On the proposal for a decision of the European Parliament and of the Council on providing macro-financial assistance to the Arab Republic of Egypt

PA_Legam

SHORT JUSTIFICATION

As enshrined in the Treaties, the EU is required to uphold and promote the principles of human rights, democracy and the rule of law in its external action. While acknowledging the importance of the EU-Egypt strategic partnership and the need for MFA-support to Egypt in light of the economic impact of, among others, the current geopolitical situation, this opinion aims to integrate human rights, democracy and the rule of law as core parts of the MFA and to strengthen provisions related to benchmarks, parliamentary scrutiny and transparency.

AMENDMENTS

The Committee on Foreign Affairs submits the following to the Committee on International Trade, as the committee responsible:

Amendment 1

Proposal for a decision

Recital 3

Text proposed by the Commission

Amendment

(3) In line with the Partnership Priorities, the EU and Egypt are committed to ensuring accountability, the rule of law, the full respect of human rights, fundamental freedoms, promoting democracy, gender equality and equal opportunities as constitutional rights of all their citizens. These commitments contribute to the advancement of the partnership and to Egypt’s sustainable development and stability. The increased and constructive engagement between the EU and Egypt in the last period has opened the path to more meaningful dialogue on human rights related issues. The subcommittee on Political Matters, Human Rights and Democracy, International and Regional issues of December 2022 and the Association Committee of May 2023 provided the institutional platforms to exchange on an array of human rights issues, which the EU would like to continue and build on. The improvement of the human rights situation in Egypt will have a positive impact on EU-Egypt relations.

(3) In line with the Partnership Priorities, the EU and Egypt are committed to ensuring accountability, the rule of law, the full respect of human rights, fundamental freedoms, promoting democracy, gender equality and equal opportunities as constitutional rights of all their citizens. These commitments contribute to the advancement of the partnership and to Egypt’s sustainable development and stability. The increased and constructive engagement between the EU and Egypt in the last period has opened the path to more meaningful dialogue on human rights related issues. The subcommittee on Political Matters, Human Rights and Democracy, International and Regional issues of December 2022 and the Association Committee of May 2023 provided the institutional platforms to exchange on an array of human rights issues, which the EU would like to continue and build on. Any improvement of the human rights situation in Egypt will have a positive impact on EU-Egypt relations.

Or. en

Amendment 2

Proposal for a decision

Recital 6

Text proposed by the Commission

Amendment

(6) Recalling the geo-political challenges, such as the consequences of Hamas terrorist attacks across Israel on 7 October 2023 as well as the conflict in Sudan, and the strategic importance of Egypt as the largest country in the region and a pillar of stability for the whole Middle East, the Union is embarking on concluding a Strategic and Comprehensive partnership with Egypt as outlined in the Joint Declaration.

(6) Recalling the geo-political challenges, such as the consequences of the situation in the Middle East, as well as the conflict in Sudan, and the strategic importance of Egypt as the largest country in the region and a pillar of stability for the whole Middle East, the Union is embarking on concluding a Strategic and Comprehensive partnership with Egypt as outlined in the Joint Declaration.

Or. en

Amendment 3

Proposal for a decision

Recital 9

Text proposed by the Commission

Amendment

(9) Egypt’s macro-fiscal situation has faced significant challenges and deteriorated substantially over recent months, as external pressures have intensified and public debt has increased further, with substantial downside risks to the economic outlook persisting. The repercussions of Russia’s war on Ukraine and of Hamas terrorist attacks against Israel have led to protracted capital outflows and lower foreign currency receipts, notably due to sharply falling income from tourism and Suez Canal proceeds. This is particularly challenging amid Egypt’s difficult fiscal situation, which is characterised by constant fiscal deficits and high and growing debt to GDP ratios.

(9) Egypt’s macro-fiscal situation has faced significant challenges and deteriorated substantially over recent months, as external pressures have intensified and public debt has increased further, with substantial downside risks to the economic outlook persisting. The repercussions of Russia’s war on Ukraine and of the situation in the Middle East have led to protracted capital outflows and lower foreign currency receipts, notably due to sharply falling income from tourism and Suez Canal proceeds. This is particularly challenging amid Egypt’s difficult fiscal situation, which is characterised by constant fiscal deficits and high and growing debt to GDP ratios.

Or. en

Amendment 4

Proposal for a decision

Recital 18 a (new)

Text proposed by the Commission

Amendment

(18a) As enshrined under Article 21 TEU, the Union’s action should be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations Charter and international law.

Or. en

Amendment 5

Proposal for a decision

Recital 19

Text proposed by the Commission

Amendment

(19) The Commission should ensure that the Union's macro-financial assistance is legally and substantially in line with the key principles, objectives and measures taken within the different areas of external action and with other relevant Union policies.

(19) As enshrined under Article 212 TFEU, the Commission should ensure that the Union's macro-financial assistance is legally and substantially in line with the key principles, objectives and measures taken within the different areas of external action and with other relevant Union policies.

Or. en

Amendment 6

Proposal for a decision

Recital 22

Text proposed by the Commission

Amendment

(22) A pre-condition for granting the Union's macro-financial assistance to Egypt should be that the country continues to make concrete and credible steps towards respecting effective democratic mechanisms – including a multi-party parliamentary system – and the rule of law, and guarantees respect for human rights. In addition, the specific objectives of the Union's macro-financial assistance should strengthen the efficiency, transparency and accountability of the public finance management systems, the governance and supervision of the financial sector in Egypt and promote structural reforms aimed at supporting sustainable and inclusive growth, decent employment creation and fiscal consolidation. The fulfillment of the pre-condition and the achievement of the specific objectives should be regularly monitored by the Commission services and the European External Action Service.

(22) A pre-condition for granting the Union's macro-financial assistance to Egypt should be that the country makes concrete and credible steps towards respecting effective democratic mechanisms – including a multi-party parliamentary system – and the rule of law, and guarantees respect for human rights. In addition, the specific objectives of the Union's macro-financial assistance should strengthen the efficiency, transparency and accountability of the public finance management systems, the governance and supervision of the financial sector in Egypt and promote structural reforms aimed at supporting sustainable and inclusive growth, decent employment creation and fiscal consolidation. The fulfillment of the pre-condition and the achievement of the specific objectives should be regularly monitored by the Commission services and the European External Action Service.

Or. en

Amendment 7

Proposal for a decision

Recital 26

Text proposed by the Commission

Amendment

(26) The Union's macro-financial assistance should be managed by the Commission. In order to ensure that the European Parliament and the Council are able to follow the implementation of this Decision, the Commission should regularly inform them of developments relating to the assistance and provide them with relevant documents.

(26) The Union's macro-financial assistance should be managed by the Commission. In order to ensure that the European Parliament and the Council are able to follow the implementation of this Decision, the Commission should regularly inform them of developments relating to the assistance and pre-conditions under recital 22 and provide them with relevant documents.

Or. en

Amendment 8

Proposal for a decision

Recital 28

Text proposed by the Commission

Amendment

(28) The Union's macro-financial assistance should be subject to economic policy conditions, to be laid down in a Memorandum of Understanding. In order to ensure uniform conditions of implementation and for reasons of efficiency, the Commission should be empowered to negotiate such conditions with the Egyptian authorities under the supervision of the committee of representatives of the Member States in accordance with Regulation (EU) No 182/2011. Under that Regulation, the advisory procedure should, as a general rule, apply in all cases other than as provided for in that Regulation. Considering the potentially important impact of assistance of more than EUR 90 million, it is appropriate that the examination procedure be used for operations above that threshold. Considering the amount of the Union's macro-financial assistance to Egypt, the examination procedure should apply to the adoption of the Memorandum of Understanding, and to any reduction, suspension or cancellation of the assistance.

(28) The Union's macro-financial assistance should be subject to economic policy and democracy, rule of law and human rights conditions, to be laid down in a Memorandum of Understanding, including clear and measurable benchmarks to assess the implementation of the conditions for each instalment. In order to ensure uniform conditions of implementation and for reasons of efficiency, the Commission should be empowered to negotiate such conditions with the Egyptian authorities under the supervision of the committee of representatives of the Member States in accordance with Regulation (EU) No 182/2011. Under that Regulation, the advisory procedure should, as a general rule, apply in all cases other than as provided for in that Regulation. Considering the potentially important impact of assistance of more than EUR 90 million, it is appropriate that the examination procedure be used for operations above that threshold. Considering the amount of the Union's macro-financial assistance to Egypt, the examination procedure should apply to the adoption of the Memorandum of Understanding, and to any reduction, suspension or cancellation of the assistance.

Or. en

Amendment 9

Proposal for a decision

Article 2 – paragraph 1

Text proposed by the Commission

Amendment

1. A pre-condition for granting the Union's macro-financial assistance shall be that Egypt continues to make concrete and credible steps towards respecting effective democratic mechanisms – including a multi-party parliamentary system – and the rule of law, and guarantees respect for human rights.

1. A pre-condition for granting the Union's macro-financial assistance shall be that Egypt takes concrete and credible steps towards respecting effective democratic mechanisms – including a multi-party parliamentary system – and the rule of law, and made a quantitative and substantial improvement in the respect for human rights, since the signing in June 2024 of the Memorandum of Understanding linked to the EUR 1 billion macro-financial assistance package, and that it continues to make concrete and credible improvements in these domains throughout the period covered by this Decision.

Or. en

Amendment 10

Proposal for a decision

Article 2 – paragraph 2

Text proposed by the Commission

Amendment

2. The Commission services and the European External Action Service shall monitor the fulfilment of this pre-condition throughout the life-cycle of the Union's macro-financial assistance.

2. The Commission services and the European External Action Service shall monitor the fulfilment of this pre-condition throughout the life-cycle of the Union's macro-financial assistance in a transparent process in which civil society and international entities such as UN organisations are able to contribute, and report, regularly and in writing, to the European Parliament on the conditions in Article 2 (1) and implementation of the applied benchmarks to measure progress.

Or. en

Amendment 11

Proposal for a decision

Article 3 – paragraph 1

Text proposed by the Commission

Amendment

1. The Commission, in accordance with the examination procedure referred to in Article 7(2), shall agree with the Egyptian authorities on clearly defined economic policy and financial conditions, focusing on structural reforms and sound public finances, to which the Union's macro-financial assistance is to be subject, to be laid down in a Memorandum of Understanding ("the Memorandum of Understanding") which shall include a timeframe for the achievement of those reforms. The economic policy and financial conditions set out in the Memorandum of Understanding shall be consistent with the agreements or understandings referred to in Article 1(3), including the macroeconomic adjustment and structural reform programmes implemented by Egypt with the support of the IMF.

1. The Commission, in accordance with the examination procedure referred to in Article 7(2), shall agree with the Egyptian authorities on clearly defined economic policy and financial conditions, focusing on structural reforms and sound public finances, as well as on democracy, rule of law and human rights conditions, including benchmarks, to which the Union's macro-financial assistance and the release of each separate instalment is to be subject, to be laid down in a Memorandum of Understanding ("the Memorandum of Understanding") which shall include a timeframe for the achievement of those reforms. The economic policy and financial conditions set out in the Memorandum of Understanding shall be consistent with the agreements or understandings referred to in Article 1(3), including the macroeconomic adjustment and structural reform programmes implemented by Egypt with the support of the IMF.

Or. en

Amendment 12

Proposal for a decision

Article 3 – paragraph 2

Text proposed by the Commission

Amendment

2. The conditions referred to in paragraph 1 shall aim, in particular, at enhancing the efficiency, transparency and accountability of the public finance management systems in Egypt, including for the use of the Union's macro-financial assistance. Progress in mutual market opening, the development of rules-based and fair trade, and other priorities in the context of the Union's external policy shall also be duly taken into account when designing the policy measures. Progress in attaining those objectives shall be regularly monitored by the Commission.

2. The conditions referred to in paragraph 1 shall aim, in particular, at enhancing the efficiency, transparency and accountability of the public finance management systems in Egypt, including for the use of the Union's macro-financial assistance. Progress in mutual market opening, sustainable development, poverty reduction, the development of rules-based and fair trade, and other priorities in the context of the Union's external policy, including those relating to democracy, rule of law and human rights, shall also be duly taken into account when designing the policy measures. Progress in attaining those objectives shall be regularly monitored by the Commission.

Or. en

Amendment 13

Proposal for a decision

Article 4 – paragraph 3 – subparagraph 1 – point c

Text proposed by the Commission

Amendment

(c) the satisfactory implementation of the economic policy conditions and financial conditions agreed in the Memorandum of Understanding.

(c) the satisfactory implementation of the economic policy conditions, financial conditions, and democracy, rule of law and human rights conditions, agreed in the Memorandum of Understanding.

Or. en

Amendment 14

Proposal for a decision

Article 8 – paragraph 1 – point c a (new)

Text proposed by the Commission

Amendment

(ca) outline the concrete and credible steps Egypt has taken towards respecting effective democratic mechanisms – including a multi-party parliamentary system – and the rule of law, and toward guaranteeing respect for human rights.

Or. en

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR FOR OPINION HAS RECEIVED INPUT

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur for opinion in her capacity as rapporteur for opinion declares that she received input from the following entities or persons in the preparation of the (draft) opinion, prior to the adoption thereof in committee:

Entity and/or person

European Commission - DG ECFIN

EEAS

The Egyptian Ambassador to the EU

Amnesty International

Euromed Rights

CIHRS

Egyptian Front for Human Rights

Committee to Protect Journalists

The list above is drawn up under the exclusive responsibility of the rapporteur for opinion in her capacity as rapporteur for opinion.

Where natural persons are identified in the list by their name, by their function or by both, the rapporteur for opinion in her capacity as rapporteur for opinion declares that she has submitted to the natural persons concerned the European Parliament’s Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.