Opinion of the Economic and Social Committee on 'Tacis - Technical Assistance to the Commonwealth of Independent States and Mongolia` (98/C 214/22)

At its plenary session on 10 July 1997 the Economic and Social Committee decided to draw up an opinion on 'Tacis - Technical Assistance to the Commonwealth of Independent States and Mongolia`.

At its plenary session on 29-30 October 1997 the Committee, acting under Rule 23(3) of its Rules of Procedure, decided to draw up an opinion instead of an information report.

The Section for External Relations, Trade and Development Policy, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 15 April 1998. The rapporteur was Mr Hamro-Drotz.

At its 354th plenary session (meeting of 29 April 1998), the Economic and Social Committee adopted the following opinion by 90 votes to one, with one abstention.

1. Introduction

'Tacis` stands for 'Technical Assistance to the Commonwealth of Independent States` and it is the EU's programme for technical assistance to the New Independent States (NIS) of eastern and south-eastern Europe and Mongolia.

The twelve NIS are the Russian Federation, Ukraine, Kazakhstan, Belarus, Uzbekistan, Azerbaijan, Georgia, Armenia, Moldova, Kyrgyzstan, Turkmenistan and Tajikistan. Mongolia has been included in the programme since 1993. The three Baltic States were included in 1991 but since 1992 they have been covered by the Phare programme.

European integration occupies a central position in the work of the ESC and the Committee has previously issued opinions and reports on the EU's relations with Russia and the other NIS. These have been taken into account in the present opinion without referring directly to them.

Key facts and figures on the Tacis programme and the current situation are presented in Appendix A.

2. Conclusions

In the course of drawing up this opinion, the Economic and Social Committee wrote to interested parties in the Tacis partner countries asking them for their views on the programme and its effectiveness in their countries. In January 1998 representatives of these groups in some of the countries concerned were invited to attend a hearing organized by the ESC in Brussels. In addition, the Committee wrote to leading socio-economic organizations in the EU asking them for their views on the Tacis programme.

These views are documented separately and are included in Appendices B and C. They have also been taken into account in the Committee's conclusions and recommendations below.

The Economic and Social Committee notes that:

- so far the Tacis programme has been relatively successful in achieving the stated objectives of helping the partner countries make the transition to a market economy and promoting the democratization process. The Committee is, however, aware that the Court of Auditors has singled out Tacis (and Phare) for serious criticism with regard to its activities in 1996, while the European Parliament is refusing to approve the European Commission's account of its spending in 1996 until it has dealt with these aid programmes;

- if the partner countries are to meet these objectives they will continue to need assistance of various kinds on a large scale from the EU and its Member States, as well as from other countries and international financial institutions and organizations;

- the Tacis programme will play a prominent role in the development of relations between the EU and the partner countries in the years ahead, particularly in view of the entry into force of the Partnership and Cooperation Agreements (PCAs) and the EU's current moves towards enlargement in central Europe. Tacis will have to focus increasingly on implementation of the objectives of the PCAs;

- the preparations now under way for a new Tacis programme offer the EU an excellent opportunity to significantly step up its cooperation with the partner countries. This opportunity should be exploited so that the new Regulation can be introduced with effect from the beginning of 2000.

3. Recommendations

The present division of Tacis into national programmes, regional programmes (Inter-state and Cross-border Cooperation Programmes and the Nuclear Safety Programme) and the Facilities is well-founded and the ESC makes the following recommendations for improving the effectiveness of the current Tacis programme and, in particular, for the new Tacis regulation now in preparation:

3.1. The sectoral objectives of the Tacis programme (relating to energy, agriculture, etc.) should be defined more closely. In Tacis programming, further efforts should be made to ensure that the economic, political, social and environmental objectives set for projects are as clear-cut as possible. Efforts should also be made to assess the effects of planned Tacis projects, including their employment impact.

The main emphasis in Tacis should continue to be on assistance, promoting a functioning economy and entrepreneurship in partner countries, boosting the international competitiveness of SMEs and industry, improving management training and know-how, putting in place effective social legislation and a social security system and developing infrastructure, transport networks and the agricultural sector on a broad front.

These measures should be accompanied by action to support reform processes which are founded on the principles of civil society, democracy and the rule of law. For there to be a well-functioning economy there must also be an efficient labour market and effective social dialogue between independent interest groups representing the two sides of industry, the farming community etc., as well as between these groups and government. The partner countries should endeavour to create and develop these structures, know-how and tripartite arrangements with Tacis aid.

Consideration should be given to separating the Nuclear Safety Programme from the overall framework of the Tacis programme with a view to maximizing efficiency in administering this important operation, with its heavy resource requirements.

3.2. More resources should be devoted to regional programmes so as to strengthen cooperation on a wide front between the partner countries and between these countries and their neighbours. There should also be due regard for this in the preparations for EU enlargement in central Europe.

There must be marked improvement in the management and coordination of projects under the Tacis Cross-border Cooperation (CBC) Programmes so that the programmes function effectively. The present arrangements for cofinancing under a number of programmes (Tacis, Phare and Interreg) should be made more flexible.

3.3. The recommendations for improving the effectiveness of the Tacis programme set out in the Commission's evaluation report are, by and large, along the right lines. The ESC is pleased to note that the Commission has already begun to take appropriate steps and provide relevant guidance. The shortcomings identified in the report should be remedied before the new Regulation comes into force.

There is still a need to simplify and streamline the administration of programming under Tacis. The Phare programme could serve as a general model in this regard. Efforts to eliminate red tape, overlapping and poorly coordinated work should be continued. The views of socio-economic operators in the EU and Member States could be useful to the EU in its endeavours to improve the effectiveness of the Tacis programme. The Commission and Member States should make use of these operators in implementing the programme and also take account of the views and priorities of operators in the partner countries.

3.4. Responsibility for management of the Tacis programme should be transferred increasingly to the partner countries. The Commission's presence in the partner countries should be stepped up by, inter alia, opening new Tacis offices, and administrative procedures should be developed on a country-specific basis in accordance with the level of development and readiness of the country concerned.

Tacis should encourage initiative in the partner countries so that assistance is channelled to the most important projects from the point of view of the country concerned. Increased use of local expertise should be supported, and the partner countries should, according to the circumstances in the country concerned, be given a greater say in deciding on the programme's guidelines and implementation. Similarly, it should be endeavoured to link Tacis projects to partner countries' own development projects and thereby establish a closer connection with national and regional budgets, in part to secure better co-financing. Tacis funding must also take account of the progress made by the partner country in achieving the objectives set for the programme.

The views of industry and business, employees, farmers, consumers and other key socio-economic interest groups in the partner countries should be taken into account in the management of the Tacis programme by means of appropriate social dialogue. The Tacis programme is far more likely to succeed if these groups are consulted about the programme's objectives and priority areas and about planned projects and involved in project implementation and regular evaluation and monitoring of projects, thus benefiting from these groups' knowledge, experience and points of view.

This calls for greater transparency between officials responsible for Tacis in the partner countries, including Tacis coordinators and socio-economic operators. To this end, efforts should be made in the partner countries to create advisory mechanisms and possibilities for interaction in connection with the management of Tacis. If representative socio-economic groups operating independently in the partner countries do not possess sufficient know-how to carry out this advisory function on a credible basis, Tacis projects should be initiated specifically to eliminate this deficiency.

With this in mind, the Democracy and Partnership and Coordination Programmes, for example, should be made to function in such a way as to enable closer involvement by socio-economic operators in efforts to develop society within the framework of the Tacis programme. It should also be possible to use other programmes, such as Bistro, for this purpose, and these programmes should be made accessible to various independent operators on the basis of objective criteria.

Tacis projects directed at SMEs, in particular, have generated new business structures which, however, often find it difficult to do well once Tacis funding has come to an end. Socio-economic operators in the EU (industry and business, farmers' and employees' groups, etc.) can pass on expertise and know-how to the Tacis partner countries and socio-economic operators in these countries in order to help them cope with situations like this.

3.5. Although every endeavour has been made to provide ample information on the Tacis programme in the partner countries, a determined effort is still required in this regard. Channels for disseminating information on Tacis in the partner countries should be strengthened and where necessary specific Tacis projects should be launched with a view to improving necessary know-how and arrangements for handling and distributing information. This should be done by, for example, involving socio-economic players and their organizations in these countries in the provision of information, where necessary reinforcing their capacity to engage in such activity. Among other things, there is a need in the partner countries for regular provision of up-to-date information and feedback on Tacis projects - including those which have been completed - on a larger scale than at present.

3.6. It must be ensured that adequate resources are made available for the new Tacis Regulation in the EU's next budgetary framework. Efforts must also be made to achieve better coordination of financial support with other international and national donors. The incipient cooperation between the EU, World Bank and EBRD is an example of this. Similarly, new donors, such as the European Investment Bank, should be involved in coordinated assistance arrangements.

It should also be endeavoured through Tacis to establish stable banking systems and stock markets in the partner countries. This is a necessary precondition for attracting domestic and foreign capital into productive investments. The development of the rule of law and a legal framework supporting stable proprietary rights with the aid of Tacis will continue to be of key importance for investment. In particular, better opportunities must be created under Tacis for investment, etc. originating from Member States.

Norway has announced that it is prepared to negotiate with the EU about taking part in the funding of, inter alia, infrastructure investment under Tacis. The Committee endorses the plans to extend Tacis to include cooperation with Norway as it seems likely that Tacis will become more effective as a result.

3.7. In order to speed up structural reforms the Tacis investment share should be raised significantly, provided that there is a corresponding increase in the recipient country's funding share of such projects. In order to boost investment in the partner countries it should be possible to use funds earmarked for project preparation to support project preparation by productive enterprises. Part of Tacis funds should be deployed to underpin, inter alia, environmental and other infrastructure projects in the partner countries. In addition, it should be possible to use concessionary interest rates to encourage such investment.

The Committee would nevertheless stress that Tacis should remain primarily a technical assistance programme for, inter alia, enhancing conditions conducive to investment. Investment in management training and the development of other human resources and administration have an important role to play in this regard.

3.8. Tacis programming and project preparation and implementation should be speeded up, thereby also making for more effective deployment of funds allocated to the Tacis programme. The total resources allocated to funding of the type available under the Bistro Programme should be increased and the maximum rate of interest for projects funded under this and similar facilities programmes should be raised, among other things in order to defray part of the excessive administrative costs in relation to actual support.

3.9. In future, the Economic and Social Committee will endeavour to assist the Commission by presenting its views on the programme and intensifying its contacts with socio-economic operators in the partner countries. To this end, the Committee intends to issue additional opinions, to consolidate cooperation with the European Parliament and the Committee of the Regions, to apprise itself of the views and observations of operators in the partner countries concerning Tacis activities in their respective countries and to transmit this information to the Commission and other EU bodies and to lend its support to strengthening the economic and social structures in partner countries proposed in this opinion. By so doing, the ESC aims to support the achievement of the objectives set for the EU's Tacis programme.

Brussels, 29 April 1998.

The President of the Economic and Social Committee

Tom JENKINS