PROGRAMME CONTRACT (87/C 35/02)

- The Commission of the European Communities (hereinafter referred to as 'the Commission'),and-the Hellenic Republic,hereinafter referred to jointly as 'the Parties',have agreed as follows: TITLE I Joint implementation of the integrated Mediterranean programme for the island of Crete (hereinafter referred to as the 'IMP for Crete') Article 1 This contract shall constitute a programme contract within the meaning of Article 9 of Regulation (EEC) No 2088/85. It shall enter into force on the 2 September 1986 and shall expire upon completion of the IMP for Crete. Under this contract, the parties shall agree on joint action to ensure effective implementation of the entire IMP for Crete as adopted by the Commission Decision of 29 July 1986. The purpose of such joint action shall be to ensure:- the effectiveness of the initiatives taken to implement the IMP for Crete, notably through sound administrative organization at all levels,-coordination with the bodies representing the beneficiaries and between all the administrations concerned,-appropriate management of national and Community aid made available from budgetary resources,-reliable, relevant and readily available information for the parties,-compliance with Community policies, and in particular with the general objectives of production management defined by the common agricultural policy and with the procedures for issuing invitations to tender and for awarding contracts. TITLE II Machinery for coordinating and mobilizing initiatives Article 2 1. The Hellenic Republic shall designate the Minister for the National Economy as being responsible for the effective implementation of the IMP for Crete.The Minister shall be assisted by a Monitoring Committee that will hold its meetings in Crete. The tasks and responsibilities of the Committee shall be those laid down in Chapter 5, paragraph 53, of the IMP for Crete and any other task that might be assigned to it by the parties. The Monitoring Committee shall comprise, among others, the permanent members listed in Annex 1. The total number of permanent members shall remain as indicated.The Minister shall decide on the coordination machinery required at national level, and in particular the establishment of an Interministerial Committee to be chaired by his representative. The tasks and responsibilities of the Interministerial Committee shall be those laid down in Chapter 5, paragraph 54, of the IMP for Crete and any other task that might be assigned to it by the Minister. Any such new task shall be notified to the Commission by the Hellenic Republic.The Commission, where appropriate in consultation with the European Investment Bank, shall decide on the coordination machinery at Community level. 2. Within their respective fields of competence, the parties shall undertake to issue any appropriate instructions to the persons to whom tasks are assigned under this programme contract, notably with a view to securing the consultation and coordination necessary for the smooth implementation of the IMP for Crete. Article 3 The prefects shall be responsible, each for their own prefecture and for that part of the IMP for Crete financed out of the prefectural budget, for the smooth implementation of the IMP for Crete. Similarly, for that part of the IMP for Crete not financed out of the prefectural budget, it shall be for the prefects to ensure that the necessary steps are taken to ensure the effective implementation of the IMP. In accordance with Article 9 of this contract, the parties shall undertake to examine, in the light of the initial experience of implementing the IMP, whether or not it is expedient to consolidate in certain respects the authority granted to the prefects with a view to expediting the necessary administrative and budgetary decision making. Article 4 With the agreement of the other prefects in Crete, the chairman of the Monitoring Committee shall decide on the use to which the appropriations available under subprogramme No 6: 'Implementation of the IMP for Crete', are to be put. Those appropriations shall, in any event, cover only expenditure directly related to implementation of the IMP for Crete. Article 5 The Greek authorities shall appoint in Crete within the public administration an official responsible for monitoring each of the six subprogrammes making up the IMP for Crete. Each monitoring official shall see to it that full and standardized information is supplied to the prefects and to the Monitoring Committee on each of the measures making up the subprogramme for which he is responsible, in the manner provided for in Articles 12 and 13 of this contract. He shall at all times bring to the attention of the prefects and, after informing the prefect concerned, of the other Greek authorities the various administrative, technical or budgetary initiatives necessary to ensure effective implementation of the subprogramme, as approved, for which he is responsible. Under the authority of the chairman of the Monitoring Committee, the monitoring official shall also chair the meetings of the technical working parties set up to prepare the ground for discussions within the Monitoring Committee. Article 6 Before 1 October 1986, the Minister for the National Economy shall designate the permanent members and the Secretary of the Monitoring Committee, who shall come from the regional department in Crete of the Ministry of the National Economy. The Commission shall be informed thereof. The Commission shall designate its representatives on the Monitoring Committee before 1 October 1986. The Greek authorities shall be informed thereof. Under the authority of the chairman of the Monitoring Committee, the Secretary shall take all the necessary steps to ensure the proper functioning of the Monitoring Committee, including the handling of information. In performance of that task, he shall be assisted by a staff and by the requisite material resources, which he shall place at the disposal of the Monitoring Committee. Article 7 Before 31 December 1986, the parties shall agree on the appointment of an appraisal official to the Monitoring Committee. The appraisal official shall possess the professional experience and knowledge necessary to perform his task and shall come from outside the public service. He shall be recruited on the basis of a contract the terms of which are to be agreed between the parties. He shall be remunerated out of the appropriations available under the heading 'assessment' of subprogramme No 6: 'Implementation of the IMP for Crete'. The appraisal official may, provided he gives notice of his intention, visit the location of operations being carried out. TITLE III Community and national financing Article 8 The list and schedule of measures already adopted for the IMP for Crete are given in Annex 1 to the IMP for Crete. The estimated timetable for commitments and payments from the various sources of Community budget financing is indicated in Annex 2 hereto. The forecasts are in current ECU, with no indexation clause. Commitments and payments out of budgetary resources, which, pursuant to Regulation (EEC) No 2088/85, are to be decided in accordance with the rules governing each source of financing, shall be made in ECUs, with the exception of aid payments from the Guidance Section of the European Agricultural Guidance and Guarantee Fund and of payments in connection with that Fund, which are made under the budget heading referred to in Article 11 (2) of the aforementioned Regulation. In the last two cases, payments in ECU shall be effected as soon as possible. The exchange rate applied in converting drachma into ECU shall be the rate applicable on the first working day of the month during which the payment is made. Not later than 31 March each year, the Greek authorities shall present for each prefecture in Crete a forward financial statement for the current year identifying separately the appropriations managed by the national authorities and those managed by the prefectural authorities with a view to implementing the IMP for Crete. The statement shall be accompanied by a synopsis of the IMP for Crete, with each measure being examined in turn, giving direct comparison with the annual financial forecast for each subprogramme within the IMP for Crete, drawn from the current budgets as adopted by the Greek authorities. Those forecasts shall also indicate the amount of Community aid planned for implementing those measures. The synopsis and the forward financial statements shall be transmitted to the Monitoring Committee by the Ministry of the National Economy before 15 April each year. Article 9 Before 31 August 1987, the Greek authorities shall present to the Commission a draft detailed financial plan for the years 1988 to 1992 inclusive. They shall also propose any amendments or clarifications to be made to Annex 1 to the IMP for Crete. The Commission shall then examine and determine the list and schedule, together with any amendments, of measures to be adopted under the IMP for Crete for the period after 1987 and shall revise Annex 1 to the IMP for Crete accordingly. The estimated timetable for commitments and payments from the various sources of Community budget financing shall be updated and communicated to the Greek authorities, together with the list and schedule of measures and the revised Annex 1 to the IMP for Crete, before the end of 1987. At the same time, the parties shall check on the establishment and functioning of the coordination, mobilization and monitoring machinery referred to in this contract and shall consider the implications for the continued implementation of the IMP for Crete. Article 10 Irregularities or substantial changes that have not been submitted to the Commission for its approval and that are liable to jeopardize compliance with the integrated nature of the IMP for Crete, especially where they concern the establishment or functioning of the coordination, mobilization and monitoring machinery for the IMP for Crete set up under this contract, may result in application of Article 17 (4) of Regulation (EEC) No 2088/85. If the Commission was considering applying Article 17 (3) or (4) of Regulation (EEC) No 2088/85, the Hellenic Republic would be given an opportunity to submit its observations within the time limits set by the Commission. TITLE IV Arrangements for appraising, evaluating and, more generally, monitoring operations Article 11 On the basis of a model to be proposed by the Commission, the parties shall agree to set in place, not later than 31 March 1987, a system for gathering and managing the different data relating to the arrangements for appraising, evaluating and monitoring operations, due regard being paid to the internal appraisal, evaluation and monitoring rules of each structural Fund. Article 12 On 1 January each year and every three months thereafter, each monitoring official shall prepare the forward financial statement referred to in Article 8, indicating, in terms of commitments and payments made to the final beneficiaries, for each prefecture and for the island of Crete overall how his subprogramme has been carried out. That information shall be available to the Monitoring Committee from its secretariat. Observing the same schedule, the Commission shall inform the Monitoring Committee of any direct payments made by the Community to final beneficiaries in respect of measures forming part of a subprogramme. Article 13 At the end of each half-year, the monitoring official shall prepare for the Monitoring Committee a report on the state of implementation of the subprogramme for which he is responsible, indicating public expenditure, total expenditure and physical indicators and specifying for each measure the changes as compared with forecasts based on Annex 1 to the IMP for Crete. The report shall make particular reference to measures in respect of which the level of total expenditure in two successive reports is 50 % lower than that given in the schedule for the IMP for Crete. Article 14 On the basis of the aforementioned information in particular, the appraisal official on the Monitoring Committee shall submit an annual report to it not later than 31 March of the year following the year in question. Before starting the annual report, he shall seek the opinion of the chairman of the Monitoring Committee. The anual report shall discuss:(a) the progress made towards attaining the socio-economic objectives laid down in the IMP for Crete on the basis of an assessment of the state of implementation and of the socio-economic impact;(b)the initiatives needed to secure closer compliance with the IMP for Crete as approved, notably as regards the progress made in implementing it, its socio-economic objectives and its integrated nature;(c)any changes needed in the measures to be carried out and described in Annex 1 to the IMP for Crete in order to promote attainment of the latter's socio-economic objectives; (d)any changes needed in the organization and functioning of authorities concerned in order to streamline decision making. The annual report shall be confidential. It shall be made available to the permanent members of the Monitoring Committee only. At a subsequent meeting, and before the prefects decide on the operations falling within their field of competence, the Monitoring Committee shall discuss the operational proposals contained in the annual report, giving its views also in the soundness of the quantitative data and estimates. Where the proposed operations fall within the field of competence of other authorities, the Monitoring Committee shall, under the authority of its chairman, transmit its conclusions to the parties not later than one month following its meeting. Article 15 Before 31 July each year, and for the first time in 1987, the Commission shall provide the Greek authorities with a list of the Community grant applications to be submitted to it the following year, together with the schedule to be met. Not later than 31 October each year, the Greek authorities shall provide the Commission with a summary list and a schedule of national administrative or legislative measures that will be particularly important for the implementation of the IMP for Crete during the following year, and in particular the measures referred to in paragraph 54.5 of the IMP for Crete, specifying the national or local authorities responsible. Each year, the monitoring officials shall check at all times on the implementation of those administrative and legislative measures. Article 16 As regards the specific action programme for Crete financed under Article 12

(1) of Regulation (EEC) No 2088/85, the Greek authorities shall transmit to the Commission before 1 July each year the information provided for in Commission Decision 85/22/EEC of 5 December 1984 concerning the operations to improve the rural infrastructure, the irrigation schemes and the forestry measures carried out during the preceding calendar year. TITLE V Information to be supplied in support of Community grant applications Article 17 Forms for payment claims shall be submitted in accordance with the rules of each Fund. Any changes that have to be made to existing forms in order to take account of Community financing over and above the ceilings laid down in the provisions governing the Funds shall be notified to the Greek authorities by the Commission before 30 November 1986 where they have to be returned before the end of 1986. Subsequently, any other form necessary shall be notified in good time. As regards payments made under the special budget heading referred to in Article 11

(2) of Regulation (EEC) No 2088/85, the Commission shall notify the Hellenic Republic of the forms to be submitted for those payment claims before 30 November 1986 where they have to be returned before the end of 1986. Subsequently, any other form necessary shall be notified in good time. As regards the specific action programme for the island of Crete financed by the Guidance section of the EAGGF under Article 12 (1) of Regulation (EEC) No 2088/85, the procedures laid down in Commission Decision 83/644/EEC and for the purpose of applying Regulation (EEC) No 2966/83 shall be complied with by the Greek authorities. TITLE VI Compliance with Community policies Article 18 The Greek authorities shall submit to the Commission and the Monitoring Committee for their opinions before 31 October 1986 the terms of reference for the studies and research work provided for in subprogramme 1, measure 4, point 1.1, second indent, measure 6 and measure 7, point 1.1 (b) of Annex 1 of the IMP for Crete. The Monitoring Committee shall be kept informed at all times by the official responsible for monitoring subprogramme 1 of the progress made with those studies and research work and shall make a continuous assessment of them. In performance of his duties as defined in Articles 12 and 13 of this contract, the official responsible for monitoring subprogramme 1 shall ensure in particular that progress with, and the results of, the studies and research work referred to above are effectively coordinated. The terms of reference for the studies and research shall, in particular, take in the supply and demand forecasts for agricultural products, the prospects of finding normal marketing outlets and/or arrangements for promoting such products, and notably those that are affected by an extension of the areas under irrigation and/or are the subject of conversion operations. Article 19 In order to enable the Commission to decide, in accordance with the procedures laid down in Article 9 of this contract, whether or not it is expedient to use the indicative financial reserve referred to in paragraph 15.7 of the IMP for Crete, the Greek authorities shall transmit to the Commission in a coordinated fashion and before 30 June 1987 the reports on the studies and research work referred to in Article 18 above and which shall include the results available at the time, together with a synopsis of those reports. Article 20 The Greek authorities shall supply the Commission in advance with the summary list of investment projects in the manufacturing sector that might qualify for financing (under National Law No 1262/82) with the assistance from the Community in the context of the IMPs and which satisfy the following conditions:- either they are located in a sensitive sector indicated in a list communicated by the Commission to the Greek Governement and cost more than 300 000 ECU,-or they cost less than 300 000 ECU and are carried out by a firm with a turnover of more than 3 million ECU or whose capital is controlled to the extent of more than one-third by a firm satisfying that turnover criterion. If so requested, the Greek authorities shall provide the Commission with a detailed case file for a particular project before the financing decision. The Greek authorities shall submit for agreement beforehand all investment projects costing more than 15 million ECU, together with the feasability and profitability studies normally requested for such projects by the European Regional Development Fund. The Greek authorities shall also agree to present to the Commission at the end of each half-year grouped references to the invitations to tender published in the Official Journal of the European Communities and a report on the award procedures designed to show that Directives 77/62/EEC, 80/797/EEC and 71/305/EEC have been complied with. Article 21 In the case of all infrastructure investment projects costing more than 15 million ECU, the Greek authorieties shall transmit to the Commission for its agreement a socio-economic cost-benefit analysis. Industrial and infrastructure investment projects costing more than 15 million ECU shall be examined by the Monitoring Committee in the light of the findings of the studies referred to in Article 20. Article 22 The Greek authorities shall take the necessary steps to publicize the granting of Community assistance as widely as possible. In the case of individual projects costing more than 500 000 ECU, permanent signboards shall be erected at the sites of the said projects. TITLE VII Recipients of payments made by the Commission Article 23 Community grants made under the IMP for Crete shall be paid into the account(s) with the Bank of Greece designated by the Greek authorities, with the exception of certain direct payments made by the Guidance section of the EAGGF and by the European Social Fund. TITLE VIII Conditions governing the adoption of clauses suplementary to the contract Article 24 Substantial changes to the IMP for Crete, which have to be referred to the Advisory Committee on IMPs in the manner provided for in Article 7 of Regulation (EEC) No 2088/85, shall be the subject of clauses suplementary to this contract. TITLE IX Final provision Article 25 Any dispute as to the interpretation, validity or implementation of this contract shall be referred to the Court of Justice of the European Communities. Done at Crete, 2 September 1986. For the CommissionFor the Hellenic Republic G. VARFISK. SIMITIS ANNEX 1 Composition of the Monitoring Committee for the IMP for Crete Number ofpersons Chairman: The Prefect of Iraklio 1 Permanent secretary: Regional department in Crete of the Ministry of the National Economy 1 Permanent members: The Prefects of Lasithi, Rethimno and Khania, or their deputies (1) (2) 3 A representantive of the local Union of Municipalities 1 A representative of the Chambers of Commerce 1 A representative of the Chambers of Small Industry 1 A representative of the Union of Agricultural Cooperatives 1 The official responsible for monitoring each subprogramme of the IMP for Crete 6 The appraisal official 1 A maximum of three persons appointed by the Greek authorities 3 A maximum of three Commission representatives 3 A representative of the European Investment Bank 1 23 Optional members: On an invitation from the chairman of the Committee or at the request of the Commission, representatives of the public administrations and of the agencies or other bodies directly concerned may attend meetings of the Monitoring Committee in their capacity as contractors for the measures to be discussed at those meetings in so far as the permanent members of the Monitoring Committee are unable to represent them satisfactorily. (1) To be appointed by the prefect in question. (2) The prefects may each be accompanied by one person.

ANNEX 2 (in million ECU)

Source Financial forecasts (1): IMP for Crete Commitments Payments 1986 1987 1988 1989 1990 1991 1992 1993 Total 1986 1987 1988 1989 1990 1991 1992 1993 Total 1. EAGGF 2. ERDF 3. ESF 4. Article 551 10,023 17,582 0,024 15,472 8,946 19,850 0,200 19,252 6,675 9,670 0,140 13,555 5,837 9,670 0,140 13,555 5,837 9,670 0,140 13,555 5,837 9,670 0,140 13,555 5,837 9,670 0,140 13,555 1,167 - - - 50,16 85,78 0,92 102,50 3,816 7,033 0,012 6,189 10,423 13,214 0,112 12,342 10,445 15,097 0,17 15,839 6,797 12,724 0,14 15,264 5,837 9,670 0,14 13,555 5,837 9,670 0,14 13,555 5,837 9,670 0,14 13,555 1,167 8,703 0,070 12,199 50,16 85,78 0,92 102,50 Total 43,101 48,248 30,040 29,202 29,202 29,202 29,202 1,167 239,36 17,050 36,091 41,551 34,925 29,202 29,202 29,202 22,139 239,36

(1) In accordance with the financial plan in paragraph 43.2 of the IMP for Crete; as the details of commitments for 1988 to 1992 are not yet available, the calculations have been based on an annual average for that period as a whole.