PARIS, Feb 27: The European Commission adopted on Wednesday a project proposed by its president Romano Prodi to set up the Euro-Mediterranean Bank (EMB), whose principal function will be, in the words of Mr Prodi, “promoting the working together of the European and Mediterranean countries.” The EMB is to be a subsidiary of the European Investment Bank (EIB).

The EMB builds on the idea of the Euro-Mediterranean Partnership (EMP) launched at Barcelona in 1995, a project which associated Algeria, Cyprus, Egypt, Israel, Jordan, Lebanon, Malta, Morocco, the Palestinian Authority, Syria, Tunisia and Turkey. The European Commission holds a 10-per cent stake in the EMP, with the EIB exercising majority control.

The starting capital of the new bank is estimated at between euros 7 and 9 billion ($6.3-$8.1 billion). Its principal difference with the EIB is in the kind of projects that the new bank is to finance, with the EMB specializing in the private sector. The EIB finances essentially public sector infrastructure projects.