment bank, which is one of the Community's least-known, but most efficiently run bodies. It is under the new and illustrious British presidency of Sir Brian Unwin, Because of recent concerns, I visited the bank, and I can report that I did not see signs of extravagance; indeed, I found it to be an extremely professional and well-run organisation.
As the House will know, the bank's primary purpose is to provide medium and long-term loans to capital investment projects that further the economic development of the Community. It borrows the bulk of its funds on the capital markets and borrowers have to meet the full cost of loans. The bank is not allowed to subsidise. Because it has a triple-A credit rating and is non-profit-making, it is able to on-lend at very attractive rates. It now operates on a considerable scale throughout the Community and the United Kingdom is a major beneficiary.
The European investment fund will be an offshoot of the bank. Although the fund will be based at the bank's headquarters in Luxembourg, it will be staffed by bank personnel on secondment. Legally and financially, it will be entirely independent of the bank. There are two reasons for that. The first is operational. The fund will complement, not duplicate, the bank's function as a lender to European Community investment projects. It will not make loans, but rather provide guarantees and in due course take equity stakes in enterprises.
The fund's draft statute allows it to operate throughout the Community in support of two classes of undertakings. One will be small and medium-sized enterprises; the other will be trans-European networks—projects to improve the links between the various member states' national transportation, telecommunication and energy networks.