Abbreviations

BiH : Bosnia and Herzegovina

BiHCC : Constitutional Court of BiH

BCP : Border crossing point

CARDS : Community Assistance for Reconstruction, Development and Stabilisation

DG ELARG : Directorate-General for Enlargement

EAR : European Agency for Reconstruction

EBRD : European Bank for Reconstruction and Development

EC : European Commission

EIB : European Investment Bank

EU : European Union

EUPOL-Proxima : European Union Police Mission in the former Yugoslav Republic of Macedonia

HQ : Headquarters

HRC : Human Rights Commission

IBM : Integrated border management

JHA : Justice and Home Affairs

PAMECA : Police Assistance Mission of the European Community to Albania

SAp : Stabilisation and Association process

SR : Special Report of the European Court of Auditors

UNSCR : United Nations Security Council Resolution

WCC : War Crimes Chamber

Executive Summary

I. The European Union's strategic interest in the western Balkans is to install democracy, security and long-term stability. The Balkans have been affected by insecurity and violence in the past. The political and economic environment is still fragile. The relevance of the Justice and Home Affairs (JHA) sector is therefore high for the EU. The incentive of EU membership has contributed to making the EU the biggest and most influential external stakeholder in the region. Between 2001 and 2006, the Commission has spent almost 500 million euro on Justice and Home Affairs projects in the western Balkans. The aim of the Commission's assistance was to align the western Balkan countries with EU standards through appropriate administrative, judicial and law enforcement structures.

II. The Court's audit assessed to what extent:

(a) needs in the Justice and Home Affairs area had been properly identified and the projects were relevant to the identified needs, and

(b) the intended outputs had been delivered and the expected results were achieved and sustainable.

III. The Court's audit covered both investment and institution-building projects in the four Justice and Home Affairs sub areas: asylum and migration, integrated border management, judiciary and police. The Court found that [1]:

(a) unlike the previous accession programmes, the Commission has prioritised the Justice and Home Affairs sector and attempted to tackle important structural reforms earlier in the enlargement process;

(b) against the background of a difficult political and organisational environment, the Commission's management of Justice and Home Affairs projects has been largely effective, although the Court identified some shortcomings, particularly in terms of the sustainability of results;

(c) the needs analyses were sometimes inadequate and there was a lack of donor coordination;

(d) although not all investment projects achieved fully satisfactory results and the sustainability is at risk, the investment assistance financed by the Commission made a relevant and useful contribution to the national infrastructure and institutions;

(e) on the other hand the achievements of institution-building projects were only partially satisfactory and unlikely to be sustainable. This was due to continued political weakness and lack of commitment (ownership) by the beneficiaries, as most reform initiatives do not come from within the region but from the European Commission or other external stakeholders;

(f) there was no significant difference in the degree of success achieved in projects managed by the Delegations compared with those managed by the European Agency for Reconstruction.

Graph 1

Summary of findings on audited projects

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IV. On the basis of these observations, the Court makes recommendations which could help the Commission to provide more efficient and effective assistance. The project results could be improved if:

(a) when designing the Justice and Home Affairs projects, the Community support complied with annual programme objectives (for example the future joint border crossing points should be given priority as this would foster regional cooperation);

(b) investment projects were matched more closely with institution-building projects;

(c) all donors active in the area, including the Commission as the main donor, coordinated better with each other (for example one donor could fund or co-fund a project designed by another donor);

(d) the procurement process for equipment was reconsidered by the donor community. Wherever possible, joint investment pools managed by the recipient countries should be considered.

V. Project sustainability could be improved if:

(a) beneficiary involvement were increased;

(b) no projects were launched without a maintenance plan;

(c) the Commission monitored more closely the distribution and evaluated the use of EU-funded equipment and infrastructure;

(d) the delivery of technical assistance was adequately complemented by active encouragement for institutional change.

Introduction

1. Enlargement serves the EU's strategic interests in stability, security, and conflict prevention. The present enlargement agenda covers the western Balkans, which have been given the prospect of becoming EU members once they fulfil the necessary conditions.

2. The audit of the Justice and Home Affairs (JHA) sector for the western Balkans addressed an area of high political relevance. The JHA sector is one of the most prominent areas of cooperation between the European Union and western Balkan countries and can be categorised into four sub areas: asylum and migration, integrated border management, judiciary and police. The value of Justice and Home Affairs-related contracts under the Commission programme for the western Balkans (CARDS [2]) amounts to around 470 million euro from 2001 to 2006 [3].

3. Prior to starting the audit, the following principal risks to sound financial management were identified:

(a) Justice and Home Affairs projects are implemented in a fragile political and economic environment which means that the Commission assistance might not achieve the intended policy objectives and might be unsustainable.

(b) The role of the recipient country and final beneficiaries is of fundamental importance to the success of the projects because the Commission's powers to strengthen the competence, professionalism and independence of Justice and Home Affairs institutions are limited.

(c) The Community is under pressure to obtain high contracting rates and the recipients' and beneficiaries' budgetary, procedural and political constraints might therefore be disregarded. This might hamper the effectiveness of the outputs, especially when aiming to improve administrative capacities.

(d) Based on previous experience, compliance with Justice and Home Affairs criteria is one of the most, if not the most, difficult issues in enlargement [4].

4. The objectives of the Commission's programmes were to:

(a) reinforce the rule of law, human rights and relationships with civil society;

(b) support judicial reform and harmonisation of national legislation with EU requirements;

(c) reform the police in general, and border police more specifically, and ensure public order;

(d) fight against corruption, illegal migration, organised crime and terrorism;

(e) facilitate development, trade relations and traffic;

(f) strengthen institutional and operational capacities, e.g. in asylum and migration, visa and integrated border management matters.

5. The Community Justice and Home Affairs assistance is implemented by financing investments in infrastructure and equipment or through institution-building projects. Investments are either works or supply contracts. Institution-building via technical assistance [5] or twinning [6] establishes standards and ground rules for public service, e.g. laws and strategies with the necessary training.

Audit scope and approach

6. The European Union helps the western Balkan countries mainly through specific programmes and project assistance. The purpose of the Court's audit was to assess the effectiveness of the European Commission's (EC's) projects in the areas of Justice and Home Affairs for the western Balkans. The audit work included a sample of 33 Justice and Home Affairs projects, i.e. 30 national and three regional, over the 2001–05 annual programmes [7]. Both types of assistance, i.e. investments and institution-building, were equally represented in the sample. The list of audited projects with the results and the Court's findings is given in Annex I. Details of the audit methodology and sample are given in Annex II.

7. The main objectives of the audit were to assess the extent to which:

(a) Justice and Home Affairs needs were properly identified and the projects were relevant to the identified needs [8], and

(b) the intended outputs had been delivered and the expected results were achieved and sustainable [9].

8. The Commission used two basic management approaches in the western Balkans: devolved and indirect centralised management. In devolved management the Commission's Delegations in Albania, Bosnia and Herzegovina and Croatia are responsible for project preparation, contracting, and financial and technical implementation. In the indirect centralised management approach, the European Agency for Reconstruction (EAR) managed the programmes in the former Yugoslav Republic of Macedonia, Kosovo (under UNSCR 1244/99), Montenegro and Serbia until the end of 2008. The Court examined whether there was any evidence that one management approach was more effective than the other as regards the Justice and Home Affairs projects [10].

9. The European Commission is financially the most significant donor in the western Balkans. More than half of the grants given to the region come from the EU budget (Annex III). In this context, the audit examined how the recipient country government had harvested the benefits from donor coordination.

10. The report is structured according to the form of assistance, investment and institution-building projects and discusses their relative strengths and weaknesses. The horizontal issues of management approach and donor coordination are dealt with in a third section.

Map of the western Balkans

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Observations

Eu investment support mostly successful but sustainability at risk

11. This section first deals with the relevance of investment projects and the needs assessments on which the projects were based. It goes on to present the findings on achievement of results and on the necessary alignment of EU and national priorities, and then continues with the issue of sustainability, divided in two parts: one on the importance of maintenance, and one on the need for sufficient institutional capacities for ensuring sustainability.

Real need for investments due to eu standards and dilapidated infrastructure

12. Because of years of underinvestment and changes in geopolitics [11], the investment needs in the western Balkans to bring infrastructure up to EU standards are significant and in most cases are beyond the means of national budgets. The investment requirements result from two main factors:

(a) EU standards for completely new institutions [12] have to be complied with. For example, EU standards require a professional border surveillance service. This is a challenge because until recently the borders were mainly controlled by military conscripts [13]. In addition, the new borders should be open to legitimate movements of persons and goods but at the same time be secure and controlled.

(b) Dilapidated Justice and Home Affairs infrastructure. The current infrastructure in the western Balkans is poor and inadequate. For example, when external evaluators [14] visited 38 court buildings in Albania in 2004–05, they could not usually distinguish judges from defendants or members of the public or prosecutors and cases were handled in corridors.

Box 1

Examples of strategic and non-strategic investments projects

Case 1: Project following strategic objectives

Albania's prison system is below international standards. Prisons and pre-trial detention centres are heavily overcrowded. At the time of the audit Albanian prisons were occupied by 3049 inmates, although their capacity was 1510 people. This means an overpopulation of 102 %. Therefore, the construction of Fushe Kruja prison to accommodate 312 detainees could be considered a key and relevant priority.

Case 2: Project not following annual programme

In the former Yugoslav Republic of Macedonia, the approved asylum project documents allocated a budget of 2 million euro to institution-building activities such as drafting legislation, strategies and national action plans. This was not done. Instead, a reception centre for asylum seekers was built.

13. The audit identified that in around 70 % of cases Justice and Home Affairs investment projects stayed within the broadly defined boundaries of strategic objectives [15], i.e. to create stability and security and to enhance association with the EU. The remaining projects were not in line, or only partly in line, with the objectives in the annual programme (Box 1).

14. The audit revealed that the assistance was triggered without adequate feasibility studies defining the scope and specifications of the projects. Performing studies is a demanding task given that the beneficiary institutions did not have soundly formulated national strategies or action plans which would have set priorities. Out of the 17 audited investment projects, there were only two highly satisfactory studies describing beforehand the importance of the selected project (Box 2).

Box 2

Example of highly satisfactory needs analysis

The construction of the two Courts of Appeal in Korça and Vlora in Albania were the two top priorities in the "Master plan for judicial infrastructure" study. The study analysed the situation and prospects of all district and appeal courts in Albania. The master plan was well prepared and detailed.

15. Weaknesses at the planning stage both by the recipient country and, in some cases, the Commission led to inefficient and ineffective distribution and use of EU-funded equipment (Box 3).

Mixed results for a major category of investment projects: border management and security

16. The EU–western Balkan summit in Thessaloniki in June 2003 emphasised that border insecurity is one of the real obstacles to the rule of law and constitutes a major priority for the Union. The Commission has been heavily involved in the sector of integrated border management, to which a major share of Justice and Home Affairs funding (37 %) has been committed. The sector has two components — border management and border security. The Court audited eight integrated border management investment projects, including the construction of several border crossing points. The results of these investments were generally more satisfactory when combined with institution-building measures such as drafting national strategies for integrated border management [16]. An effective border management system requires a balance between open, but secure borders [17]. This balance has been achieved in Serbia, for example (Box 4).

Box 3

Examples of inefficient and ineffective distribution and use of EU-funded equipment

In the former Yugoslav Republic of Macedonia some of the EU-financed motorcycles provided in summer 2005 to the border police were hardly used for the first 18 months because the government did not provide the police with the necessary protective gear as agreed. Some pieces of equipment were still missing in 2007. The government launched the complementary equipment tender in September 2008 and the contract should be signed during the first quarter of 2009.

The opening of the asylum centre in the same country was also delayed by one year because the government failed to provide the necessary equipment.

Computers supplied to the Albanian police were still in cardboard boxes eight months after the contract signature awaiting the decision of the authorities concerning the allocation of the computers to the final beneficiaries.

Photo 1

The EU-financed Batrovci border crossing point on the Belgrade–Zagreb motorway has led to significant reductions in passenger waiting times.

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Box 4

Example of how the use of modern equipment strengthens border controls while passenger waiting times are reduced

In Serbia the new infrastructure and the equipment at the Batrovci border crossing point made a difference compared to the past (Photo 1). Thanks to the project, the throughput increased and waiting times were reduced. The waiting time for lorries has fallen from several hours to 30 minutes. Passenger traffic waiting times during peak season have decreased from 12 hours to around 20 minutes.

The border crossing point was also supplied with modern equipment so that the border guards could detect forged documents, even well forged ones. The "docubox" was used 100 times a day on average and since putting it into operation the authorities have discovered almost one forged document a day.

17. Modern border security is based on four elements: mobility, communication, intelligence and firepower. The Commission's support has covered all of these except arms. In Shkodra, in Albania, the border police were obviously better able to patrol the northern land borders with their four-wheel drive vehicles than previously on foot. Also the land border between the former Yugoslav Republic of Macedonia and Greece and the sea border between Albania and Italy are now better controlled than before (see Photos 2 and 3). The number of attempts for illegal border crossings from and into the former Yugoslav Republic of Macedonia decreased substantially from 2005, when the vehicles were delivered, to 2008.

18. Although the overall picture remains rather positive some weaknesses were identified in this area that relate not only to the lack of political will and legal means in the recipient countries (see paragraphs 36 to 39) but also to certain specific weaknesses in the Commission's management (Box 5).

Box 5

Example of a non-implemented border crossing point project

The Gorica border crossing point (BCP) in Bosnia and Herzegovina is located on the busy international road from Mostar (BiH) to Split (Croatia). The Croatian authorities had already constructed a BCP of their own but the Bosnian side lacked proper infrastructure. The Commission signed a 3 million euro works contract without checking that the land expropriation process was complete. Because of disputes over the valuation of the land, the project never started and the contract expired in December 2006 [18].

The consequence is that a "customs terminal" on the Bosnian side is being run by a private legal entity which withholds 70 % of fees for access to the customs terminal (amounting to approximately 20 euro per lorry). There is no plan for the government to take over this infrastructure.

19. The break-up of the former Yugoslavia created over 5000 kilometres of new international borders in the region. The most cost-effective way to control these borders would have been to construct joint border crossing points (BCP). However, the Commission continues to finance the BCP projects using national allocations instead of the regional allocation. This approach does not support the development of regional cooperation.

Photo 2

All projects except one were audited on the spot. Here an EU-financed four-wheel drive vehicle is being checked by Court staff in Gevgelija on the border of the former Yugoslav Republic of Macedonia facing Greece.

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Photo 3

A result of the strengthened sea border control in Albania: a confiscated speedboat used by organised crime to smuggle people into EU.

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Alignment of EU and national priorities a necessary pre-condition for success

20. Reforms in the Justice and Home Affairs sector, whether related to investment or institution-building, are a huge and complex undertaking. However, the national budgets do not provide sufficient funding for Justice and Home Affairs priorities, particularly in the economically less developed western Balkan countries [19].

21. Even though the Commission is the major donor in the western Balkans, EU funds are not enough to cover all investment needs. The Commission therefore usually financed pilot projects, which showed the beneficiary the advantages of up-graded infrastructure. An example of this kind of assistance is the EU-financed "state-of-the-art" Court house in Vlora, which improved the transparency of justice (Box 6).

22. The level of national funding varied considerably between the countries concerned. The audit identified a case where donor dependence was no longer a reality. In Serbia the costs of the EU-funded court renovation projects were approximately 5 % of the total Serbian Justice and Home Affairs budget for the years between 2003 and 2007 (Box 7).

Box 6

Example of an investment enforcing the rule of law

Construction of the Court of Appeal in Vlora, Albania

The Commission invested 770000 euro in the construction of the Court of Appeal in Vlora, Albania. The short-term result of the project was positive. In the new building the average number of cases judged during the first operational year (2007) more than doubled compared with the cases judged on the old premises. Also for the first time, the Court of Appeal had proper courtrooms. This increased the transparency of the proceedings and improved the "reality of justice" in general.

However, at the time of the audit, there was no electricity from the national power grid and the annual budget for heavy oil for the generators had already been exhausted four months before the year end. For this reason, computers could not be used. This reduced the throughput of the cases and diminished the overall effectiveness of the investment.

Photo 4

The new and more secure Court of Appeal building in Vlora Albania was financed by the European Union. The works were completed in 2006.

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Box 7

Example of a sufficient national budget commitment

Renovation of the biggest court building in Serbia

Following the assassination of the Serbian Prime Minister Zoran Djindjic in March 2003, the authorities arrested a high number of suspected criminals. However, the Serbian authorities lacked suitable facilities to enable them to try high-profile cases in a safe and dignified manner. The renovation work financed from the EU budget provided the Belgrade District Court with, for example, a modern courtroom. Since the opening of the courtroom in June 2006, it was used for 35 trials in 2006 and 40 trials during 2007 — most of them related to high-level organised crime and war crimes. Since then the Serbian government has allocated considerable resources to reconstruction of court houses throughout the country.

23. When the EU and national priorities are not aligned, the result is ineffective assistance. For example through the Stabilisation and Association Agreements (SAA) the Commission obliges the western Balkan countries to implement readmission provisions [20]. But the provisions have not been successfully applied because the recipient countries have not reserved sufficient funds in the national budgets. For example, in Albania a lack of staff in the border and migration directorate of the state police put at risk Albania's ability to fulfil its obligations under the agreement. Even when the Commission financed the national strategy on migration and readmission for Albania and highlighted the agreement's conditionalities during the high-level committees meeting, progress was slow.

Impact and sustainability of investment projects at risk

24. Six out of the 16 audited investments projects had problems affecting their sustainability. Although the countries visited had carried out some maintenance of the infrastructure and equipment put in place, the level of maintenance was not sufficient to ensure the sustainability of the investments. At the time of the audit the beneficiary did not have to provide evidence of a proper maintenance plan and budget prior to receiving EU funding.

Box 8

Example of infrastructure project with lack of impact

The Commission invested over 3 million euro to upgrade the border crossing point (BCP) in Kamensko in Bosnia and Herzegovina to the level of a "first category" BCP, i.e. all types of goods can enter and leave the country. However, since the completion of this EU project, the government has revised its decision and down-graded the status of Kamensko BCP. Because of this decision, several types of goods (e.g. petrol) can no longer be declared there. The traffic levels have decreased although the road is the most practical road for traffic from Split in Croatia to the centre-west and north of Bosnia and Herzegovina. The Commission was not aware of this change.

25. The Delegations were not always aware of the situation on the ground because the use of infrastructure and equipment is not monitored. Therefore, the impact and sustainability of investment projects could not be assured by the Commission (Box 8).

26. Although the procurement rules allow for the inclusion of after-sales services in the procurement process, this provision is not sufficiently applied. In Albania the Delegation procured four-wheel drive vehicles for the border police although it knew that there would be problems in maintaining the equipment [21]. The relevant beneficiary institutions in charge of maintenance are also not systematically invited as voting members to tender evaluation committees nor were they sufficiently involved in earlier stages in the tendering procedure.

Investments not matched with necessary institutional capacities

27. In many cases the situation improved on the ground because of the EU assistance with equipment or infrastructure. However, the investments on their own will not achieve the overall objectives for a target institution. For example, it is not enough to build a modern border crossing point: the working practices of the border police have to change accordingly.

28. Other examples of investments that were not matched with necessary institutional capacities were the audited IT projects. Even when the equipment supplied was relevant to the work of the police or judiciary and addressed current and future needs, the projects' potential effectiveness could not yet be adequately exploited because of:

(a) the low number of border police stations and court buildings that were connected to the networks. For example, in Montenegro only three out of 26 border crossing points were interconnected;

(b) projects relating to public authorities' information systems require a solid legislative framework and adequate security policies if they are to be sustainable, as confidential data are exchanged. At the time of the audit, no country had a law on data protection which was fully aligned with the Community acquis. In the case of Bosnia and Herzegovina, a data protection law had been enacted in 2006 but still needs to be updated to align with the Community requirements;

(c) none of the three IT software projects audited had written instructions for access controls. Access control is a key process that controls and limits access to the resources of a computer system; it should be designed to protect against unauthorised entry or use.

Significant institution-building needs but only limited change resulting from EU spending

29. This section first deals with reasons for limited achievements in institution-building projects and the lack of measurement of achievements. Factors critical for sustainability are presented in the next subsections: stability of key staff and an environment free of corruption, specific factors relating to training projects, and ownership at the level of the beneficiaries.

Change management and institution-building limited and poorly measured

30. A Justice and Home Affairs project can be said to be potentially effective if it addresses recognised needs and weaknesses, produces expected benefits, is supported by a commitment to sustainability by the beneficiary and is part of a coordinated strategy to address institution-building.

31. The results of the Commission's projects improved the situation of the beneficiaries. This was most evident in supply and works contracts but the greatest challenge remained with the sustainability of institution-building projects.

32. For cases where institution-building projects did not achieve their objectives, three main reasons were identified by the Court:

(a) administrative instability in the region, e.g. significant turn-over of staff after elections;

(b) training delivering fewer results than expected;

(c) lack of country ownership of reform.

33. The audit also noted the opposite, i.e. when there is stability in the civil service, when training is well targeted and when the top management of the beneficiary is committed to change, progress is achieved. For example, in Albania the government is committed to finalising its de-mining efforts, in Bosnia and Herzegovina the Constitutional Court solved the backlog of pending human rights cases and the court in Sremska Mitrovica in Serbia became a model court using case management software.

34. The Commission introduced few specific activity-based management indicators in this area. In various activity statements the Commission notes that progress in the justice, freedom and security area in the western Balkans has been made, as judges and prosecutors have received training and police and prosecutors have improved cooperation. However, it is not clear how the Commission measures the impact of these activities.

35. The Commission used to measure the success of its assistance by focusing solely on contracting and disbursement rates. In 2002 the Commission started aiming for sustainable capacity development of institutions, which is more difficult to measure. The western Balkan countries are preparing for a decentralised implementation system of assistance, which is positive as the conferral of management indicates a sufficient level of management capacity. However, the Commission has not yet fully integrated the measurement of capacity development into the accreditation process of the beneficiary authorities [22].

Sustainability of institution-building compromised because of changes in key staff and corruption

36. Only two of the 15 institution-building projects achieved satisfactory sustainability. A common feature of the institution-building projects audited was the disruptive effect of changes of beneficiary personnel. The positive results of institution-building training projects were almost always diluted by staff changes in key positions (Box 9).

37. The audit also noted a few positive examples of increased capacities. These have resulted in improvements at operational level (Box 10). Despite the high staff turnover, the strategic objectives, i.e. maintaining security and stability and keeping public order, were ensured. This was achieved only through continuous EU assistance.

Box 9

Unstable staffing situation in public administration in Albania and the former Yugoslav Republic of Macedonia

In Albania, three out of the eight JHA projects audited included training. There were some positive results but staff changes, for example in the migration area, continued to hinder capacity building and delayed decision-making. Immediately after the parliamentary elections in 2005 in Albania, all 20 persons in the regional employment offices dealing with migration issues were replaced.

In the police of the former Yugoslav Republic of Macedonia, 30 key managerial positions were identified. Twenty-eight of these positions were subject to staff changes within months of the elections in 2006, i.e. staff turnover of 93 %.

38. The audit noted inadequate cooperation between law enforcement agencies affecting the sustainability of projects. For example although the police surveillance equipment and the fingerprint system were relevant to the Bosnian police and should enable better detection rates in crime cases, it was not used to its fullest potential due to lack of police cooperation [23].

39. The integrity of Justice and Home Affairs institutions can be bolstered by fighting corruption. There are indications that things have improved somewhat in the countries audited, although the progress is fragile. One possible overall indicator of the effectiveness of EU spending is the corruption perception index issued by Transparency International. Annex IV shows how the rating (ranking and score) has improved slightly since the year 2004.

Box 10

Examples of enhanced operational capacity

In the former Yugoslav Republic of Macedonia the "Mountain Storm" operation in November 2007 was planned, executed and concluded by specialised police units. In this operation, a major arms cache, sufficient to equip 650 solders, was discovered, including anti-aircraft weaponry. It was found in the possession of what was initially described as an "organised crime group" but was later labelled a terrorist cell. The operation was carried out without civilian casualties. According to the international observers interviewed by the Court, an operation of this magnitude would have been impossible a couple of years ago.

In July 2008, the Mountain Storm trial verdict sentenced 17 people to a total of 192 years' imprisonment. According to the judgement, the group's goal was to create insecurity among the citizens and jeopardise the constitutional order of the country.

In Albania the EU has helped the police to strengthen the authorities' law enforcement capacity since 1997. Assistance to the police will continue until at least 2011.

Training — more outputs than results

40. A key element of the process of introducing reforms and change is through the provision of training to civil servants (Box 11). This has been an important Commission priority. For example, all three regional projects [24], with a total budget of 10 million euro, involved training. The training outputs (seminars, workshops and conferences) were delivered satisfactorily, but the impact was limited (Box 11).

41. Getting civil servants from different western Balkan countries around the same training table is of course a worthwhile aim in itself, given the recent history of the region. But the specific objectives of the Commission's projects were more ambitious, e.g. to develop regional strategies in asylum, migration and visa matters based upon a set of commonly accepted EU technical standards and principles.

Box 11

Examples of Judicial Training Centres (JTCs)

The Court audited two training institutes for the judiciary. The overall objective of the JTCs was the same, i.e. to become a fully fledged training institute in line with best European practices, offering high-quality and targeted training to judges, prosecutors, court staff and advocates.

In the former Yugoslav Republic of Macedonia, the EU experts' advice was overlooked when establishing the institution. The ministry did not invite any of the international experts to participate in the draft JTC law, which was then heavily criticised by the donors because it was not compliant with European standards. Furthermore, the curriculum for the initial training of 24 months was cut to 15 months, with a risk of reducing the impact of the training.

In Serbia, the training institute for judges lacked direction and a clear legal base. Furthermore, the "training of trainers" programme proposed the use of modern teaching methods, i.e. small training groups with a lot of interaction. In reality only "ex cathedra" training was delivered.

42. It is inherently difficult to develop common targets for regional training projects because of the differing stages of advancement within the individual countries. The situation in Croatia was usually more advanced than in the other countries. The Commission rightly considered that the regional dimension had to be used to put the knowledge of the most developed national system at the service of the other recipient countries. However, the Commission rarely measured how the training changed policies or working practices, despite this being a good practical approach to alignment with EU standards.

43. The Commission did not establish any system for measuring the regional judicial cooperation project's performance, not even after it was criticised by its own monitors [25]. The indicators did not allow the measurement of the impact as they were activity-driven and formalistic rather than evaluative, e.g. number of meetings or conferences. The objectives were also vague and unclear, e.g. to enhance regional dialogue or to facilitate operational cooperation. Attainment of objectives could therefore not be measured because they were not directly linked to the activities.

44. At the national level too, the Commission's training projects did not fully meet their objectives, because they were run without the commitment of the top management. Two special training courses within the Albanian police project (PAMECA II) can be mentioned. "Strategic Command Courses" were given to 60 middle-ranking to senior-ranking officers. When the trained police managers returned to implement the theory they faced resistance from their superiors. To try and remedy the potential lack of impact, a "Senior Executive Programme" had therefore to be launched involving 34 of the most senior police officers. Although the Commission can be complimented for taking this corrective action, it would have been preferable to ensure the commitment of the top management before presenting the course to middle management.

45. Learning-by-doing and on-the-spot training are effective ways of developing a modern and efficient administration. Handing over administrative responsibilities can be done as long as staff turnover is not excessive (Box 12). Twinning projects with Member States and grant contracts with international organisations are used more since the CARDS programme was reorientated from a reconstruction-driven to a reform-driven programme.

Box 12

Examples of "learning-by-doing" projects in Bosnia and Herzegovina

Case 1: Complete hand-over of responsibilities to the beneficiary — Human Rights Commission

In 2004 the Commission signed a grant contract with the Constitutional Court of Bosnia and Herzegovina (BiHCC) to establish a special judicial body within BiHCC, the Human Rights Commission (HRC), in order to address a back-log of almost 9000 human rights cases [26]. During the first year the Human Rights Commission (HRC) resolved more than 3000 cases. The HRC started operating with international staff, but since 2005 the HRC was composed of national staff only. During the project the national staff applied the European Convention of Human Rights and other international instruments on a daily basis. The project succeeded because 9 out of the 10 key staff stayed with the Constitutional Court. In June 2007 all back-log cases had been resolved. According to the beneficiary, the project made a significant contribution to the awareness of human rights standards in Bosnia and Herzegovina.

Case 2: Incomplete hand-over of responsibilities to the beneficiary — War Crimes Chamber

The War Crimes Chamber (WCC) in BiH is the first permanent and specialised state-level organ designed to deal with grave breaches of international humanitarian law and part of the International Criminal Tribunal for the former Yugoslavia's completion strategy [27]. The number of war crimes suspects in Bosnia and Herzegovina is estimated at several thousand. At the time of the audit the handover from international experts to national experts was delayed. The actual number of active trials exceeded the number forecast, which is positive, but the Court's workload well exceeded its capacity. This situation was aggravated by the turnover of international judges.

Local ownership a key success factor in improving the rule of law

46. One of the most common strategic objectives of the audited projects was to reinforce the rule of law in the western Balkans. The western European concept of rule of law is in essence the principle that no one is above the law. Cementing the rule of law in the western Balkans is essential for stability and security in Europe. Despite some progress, the rule of law in the western Balkans is still weak (Box 13).

47. In many of its progress reports, the Commission has expressed dissatisfaction at the slow speed of reforms. The project approach adopted by the Commission has its limitations. It is not a "cure all remedy". Success in the Commission's Justice and Home Affairs projects requires a change in attitudes of national authorities and continuity of government structures. These factors lay beyond the Commission's direct powers and their negative impact, in particular on institution-building, should not be underestimated.

Box 13

Rule of law concept in western Balkans weak

The "rule of law" is weak in the region and confidence in the government and institutions is low. The citizens distrust the legal system and they feel it benefits only certain status groups. When asked whether "some people are above the law in this country", the percentage of positive responses in certain countries of the region was the following [28]:

Montenegro: 69 %;

Serbia: 81 %;

The former Yugoslav Republic of Macedonia: 85 %.

It should be noted that those who feel most strongly that society is unfair and that people lack equality before the law are the most educated and the best politically informed.

48. However, the Commission has learnt the lesson of previous experiences. Compared with the Commission's earlier pre-accession programme (Phare), important structural reforms in Justice and Home Affairs are now tackled earlier in the enlargement process.

49. Until now most reform initiatives did not come from within the region but from the European Commission and other external agents [29]. The resulting lack of ownership weakens the projects' long-term results. The first serious initiative within the region is the Regional Cooperation Council, which was launched in February 2008, as the successor of the Stability Pact for South Eastern Europe. The work of the Cooperation Council will focus on six priority areas. One of them is Justice and Home Affairs. Almost two decades after the collapse of the former security and stability structure in South-Eastern Europe, this new institution, based in Sarajevo, aspires to become the first regional forum of its kind through a regionally owned and led framework that also supports European integration.

Management approaches and donor coordination

50. This section presents the results of the audit on two horizontal issues, covering both types of projects: the comparison between the two management approaches used by the Commission and donor coordination.

No significant difference between management approaches

51. In the western Balkans the Commission used two basic management approaches (see Annex V), through the European Agency for Reconstruction (EAR) or through Commission Delegations. The Court analysed the audit results obtained on projects in order to determine if there was evidence that one management approach was more effective than the other.

52. Out of the 30 Justice and Home Affairs projects audited in the recipient countries, 18 were managed by the Delegation, and 12 by the EAR (see Annex I). While the overall performance of the projects audited was mixed, there was no significant difference in the degree of success achieved in projects managed by the Delegations compared with those managed by the EAR. One of the strengths of a devolved Delegation is the close link between policy dialogue and the annual programming process. On the other hand, the EAR's headquarters contributed to the dialogue with additional expertise for the region as a whole.

Beneficiary-led donor coordination not enhanced

53. The Commission has committed itself to playing an active role in fostering donor coordination in the western Balkans. Donor coordination is one of the principles of the 2005 Paris Declaration on Aid Effectiveness and the EU Code of Conduct on Division of Labour. The Commission subscribes to these principles. The Court found that it was difficult for the Commission to put donor coordination into practice on the ground.

54. Justice and Home Affairs constitute a sector where there is common donor interest. The Commission, the international financial institutions, the Member States and the non-EU donors are all active in the western Balkans (Annex VI). The principle that the recipient country should lead the donor coordination process could not be applied, because the recipient countries' capacity to operate was still weak. Moreover, the beneficiaries did not receive sufficient support to enhance their capacity to lead donor coordination. Even when the beneficiary had a clear vision of how to implement their preferred solution, they were faced with un-coordinated donor activities (Box 14).

55. The lack of donor coordination was not limited to investment projects only. In institution-building cases the beneficiary was confused by recommendations given by different EU operators. An overload of advice with mixed messages was most obvious in the former Yugoslav Republic of Macedonia. In 2004–05 five separate EU entities (the EC Delegation, EAR, EU special representative, EUPOL-Proxima and EU monitoring mission) were active in the area of police development. Additionally, the Organization for Security and Co-operation in Europe, International Criminal Investigative Training Assistance Programme (a police project funded by the USA) and a number of EU Member State bilateral programmes were operating simultaneously. The problem was especially damaging where advice was of a contradictory nature.

Box 14

Example of uncoordinated multi-donor investment activity

One aid harmonisation principle deals with aid alignment and untied aid. However, because of uncoordinated multi-donor activities, where each donor gave cars, lorries and vans originating from their country, the police of the former Yugoslav Republic of Macedonia uses over 40 types of vehicle. This makes it impossible to run the fleet cost-effectively. The police aims to use only 12 types of vehicle in the future.

Conclusions and recommendations

56. The incentive of EU membership has contributed to making the EU the biggest and most influential stakeholder in the western Balkans. Unlike the previous accession programmes, the Commission has prioritised the Justice and Home Affairs sector and attempted to tackle these important structural reforms earlier in the enlargement process. The Justice and Home Affairs projects managed by the Commission take place in a difficult political and organisational environment. Against this background the Commission's management has been largely effective. However, the Court's audit identified some shortcomings in Commission management which, if addressed, could have resulted in an even higher rate of project success, particularly in terms of the sustainability of their results.

57. The Court concludes that needs analyses were sometimes inadequate and that there was a lack of donor coordination. Although not all investment projects achieved fully satisfactory results, and the sustainability is at risk, the investment assistance financed by the Commission has made a relevant and useful contribution to the national infrastructure and institutions. On the other hand the Court found that the results of institution-building projects were only partially satisfactory and unlikely to be sustainable. This was due to continued political weakness and lack of commitment (ownership) by the beneficiaries, as most reform initiatives do not come from within the region but from the European Commission or other external stakeholders.

Table 1

Main conclusions on investment and institution-building projects

Rating: S = Satisfactory, PS = Partly Satisfactory and US = Unsatisfactory;

S / PS means that the rating falls between Satisfactory and Partly Satisfactory.

Audit question | Needs | Project outputs | Results |

Type of assistance | Relevance | Assessment | | Achieved | Sustainability |

Investment | S | PS | S | S / PS | S / PS |

Institution-building | S | S | S | PS | US |

58. While the overall performance of the projects audited was mixed, with regard to the management approaches, there was no significant difference in the degree of success achieved in projects managed by the Delegations compared with those managed by the European Agency for Reconstruction.

Recommendation 1

The Commission's rationale for working in the Justice and Home Affairs sector in the western Balkans is clear but project results would be even better if:

(a) when designing Justice and Home Affairs projects, the Commission gave appropriate weight to project objectives and ensured that project activity-based impact indicators are set;

(b) investment projects were matched more closely with institution-building projects;

(c) all donors active in the area, including the Commission as the main donor, coordinated better with each other, for example one donor could fund or co-fund a project designed by another donor;

(d) the procurement process for equipment was reconsidered by the donor community. Wherever possible, joint investment pools managed by the recipient countries should be considered, although tight monitoring of the procurement process by the beneficiary organisations will still be necessary.

Recommendation 2

The sustainability of projects would improve if:

(a) beneficiary involvement were increased, e.g. in the public procurement process;

(b) no projects were launched without a maintenance plan;

(c) the Commission monitored more closely the distribution and evaluated the use of EU-funded equipment and infrastructure and took corrective action when necessary;

(d) the Commission used impact indicators to measure results;

(e) the delivery of technical assistance was adequately complemented by active encouragement for institutional change.

Recommendation 3

The regional aspect would be enhanced if infrastructure interventions in the integrated border management area were designed and implemented in a way that would foster regional cooperation. For example, joint border crossing points, financed from the regional allocation, should be given priority.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 15 and 16 July 2009.

For the Court of Auditors

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Vítor Manuel da Silva Caldeira

President

[1] The summary of findings on projects is in Graph 1.

[2] CARDS is the acronym for "Community Assistance for Reconstruction, Development and Stabilisation" and covered the period 2000–06.

[3] This represented around 10 % of the total CARDS budget. Most of the CARDS spending took place during the first years of the programme, addressing the urgent post-conflict needs of the western Balkan population.

[4] Concerning the latest enlargement in 2007, Bulgaria and Romania have still progress to make in the Justice and Home Affairs sector. The EU decided to establish a special cooperation and verification mechanism to help the newest Member States to address outstanding shortcomings.

[5] Technical assistance is a resource used in many development projects and programmes of different types and can be defined as "experts contracted for the transfer of know-how and skills and the creation and strengthening of institutions". Reference made to Court's Special Report No 6/2007 on the effectiveness of technical assistance in the context of capacity development (OJ C 312, 21.12.2007, p. 3).

[6] Launched in 1998 for accession assistance, twinning provides the framework for administration and semi-public organisations in the recipient countries to work with their counterparts in Member States.

[7] As provided in the CARDS regulation, the annual programme, drawn up for each country receiving Community assistance, contains a list of projects to be financed and specifies the relevant amounts. The management committee, composed of representatives of Member States and chaired by the Commission, gives its opinion on the annual appropriations.

[8] The audit assessed the extent to which the Justice and Home Affairs projects were justified in the light of the scope and specifications of the needs and whether alternative approaches had been considered and properly analysed. Furthermore, it assessed whether the objectives were in line with priorities defined in Commission, Council and national strategy documents.

[9] The audit assessed the extent to which the beneficiary used given EU-funded assistance (for example equipment, infrastructure and training) effectively and whether the results of the projects were financially and operationally sustainable.

[10] This additional component of the audit was included at the request of the European Parliament. Reference was made to the European Parliament resolution of 22 April 2008 with observations forming an integral part of the decision on discharge in respect of the implementation of the European Union general budget for the financial year 2006, section III — Commission.

[11] The emergence of six new states from the break-up of the former Yugoslavia has created over 5000 kilometres of new international borders in the region that have to be properly controlled.

[12] For example, in Bosnia and Herzegovina the border police is the oldest of the state-level institutions but less than 10 years old in 2009.

[13] For example, in Serbia the army was controlling the borders until 2007.

[14] "Master plan for judicial infrastructure" — study carried out by external consultants between January 2004 and April 2005.

[15] The Court's Special Report No 5/2007 on the Commission's management of the CARDS programme (OJ C 285, 27.11.2007, p. 1) concluded that the strategic guidance was very general. This was adequate for the reconstruction phase but not for the more challenging institution-building objectives.

[16] The national integrated border management strategy was adopted in Albania in November 2006, in Bosnia and Herzegovina in July 2005, in the former Yugoslav Republic of Macedonia in October 2005, in Montenegro in February 2006 and in Serbia in January 2006.

[17] It should be noted that the EU acquis communautaire, the Schengen standards or Community custom code do not provide a universal, "one-size-fits-all" model for border management. Nevertheless, the standards do require the system to be effective and risk adjusted.

[18] As the Commission could not honour the contract, the contractor filed a request for over 550000 euro for losses and damages and an amicable settlement procedure was ongoing at the time of the audit.

[19] In the former Yugoslav Republic of Macedonia, the academy for training judges and public prosecutors is partly financed from the state budget under a specific law. This ensures its educational independence. But 63 % of the total funding to the academy in 2008 came from international donors. A more balanced financial framework is needed to ensure the operational independence of the institution.

[20] The western Balkan countries and the European Union have signed a readmission agreement as part of the SAA. This agreement provides for western Balkan and EU member countries to accept the return of citizens who have illegally entered or illegally remained on the territory of any of the other countries, as well as to accept illegal migrants who are citizens of third countries or stateless individuals who have come to the territory of one of the countries through the territory of the other country. The agreement essentially obliges western Balkan countries to share responsibility for EU security with the European Union.

[21] The Delegation's own four-wheel drive vehicle is not serviced in Tirana but driven to a neighbouring country.

[22] The first step in the process of decentralised implementation is the national accreditation of beneficiary authorities on the basis of capacity assessments. The next step is the conferral of management from the Commission to the recipient country.

[23] It should be recognised that in Bosnia and Herzegovina 13 different police forces exist, two at entity and 10 at cantonal level in addition to the autonomous police of Brcko District.

[24] Because of past conflicts, regional cooperation has been a challenge in the western Balkans. Therefore the Commission's regional programme focused on promoting relations between western Balkan states. The EU has made it clear that regional cooperation is a prerequisite for progress towards accession. Some 10 % of the CARDS funding was directed to supporting this objective and the regional programme has always focused on the rule of law and Justice and Home Affairs issues.

[25] The Commission has contracted external monitors to assess the implementation of the projects.

[26] There are four main types of human rights violation cases in Bosnia and Herzegovina: equality before the law, property rights, right to work and receive education and missing persons ("Srebrenica cases").

[27] Reference made to UN Security Council Resolution 1503.

[28] See the research paper by Alina Mungui-Pippidi: "Deconstructing Balkan particularism — The ambiguous social capital of south eastern Europe", 2005.

[29] Reference made to Delevic, Milica "Regional cooperation in the western Balkans," EU-ISS Chaillot Paper No 104, July 2007.

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ANNEX I

CARDS JUSTICE AND HOME AFFAIRS PROJECTS AUDITED AND AN ASSESSMENT OF THEIR EFFECTIVENESS

Audit criteria for relevance: The project objectives were in line with JHA priotities for the country.

Audit criteria for needs assessment: The projects were justified and alternative approaches had been considered.

Audit criteria for outputs: The completed activities had delivered the outputs as planned.

Audit criteria for results achieved: The EU-funded assistance was used effectively.

Audit criteria for sustainability: The results of the projects were financially and operationalily sustainable.

N/A: Not applicable.

| NEED | OUTPUT COMPLETED | RESULTS |

| RELEVANCE | ASSESSMENT | ACHIEVED | SUSTAINABILITY |

| PROJECT DESCRIPTION | CARDS Annual programme | AMOUNT IN EURO (contracts) | | PROJECT COMPLETION | MANAGED BY | Satisfactory (S), Partly satisfactory (PS), Unsatisfactory (US) | Yes/Partial/No | S, PS, US, N/A | Satisfactory/ Unsatisfactory/ N/A |

Investment

Albania | Office equipment for police stations | 2001 | 419093 | | September 2005 | Delegation | US | US | Yes | US | Unsatisfactory |

Albania | Construction of Fushe Kruja prison | 2001 | 2874708 | | March 2007 | Delegation | S | US | Partial | PS | Unsatisfactory |

Albania | Appeal courts in Korça and Vlora | 2003 | 1636375 | | May 2006 | Delegation | S | S | Yes | S | Unsatisfactory |

Albania | Border control and green border management | 2003 | 2127106 | | February 2006 | Delegation | S | US | Yes | PS | Unsatisfactory |

Bosnia and Herzegovina | Supervision and construction of Kamensko BCP | 2001 | 3349597 | | October 2005 | Delegation | S | S | Yes | PS | Unsatisfactory |

Bosnia and Herzegovina | Construction of Gorica BCP | 2002 | 2971834 | | Never started | Delegation | S | S | No | N/A | N/A |

Bosnia and Herzegovina | Supervision and rehabilitation of premises for the BiH Judiciary | 2002 | 2310367 | | December 2004 | Delegation | S | PS | Yes | S | Satisfactory |

Bosnia and Herzegovina | Equipment for police forces | 2003 | 1576604 | | July 2005 | Delegation | S | S | Yes | S | Satisfactory |

Bosnia and Herzegovina | Supervision and construction of the border police HQ of BiH | 2003 | 2589621 | | July 2008 | Delegation | PS | PS | Yes | PS | Satisfactory |

Bosnia and Herzegovina | Provision of IT telecommunication system | 2003 | 2597772 | | December 2006 | Delegation | S | S | Yes | S | Satisfactory |

The former Yugoslav Republic of Macedonia | Provision of vehicles for border police | 2003 | 2799813 | | June 2005 | EAR | S | PS | Yes | PS | Unsatisfactory |

The former Yugoslav Republic of Macedonia | Construction of reception centre for asylum seekers | 2002 | 1419580 | | November 2006 | EAR | PS | S | Yes | S | Satisfactory |

Montenegro | Construction of border crossing points D. Brijeg and S. Polje | 2001 | 3685662 | | July 2005 | EAR | PS | S | Partial | PS | Satisfactory |

Montenegro | IT and special equipment for the border police | 2003 | 1683038 | | March 2005 | EAR | S | S | Yes | S | Satisfactory |

Serbia | Construction and supervision of border crossing Batrovci | 2002–03 | 5134209 | | August 2006 | EAR | S | S | Partial | PS | Satisfactory |

Serbia | Renovation and maintenance of the main courtroom in Belgrade | 2003 | 1196963 | | May 2005 | EAR | PS | S | Yes | S | Satisfactory |

Serbia | Supplies to border police | 2003 | 2782209 | | May 2005 | EAR | S | US | Yes | S | Satisfactory |

| | Subtotal | 41154551 | | | | | | | | |

Institution building

Albania | National strategy of migration | 2001 | 1000000 | | January 2005 | Delegation | S | S | Yes | US | Unsatisfactory |

Albania | Albanian mine action programme | 2002 | 2000000 | | May 2006 | Delegation | S | S | Yes | S | Satisfactory |

Albania | Pre-screening of asylum seekers and migrants | 2003 | 2000000 | | February 2006 | Delegation | S | S | Yes | PS | Unsatisfactory |

Albania | PAMECA II – police mission | 2004–05 | 6314404 | | December 2007 | Delegation | S | PS | Yes | PS | Unsatisfactory |

Bosnia and Herzegovina | Support to the prosecutor's office in BiH | 2002 | 916668 | | May 2005 | Delegation | S | PS | Yes | PS | Unsatisfactory |

Bosnia and Herzegovina | Support to Human Rights Commission | 2003 | 645705 | | March 2005 | Delegation | S | S | Yes | S | Satisfactory |

Bosnia and Herzegovina | Support of the high judicial and prosecutorial council | 2004 | 3120986 | | January 2006 | Delegation | S | S | Yes | S | Unsatisfactory |

Bosnia and Herzegovina | Support to the war crimes registry in BiH | 2004 | 3500000 | | January 2008 | Delegation | S | S | Yes | S | Unsatisfactory |

The former Yugoslav Republic of Macedonia | Training institute for judiciary | 2001 | 1188405 | | October 2005 | EAR | S | S | Yes | S | Unsatisfactory |

The former Yugoslav Republic of Macedonia | Support to the national police reform strategy | 2001 | 1457533 | | September 2005 | EAR | S | PS | Yes | PS | Unsatisfactory |

Serbia | Judicial training centre | 2004 | 2499175 | | October 2007 | EAR | S | PS | Partial | US | Unsatisfactory |

Serbia | Capacity building of Ministry of Justice | 2004 | 1491029 | | September 2007 | EAR | S | S | Partial | PS | Unsatisfactory |

Regional | Establishment of EU-compatible framework in asylum, migration and visa matters | 2002 | 2922700 | | December 2005 | DG ELARG HQ | S | S | Yes | PS | Unsatisfactory |

Regional | Support to and coordination of IBM strategies in the western Balkans | 2002–03 | 1999984 | | March 2007 | DG ELARG HQ | S | S | Yes | PS | Unsatisfactory |

Regional | Establishment of an independent, reliable and functioning judiciary and enhancing the judicial cooperation | 2003 | 5499579 | | April 2007 | DG ELARG HQ | S | US | Yes | PS | Unsatisfactory |

| | Subtotal | 36556168 | | | | | | | | |

Investment and Institution building

Serbia | IT support to the court administration, case management | 2004 | 3232093 | | November 2005 | EAR | S | S | Yes | PS | Satisfactory |

| | TOTAL | 80942812 | | | | | | | | |

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ANNEX II

AUDIT METHODOLOGY AND SAMPLE

1. The audit work included a review of strategy and planning documents, e.g. country strategy papers, multiannual indicative programmes and European partnership documents, as well as monitoring and evaluation reports. A sample of 30 projects over the 2001–05 annual programmes was audited in the following countries of the western Balkans: Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Montenegro and Serbia. The projects were managed either by the European Agency for Reconstruction or by the European Commission's Delegations [30]. Three additional regional-level projects were audited which were managed by DG Enlargement (DG ELARG) in Brussels.

2. Altogether contracts of around 81 million euro, covering 17 % of the CARDS 2001–06 JHA commitments, were audited. The projects were selected in the light of the following criteria: (i) financial importance, (ii) coverage of all sub-sectors of JHA and (iii) coverage of all types of contracts, i.e. grant, service, supply and works. In order to allow meaningful observations on outputs, results and the sustainability of the projects, 29 of 30 national projects were visited on the spot.

TABLE 1: ELIGIBLE NUMBER OF PROJECTS PER COUNTRY IN APRIL 2007

Country | Number of projects | Amount in million euro |

Albania | 21 | 38 |

Bosnia and Herzegovina | 30 | 48 |

The former Yugoslav Republic of Macedonia | 12 | 15 |

Regional programme | 6 | 15 |

Serbia and Montenegro | 14 | 21 |

Total | 83 | 137 |

Audited | 33 | 81 |

Coverage | 40 % | 59 % |

3. The audit focused on projects that were mature but not too old, thus limiting the audit to those projects that started not earlier than 48 months ago and not later than 18 months ago when the audit started. With these criteria the contracted amount in the audited countries was 137 million euro, and the audit coverage was 59 % of the contracted amount. Except in one case (Gorica border crossing point project in Bosnia and Herzegovina) that was never started, other projects were completed ones. There was thus sufficient material to identify and analyse the main effectiveness problems.

[30] The EAR closed down at the end of 2008. It had operational centres in the former Yugoslav Republic of Macedonia, Montenegro and Serbia. The EC Delegations are implementing programmes in Albania and Bosnia and Herzegovina. The EAR also had an operational centre in Kosovo and there is a Delegation in Croatia but these were not audited.

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ANNEX III

TOTAL GRANT ASSISTANCE DURING 2006–08, 4240 MILLION EURO BY SOURCE

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ANNEX IV

LEVEL OF PERCEIVED CORRUPTION — THE WESTERN BALKANS

The Corruption Perception Index (CPI) is calculated for 180 countries, with the ranking of 1 for the country that is perceived as the least corrupt and 180 for the country that is perceived as the most corrupt country.

The CPI score ranges from 0 to 10 and expresses the level of perceived corruption, i.e. the lower the score the higher the level of perceived corruption.

Source: Transparency International (http://www.transparency.org).

| 2008 | 2007 | 2006 | 2005 | 2004 |

Ranking | CPI score | Ranking | CPI score | Ranking | CPI score | Ranking | CPI score | Ranking | CPI score |

Albania | 85 | 3,4 | 105 | 2,9 | 111 | 2,6 | 126 | 2,4 | 108 | 2,5 |

Bosnia and Herzegovina | 92 | 3,2 | 84 | 3,3 | 93 | 2,9 | 88 | 2,9 | 82 | 3,1 |

The former Yugoslav Republic of Macedonia | 72 | 3,6 | 84 | 3,3 | 105 | 2,7 | 103 | 2,7 | 97 | 2,7 |

Montenegro | 85 | 3,4 | 84 | 3,3 | N/A | 97 | 2,8 | 97 | 2,7 |

Serbia | 85 | 3,4 | 79 | 3,4 | 90 | 3,0 | | | | |

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ANNEX V

THE COMMISSION'S MANAGEMENT STRUCTURE IN THE WESTERN BALKANS

CARDS is mainly implemented through two out of a total of four different management structures (see Diagram 1):

(a) The EC Delegations in Albania, Bosnia and Herzegovina and Croatia manage the projects, from identification and formulation to tendering, contracting, implementation and evaluation [31].

(b) The European Agency for Reconstruction (EAR) [32], an independent agency of the EU, manages the programme in Serbia and Montenegro, including Kosovo, and the former Yugoslav Republic of Macedonia. It was created as a response to the need to act quickly and efficiently when addressing the urgent post-conflict needs of the population in Kosovo in the immediate aftermath of the 1999 crisis.

(c) DG Enlargement (and earlier EuropeAid) manages the Regional Programmes directly from the headquarters.

(d) Implementing Agencies of the beneficiary countries manage the Local Community Development Programmes in Albania and a part of the CARDS 2002 programme in Croatia in a decentralised way.

Diagram 1: CARDS management structure

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[31] The devolution process started in Bosnia and Herzegovina in 1998. This was done in order to improve the speed of EC external aid, while ensuring robust financial procedures.

[32] The EAR was established in February 2000; its predecessor, the Task Force for Kosovo, had already started operation in 1999. In 2001, the agency's mandate was extended to Serbia and Montenegro and in 2002 to the former Yugoslav Republic of Macedonia.

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ANNEX VI

TOTAL GRANTS AND LOANS DURING 2006–08, 10488 MILLION EURO BY SOURCE

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