Decision of the European Parliament

of 10 April 2002

concerning discharge to the Director of the European Agency for Reconstruction in respect of the implementation of its budget for the 2000 financial year

(2002/452/EC)

THE EUROPEAN PARLIAMENT,

- Having regard to the report of the Court of Auditors concerning the financial accounts of the European Agency for Reconstruction and the implementation of aid for Kosovo for the year 2000, accompanied by the replies of the Commission and of the European Agency for Reconstruction(1) (C5-0673/2001),

- Having regard to the 2000 annual report from the Commission to the European Parliament and the Council on the European Agency for Reconstruction (COM(2001) 446),

- Having regard to the Council Recommendation of 5 March 2002 (C5-0123/2002),

- Having regard to Article 276 of the EC Treaty,

- Having regard to Rule 93 of and Annex V to its Rules of Procedure,

- Having regard to the report of the Committee on Budgetary Control and the opinion of the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy (A5-0101/2002),

A. Whereas as early as July 1999, immediately after the war in Kosovo, the Commission set up the EC TAFKO Task Force to implement the first stages in the reconstruction programme;

B. Whereas in February 2000 the European Agency for Reconstruction took over EC TAFKO's programmes and incorporated them into its programme for 2000;

C. Whereas the challenge of reconstructing Kosovo was and is enormous, due to the fact that physical and human damage is widespread in a province devastated by a decade of chronic under-investment, neglect and abuse of human rights; whereas safeguarding sustainability of the investments in Kosovo is a prerequisite for sound and efficient management of the EU budgetary resources allocated to this region;

D. Whereas the Agency's strategy involves moving from the emergency actions which characterised the international community's assistance in 1999 to longer-term measures aimed at sustainable reconstruction and recovery;

E. Whereas, nevertheless, emergency actions continued well into 2000, concerning in particular the provision of basic public utilities such as electricity, water and waste collection as well as emergency measures to restore key infrastructure such as the transport network;

F. Whereas the Court of Auditors takes the view that the administration of the Agency and its budgetary management in 2000 were very efficient, the result being that the Agency achieved the most ambitious objectives it had set for its first year of activity in the spheres of energy, housing, transport and agriculture;

G. Whereas the Court of Auditors judges that the Agency paid attention to the principles of efficiency and economy and that, through the very flexible application of the rules in force, it has succeeded in keeping prices low and stimulating the regional economy;

H. Whereas the Court of Auditors has obtained reasonable assurance that the annual accounts for the financial year ended 31 December 2000 are reliable and that the underlying transactions are, taken as a whole, legal and regular,

1. Notes the following figures for the accounts of the European Agency for Reconstruction:

2000 financial year

>TABLE>

Financial control

2. Notes the replies given by the Commission and the Agency regarding the risks referred to in paragraph 68 of the Court of Auditors' report; looks to the Commission and the Agency for assurance that regular, comprehensive, on-the-spot ex ante checks have been carried out on the transactions; calls for prompt adoption of the revised Financial Regulation which has already been announced, the provisions of which include the appointment of an internal auditor;

3. Impresses on the director of the European Agency for Reconstruction the importance of respecting the provisions laid down by Council regulation (EC) No 2667/2000 of 5 December 2000 on the European Agency for Reconstruction(2), regarding informing the European Parliament, including the presentation of a quarterly activity report (Article 5(5));

4. Recommends that the Commission submit to the European Parliament the annual report drawn up pursuant to Article 4(14) of Regulation (EC) No 2667/2000, before 1 May each year, at the latest;

5. Insists on the need to promote adequate investigation, including, as appropriate, an internal evaluation by the European Anti-Fraud Office (OLAF), of any well-founded suspicion of mismanagement and corruption linked to investments in favour of power-stations in Kosovo;

European Agency on Reconstruction

6. Congratulates the Agency on its good performance in 2000 in connection with the implementation of the reconstruction programme and applauds the individual commitment displayed by the staff seconded to the Agency, who are required to perform their work under what are sometimes very difficult circumstances; points out, further, that the staff of EC TAFKO likewise carried out their task in an exemplary fashion in the period immediately following the war;

7. Notes that the largest item in the Agency's budget is that dealing with the "rehabilitation of the energy sector"; in that connection, draws attention to the incomprehension of the local population when faced with the paradoxical situation of daily power cuts;

8. Notes that closer cooperation with Belgrade is essential to improve the energy situation in Kosovo and will facilitate UNMIK's (United Nations Mission in Kosovo) task of finding creative solutions to allow the Kosovo Electricity Company (KEK) to have a legal corporate status and to establish mechanisms for the international financial institutions to provide credit to KEK, as the donors cannot provide indefinite financing through grants for all the investment and recurrent needs of Kosovo;

9. Welcomes the Action Plan for the energy sector agreed in October 2001 between the Commission and the Agency which lays down the benchmarks to be achieved by UNMIK and KEK;

10. Applauds the effective and economical approach employed by the Agency in the housing, transport and agriculture sectors;

United Nations Mission in Kosovo (UNMIK), Special Representative Secretary General and European Commission

11. Calls on UNMIK to implement the Action Plan of essential measures, agreed upon by the Commission and UNMIK, notably regarding the need for a multi-media campaign aimed at raising the public awareness of power sector problems which contribute to wastage and non-payment;

12. Urges UNMIK likewise to draw up a transport policy so that the sustainability of the investments can be guaranteed; urges UNMIK, further, to take account of the observations made by the Court of Auditors concerning the high customs duties and sales taxes imposed on agricultural inputs, which act as a disincentive to agricultural production;

13. Urges the Special Representative Secretary General (SRSG) of the United Nations in Kosovo to make much greater efforts to draw up a policy framework and a long-term strategy to ensure the sustainability of the EC and international investment in Kosovo; calls on the Commission, which funds the EU pillar of UNMIK, to discuss the development of a sustainable policy and a regulatory framework with UNMIK and the provisional institutions for self-government (PISG), in particular the Kosovan President, the Kosovo Prime Minister and government and the Kosovo Assembly; requests that a report on the development of a sustainable policy and regulatory framework and on the progress of the sectoral Action Plans agreed with the Commission be included in the UNMIK end-of-year report for 2002; underlines in this respect, that it is of utmost urgency, to improve Kosovo's tax collection capacity, in order to increase its budget revenue and attain budget sustainability; requests UNMIK to indicate in its mid and end-of-year report, the measures taken and foreseen with a view to increasing Kosovo's budget revenue;

14. Calls on UNMIK to carry-out an audit of the cash management and procurement procedures of KEK; requests that longer-term options for the development of Kosovo's electricity sector be examined in the light of the forthcoming World Bank study;

Kosovo authorities

15. Calls on the relevant Kosovo authorities to take the necessary steps, as provided for in the abovementioned Action plan, to raise the revenue collection rate, curb the electricity consumption, and formalise an agreement on electricity exchanges with Serbia and neighbouring countries, as Kosovo's power generation system has to import electricity during peak periods and export it during off-peak times;

Discharge decision

16. Gives discharge to the Director of the European Agency for Reconstruction in respect of the implementation of the budget for the 2000 financial year, on the basis of the report of the Court of Auditors;

17. Instructs its President to forward this decision to the Director of the European Agency for Reconstruction, the Council, the Commission and the Court of Auditors and to have it published in the Official Journal (L series).

The Secretary-General

Julian Priestley

The President

Pat Cox

(1) OJ C 355, 13.12.2001, p. 1.

(2) OJ L 306, 7.12.2000, p. 7.