Table of Contents

A. FINANCIAL ASSISTANCE TO THE WESTERN BALKANS, ICELAND AND TURKEY 4

CROATIA.. 4

1. SUMMARY.. 4

2. STRATEGIC PLANNING AND PROGRAMMING.. 4

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012. 8

4. IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 13

TURKEY.. 16

1. SUMMARY.. 16

2. STRATEGIC PLANNING AND PROGRAMMING.. 16

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012. 20

4. IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 29

ICELAND.. 32

1. SUMMARY.. 32

2. STRATEGIC PLANNING AND PROGRAMMING.. 32

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012. 35

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA.. 37

1. SUMMARY.. 37

2. STRATEGIC PLANNING AND PROGRAMMING.. 37

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012. 41

4. IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 45

MONTENEGRO.. 49

1. SUMMARY.. 49

2. STRATEGIC PLANNING AND PROGRAMMING.. 49

3. IMPLEMENTATION OF ASSISTANCE. 54

4. IMPLEMENTATION MODALITIES AND STRUCTURES. 58

ALBANIA.. 61

1. SUMMARY.. 61

2. STRATEGIC PLANNING AND PROGRAMMING.. 61

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012. 65

4. IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 74

SERBIA.. 77

1. SUMMARY.. 77

2. STRATEGIC PLANNING AND PROGRAMMING.. 77

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012. 80

4. IMPLEMENTATION AND MONITORING MOSALITIES AND STRUCTURES. 88

BOSNIA AND HERZEGOVINA.. 91

1. SUMMARY.. 91

2. STRATEGIC PLANNING AND PROGRAMMING.. 91

3. IMPLEMENTATION OF ASSISTANCE. 96

4. IMPLEMENTATION MODALITIES AND STRUCTURES. 98

KOSOVO[1] 102

1. SUMMARY.. 102

2. STRATEGIC PLANNING AND PROGRAMMING.. 102

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012. 105

4. IMPLEMENTATIONAND MONITORING MODALITIES AND STRUCTURES. 110

B. MULTI - BENEFICIARY.. 114

1. SUMMARY.. 114

2. STRATEGIC PLANNING AND PROGRAMMING.. 114

3. IMPLEMENTATION OF ASSISTANCE. 119

C. Towards a more efficient and effective delivery of assistance: linking assistance more closely to the enlargement policy priorities and the sector approach. 122

1. Towards a new Instrument for Pre-accession for 2014-2020. 122

2. Cooperation with the donor community on aid effectiveness. 122

3. Sector approach. 123

4. Lessons learned from Evaluation. 124

5. TAIEX, a demand driven instrument aligned with EU policy priorities. 126

D. PHARE, CARDS, TURKEY PRE-ACCESSION AND TRANSITION FACILITYFINANCIAL DATA AT 31ST DECEMBER 2012 : 129

1. EU 12 – PHARE and Transition Facility - Decentralised Management 129

2. Candidates and Potential Candidates - CARDS (and PHARE for HR) or Turkey Pre-accession Assistance - FINANCIAL DATA.. 129

Acronyms and Abbreviations: 132

A. FINANCIAL ASSISTANCE TO THE WESTERN BALKANS, ICELAND AND TURKEY

CROATIA

1. SUMMARY

Following the signature of the Accession Treaty on 9 December 2011, Croatia continued throughout 2012 the implementation of measures to further strengthen its capacity to meet the obligations of membership to the EU. Since 1 July 2013, Croatia is an EU Member State.

The National Programme[2] for component I adopted in 2012 covers two budgetary years, namely the IPA 2012 Transition Assistance and Institution Building allocation, as well as the 6-month allocation for 2013 (in accordance with the envisaged EU accession of Croatia on 1 July 2013). The total amount of the 2012 and 2013 National Programmes was EUR 46.80 million. The implementation of EU financial assistance in 2012 accompanied these developments by providing further support for completing reforms and building up capacity in the key areas necessary for assuming the obligations of membership, namely in the areas of judiciary and fundamental rights and justice, freedom and security, as well as continuing the efforts of preparing Croatia for the management and implementation of post-accession funds.

Furthermore, during 2012 Croatia completed its preparations for the waiver of the ex-ante controls on procurement in order to achieve full decentralisation of the management and implementation of EU financial assistance prior to accession.

2. STRATEGIC PLANNING AND PROGRAMMING 2.1 Multi-annual Indicative Planning Document

The Instrument of Pre-accession Assistance (IPA) support for the period 2012-2013 reflects, in accordance with the 2011-2013 MIPD[3], the shift to a stronger sector approach to EU financial assistance under the IPA Instrument. A positive effect of this new approach was the more targeted assistance allowing easier identification of the remaining gaps as well as improved donor coordination.

The sectors identified as key for EU assistance in Croatia are 1. justice and home affairs and fundamental rights; 2. public administration reform; 3. environment and climate change; 4. transport; 5. private sector development; 6. social development; 7. agriculture and rural development.

In line with the Enlargement Strategy and Main Challenges 2011-2012 and the accompanying 2011 Progress Report for Croatia, which identified the need to further consolidate reforms in the fields of rule of law, fight against corruption and reform of the public sector had been identified as key accession priorities, the IPA 2012-2013 National Programmes under Component I mainly focused on the first two sectors of the MIPD.

In addition, the priorities identified under the sectors 3 to 7 continued to contribute to the "Europe 2020" objectives of the EU by improving regional competitiveness, as well as human capital and natural resources management. The implementation of the assistance in these sectors took place under IPA Components III, IV and V, allowing Croatia to continue its preparation managing decentralised funds.

Table 1: MIFF[4] allocations per component, in million EUR

Component || 2011 || 2012 || 2013 || 2011-2013

I – Transition Assistance and Institution Building || 39.96 || 39.97 || 17.44 || 97.37

II – Cross-border cooperation || 15.87 || 16.44 || 9.75 || 42.06

III – Regional Development || 58.20 || 57.45 || 30.09 || 145.74

IV – Human Resources Development || 16.00 || 15.90 || 8.55 || 40.59

V – Rural Development || 26.50 || 25.82 || 27.70 || 80.02

TOTAL || 156.53 || 155.59 || 93.52 || 405.78

2.2. Programming 2.2.1 Component I

The National Programme for component I adopted in 2012 covers two budgetary years, namely the IPA 2012 Transition Assistance and Institution Building allocation, as well as the 6-month allocation for 2013 (in accordance with the envisaged EU accession of Croatia on 1 July 2013). The total amount of the 2012 and 2013 National Programmes was EUR 46,804,559 (2012: EUR 35,219,859; 2013: EUR 11,584,700). The latter focuses on the priorities identified by the Enlargement Strategy 2011-2012 and the 2011 Progress Report and in the MIPD 2011-2013, namely public administration reform as well as justice, home affairs, and fundamental rights.

In addition to the National Programme 2012/2013, two separate Decisions were adopted to support Croatia's participation as active observer in the committees and expert groups of the European Commission (2012: EUR 800,000; 2013: EUR 500,000), and an amount of EUR 9,302,571 was transferred to the Regional Housing Programme under the Sarajevo Process.

The Commission, with the support of the EU Delegation in Croatia organised consultations on the 2012/2013 National Programme, with EU Member States' Embassies and local branches of International Financial Institutions (IFIs) in Zagreb, and the comments received were duly incorporated in the final programme.

As regards the evaluation of IPA assistance, Croatia has taken over full responsibility of interim evaluations under IPA Component I. The final report of the 2011 Country Programme interim Evaluation (CPiE) was presented in March 2012. The report gave a positive conclusion regarding the implementation of IPA projects in Croatia and also provided useful analyses and recommendations, able to lead to further improvements in the medium-term for the management of the implementation of financial assistance by the national authorities.

Table 2: Indicative financial allocations for the year under the National Programme, per priority axis and per project, in million EUR:

Priority Sector || Projects || Budget

2012 Allocation || 35,219

Public Administration Reform || 6,400

Project 1 || Support to the enhanced functioning of the public administration || 1,021

Project 2 || Supply of IT equipment for the customs administration || 1,700

Project 3 || Flexible facility for reinforcement of administrative capacity || 3,679

Justice, Home Affairs, Fundamental Right || 22,352

Project 4 || Strengthening the capacity and efficiency of SAO/USKOK || 2,900

Project 5 || Further improvement of the case management system || 5,710

Project 6 || Support to the prison system of the Republic of Croatia || 4,399

Project 7 || Construction and equipping of police station Tovarnik and border police station Maljevac || 2,560

Project 8 || Civil society organisations || 4,950

Project 9 || Support to national minorities at local level || 1,832

Social Development and Supporting Programmes || 6,467

Project 10 || Strengthening policy and capacities to reduce undeclared work || 1,375

Project 11 || Participation in Union Programmes and Agencies || 5,092

2013 Allocation || 11,584

Public Administration Reform || 2,893

Project 1 || Strengthening Croatian tax administration's G2B capacities through consolidation of IT systems || 1,393

Project 2 || Flexible facility for reinforcement of administrative capacity || 1,500

Justice, Home Affairs, Fundamental Right || 5,164

Project 3 || Development of geographic information system with geographic profiling of serial criminal offenders || 925

Project 4 || Strengthening capacities of the Ministry of Interior to implement the automated exchange of DNA and dactyloscopic data || 1,080

Project 5 || De-mining of social/economic infrastructure in Lika-Senj, Sisak-Moslavina and Zadar county || 3,159

Social Development and Supporting Programmes || 3,527

Project 6 || Reconstruction of Moise Palace on the Island of Cres || 3,527

TOTAL || 46,805

2.2.2 Component II

The IPA Cross-border Programmes Croatia – Bosnia and Herzegovina, Croatia - Montenegro and Croatia - Serbia, adopted in 2007 and revised in 2010, included only a financing plan covering the period 2007-2011.

In agreement with the participating countries, these programmes have been revised in 2012, in accordance with Art. 93(1)(a) of the IPA Implementing Regulation No. 718/2007, in order to update the financing plan according to the revision of the Multi-annual Indicative Financial Framework 2011–2013 and in line with the Multi–annual Indicative Planning Document 2011–2013 for the IPA Cross–border cooperation component.

The revision of the programmes essentially entailed the update of the financing plan to include the 2012–2013 appropriations. In accordance with the foreseen date of Croatia's accession (1 July 2013), the 2013 allocations for these programmes cover until 30 June 2013. IPA funds for the second half of 2013 would be committed through further Commission Decisions. At that stage, about two years before the end of the programming period, it was considered as untimely to change the content of the programmes, which would have entailed operational difficulties, especially for the use of possible leftovers 2010–2011 into the 2012–2013 calls for proposals.

These programmes have been jointly revised by the Operating Structures of the participating countries and approved by the Joint Monitoring Committee, before the submission to DG Enlargement and the adoption by the Commission.

2.2.3 Component III

Under IPA Component III, "Regional Development", the programming exercise continued to follow a multi-annual approach, mirroring the Cohesion and Structural Funds programmes. Three Operational Programmes related to the Environment, Transport and Regional Competitiveness sectors were originally agreed for the period 2007-2009. They underwent a first revision in 2010 following the allocation of 2010-2011 funds, and were revised again in 2012 in order to cover the full period until the accession to the EU expected in July 2013.

Despite these two revisions, the strategic priorities of these programmes remain the same: the development of waste management infrastructure, the improvement of the water supply and the waste water management systems, the upgrading of the rail and inland waterway systems, the support of business-related infrastructure, to technology transfer and support for Small and Medium-Size Enterprises (SMEs).

2.2.4 Component IV

The Operational Programme for Human Resources Development was modified on 1 August 2012 (Commission Implementing Decision C (2012) 5580). The modifications consisted of an allocation of additional resources (for 2012 and 2013), adaptation of indicators and addition of one new priority (Priority 5 - Strengthening the role of civil society for better governance). Two new bodies were also included in the Operating structure: the National Foundation for Civil Society Development and the government's office for NGOs.

2.2.5 Component V

During 2012 two calls were launched for the first two conferred measures, namely measure 101 'Investments in agriculture holdings to restructure and to upgrade to EU standards' and measure 103 'Investments in the processing and marketing of agricultural and fishery products to restructure these activities and to upgrade them to EU standards'.

So far, the implementing body – the IPARD Agency - has received 305 applications out of which 167 projects were contracted, with an IPA contribution of over EUR 56 Million by the end of 2012.

Further to the two measures conferred in March 2010, namely measure 301 'Improvement and development of rural infrastructure' and measure 302 'Diversification and development of rural economic activities' three additional calls were launched throughout 2012.

As a result, 383 applications were received for both measures from the beginning of implementation, conversely only 84 were contracted. The low contracting rate is explained by the important rejection rate concerning the first call for the Measure 301. Most difficulties encountered by beneficiaries - Croatian small municipalities - were related to the implementation of public procurement rules. However, it is worth mentioning that compared to the first call, all following calls observed an increased number of contracted projects. Moreover, the last call for the Measure 302 'Diversification' was launched at the end of 2012.

The measure 'Rural infrastructure' continued to play an important role in the IPA Component V programme, mainly due to its social impact on the population within the rural areas.

Last but not least, in July 2012, the Croatian authorities submitted to the Commission an application for conferral of management for the two remaining programme measures, namely measure 501 "Technical Assistance" and the measure 202 " Preparation and implementation of local development strategies". The conferral decision was expected in early 2013; follow by the first call for selection of Local Action Groups (LAGs). Implementation of the "LEADER approach"[5] still in the pre accession period is crucial to guarantee readiness of Croatian LAGs for implementation of long term local rural strategies as a Member State.

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012 3.1 Success stories

IPA 2009 'Capacity Building in the Field of Fight against Sexual Exploitation and Sexual Abuse of Children, and on Police Assistance to Vulnerable Crime Victims' (EUR 1.6 million)

This project contributed to enhance law enforcement in the fight against sexual exploitation and sexual abuse of children, as well as police assistance to vulnerable crime victims, especially children and their families, according to EU standards and best practices. It strengthened institutional capacities by providing recommendations to the Ministry of Interior and the Ministry of Justice, including the Public Prosecutor’s Office, and preparing a protocol and Standard Operating Procedures for handling investigations among the relevant institutional actors, internet service providers and NGOs. This project raised the skills of police officers, public attorneys and judges, including in the area of Internet and computer related crime, by designing a training needs analysis and a "train the trainers" programme and providing guidelines for police officers in order to prevent secondary victimization and reduce the risk of repeated victimization. In terms of awareness-raising activities, this project improved communication with the concerned groups (victims and those who are in risk of becoming victims of sexual exploitation and sexual abuse involving their parents and teachers), focusing on the use of Internet as a tool for dissemination of information and prevention, and for reporting criminal offences. EU funds also provided equipment to implement the "witness and victim support system" in all police districts, conduct interviews with children, equip official police premises with digital units for audio-visual recording of interviews, and purchase forensic computers and forensic software for investigating computers, mobile phones and similar storage devices.

IPA 2008 'Strengthening of the Tax Administration in the Fight against Corruption' (EUR 230 000)

This project contributed to strengthen the accountability and transparency of work in the Croatian Tax Administration and to raise efficiency with regard to the detection and prosecution of corruptive offences. The project first reviewed the existing system for combating corruption and for improving ethics, integrity and the transparency of the Croatian Tax Administration towards the public. Secondly, an Internal Anticorruption Strategy and related Action Plan were prepared, including guidelines for the treatment of citizen's complaints against the work of employees. Extensive trainings were conducted in order to transfer knowledge and skills to middle management and officers who are connected with the fight against corruption. A training plan was developed for continuous training of the employees in the central office and in the regional offices together with 'train the trainers' training after which the participants are capable of training other employees. Procedures for reporting, detection and investigation of criminal acts were improved and relevant guidelines were created.

IPA 2008 'Support to the Management, Monitoring and Evaluation of the Structural Instruments (SI) in Croatia' (EUR 1.9 million)

This project implemented by Lithuanian and Hungarian Member States counterparts contributed significantly to the preparations of Croatia for the management of Structural Instruments (SI) in the post-accession period. The twining partners assisted in providing guidance for the preparation of, as well as critical review of, draft key documents relevant for the programming of SI in Croatia for the period 2007-2013, such as the National Strategic Reference Framework and Operational Programmes. The key contribution of the twinners was guidance in the preparation of the Common National Rules which will regulate the management and control system for SI. Since Croatia is preparing in parallel for the 2014-2020 perspective, the twining partners assisted in the programming process for this new period, especially in facilitating the work of seven thematic working groups on the national level which are to produce conclusions on funding priorities for 2014-2010. The twinning partners also organized a series of trainings for the staff of the Croatian state administration on SI including topics such as establishment of management and control systems, project selection criteria, management of grants, financial management and monitoring of operational programmes. The final phase of the implementation of the project confirms the high level of ownership of the project by the Croatian authorities, which demonstrates the high level of sustainability of the project

3.2 Overview of the implementation status of the different instruments and components

Regarding IPA Component I and II, good progress was accomplished concerning the decentralised implementation of the assistance by the Croatian authorities.

As regards the contracting performance of the national authorities in Croatia, in 2012 a total of EUR 35.2 million were contracted, which is 57% of the forecast established in January 2012 (EUR 61.74 million). The National Programme TAIB 2008 achieved a contracting rate of 94.67% around its deadline expiration, namely 5 June 2012.

In 2012, EUR 40 million were disbursed to contractors/grant beneficiaries representing 63% of the aforementioned forecast.

Regarding transfers for Components I and II by the Commission to the National Fund following requests for funds (RfF), EUR 39.2 million were funded in 2012, which is 94% of the forecast established in January 2012 (EUR 41,68 million).

Under IPA Component III, the contracted rate amounts to 49% and the certified rate at 24% of the funds allocated in 2007-2013. In line with progress in the physical implementation of the programmes, the decommitment rate decrease at EUR 2,607,118 (Regional competitiveness programme), as against EUR 16.5 Mio in 2011 (three programmes).

The implementation of the Environment Operational Programme registered progress during 2012. The pending contracts for the implementation of the two major waste management centres in Marišćina and Kaštijun have been signed. The works for the Water supply and sewerage treatment projects in Slavonski Brod have progressed.

Tangible progress was also registered regarding the Transport Operational Programme. The project aiming at the development of the signalling and telecommunications infrastructure at Zagreb Main Railway station pursued its physical implementation. Works started for the Okučani to Novska Railway Rehabilitation and Upgrade project. As a consequence, no IPA funds were de-committed in the end of 2012.

Under the Regional Competitiveness Operational Programme six tourism and business-related infrastructure projects have been completed whereas nineteen new projects have been selected. Newly established Business Support Centres delivered training and services to SMEs in the e-commerce and e-business activities sector. Business centres were coached and trained to deliver high-level consultancy & training services to the SMEs throughout Croatia. A certification programme was developed to attract investors that will assist investors in eight lagging-behind counties. New infrastructure and entrepreneurial training curricula were developed in universities and research centres in order to boost the technology transfer and commercialisation of public sector R&D. Despite progress in the implementation of the programme, EUR 2,607,118 IPA funds were de-committed in the end of the year.

As regards IPA Component IV, under the Human Resource Development Operational Programme, tenders in the total amount of EUR 67.50 million or 71% of total 2007-2013 allocation were launched. Contracts in the total amount of 43.18 million or 46 % of total 2007-2013 allocation were signed. The National Authorising Officer (NAO) submitted statements of expenditure to the European Commission (last statement dated 27 December 2012) in the total amount of EUR 24, 13 million. The amount represents 56% of the total amount contracted so far or 26% of the total amount available under HRD OP 2007-2013. The "n+3" requirement for 2012 is EUR 26, 79 million – therefore, de-commitment could not be avoided.

As regards Component V, although Croatia made important progress in 2012 in the implementation of the IPA Rural Development Programme, certain delays in implementation and more particularly in payments to final beneficiaries accumulated so far persisted in 2012. This is due to the fact that completion of rural development projects can be quite lengthy, and therefore only a part of contracted projects could be paid in 2012. Due to this situation, according to the N+3 budgetary rule, a part of the funds allocated in 2009, about EUR13 million, was de-committed at the end of 2012.

Such a situation should be avoided in the next years as currently the contracting is increasing. However Croatia should carefully monitor the progress of implementation taking into account proportional distribution of funds between the IPARD measures.

The implementation of the IPARD has made an important contribution to building up Croatia's capacity for managing post-accession funding, including by "learning-by-doing".

3.3 Sector I: Justice and Home Affairs and Fundamental Rights

IPA 2007 Component I 'Strengthening Capacities of the Ministry of the Interior to Combat Narcotic Drugs Trafficking and Drug Abuse', EUR 2.20 million.

This project supported the strengthening of the ability of the Ministry of Interior in the fight against organised crime, especially in the field of combating drugs trafficking and drugs abuse. It contributed to enhance the ability of criminal police officers, to strengthen the institutional capacities of the Forensic Science Centre ”Ivan Vučetić” in the area of drugs analysis, and to establish a National Contact Point for the transmission of synthetic drugs samples and data exchange with other Forensic Science Centres. Some of the main achieved results were, for example, increased capacity for narcotic drugs analysis and profiling, development of a protocol for cooperation, communication and strengthening of the institutional control model for precursors, establishment of contact points in governmental institutions, and training of police officers on advanced methods of investigations related to drug crimes.

IPA 2007 Component I 'Development of modern information system for strengthening Anti-Corruption Inter Agency cooperation', EUR 460 000.

This project supported Croatia in its efforts to implement the National Anti-Corruption Strategy (adopted in 2008). The success of the Strategy relies very much on the good cooperation among all stakeholders (Croatian Ministries, specific administrations, control bodies, other agencies, etc.). Therefore, the project focussed on the development of an IT tool (including Internet portal) to support the Ministry of Justice in coordinating the Croatian anti-corruption efforts of all stakeholders; improving its capacity in managing the flow of information from and towards other involved bodies, facilitating its monitoring and analytical tasks, and improving its communication towards the public. The project contributed to increase the public awareness on corruption. Its effects should allow a better prevention of corruption, allowing Croatia to become also more attractive to international business and foreign investments.

3.4 Sector II: Public Administration Reform

As regards TAIEX, the EU Delegation to Croatia received 183 TAIEX applications for review in 2012, of which the majority, 51 applications, concerned Chapter 12, Food Safety, Veterinary and Phytosanitary Policy and Chapter 11, Agriculture and Rural Development with 40 applications. Chapters 24 (Justice, Freedom and Security), 27 (Environment), 23 (Judiciary and Fundamental Rights) and 28 (Consumer and Health Protection) followed with 27, 21, 11 and 7 applications respectively. Chapter 1 (Free movement of goods) and Chapter 22 (Regional policy and coordination of structural instruments) had 6 applications each. The Delegation also participated in the coordination and recruitment for 13 Local Administration Facility events and 7 events funded by the People to People Programme.

Twinning enjoyed a major success in 2012, contracting 13 twinning lights and a total of 19 twinning contracts for a total of EUR 21,2 million The sectors targeted by twinning and partner countries were as follows: under IPA 2008: judiciary reform (one with Germany and France and another one with the UK and Czech Republic), road safety (Germany with Poland), effective management of EU cohesion funds (one with Lithuania and Hungary, another with Italy and Poland), environment (Austria); under IPA 2009: training of judicial advisors, future judges and state attorneys (Spain), fighting sexual exploitation and sexual abuse of children and police assistance to vulnerable victims (UK), anti-discrimination protection (Austria), co-ordination of social security schemes (Sweden), Croatian Civil Aviation Agency and Aircraft Accident and Incident Investigation Agency (Austria with Germany), tax audit (German with the UK), environment (France with Austria and another one Austria), audit function for the structural, cohesion and agricultural funds (Netherlands), energy (Austria); under IPA 2010: taxation/VAT EU common system (Netherlands), Integrated Border Management (Austria).

During 2012, SIGMA provided assistance to the Ministry of Public Administration analysing the draft legislative framework linked to the prevention of corruption and workshops were organised in the field of performance appraisal of civil servants and integrity. In the area of policy-making, SIGMA provided support to the Government Legislation Office in the field of regulatory impact assessment and legislative drafting.

Concerning public finance, SIGMA supported the Ministry of Finance in the preparation of the new Action Plan for the implementation of financial management and control for the period 2012 – 2013; draft Public Finance Management Strategy for the period 2013 – 2016; Guidelines on managerial accountability and Guidelines on cost and management accounting. In addition, the new Financial Management and Control Manual and Rulebook on Internal Audit criteria (including at the local level) were elaborated with the support of SIGMA. Workshops and on-the-job trainings were consequently organised in the areas of risk management at central and local levels; quality assurance process of the internal audit function of budget users; use of Structural Funds and Cohesion Fund. In addition, a conference on the supervision and external quality assessment of internal audit was organised. SIGMA also conducted a peer review of the Agency for the Audit of European Union Programmes' Implementation System (ARPA).

In the area of public procurement, SIGMA made a review of the structure and organisation of the State Commission for Supervision of Public Procurement Procedures and provided assistance in developing its Action Plan. SIGMA worked with the Central Procurement Office on preparing a draft Strategy and Action Plan. In addition, assistance was provided in drafting the new Public-Private Partnership (PPP) Act and the Concessions Act as well as in the elaboration of the relevant secondary legislation. Workshops were organised in the following areas: review procedures; blending of PPP schemes and EU Structural and Cohesion Funds; defence procurement; centralised procurement; e-procurement and utilities for various stakeholders.

As regards participation in EU Programmes and Agencies, in 2012 Croatia participated in the following programmes for which it will continue to participate in the first half of 2013 on the basis of signed Memoranda of Understanding: Fiscalis 2013, CUSTOMS 2013, Culture 2007-2013, Criminal Justice Programme, Civil Justice Programme, Media 2007, Seventh Framework Programme for Research, Technological Development and Demonstration Activities, Europe for Citizens, PROGRESS, Competitiveness and Innovation Framework Programme (CIP), EU Civil Protection Mechanism, Second Programme of Community Action in the Field of Health 2008-2013, Marco Polo II, ISA Programme (Interoperability Solutions for European Public Administrations), Life-Long Learning Programme (LLP), Youth in Action Programme. Croatia also participates as an observer in the European Agency for Fundamental Rights. As regards the participation of Croatia in Union Programmes and Agencies as a Member State, there will be no horizontal arrangements or specific terms or conditions applicable to all such programmes, and each responsible Commission's Directorate General will make the necessary arrangements to include Croatia as a Member State in the programmes under their responsibility.

4. IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES

One of the main objectives of the IPA instrument is that, in addition to supporting the efforts of the country in the negotiating process, it will also prepare the country for managing the structural and cohesion and rural development funds, which become available after accession. In order to achieve this, the full potential of IPA is reached when the beneficiary country becomes fully responsible for managing the assistance it receives from the EU. Furthermore, Article 29 of the Croatian Act of Accession stipulates that the ex-ante control by the Commission over procurement and grant awards shall be waived by a Commission Decision to that effect, once the Commission is satisfied with the effective functioning of the management and control system concerned in accordance with the criteria and conditions laid down in Article 56(2) of the Financial Regulation and in Article 18 of Commission Regulation (EC) No 718/2007.

Following the Commission Decisions to confer the management of the IPA funds to the Croatian national authorities in 2008 and 2009, Croatia continued to implement IPA programmes in 2012 on a decentralised basis, with ex-ante controls by the European Union Delegation in Zagreb.

Furthermore, Croatia moved closer in 2012 to the ultimate objective of the conferral of management process, the decentralised implementation without ex ante controls by the Commission for IPA Components I to IV. Component V has operated directly without ex ante controls since the conferral of management decision in 2009.

In June 2012, the National Authorising Officer (NAO) submitted to the Commission the requests to waive ex-ante controls under IPA Components I and II. On the basis of the regular review of the implementation of the roadmap for the waiver of ex-ante controls, and of the supporting evidence submitted by the NAO as part of the application for the waiver of ex-ante controls, the Commission examined the readiness of the Croatian national authorities and Implementing Bodies for the waiver of ex-ante controls and the compliance with the requirements of Article 18 of Regulation (EC) No 718/2007. Following a review by the Commission of the procurement systems of Croatia, it was concluded that the capacity of the Croatian authorities has sufficiently developed to take over the full responsibility of the system without ex-ante controls.

As regards rejection rates in the context of the ex-ante controls, under IPA Component I in 2012 they averaged at 2.4%, i.e. 8 rejected files out of a total of 337.

On the basis of these assessments and of the steady low rate of rejections, the amendments of the conferral of management decisions for Component I and II with the view of waiving the ex-ante controls on procurement currently exercised by the EU Delegation were launched in the third quarter of 2012.

PART II - FINANCIAL DATA (EUR million and %)

On implementation of assistance by DG ELARG at 31 December 2012

IPA I + II Croatia

Croatia || Allocated || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 44.96 || 44.93 || 99.94% || 42.58 || 94.72%

IPA 2008 || 45.03 || 45.03 || 100.00% || 40.12 || 89.10%

IPA 2009 || 47.36 || 47.36 || 100.00% || 32.42 || 68.46%

IPA 2010 || 40.82 || 40.82 || 100.00% || 17.18 || 42.08%

IPA 2011 || 42.17 || 39.86 || 94.52% || 12.39 || 29.39%

IPA 2012 || 38.52 || 0.00 || 0.00% || 0.00 || 0.00%

Total || 258.86 || 218.01 || 84.22% || 144.70 || 55.90%

IPA – Component I National Programme Croatia

Croatia || Allocated || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 42.30 || 42.28 || 99.94% || 40.12 || 94.85%

IPA 2008 || 41.37 || 41.37 || 100.00% || 37.46 || 90.54%

IPA 2009 || 44.60 || 44.60 || 100.00% || 31.12 || 69.77%

IPA 2010 || 38.62 || 38.62 || 100.00% || 16.76 || 43.38%

IPA 2011 || 39.16 || 39.05 || 99.72% || 12.39 || 31.65%

IPA 2012 || 36.02 || 0.00 || 0.00% || 0.00 || 0.00%

Total || 242.08 || 205.93 || 85.07% || 137.85 || 56.94%

IPA – Component II (CBC) Programme Croatia

Croatia || Allocated || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 2.65 || 2.65 || 100.00% || 2.46 || 92.63%

IPA 2008 || 2.71 || 2.71 || 100.00% || 2.57 || 94.98%

IPA 2009 || 2.76 || 2.76 || 100.00% || 1.30 || 47.25%

IPA 2010 || 2.20 || 2.20 || 100.00% || 0.42 || 19.09%

IPA 2011 || 2.20 || 0.00 || 0.00% || 0.00 || 0.00%

IPA 2012 || 2.50 || 0.00 || 0.00% || 0.00 || 0.00%

Total || 15.02 || 10.32 || 68.71% || 6.75 || 44.95%

TURKEY

1. SUMMARY

In 2012, the Positive Agenda for EU - Turkey relations brought fresh dynamism putting in several areas the accession process back on track after a period of stagnation. This agenda focused on efforts related to common interests, including:

· the alignment with the acquis;

· enhancing the energy cooperation;

· visas, mobility and migration;

· trade agreements as well as the Customs Union, on which a specific study to assess its overall impact was launched with the World Bank;

· foreign policy, including political reforms and counter terrorism actions;

· substantial increase in the participation in Union programmes.

The IPA financial assistance in 2012 continued to support the political priorities of the accession process with a focus on the rule of law and tackling key reforms linked to the judiciary and fundamental rights, under Component I, for a total value of EUR 225.74 million in 2012.

Positive developments were also observed in the management of the financial assistance by the Turkish national authorities under decentralised management mode. The accreditation process in view of transferring tendering, contracting and financial management functions from the Central Finance and Contracts Unit (CFCU) to the line ministries has been successfully finalised for all Operating Structures under IPA Components III and IV. The conferral of management for the IPA Component V has also been granted for almost twenty provinces.

Throughout 2012, the dialogue with the Turkish institutions was enhanced on migration and asylum as well as on integrated border management. Further opportunities were explored, to support institutional reform with EU financial assistance. A pipeline of project proposals was developed and reviewed by all the relevant programming stakeholders for financing under IPA, including specialised UN agencies. Efforts to improve the management and control system by the Turkish authorities, responsible for the implementation of IPA programmes continued, although further improvements are still required in the area of IPA programming and monitoring.

2. STRATEGIC PLANNING AND PROGRAMMING 2.1 Multi-annual Indicative Planning Document 2011-2013

The selection of a relatively limited number of sectors in the MIPD 2011-2013 allowed for a more targeted approach towards EU assistance that aims to deliver the expected results and meet the envisaged objectives in a sustainable manner. The MIPD identifies priorities based on the needs documented in the Accession Partnership of the country as well as the latest progress report and the Turkish authorities' own strategies. It takes into account the lessons learned as outlined in the Commission’s own assessment of past performance and on recent audits and evaluations.

EU assistance provides added value and often initiates important reform processes that will continue in a sustainable manner beyond the duration of the EU programmes.

In line with the MIPD 2011-2013 sectors and priorities identified for the 2012 IPA funds under IPA component I have been programmed, mainly supporting projects in the sectors of justice, home affairs and fundamental rights, energy, transport, social development and agriculture and rural development, as well as horizontal support activities.

Table 1: MIFF[6] allocations per component, in EUR million

Component || 2011 || 2012 || 2013 || 2011-2013

I – Transition Assistance and Institution Building || 231.27 || 227.50 || 238.50 || 697.27

II – Cross-border cooperation || 5.13 || 2.17 || 2.22 || 9.52

III – Regional Development || 293.40 || 356.07 || 366.88 || 1,016.35

IV – Human Resources Development || 77.60 || 83.19 || 91.17 || 251.96

V – Rural Development || 172.50 || 187.39 || 204.18 || 564.07

TOTAL || 779.90 || 856.32 || 902.95 || 2,539.17

2.2 Programming 2.2.1 Component I

The National Programme 2012 which has been adopted by the Commission on 21 June 2012 is split between 5 sectors in line with the MIPD 2011-2013: (1) justice, home affairs and fundamental rights; (2) transport; (3) energy; (4) social development and (5) agriculture and rural development and supports 14 projects in the above-mentioned sectors. Projects under these sectors were selected as they were mature for implementation and are of high priority for Turkey. As part of the programming process, only those relevant and eligible projects proposed by the Turkish authorities that have achieved sufficient readiness for implementation have been accepted.

While programming 2012 IPA funds, efforts were made to better focus projects on the political priorities of the accession process as well as on aligning them with sector priorities. The largest part of the budget has been programmed to support projects in the justice, home affairs and fundamental rights sector, aiming to strengthen effective law enforcement, successful fight against organised crime and corruption as well as improved integrated border management and prevention of illegal migration. For example, project TR2012/0329.06 ''Modernisation of Turkish Customs Administration VIII'' (EUR 10.49 million) aims to modernize the Turkish Customs Administration (TCA) and to ensure a harmonized implementation of Customs Code and effective functioning of the Customs in their law enforcement and border management tasks, border protection of intellectual and industrial property rights (IPRs) and Customs Laboratories in line with obligations of an EU Member State Customs Administration.

While programming 2012 IPA Component I programme, a project TR2012/0315.10 "Energy sector programme – phase 1" has been developed together with the World Bank, which will manage it. The project aims at enhancing Turkey's energy sector in line with the EU energy strategies and priorities in energy efficiency, renewable energy, and the natural gas and electricity markets. This project is in line with the MIPD 2011-2013 objective of promoted energy efficiency and renewable energies.

When it comes to donor coordination, the Commission took several initatives in Brussels and Ankara in order to coordinate with IFIs, notably EIB, EBRD as well as theWorld Bank. In particular a second EU-WB Turkey Country Day was organised in Brussels on 2 May 2012 in order to explore further areas where synergy and value added can be found through a joint approach. In addition, the Ministry of EU Affairs has also organised on May 23rd a meeting with the participation of several IFIs (EBRD, AFD, KFW, WB) and other donors (UNDP, UNICEF, UNIDO, ILO, IMO, CoE, WHO) in order to facilitate donor coordination activities within the scope of the accession agenda.

Table 2: Indicative financial allocations under IPA 2012 (component I) National Programme, per MIPD sector and per project, in EUR million:

Priority Sector || Projects || Budget

Justice, Home Affairs and Fundamental Rights ||

TR2012/0123.01 || Prevention of corruption and promotion of ethics || 2.25 MEUR

TR2012/0123.02 || Strengthening Judicial Ethics in Turkey || 3 MEUR

TR2012/0324.03 || Efficiency in anti-money laundering and counter terrorist financing || 3.75 MEUR

TR2012/0124.04 || Socioeconomic development through demining and increasing the Border Surveillance Capacity at the Easter Borders of Turkey - Phase II (EUR 40 million) || 40 MEUR

TR2012/0323.05 || The Strengthening of Probation Services’ Institutional Capacity in Transition to Electronic Monitoring System || 1.8 MEUR

TR2012/0329.06 || Modernization of Turkish Customs Administration VIII || 10.49MEUR

TR2012/0136.07 || Common Cultural Heritage: Preservation and dialogue between Turkey and the EU (Phase II) || 5.42 MEUR

TR2012/0136.08 || Jean Monnet Scholarship Programme || 8.84MEUR

Transport ||

TR2012/0314.09 || Capacity Building on Safety and Security Training Requirements of the Turkish Civil Aviation || 13.55 MEUR

Social Development ||

TR2012/0465.11 || Turkey's Participation in Union Programmes and Agencies || 67.93 MEUR

TR2012/0465.11 || Preventing and combating selected Risk Factors for Health in school || 3 MEUR

Energy ||

TR2012/0315.10 || Energy sector programme (phase I) || 11.8 MEUR

Agriculture and rural development ||

TR2012/0312.13 || Electronic identification and registration system for sheep and goats || 28.9 MEUR

Other activities ||

TR2012/0740.14 || Enhanced Support Activities to Strengthen the European Integration Process (ESEI) (EUR 25 million) || 25 MEUR

TOTAL || 225.74*

* The figure only concern National Programme 2012 and not include the amount allocated to the CSF

2.2.2 Component II

On 17 July 2011 the Commission adopted an annual programme on financing the participation of Turkey in the European Neighborhood & Partnership Instrument (ENPI) Black Sea Basin programme[7], worth EUR 3 million. To streamline implementation, for the last three years (2011–2013) of the programme, it has been decided to front load the remaining IPA contribution within a single financing decision of EUR 3 million to be adopted in 2011. The multi-annual Black Sea basin programme (2007-2013) aims at supporting stronger and sustainable economic and social development of the regions of the Black Sea basin and enhanced mutual understanding through cross-border partnerships. Consequently, there was no dedicated programming activity to be reported.

2.2.3 Components III-V

Component III and Component IV programmes were adopted in 2007 and 2008 covering a seven-year programming period.

As regards the revision of Environment, Regional Competitiveness and Transport operational programmes (OPs) under IPA component III in 2011, preparations were done regarding the distribution of the total allocation and the project pipeline.

In 2012, the Environment, Regional Competitiveness and Transport operational programmes were again subject to an amending decision in order to revise the financial tables, monitoring indicators as well as the project pipeline. The programme modification also addressed the restructuring of the public institutions in Turkey in 2011. The amending programme decisions were adopted in October 2012 and the transposing amending financing agreements were signed in November 2012.

Following the entry into force of the amending financial agreements, an additional pre-financing of approximately EUR 36 million was paid for the Transport OP and EUR 38 million for the Environment OP.

The Human Resources Development OP (HRD OP) under IPA component IV was also revised in 2012 and the related Financing Agreement was updated accordingly. In the framework of this revision, the scope of eligible actions was increased and funding opportunities were opened up to a wider range of final beneficiaries. Finally, provisions were included to allow for funding to be provided to all Turkish regions while maintaining the principle to concentrate on the Turkish regions with a GDP per capita below 75% of the Turkish national average. The Commission Decision concerning the revised operational programme was adopted on 12 October 2012.

As regards IPA Component V, the fourth and fifth modifications of the IPA rural development programme (IPARD) were adopted by the Commission respectively on 7 September and 5 December 2012. The main thrust of the fourth modification was the improvement of absorption capacity, via an extended geographical scope, more flexible eligibility conditions and broader eligible expenditure. The fifth modification consisted in updating the financial table to add the allocation for 2012 as in the agreed EU budget.

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012 3.1 - Success stories

IPA Component I, '2007 project Introduction of quality management in the revenue administration'(EUR 1.18 million)

The project, implemented in 2012, aimed to improve the administrative capacities and efficiency of the tax administration in line with the Fiscal Blueprints, and to align the Turkish tax system with the EU directives. The training was provided to the Turkish Revenue Administration (TRA) in particular in relation to the implementation of the European Foundation for Quality Management (EFQM) excellence model and establishing the infrastructure for its implementation. During the course of project implementation the infrastructure for the implementation of EFQM model was established through its basic tools and frameworks such as self-assessment, RADAR benchmarking[8] and other new tools. The following results have been achieved: establishment of a Complaint Management System, creation of a Suggestion Improvement System for suggestions of employees, enhanced level of administrative capacity of the TRA for the National Quality Movement.

IPA Component I, '2008 project Improving Occupational Health and Safety Conditions at Workplaces', (EUR 3.50 million)

The project has been implemented between 2010 and 2012 aiming to provide Turkish workers with safer workplaces and healthier working conditions. National Occupational Health and Safety Management Systems have been established for risky sectors to be implemented at company level. Occupational health and safety conditions in 128 SMEs operating in the top risk sectors (mining, construction, and metal) have been improved, significantly reducing accident risks. The outputs were disseminated to SMEs and related partners all around the country. A national web-based recording system has been established, aiming to gather reliable data concerning occupational accidents and occupational diseases. This enables Turkey to produce data comparable with the EU, allowing for better informed policy making processes.

IPA Component IV – 'Increasing Enrolment Rates Especially For Girls', EUR 13.61 million)

Particularly focusing on girls and women, this operation aims at increasing enrolment rates in secondary education and vocational education and training, decreasing drop-out rates in both primary and secondary education and increasing vocational skills and competences of the labour force. Early drop outs from school are a problem especially for girls often caused by cultural obstacles, early and forced marriages, and economic insufficiencies, among others.

This project, directly related to the EU 2020 targets of increasing the educational attainment and preventing early school leaving and drop outs, will help Turkey, as a potential future Member State, to pursue the EU 2020 targets. The implementation started in May 2011 and is expected to run until July 2013. It has supported the Turkish Ministry of National Education (MoNE) in its efforts to tackle the drop out problem, especially for girls.

So far, the technical assistance team in cooperation with the MoNE has prepared local actions plans covering 16 cities where school enrolment rates are low, aiming at increasing enrolment rates through persuasive activities with families, teacher training and monitoring of drop outs and absenteeism. These actions are currently implemented by the local authorities and monitored by the technical assistance team. Thanks to the project support, the MoNE has improved guidance services within schools in Turkey's less developed regions, targeting the existing students with focused training for teachers and students of Guidance and Psychological Counselling Departments within universities.

In addition to these bigger-scale activities, the project also supported 89 small-scale interventions implemented by primary schools, universities, local authorities and non-governmental organisations, to help their activities to increase school enrolment rates, including direct persuasive engagements with families to send their children to school, which is the most significant factor influencing girls' education. These small-scale projects are targeting specifically the problems in the Eastern and South-Eastern provinces of Turkey, where the school enrolment rates are low compared to the other provinces. As a result of the 89 grant projects, project workers visited 16,600 households. So far, 2800 girls have been enrolled to catch up education. 1500 girls and women received skills development training. 1000 girls and women learned how to read and write. 3300 girls went back to formal education. 2800 drop-out cases have been prevented. 3300 girls received psychological and counselling support to keep them in school.

The project also supported a very effective awareness campaign, by broadcasting on national channels short movies targeting girls outside the education system. As a result, 800 children who had dropped out or who had never attended school have so far been enrolled. This has happened only within two months following the broadcasting of the short movies, which can be seen at this link: http://www.eba.gov.tr/video/izle/025876bd3ffe9d02a4ff4b0f88760d33b614081ed6001

3.2 Overview of the implementation status of the different instruments and components 3.2.1 Component I

EU assistance implementation under IPA component I has advanced compared to the previous years. The financial performance has been positive overall in 2012 thanks to a substantial effort and the good cooperation among different institutions that resulted in contracting almost 94% of the NP 2008 and 97% for NP 2009 (programme part for which the contracting deadline has not been extended). Nonetheless, despite good contracting rate of 2008 and 2009 funds, the contracting of 2010 and 2011 programmes encounters substantial delays. The lengthy preparation of the tender dossiers and then of the evaluation process, explains the long time required to get to the contract signature. Payments still remain low due to the fact that they are lagging behind contracting and that final payments are only made on average several months after contracts are fully implemented.

3.2.1.1. Sector I: Public Administration Reform

In the MIPD 2011-2013, Public Administration Reform (PAR) is addressed under the sector of "Justice, Home Affairs and Fundamental Rights" where one of the sector objectives is "Effective implementation of the legislation regarding the reform and restructuring of the central public administration and transferring authority to the local and provincial administrations; reduced bureaucracy, strengthened policy making systems and sustainable development of a professional, accountable, transparent and merit-based civil service; parliamentary and civilian oversight mechanism over security sector secured; oversight, control and participatory mechanisms supported including strengthened external and internal audit functions and establishing an independent data protection system".

Within this framework, the project ''Participatory Decision Making at the Local Level'' (EUR 3,305,000) has been implemented by the Ministry of Interior as the main beneficiary and the Ministry of Development as a co-beneficiary. 26 province municipalities are involved as pilots. The overall objective of the project is to increase the scope of local government reform in Turkey by improving the capacity of local governments for enhancing participatory strategic governance at the local level. In line with the overall objective, the project’s purpose is three-fold:

1. Improving strategic planning and programming capacity and capability of local governments;

2. Enhancing citizens' role within assemblies in local decision making mechanisms;

3. Supporting further implementation of the recent legislation to ensure transparency and accountability in 26 local governments in Turkey.

In Turkey, one of the main challenges is the need to strengthen the administrative and judicial capacity to implement and enforce the acquis. Under IPA, the Commission continued to mobilise significant human and financial resources to help Turkish public administrations with this process, using the mechanism of T-twinning administrations and agencies. In 2012, 7 twinning contracts were signed with Member States in the area of judiciary, transport, justice, freedom, security and health. In total, 114 out of the 132 projects initiated over the period 2002-2012, 91 projects were completed. Twinning continues to be an important element for further implementation. Through the so-called twinning Review Mission tool, in a form of a TAIEX mission, the sustainability of twinning projects continued to be reviewed once a year.

During 2012, around 100 workshops and expert missions took place in Turkey in addition to many Turkish officials who took part in numerous study visits and multicounty seminars in various European countries.

An EU funded TAIEX seminar "Cycle on Human Rights Institutions - Turkish Independent Human Rights Institutions in line with the Paris principles" was held in Ankara on 19-20 December in Ankara together with high representatives of the Ministry for EU Affairs, NGOs members and international experts. The seminar covered legislative developments in the area of national human rights institutions falling under chapter 23. The (then) Draft Law on Independent Human Rights Institutions, as well as other relevant draft laws (Ombudsman, Equality Board), including accountability and appointment of membership, eligibility and plurality of membership, budget and staffing, jurisdiction and functions were the main topics discussed.

3.2.1.2. Sector II: Justice, Home Affairs and Fundamental Rights

Key objectives set in the MIPD 2011-20213 are to implement the necessary reforms to build an independent, impartial and efficient judiciary, to foster effective law enforcement, successful fight against crime and corruption and improved integrated border management and prevention of illegal migration. This is in view of achieving tangible and measurable progress towards the full enjoyment of all fundamental rights and freedoms by all individuals without discrimination and building strong democratic institutions promoting pluralism and the values of European integration.

Therefore, the twinning Project “Improved Capacity of Civil Enforcement Offices” (IPA 2009 - EUR 1.7 million) was designed to address the deficiencies observed in this area. The transactions carried out by the enforcement offices are directly related with the fundamental rights and freedoms. In this sense, the project's purpose is to strengthen the institutional capacity of civil enforcement offices to ensure effectiveness and efficiency in executing their services thus enhancing the trust in the judiciary.

Another twinning project, Towards an Effective and Professional Justice Academy (IPA 2010 - EUR 1.13 million), started in December 2012 and is designed to support the Justice Academy to become a strong and independent training provider for the entire Turkish judiciary. The project will address both institutional and academic capacity of the Justice Academy through activities including the establishment of a Human Rights Unit in charge of providing adequate training on human rights to legal professionals.

A workshop on "International judicial cooperation in fighting transnational and Terror Crimes" took place in Ankara on 28 - 29 November 2012. It involved a large and diverse group of officials from various institutions including the Ministry of Justice, the Financial Crimes Investigation Board of Turkey, the IT and Financial Investigation Units of the Turkish National Police as well as Prosecutors from the Court of Cassation. Experts from the Department of financial information of Poland brought an international perspective to this event. The seminar was an excellent opportunity for the various institutions to share knowledge and to get acquainted with innovative international practice notably with regard to the investigation of terrorist financing cases.

The project "Improvement of Civilian Oversight of the Internal Security Sector Project – Phase II" (IPA 2011 - EUR 3.5 million) started in July 2012 and is implemented in joint management with the United Nations Development Programme (UNDP). The project is expected to make a significant contribution to increasing accountability of the internal security forces to the public and establishing the necessary checks and balances to prevent any potential abuse of power. Main targets include the revision and development of the regulatory framework to enable the Ministry of Interior and local public administrators to exercise effective civilian oversight over law enforcement bodies.

Similarly, in 2012, “Action Plan on IBM, Phase 2” developed recommendations for a structured risk analysis system on border management and also modernised the database system of the police used for border checks, supplied further border surveillance equipment for the Gendarmerie, Coast Guard and the Land Forces. Another project that was in force in 2012 on training of border police developed curriculum and training programme for the in-service training of the police. Assistance has been delivered also to the Customs Enforcement, with a project by which Turkey’s first train scanner device was installed at the border with Iran and also a number of boats were purchased to increase the maritime capacity to fight against smuggling together with training delivered via a twinning project.

In the field of asylum and migration, a major and complex programme worth more than EUR 85 million was under implementation aiming to deliver six response centres for asylum seekers and the elimination of a dedicated detention centre destined for irregular migrants.

3.2.1.3. Sector III: Private Sector Development

The MIPD 2011-2013 for Turkey under Private sector development envisages support to increase employment, productivity and export of goods and services, particulary in the regions where employment and business stocks are low. In 2012, the implementation of the projects under the Private Sector Development has continued.

Significant progress was registered regarding the facilitation of access to finance opportunities for SMEs. The Greater Anatolia Guarantee Facility (GAGF), a financial instrument designed and implemented by the European Investment Bank Group for the benefit of SMEs operating in Turkey, has become fully operational in 2011 and almost all loans were disbursed to SMEs during 2012. The second phase of the project has become operational in 2012, increasing the IPA budget to EUR 51 million, which is complemented with an EIB loan programme of EUR 450 million and an equivalent loan volume provided by participating local banks. The project provides loans to SMEs through Akbank, Yapı Kredi, Vakıfbank and Halkbank and micro-credits through Kredi Garanti Fonu.

Lending activities continued under the Crisis Response Package, where the Commission mobilized some EUR 470 million through the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) in late-2010. The programme enabled small businesses to receive loans from local banks to meet their working capital and investment needs. The programme also supports investments for energy efficiency.

3.2.1.4. Sector IV: Environment and climate change

Environment and climate change continued to be one of the highest priorities underlining the increasing EU support over the years in line with the MIPD horizontal priorities on environment, nature protection and climate change.

The projects' portfolio and investments reached up to project applications of EUR 855 million EU contribution, including all available pre-accession instruments. Under Component I and III, 85 contracts were signed so far. 22 water, wastewater or solid waste infrastructure projects were approved and are at different stages of implementation.

A technical assistance project on Increasing Implementation Capacity of the Seveso II Directive which is worth EUR 2.73 million was started in 2012. This project aims to strengthen the administrative and institutional capacity of central and local bodies responsible for future implementation of the Seveso II Directive in Turkey.

Further on, a twinning light project on Emergency Case Management and Risk Analysis in Drinking Water for the Protection of Public Health started in 2012 with a budget of EUR 250,000. The project aims to strengthen the Ministry of Health via building the institutional capacity both at the Public Health Institution of Turkey and the Public Health Directorates of the 81 provinces in the field of drinking water for risk assessment, early warning and management of emergency cases in line with the EU Drinking Water Legislation (98/83/EC).

A framework contract (FWC) for Strengthening the Institutional and Administrative Capacity on Implementation of Habitat and Birds Directives in Turkey has started in 2012 with a budget of EUR 115,877. The project aims to build the institutional capacity and strengthen the Ministry of Forest and Water Affairs through a series of training for the trainer on the implementation of Birds and Habitats Directives and assessing the potential Natura 2000 sites.

3.2.1.5. Sector V: Transport

There is an almost complete convergence between national strategies and EU pre-accession strategies with an outlook towards 2015. The priority areas are carefully selected and project pipelines are prepared to achieve the strategic priorities.

3.2.1.6. Sector VI: Energy

Defined as a major priority sector under MIPD document (2011-2013), the energy sector englobes three main objectives; the increase of capacity and better alignment in the energy efficiency field; further alignment by implementation of the acquis on the internal gas and electricity market; bringing the nuclear safety in line with EU standards.

Within this framework, the project "Structure and Capacity Improvement of Turkish Electricity Transmission Corporation (TEIAS)" (IPA 2009 - EUR 1,8 million) was contracted in December 2012, aiming to improve the institutional structure and capacity of TEIAS, by expanding its technical capacity to perform live working (LW) and to develop work safety and training activities and restructuring its organization by improving human resources policies and its IT structure. Furthermore, the LW system will not only increase the reliability and availability of the transmission system, but also reduce the operation and maintenance costs of the operators on the strategic lines and interconnections. The project is fully in line with the second objective of the MIPD related priorities particularly on the implementation of the acquis on the internal gas and electricity market.

In addition, the tendering phase was finalised for the implementation of another project related to electricity sector: "Harmonization of Transmission Code in line with ENTSO-E, (2010 - EUR 1.35 million). The project is designed to harmonize the Turkish Power System Transmission Code in line with the European Network of Transmission System Operators for Electricity (ENTSO-E). By establishing the same rules on electricity networks, they would provide better interoperability in both the EU and Turkish systems and will bring the Turkish electricity network code fully in line with EU energy acquis.

3.2.1.7. Sector VII: Social development

The first objective of this sector under MIPD document is to prepare Turkish authorities for an effective implementation of the European Social Fund (ESF) and bringing Turkey closer to the EU policies and parameters of the Europe 2020 strategy, both in terms of strengthening employment and human resources development as well as building institutional and administrative capacity.

Within this framework, one of the projects implemented is “Promoting Gender Equality in Working Life". The twinning project has helped Turkish authorities transpose the equal opportunities acquis. Turkish authorities have acquired extensive knowledge, better understanding, and more resources to make gender equality, a fundamental EU principle, a reality in their legislative and policy work. A gender equality award for Turkish companies was established, and will be granted by the Turkish authorities annually. The project is also intended to intensify discussion of harmonisation of work and private life in the private sector.

The Human Resources Development programme Operation “Improving the Quality of the Public Employment Services” – (EUR 8,600,000 EU contribution) is still on-going.

The overall objective is to attract and retain more people in employment by improving the quality of the public employment services. This is being done by assisting the Turkish Public Employment Service (ISKUR), the Ministry of Labour and Social Security, the Provincial Employment and Vocational Training Boards and the social partners to strengthen their administrative capacities. The three-year project will last until the end of 2013.

Thanks to the operation, the professional skills and behaviour of ISKUR staff at the provincial level, where they meet up with their clients, jobseekers and those seeking job changes and/or training advice, is changing and improving with intensive and extensive training on management techniques like local action planning and introducing the concept of the "Model Public Employment Office" to deliver more quality and targeted services.

One major initiative aimed at improving the access of jobseekers and employers to ISKUR's services has been a bus campaign in 2012 that reached 25,000 people in 21 provinces targeted directly at households, students, people in rural communities informing them through interviews, presentations and promotion materials about ISKUR and its full range of services. The campaign has significantly increased ISKUR's visibility in the media as well. The second bus campaign will be rolled out in 2013 visiting 22 provinces.

3.2.1.8. Sector VIII: Agriculture and rural development

MIPD 2011-2013 sets out three main objectives for agriculture and rural development sector. The first objective is to facilitate the preparation of Turkey for the future implementation of the Common Agricultural Policy (CAP) and related policies respecting the relevant EU standards and thereby ensuring a smooth integration into the Single Market, which will be achieved by assisting Turkey with getting ready to effectively implement EU rural development programmes as well as other CAP related expenditures upon accession, including the setting-up of systems for management and control of financial expenditures and agricultural information systems. The second objective is the alignment with the acquis in the area of food safety, veterinary and phytosanitary policy. The third objective is the restructuring of the administrative system for fisheries required for the adoption of the acquis for fisheries resource management, including the strengthening of resource and fleet management as well as the fisheries inspection and control services, producer organisations and an integrated approach to sea-related activities.” In this framework the following projects were particularly successful in 2012.

The project "Extending the Pilot Farm Accountancy Data Network Project and Ensure Sustainability" (IPA 2009, EUR 1.45 million) was completed in 2012 and helped improving the capacity of the Ministry of Food Agriculture and Livestock in the farm level accounts.

The current project "Tagging and Vaccination of Sheep and Goats" (IPA 2008, EUR 29.6 million) has assisted Turkey to establish the small ruminant database and identifying sheep and goats as well as contributing to improvement of the current PPR (peste des petits ruminants) situation in Turkey by strengthening the existing control measures.

3.2.2 Cross-border cooperation (ENPI Black Sea basin programme and Turkey-Bulgaria programme)

In 2012, regarding the implementation of the Turkey-Bulgaria CBC programme, the 2nd call for proposals was finalized and grant contracts were signed. These projects aim at boosting sustainable economic and social development. They build on comparative advantages to improve social development, promote social cohesion among people and communities, and to improve quality of life through the efficient use of shared natural resources, as well as the protection of natural, cultural and historical heritage sites.

3.2.3 Component III

Under Component III a high number of relevant projects was approved in 2012. Their approval, and the start of implementation of some, can be considered as a success as a good project pipeline is an important premise for a full absorption of funds and a positive step to preparing Turkey for the management of the Structural and Cohesion Funds.

The Operational Structure (Ministry of Environment and Forestry) under the Environment OP put in place a very substantial project pipeline. Out of this pipeline, the Commission adopted 7 major projects and respective Bilateral Project Agreements were signed for 3 in 2012. Cumulatively, the major projects approved under this programme amount to 19; they ensured payment requests exceeding EUR 30.7 million in 2012. In parallel, work continued on the preparation of new IPA projects to further strengthen the pipeline.

On the one hand, the Regional Competitiveness OP faced significant problems in absorbing the available funding largely due to insufficient capacities at the level of the Operating Structure (Ministry of Science, Industry and Technology) and end recipients. On the other hand a major problem, related to the extension of the financial instrument "Greater Anatolia Guarantee Facility (GAGF)", was resolved committing an additional EUR 20 million.

The Ministry of Transport, responsible for the Transport OP and the Ministry of Science, Industry and Technology, in charge of the Regional Competitiveness OP, obtained their accreditation in 2012.

With the changes made in 2012 in the operational programmes' financial tables , the final IPA contribution for the period 2007-2013 will amount to approximately EUR 682 million for the Environment OP, EUR 585 million for the Transport OP and EUR 468 for the Regional Competitiveness OP, provided no further changes are adopted in the 2013 annual budget.

The efforts made in 2012 led to important progress in terms of fund absorption eliminating the risk of de-commitment related to the 2009 funds for Transport OP and Environment OP. However, a narrow project pipeline in the Transport OP raises the risk of future decommitment, as do delays in tendering, contracting and approval of major projects in the Environment OP. Due to slow implementation and a weak pipeline of projects in 2012, the Regional Competitiveness OP suffered from a ca. EUR 12 million loss of 2009 committed funds.

3.2.4 Component IV

Progress has been made concerning the Human Resources Development Operational Programme - IPA Component IV. The Operating Structure (the Ministry of Labour and Social Security) has taken a series of actions to increase the design and implementation capacity of the operation and grant beneficiaries. Numerous trainings and other types of capacity building activities were conducted. This is an important achievement which led to the design and approval of a number of new operations in 2012, for instance for the promotion of youth employment and registered employment, for the increase of school enrolment rates, especially for girls, for the promotion of lifelong learning, for the promotion of adaptability of tradesmen and craftsmen, for facilitating access of disadvantaged higher education students to the labour market and for the promotion of active inclusion. Three calls for proposals for a total amount of EUR 50 million as well as several service and supply tenders were published. However, the progress in contracting did not reach the expected level. Although the amount that has been contracted in 2012 is higher than in 2011 (EUR 26.6 million in 2012, compared to EUR 17.8 million in 2011), the number of contracts that were signed remains at a low level. The total contracted amount since the beginning of the programme reached EUR 145 million (IPA share: EUR 123 million). This represents a 32% contracting rate for the IPA funds allocated to the HRD OP for the 2007-2012 period (EUR 383 million). The level of expenditure declared to the Commission remains low (22 % by the end of 2012).

3.2.5 Component V

Major progress was achieved for IPA Component V, since 2012 marked the first year of IPARD. Three conferred measures (on farm investments, investments in processing and marketing of agricultural holdings and diversification of economic activities) were implemented in 20 provinces. Five calls for applications were organised by the IPARD Agency in 2012 (following two calls in 2011). 630 project proposals were submitted in these calls (a total of 878 from 2011), of which 201 were contracted in 2012 (263 from 2011), whilst the project assessment for the sixth and seventh call for proposals continues in 2013. EUR 13 million were disbursed to the beneficiaries during 2012. A great majority of projects concern investments in agricultural holdings.

4. IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES

Efforts were made by the NAO office in implementing the Comprehensive action plan which is now the main tool (for IPA Component I) to follow up the outstanding shortcomings in the management and control system. In 2012, in line with the Comprehensive action plan, Turkish authorities have addressed shortcomings related to the reinforcement of the NAO supervision, workload analysis and training of staff. Nonetheless, further measures are necessary to address some system's persistent problems mostly related to high staff turnover in the Central Finance and Contracts Unit (CFCU), still high rejection rates on some transactions (tender dossiers and requests for services) delays in preparation of procurement plans and payments made by the CFCU. Improvements in those areas are crucial to increase the absorption capacity and to reduce the current backlog in contracting and payments.

For the accreditation of the operating structures under components III and IV, all necessary procedures for granting the transfer of tendering, contracting and financial management functions to the responsible line ministries were completed in 2012.

Regarding Component III, the Commission has adopted three amending Decisions conferring the tendering, contracting and financial management functions from the CFCU to the Ministry of Environment and Urbanisation (on 31 January 2011), to the Ministry of Science, Industry and Technology (on 15 February 2012) and to the Ministry of Transport, Maritime Affairs and Communication (on 12 November 2012).

Under IPA Component IV, the tendering, contracting and financial management functions were transferred from the CFCU to the Ministry of Labour and Social Security in the beginning of 2012 following the adoption of a Commission Decision. The necessary staff has been recruited and received extensive training in line with the new needs. It is also planned to recruit additional staff in order to enhance the monitoring and on the spot check functions of the Ministry of Labour and Social Security.

For IPA Component V, the process of conferral was extended to cover three additional provincial offices of IPARD Agency, thus totalling 20 by the end of 2012. Turkey continued the implementation of its action plan to improve absorption, but despite these efforts the project pipeline was still insufficient. Also not many projects were actually completed on time. As a result a major de-commitment of 2009 could not be avoided at the end of 2012 (EUR 64.9 million). Intensive work is needed to avoid a large de-commitment in 2013. A request for a conferral of additional 22 provincial offices, technical assistance and some outstanding sub-measures in the existing provinces was submitted to the Commission on 28 September 2012.

Monitoring:

A monitoring reform, set up in 2011, aimed at enhancing the DIS monitoring system in Turkey. Although there have been some major actions taken by the Turkish authorities as regards the follow up of the operational conclusions of the monitoring reform, it is still considered that the monitoring reform has not reached full speed and some further actions are needed as regards functioning of the Sectoral Monitoring Sub-Committees (SMCS) and Steering Committees.

The capacities of the NIPAC office (Ministry of EU Affairs - MEUA) have been further strengthened through trainings and assistance delivered in the context of the ROM (result oriented monitoring) contract. Much remains to be done in terms of development of own monitoring capacities of the MEUA alongside the intensification of monitoring activities.

The cooperation among the key actors needs to be strengthened further. Although there was only a very limited number of joint missions executed in 2012, the respective parties started sharing more information about their monitoring plans. In line with the recommendation of the evaluation on the Stakeholder Involvement, the MEUA has taken an active role to invite relevant stakeholders and civil society organisations to the meetings related to IPA assistance.

The IPA Monitoring Committee for all five components took place on 26 June 2012 in Ankara discussing progress and challenges in implementation. The main concern raised was related to the high risk of loss of a significant amount of funds allocated for the Components III, IV and V due to the insufficient capacities of the national authorities to absorb IPA funds. The IPA Monitoring Committee drew the attention to the fact that besides the improvement of cooperation between the different actors and the strengthening of capacities of the relevant national authorities, an effort has to be deployed to improve the pipeline of projects, especially under the Transport and Regional Competitiveness Operational Programmes.

Two transition assistance and institutional building (TAIB) sector related monitoring committees were held on 14 February and on 26 July 2012 combined with the meetings concerning the programme financing Turkey’s participation in the ENPI Black Sea basin programme under Component II.

Regarding the ENPI Black Sea Basin programme, Turkey participated in two Joint Monitoring Committees organised by the Joint Managing Authority (Romania).

In 2012, two rounds of sector monitoring committees took place including all three operational programmes under IPA component III and one annual technical meeting. The issues discussed concerned the project pipelines and the implementation progress for each of the programmes, including assessments of progress with tendering. Special attention was paid to the Regional Competitiveness Operational Programme, as the project pipeline needs to be reinforced.

The Human Resource Development sector monitoring committees for Turkey were held on 20 and 21 June 2012 in Sanliurfa and on 30 November 2012 in Ankara. During these meetings, the Committee examined the results of implementation of the operational programme on the basis of the 2011 sector-oriented annual report on the implementation. The Committee was also informed about the state of implementation of on-going operations, the identification of new operations and other implementation issues such as audit issues and the revision of the operational programme.

Last but not least, rural development sectorial committees were held on 6 June and 12 December 2012. The main topics for discussion were focused on broad issues related to the absorption of funds, publicity efforts, links with national policies, advisory services, and especially a major programme modification.

PART II - FINANCIAL DATA (EUR million and %)

On implementation of assistance at 31 December 2012

IPA Turkey – IPA I + II

Turkey || Allocated || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 257.20 || 257.20 || 100.00% || 182.11 || 70.80%

IPA 2008 || 257.13 || 257.13 || 100.00% || 201.29 || 78.29%

IPA 2009 || 205.55 || 205.55 || 100.00% || 122.11 || 59.41%

IPA 2010 || 218.81 || 217.09 || 99.21% || 112.38 || 51.36%

IPA 2011 || 232.97 || 232.69 || 99.88% || 88.45 || 37.96%

IPA 2012 || 225.75 || 213.95 || 94.77% || 67.73 || 30.00%

Total || 1397.41 || 1383.61 || 99.01% || 774.07 || 55.39%

IPA – Component I National Programme Turkey

Turkey || Allocated || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 256.20 || 256.20 || 100.00% || 181.34 || 70.78%

IPA 2008 || 256.13 || 256.13 || 100.00% || 200.99 || 78.47%

IPA 2009 || 204.55 || 204.55 || 100.00% || 122.01 || 59.65%

IPA 2010 || 217.81 || 216.09 || 99.21% || 112.28 || 51.55%

IPA 2011 || 229.97 || 229.69 || 99.88% || 88.15 || 38.33%

IPA 2012 || 225.75 || 213.95 || 94.77% || 67.73 || 30.00%

Total || 1390.41 || 1376.61 || 99.01% || 772.50 || 55.56%

IPA – Component II (CBC) Programme Turkey

Turkey || Allocated || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 0.93 || 0.93 || 100.00% || 0.89 || 95.00%

IPA 2008 || 1.00 || 1.00 || 100.00% || 0.30 || 30.00%

IPA 2009 || 1.00 || 1.00 || 100.00% || 0.10 || 10.00%

IPA 2010 || 1.00 || 1.00 || 100.00% || 0.10 || 10.00%

IPA 2011 || 3.00 || 3.00 || 100.00% || 0.30 || 10.00%

IPA 2012 || 0.00 || 0.00 || || 0.00 ||

Total || 6.93 || 6.93 || 100.00% || 1.69 || 24.32%

ICELAND

1. SUMMARY

The ratification of the IPA Framework Agreement was finalised in 2012, following the parliamentary resolution mandating the government of Iceland to approve the Framework Agreement. The parliamentary resolution was adopted on 18 June 2012, paving the way for the implementation of projects planned under IPA National Programmes for Iceland.

Following the entry into force of the IPA Framework Agreement, the implementation of projects under IPA National Programme 2011 started in the second half of 2012. The 2011 Programme supports seven projects. The budget is € 12 million and balance between the two priority axes set in the MIPD was taken into consideration (see attached). The 2012 National Programme was adopted on 16 July 2012 and supports three projects for a budget of € 12 million. The projects implementation has partially started. Programming for the National Programme 2013 was completed with a unanimous approval by the IPA Committee in November 2012 and adopted on 2 December 2012. Three projects were envisaged in a total value of € 10,8 million.

2. STRATEGIC PLANNING AND PROGRAMMING 2.1 Multi-annual Indicative Planning Document

The global objective of EU financial assistance to Iceland is to support its efforts towards compliance with the EU acquis, in order to become fully prepared to take on the obligations of membership of the European Union.

The MIPD 2011-2013 sets out two strategic objectives, to be financed under IPA assistance:

- to further enhance Iceland's ability to assume the obligations of membership by supporting institutional capacity building for acquis transposition and implementation.

- to reinforce Iceland's institutional capacity in its preparations for participation in and implementation of Structural Funds and other EU funds.

As mentioned, the Commission's Opinion on Iceland's application for membership of the European Union of 24 February 2010 constitutes the key reference for identification of IPA programming priorities. On 10 October 2012, the Commission adopted its 2012 enlargement package. The 2012 Progress Report for Iceland reconfirmed and further supported the priorities for pre-accession financial assistance that were identified in the Commission Opinion.

However, further to the parliamentary elections of 27 April 2013, the newly formed government has put the accession negotiations on hold until Parliament assesses the state of the negotiations and the developments in the EU. The consequences for IPA are being examined. The Commission does not envisage proceeding with any further projects under IPA until such time as the Icelandic government has decided whether or not to continue the accession process.

2.2 Programming 2.2.1 Component I

The Programming of the 2012 National Programme was finalised in August 2012 by signing the respective Financing Agreement.

The 2013 National Programme was presented to the IPA management committee in November 2012. The 2013 programme in a total value of € 10.8 million was adopted on 2 December 2012. The additional national contribution is € 7.7 million. The 2013 Programme covers exclusively the first strategic priority of the MIPD (To further enhance Iceland's ability to assume the obligations of membership by supporting institutional capacity building for acquis transposition and implementation).

The programming of National Programmes 2011-2013 was thus completed in 2012 with all three annual programmes adopted. The national programmes 2011-2013 is envisioning in total 13 projects including environment, food safety, increasing employability of low skilled workers, regional development, financial supervision, customs upgrading, statistics and translation of the acquis. Co-financing from the Icelandic side is sizable and stands at 33% overall for the 2011-2013 National Programmes.

Iceland National Programme 2011 under IPA component I (EUR million):

Axis 1 - Building administrative capacity for acquis transposition and implementation || EU IPA contribution || National contribution || Total amount (EU+National contribution)

Project 1: Institutional and laboratory capacity building to ensure food safety || 1.90 || 0.00 || 1.90

Project 2: Preparation for Implementing the Habitats and Birds Directives || 3.68 || 0.75. || 4.43

Project 3: Strengthening National Accounts || 0.83 || 0.24 || 1.07

Project 4: Translation of the acquis and setting up the conference interpretation programme at the University of Iceland || 1.50 || 1.92 || 3.42

Total Axis 1 || 7.91 || 2.92 || 10.83

Axis 2 - Preparation for effective use of Structural Funds and other EU funds || EU IPA contribution || National contribution || Total amount (EU + National contribution)

Project 5: Katla Geopark: Regional development for the Eyjafjallajokull area || 0.56 || 0.18 || 0.74

Project 6: Increasing employability of low qualified workers with skills recognition system in adult education || 1.88 || 0.62 || 2,50

Project 7. Technical Assistance and Structural Funds Preparation Facility || 1.65 || - || 1,65

Total Axis 2 || 4.09 || 0.81 || 4.90

Total Axis 1 + Axis 2 || 12.00 || 3.74 || 15.74

Iceland National Programme 2012 under IPA (Transition Assistance and Institution Building Component)

Axis 1 - Building administrative capacity for acquis transposition and implementation || EU IPA contribution || National contribution || Total amount (EU + National contribution)

Project 1: Preparation for implementing the Water Framework and Floods Directives in Iceland || 1.72 || 0.59 || 2.31

Project 2: Translation of the acquis || 1.00 || 2.28 || 3.38

Total Axis 1 || 2.72 || 2.97 || 5.69

Axis 2 - Preparation for effective use of Structural Funds and other EU funds || EU IPA contribution || National contribution || Total amount (EU + National contribution)

Project 3: Preparations for implementation of Structural Funds in Iceland || 9.28 || 2.59 || 11.87

Total Axis 2 || 9.28 || 2.59 || 11.87

Total Axis 1 + Axis 2 || 12.00 || 5.56 || 17.56

Iceland National Programme 2013 under IPA (Transition Assistance and Institution Building Component)

Axis 1 - Building administrative capacity for acquis transposition and implementation || EU IPA contribution || National contribution || Total amount (EU + National contribution)

Project 1: Implementation of a Risk Based Approach in Financial Supervision in Iceland || 3.16 || 0.57 || 3.73

Project 2: Reforming Icelandic business statistics || 1.67 || 0.30 || 1.97

Project 3: Implementation of transit and tariff customs systems in Iceland || 6.0 || 6.80 || 12.80

Total Axis 1 || 10.84 || 7.66 || 18.50

3. IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2012

Financial support to Iceland is exclusively implemented under IPA Component I "Transition Assistance and Institution Building", through centralized management by the Commission headquarters. Grants constitute a substantial part of the pre-accession assistance in Iceland.

Implementation of the national IPA assistance started in 2012. The implementation of the 2011 Programme is well under way with contracting rate of 75%. The contracting rate of the 2012 Programme is 8%. In the reporting period, the implementation of the 2013 Programme had not yet started.

Projects under implementation in the reporting period cover key areas of Iceland's accession process, such as environment, food safety, increasing social development, regional development, statistics and translation of the acquis.

Good progress can be reported as also verified by independent monitoring. Generally, beneficiaries have a good administrative capacity to implement the projects and there is a high projects ownership. The first IPA Monitoring Committee met in November 2012 and concluded that notwithstanding the early stage of the IPA implementation in Iceland, the programme was implemented effectively and there was a sufficient quality and coherence towards meeting the objectives set out in the multi-annual indicative planning document.

As regards technical assistance, support has been provided by means of several consultancy contracts, mainly in the area of regional development. The administrative capacity of the National IPA Coordinator's office has been also reinforced through a technical assistance contract. TAIEX continued to play a key role in providing technical assistance to Iceland in 2012 and constituted a significant component of the overall EU support in relative terms given the size of the country and the national programmes.

PART II - FINANCIAL DATA (EUR million and %)

On implementation of assistance at 31 December 2012

IPA Iceland

Iceland || Allocated || Contracted || % Contracted || Paid || % Paid

IPA 2010 || || || || ||

IPA 2011 || 12.00 || 9.04 || 75.32% || 3.03 || 25.27%

IPA 2012 || 12.00 || 1.00 || 8.34% || 0.37 || 3.11%

Total || 24.00 || 10.04 || 41.83% || 3.41 || 14.19%

IPA – Component I National Programme Iceland

Iceland || Allocated || Contracted || % Contracted || Paid || % Paid

IPA 2010 || || || || ||

IPA 2011 || 12.00 || 9.04 || 75.32% || 3.03 || 25.27%

IPA 2012 || 12.00 || 1.00 || 8.34% || 0.37 || 3.11%

Total || 24.00 || 10.04 || 41.83% || 3.41 || 14.19%

THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA

1. SUMMARY

The former Yugoslav Republic of Macedonia continued accession-related reforms with the support of IPA but faced serious challenges during 2012 as regards programming and implementation of EU assistance. In general, the capacities of the national institutions managing IPA remained uneven, contributing to recurrent delays in procurement and low contracting and disbursement rates.

The IPA 2012-2013 National Programme represents a total EU contribution to Component I of approximately EUR 28 million per year. It was prepared and adopted by the Commission in November 2012 and consists of five sector fiches and seven linked project fiches supporting the sectors of public administration, justice, home affairs and fundamental rights, private sector development, agriculture, and environment and climate change. The new allocations for the Operational Programmes under Components III, IV and V were also adopted on the same occasion.

Absorption of available funds from all IPA components was an issue to which the Commission paid attention, supporting the authorities' efforts. Temporary interruption of payments took place in March and again at the end of 2012 by the Commission (Regional Policy DG, Employment, Social Affairs and Inclusion DG and Agriculture and Rural Development DG), due to understaffing and insufficient managerial capacities in key institutions, especially in those exercising control functions, such as the Audit Authority and the National Authorising Officer's (NAO) office. Thanks to resolute action taken by the government, the capacities of all these institutions almost reached their full staff targets foreseen in their respective Workload Assessments (WLA) for 2012, although important residual gaps remain in the Ministry of Environment.

Capacity building needs and the accumulated backlog continue to pose serious problems and constant efforts and commitment should be secured at the highest possible political level to accelerate implementation.

2. STRATEGIC PLANNING AND PROGRAMMING 2.1 Multi-annual Indicative Planning Document

The overall objective of EU financial assistance to the former Yugoslav Republic of Macedonia is to support its efforts regarding reforms and towards compliance with EU acquis in order for the country to become fully prepared to take on the obligations of membership to the European Union. The last MIPD 2011-2013 has been a good ground to start introducing Europe 2020 into the national context, by stronger sector focus and implementation according to a sector-based approach, as far as possible, aiming for greater impact on the ground.

The Commission took a number of steps to strengthen ownership by the beneficiary country and to enhance the strategic nature of this process, reinforcing the link between the priorities established in the Progress Reports and the programming of assistance, starting from the IPA 2012-2013 National Programme, preparing the ground for the new IPA II instrument.

Taking into account all previous evaluations, the Commission followed up on all findings and tried to systematically address the lessons learned by improving project design, providing training and capacity building and ensuring a stronger link between existing nationally-owned strategies and EU assistance programming documents.

Table 1: MIFF[9] allocations per component, in EUR million

IPA Component || 2011 || 2012 || 2013 || Total

I (Transition Assistance and Institution Building) || 29.40 || 28.66 || 27.06 || 85.12

II (Cross Border Cooperation) || 4.52 || 3.58 || 5.09 || 13.20

III (Regional Development) || 39.30 || 40.95 || 50.28 || 130.53

IV (Human Resources Development) || 8.80 || 10.29 || 10.64 || 29.72

V (Rural Development) || 16.00 || 17.99 || 20.16 || 54.15

Total || 98.03 || 101.47 || 113.22 || 312.72

2.2 Programming 2.2.1 Component I

The switch to a sector-based approach and IPA programming proved to be a big challenge for the preparation of the Transition Assistance and Institution-Building (TAIB) 2012-2013 National programme (NP). The programming exercise was done for two years at once, allowing time for the preparations of IPA II documents, the Country Strategy Paper 2014-2020 and the Sector Programmes that would follow in 2013.

The NP 2012-2013 represents a total EU contribution of roughly EUR 28 million per year and consists of five sector fiches and seven linked project fiches supporting the sectors of public administration, justice, home affairs and fundamental rights, private sector development, agriculture, and environment and climate change. The selection of the sectors was agreed with the national authorities,