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Finding the finances

Mays change of status for 10 eastern and southern European countries from applicants to fully fledged members of the European Union will significantly expand the amount of recycling finance available to them.

On paper, claims on the special pre-accession funds by the applicants eight former eastern European communist countries plus Cyprus and Malta will end and they will have to take their place in the queue with the existing 15 member states. In practice, however, a number of environmental and economic factors should ensure that the newcomers stay well ahead of the game.

Since 2000, recycling programmes in the central and eastern European acceding countries have been funded through the pre-accession instruments ISPA, Phare and SAPARD, with total transfers exceeding E1 billion. But after accession assistance in the environment field will almost treble, according to commission environment spokesman Lone Mikkelsen.

Until the end of the current budgetary period in 2006, the new member states will receive some E8bn, which is more than 10% of the total investment requirements, she says.

EU assistance in the form of non-repayable grants will chiefly be funnelled through the structural and cohesion funds, which will increase threefold after accession to a total of E21.7bn, and through the LIFE programme. All incoming countries will be eligible for money from these regional and structural funds as well as from the LIFE programme, which provides money for smaller-scale environmental projects.



Compliance

One reason for the heavy flow of funding is to enable the new members to implement environmental and other directives where transitional periods have been agreed. Brussels says compliance with the directives justify reserving adequate financial and human resources.

Suggested future financing sources include the EU programmes, loans from international financial institutions, national budgets and private sector investment.

The commission says the new member countries will also have the opportunity to complete gaps in institution building in the environment field after accession with twinning and exchange programmes. The so-called transition facility of E420 million in 20042006 will help support them in this.

The countries should propose to the commission the list of priority fields and the projects that they intend to include in this facility, environment being one of the policy areas envisaged, according to a Brussels funding document.

After 2006 the EU will need to ensure a new financial instrument for the environment of the enlarged Europe. This would replace the current environmental funding programmes and encompass a future LIFE Programme.

There is enough here to suggest that the principal source of funding for recycling in the new EU member states will be the programmes run by the commission, and the first call by those seeking loans, grants or investment in this field should be Brussels.

But there will also be considerable funding on comparatively beneficial terms available from the European Investment Bank (EIB), which says environmental protection and improvement remains one of the principal objectives of EIB lending. The aim is that 3035% of EU-25 lending is driven by EU environmental objectives.

The EIB, the biggest source of international finance for projects in the future member states, normally lends up to 50% of project costs on average providing about one-third of the funding.

Working closely with the commission, the EIB aims to achieve the best combination of grants and loans in the future member countries. It is now placing special emphasis on financing foreign direct investment since transfers of both capital and know-how are strong drivers for economic modernisation, exports and higher productivity.

The European Bank for Reconstruction and Development is less focused in this area but is currently supporting environmental projects in Poland and invites submissions.

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