Proposal for a COUNCIL DECISION concerning the Community contribution to the International Fund " Clearance of the Fairway of the Danube"

(presented by the Commission)

EXPLANATORY MEMORANDUM

Introduction:

During NATO airstrikes on the Federal Republic of Yugoslavia (FRY) between March 23 and June 1999, in the context of the Kosovo conflict, three bridges in the vicinity of the town of Novi Sad were destroyed. The debris from these bridges, as well as the risk of unexploded ordnance in the area, prevents navigation on the Danube, with serious economic consequences for the riparian states.

Project proposal for the "Clearance of the fairway of the Danube":

On 25 January 2000, the Danube Commission [1], an inter-governmental institution with competence for navigation on the Danube, adopted a project proposal for the "Clearance of the fairway of the Danube" and submitted it to the European Commission with a request for co-funding.

[1] Austria, Bulgaria, Croatia, Federal Republic of Yugoslavia, Germany, Hungary, Moldova, Romania, Russia, Slovak Republic, Ukraine.

The project involves the removal of the debris of the bridges, the removal of any unexploded ordnance, and the restoration of the riverbed in that area.

Assessment of the project proposal

The Commission, having assessed the project proposal and having received assurances from the Danube Commission (in relation to the management, environment and security issues, clarification of the text and the establishment of the international fund to receive contributions), has concluded that the project is viable and recommends that the EC budget contribute up to 85% of the total estimated costs of the project - a maximum contribution of 22mEUR -with the remainder of the costs being paid by the Danube Commission.

EC contribution to the "International Fund for the Clearance of the Fairway of the Danube":

It has been agreed that an international fund entitled "International Fund for the Clearance of the Fairway of the Danube" will be established and managed by the Danube Commission. The European Commission has helped the Danube Commission to write the Rules of this International Fund, based on the model previously used for contributions to the EBRD's Chernobyl Shelter Fund. The Rules, which will be adopted by the Danube Commission, are attached for the information of the Council. The Fund itself will be established in Vienna, under Austrian law.

The EC contribution to the costs of the project will be paid into this international fund. The EC contribution will be drawn from several budget lines [2], as no one budget line covers all of the countries which will benefit from the restoration of Danube navigation. As the rules governing these budget lines are not compatible, funds cannot be transferred from the various budget lines to one of the lines. It will be necessary to transfer funds from these lines to the international fund, for which purpose a Council Decision based on Article 308 is necessary. The countries concerned by these budget lines are aware of the Commission proposal and the relevant Committees will discuss the issue shortly.

[2] PHARE - Budget Line B7-030, Regulation 3906/89; ISPA - Budget Line B7-020, Regulation 1266/99; OBNOVA - Budget Line B7-541, Regulation 1628/96 OJ L 204 of 14.8.96 p. 1 as last amended by Regulation 2454/99 OJ L 299 of 20.11.99.

The use of the EC contribution will be dependent on full respect for the relevant EC financial, procurement and sanctions regulations

Timing:

The Lisbon European Council Conclusions called for the Danube to be cleared for navigation by summer. In order to ensure that work can at least begin during this summer period, it will be necessary for the legislative procedures on the part of the EU to be completed as quickly as possible, with the Danube Commission performing its part of the work in parallel. It is therefore recommended that urgency procedures be used throughout the EU legislative process.

Conclusion:

The Commission requests the Council:

* To transmit this proposal to the European Parliament under the urgency procedure

* To approve the attached proposal for a Council Decision concerning the Community contribution to the international fund "Clearance of the Fairway of the Danube"

2000/0125 (CNS)

Proposal for a COUNCIL DECISION concerning the Community contribution to the International Fund " Clearance of the Fairway of the Danube"

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 308 thereof,

Having regard to the proposal from the Commission [3],

[3] OJ C , , p. .

Having regard to the opinion of the European Parliament [4]

[4] OJ C , , p. .

Whereas:

(1) The debris of bridges over the Danube, destroyed during the Kosovo conflict, as well as the risk of unexploded ordnance, is blocking navigation between km 1253 and 1258 of the Danube river; the consequent interruption of navigation on the Danube has had serious economic and environmental consequences throughout the region, and in particular on all riparian States;

(2) The Danube Commission, as an inter-governmental institution established by the 1948 Belgrade Convention, is responsible for navigation on the Danube; Member States of the Danube Commission, at their extraordinary session in Budapest on 25 January 2000, adopted a project proposal "Clearance of the Fairway of the Danube" which the Danube Commission then presented to the Commission for consideration; this project proposal covers the restoration of a navigation channel by means of removal of debris and unexploded ordnance, followed by the restoration of the river bed of the Danube in the related area;

(3) For the purpose of implementing this project, an "International Fund for the Clearance of the Fairway of the Danube" has been established in Vienna by the Danube Commission; this will be administered by the Danube Commission in accordance with the purpose of the Fund as stated in its Rules and in full compliance with the Community's relevant financial and procurement policies, as well as the sanctions regime applicable against the Federal Republic of Yugoslavia;

(4) The European Community agrees to make a contribution of up to 85% of the total estimated cost of the project, to a maximum of 22mEUR, the remainder to be met by the Danube Commission and its member states;

(5) The Community contribution will be paid into the international fund; The Community contribution to the international fund shall be administered by the Danube Commission in accordance with the principles of sound and efficient management;

(6) The Treaty does not provide, for the action concerned, powers other than those laid down in Article 308;

HAS DECIDED AS FOLLOWS:

Article 1

1. The Community shall contribute to the International Fund to be established by the Danube Commission for the Clearance of the Fairway of the Danube, in accordance with the Rules of this Fund, an amount of up to a maximum of 22mEUR, covering up to 85% of the total estimated cost of the project, to be paid during 2000, for the implementation of the project "Clearance of the Fairway of the Danube".

2. This contribution to the Fund, to be made by means of an Exchange of Letters between the European Commission and the Danube Commission, shall be administered in accordance with the Financial Regulation [5] of 21 December 1977 applicable to the general budget of the European Communities, with particular regard for the principles of sound and efficient management.

[5] Financial Regulation of 21 December 1977 applicable to the general budget of the European Community, as last amended by Council Regulation (EC, ECSC, Euratom) n°2548 of 23 November 1998

3. The Community contribution is subject to the condition that the Danube Commission, in managing this Fund and implementing the project referred to in para. 1 above, fully complies with the Community's procurement rules and the Community's sanctions regime as applicable to the FRY.

4. The Procurement Policies and Rules shall provide for participation in invitations to tender and contracts, open on equal terms to all natural and legal persons in the EU Member States and in the beneficiary states of the Community's OBNOVA and PHARE Regulations as well as Moldova, Russia and Ukraine. Without prejudice to paragraph (5), the Legal Representative of the Fund may, in exceptional circumstances, where the goods and services required cannot be procured in these states on economically favourable terms, allow, on a case by case basis, participation in invitations to tender by, and conclude contracts with, nationals and companies of third countries.

5. The operation of the Fund and the implementation of the project shall comply with the Community's sanctions regime in respect of the Federal Republic of Yugoslavia, and in particular with the prohibition against making funds available to the Governments of the Federal Republic of Yugoslavia and of the Republic of Serbia, as defined in Council Regulation (EC) No 1294/1999 , as last amended by Regulation (EC) No 723/2000 [6], as amended from time to time.

[6] OJ L 86 of 7.4.2000, p. 1

Article 2

1. The Commission will forward all relevant information to the Court of Auditors and will request from the Danube Commission any supplementary information that the Court of Auditors may wish to receive as regards the financial operation of the international fund

2. Insofar as Contributions by the European Community are concerned, all financing Agreements or contracts concluded under the International Fund will provide for the European Commission, OLAF, and the European Court of Auditors to conduct on the spot checks according to the usual procedures laid down by the European Commission under the rules in force, and in particular those of the Financial Regulation applicable to the general budget of the European Community

3. In addition, insofar as Contributions to the International Fund by the European Community are concerned, the European Commission may carry out on-the-spot checks and inspections in order to protect the European Community financial interest against fraud and irregularities in conformity with Regulation (EC, Euratom) n° 2185/96 of 11 November 1996 and Regulation (EC, Euratom) n° 2988/95 of 18 December 1995.

Article 3

The Commission shall submit an annual progress report on the implementation of the international fund to the European Parliament and the Council.

Done at Brussels,

For the Council

The President

ANNEXE FINANCIAL STATEMENT

1. Title of operation

"Clearance of the Fairway of the Danube"

2. Budget heading(s) involved

B7-020 (ISPA) 7.5 mEUR

B7-030 (PHARE) 7.5 mEUR

B7-541 (OBNOVA) 7.0 mEUR

22 mEUR

3. Legal basis

Article 308

4. Description of operation

4.1 General objective

The restoration of free navigation on the Danube, between km 1253 and 1258, by the removal of the debris of the three bridges (Sloboda, Petrovaradin and Zezelj) which were destroyed during the NATO airstrikes in 1999, as well as any unexploded ordnance, followed by the restoration of the riverbed in the same area.

4.2 Period covered and arrangements for renewal

A single contribution in budget year 2000

5. Classification of expenditure or revenue

5.1 Compulsory/Non-compulsory expenditure

Non-compulsory expenditure

5.2 Differentiated/Non-differentiated appropriations

Differentiated appropriations

5.3 Type of revenue involved

None. Interest earned on the account of the International Fund will be added to the account for use for the same project.

6. Type of expenditure or revenue

- Subsidy for joint financing with other sources

7. Financial impact

7.1 Method of calculating total cost of operation (relation between individual and total costs)

A maximum of 85% of the total cost, to a maximum amount of 22mEUR, will be met by the Community contribution. The costs of the project, according to the Danube Commission, are 24.1mEUR, to which should be added management costs, resulting in an approximate total of 26mEUR.

7.2 Itemised breakdown of cost

Commitment appropriations EUR million (at current prices)

>TABLE POSITION>

7.3 Operational expenditure for studies, experts etc. included in Part B of the budget

Not applicable

7.4 Schedule of commitment and payment appropriations

EUR mEUR

>TABLE POSITION>

8. Fraud prevention measures

Implementation by the Danube Commission in accordance with Article IV of the Rules of the International Fund and Articles 1 and 2 of the Council Decision, which provide for respect of EC rules on financial behaviour, procurement and sanctions, as well as monitoring and audit. Commission, Court of Auditors and OLAF entitled to carry out on-the-spot checks. Article V of the Rules of the International Fund also provides a termination clause and, throughout, the Community as the largest Contributor to the Fund has a large degree of control.

9. Elements of cost-effectiveness analysis

9.1 Specific and quantified objectives; target population

- Specific objectives: To restore navigation on the Danube, thus alleviating the economic and environmental consequences

- Target population: Member States of the European Union and states of the region, including candidate countries, who have suffered economic and environmental consequences due to the interruption of navigation.

9.2 Grounds for the operation

- Carried out by the Danube Commission, which will be in charge of implementation

- Financing by three Community budget lines which cover the relevant beneficiary states

- Main factors of uncertainty which could affect the specific results of the operation are political - the need for the cooperation of both the Serbian /FRY authorities and the town of Novi Sad.

9.3 Monitoring and evaluation of the operation

- Monitoring and evaluation are foreseen in the Rules of the International Fund into which the Community Contribution will be paid. In the light of a positive assessment of progress in the implementation of the project, a decision will be taken before the end of 2000 on the payment of the second part (55%) of the Community's contribution.

10. Administrative expenditure (Section III, Part A of the budget)

There are no additional resources required.