Amended proposal for a COUNCIL Reulationng the European Agency for Reconstruction

EXPLANATORY MEMORANDUM

1. INTRODUCTION

On 10 May 2000 the Commission adopted two proposals for Regulations which were sent to the Council:

-a proposal for a Regulation on assistance for Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia (hereinafter referred to as the "Regulation on assistance");

-a proposal for a Regulation on the European Agency for Reconstruction (hereinafter referred to as the "Regulation on the Agency").

The Commission then adopted guidelines on the reform of the management of external aid. The main aim of the reform is to improve radically the speed, quality and visibility of external aid.

The most important aspects of the guidelines include programming and the role of the committees responsible for assisting the Commission (comitology).

To take account of the reform guidelines, especially in the above two areas, the Commission must amend its proposals for a Regulation on assistance and a Regulation on the Agency. This explanatory memorandum covers both amended proposals.

2. PROGRAMMING

As part of the reform the Commission aims to strengthen multiannual programming, improving its quality in order to reflect the EU's political aims and priorities.

In the amended proposal for a Regulation on assistance, the programming principles are clearly set out: a strategy framework will serve as a basis for establishing an indicative multiannual programme which will enable the annual programme to be drawn up. These principles were not clearly affirmed in the previous proposal for a Regulation. The programming principles should apply in all save exceptional cases.

Introducing detailed and cohesive programming will improve the efficiency of the assistance, allow it to be linked to reform programmes carrying short- and medium-term objectives and ensure that it complements that provided by other donors.

3. COMITOLOGY

Stepping up programming and setting out a strategy framework to provide a basis for the assistance should allow the Member States to express their views on the priorities and broad guidelines for assistance within the management committee.

The guidelines on the reform of external aid recommend that the committees' contribution focus on the programming phase rather than on specific projects, as it is at the programming stage that important issues of policy and strategy arise.

The Commission proposes amending its proposal for a Regulation on assistance to take account of this principle. The management committee, together with the Commission, would examine the strategy framework (country strategy paper) on which programming is to be based. The multiannual and annual programmes would be submitted to the committee for its opinion.

The proposal is set against the backdrop of the discussions in the Council (General Affairs), including those on the MEDA Regulation and the state of play of discussions in the European parliament.

4. OTHER CHANGES

*The experience gained since the Agency began operations in February this year has highlighted the need to make the decision-making mechanisms connected with reconstruction programmes faster and more operational.

The reconstruction programmes prepared by the Agency and examined by its Governing Board had to go to the management committee to be looked at again. This created complex procedures and took an unnecessarily long time.

The reconstruction programmes proposed by the Agency must be able to be adopted by the Commission without needing to be reviewed by the management committee. It is therefore proposed that where the Commission adopts programmes proposed by the Agency, the management committee procedure should not apply.

*Other changes include:

- a distinction drawn between assistance that can be provided for UNMIK and the OHR under the Regulation regarding assistance, and that which is covered by Regulation (EC) 1080/2000 of 22 May 2000;

- a distinction drawn between budgetary aid that can be provided under the Regulation regarding assistance, and macro-economic assistance covered by ad-hoc Council Decisions;

- complementarity between Community assistance and bilateral assistance provided by the Member States;

- the adding of an expiry date to the Regulation on assistance;

- alteration of the Regulation setting up a European Training Foundation to allow the Foundation to pursue activities in the countries which are recipients under the Regulation on assistance;

- amending the Council Decision granting a Community guarantee to the European Investment Bank against losses under loans for projects outside the Community to replace the reference to Council Regulation 1628/96 (Obnova) with a reference to this Regulation.

N.B.: The proposed modifications do not entail financial consequences. The financial statement of the original remains valid.

2000/0112 (CNS)

Amended proposal for a

COUNCIL REGULATION

concerning the European Agency for Reconstruction

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, [16]

[16] OJ C

Having regard to the opinion of the European Parliament, [17]

[17] OJ C

Whereas:

(1) Assistance for Albania, Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and the former Yugoslav Republic of Macedonia has been implemented essentially under Council Regulation (Euratom, EC) No 2185/96, [18] as last amended by Regulation (EC) No 2454/1999, [19] and under Council Regulation (EEC) No 3906/89, [20] as last amended by Regulation (EC) No 1266/1999. [21]

[18] OJ L 204, 14.8.1996, p. 1.

[19] OJ L 299, 20.11.1999, p. 1.

[20] OJ L 375, 23.12.1989, p. 11.

[21] OJ L 161, 26.6.1999, p. 68.

(2) Regulation (EC) No 1628/96 as amended by Regulation (EC) No 2454/99 set up the European Agency for Reconstruction, for which it was the legal basis.

(3) On [date of adoption of CARDS] the Council adopted Regulation [CARDS] which lays down a single legal framework for assistance to those countries and repeals Regulation (EC) No 1628/96.

(4) The provisions governing the creation and operation of the European Agency for Reconstruction should therefore be adapted to Regulation [CARDS] and incorporated in a new Regulation, and the appropriate changes made at the same time.

(5) The European Council which met in Feira on 19 and 20 June 2000 emphasised that the Agency as an authority implementing the future CARDS programme should be allowed to use its full potential in order to achieve the goals set out by the European Council in Cologne.

(6) The Treaty does not provide, for the adoption of this Regulation, powers other than those under Article 308,

HAS ADOPTED THIS REGULATION:

Article 1

1. The Commission may delegate to an agency implementation of the assistance provided for in Article 1 of Regulation [CARDS], initially in Kosovo and also in other parts of the Federal Republic of Yugoslavia, when conditions permit.

The European Agency for Reconstruction, hereinafter referred to as the 'Agency', shall be set up to that end with the aim of implementing the assistance referred to in the first subparagraph.

2. Any decision to extend the Agency's activities to parts of the FRY other than Kosovo, including decisions on the arrangements for determining the bodies referred to in Article 1(2) of Regulation [CARDS], shall be taken by the Council acting by a qualified majority on a proposal from the Commission. In the light of that decision, the Agency may establish other operational centres.

Article 2

1. To achieve the objective laid down in Article 1, the Agency shall carry out the following duties, within the bounds of its powers and in accordance with the decisions taken by the Commission:

(a) gathering, analysing and communicating information to the Commission on:

(i) damage, the requirements for reconstruction and the return of refugees, and related initiatives taken by governments, local or regional authorities and the international community;

(ii) the urgent requirements of the communities concerned, taking account of the various population displacements and the possibilities for the return of those displaced;

(iii) the priority sectors and geographical areas requiring urgent assistance from the international community;

(b) preparing draft programmes for the reconstruction of Kosovo and the return of refugees in accordance with guidelines provided by the Commission;

(c) implementing the assistance referred to in Article 1, wherever possible in cooperation with the local population and where necessary by drawing on the services of operators selected by tender. The Commission may accordingly make the Agency responsible for all operations required to implement the programmes, including:

(i) drawing up terms of reference;

(ii) preparing and evaluating invitations to tender;

(iii) signing contracts;

(iv) concluding financing agreements;

(v) awarding contracts, in accordance with the provisions of this Regulation;

(vi) evaluating projects;

(vii) checking project implementation;

(viii) effecting payments.

2. Without prejudice to any operations cofinanced in the framework of the responsibilities entrusted to the Agency under Article 1, the Agency may implement reconstruction programmes and programmes for the return of refugees which the Member States and other donors entrust to it, inter alia under the arrangements for cooperation established by the Commission with the World Bank, international financial institutions and the European Investment Bank (EIB).

Such implementation shall be subject to the following conditions:

(a) the financing must be provided in full by the other donors;

(b) the financing must cover any associated administrative costs;

(c) the duration of these tasks must be compatible with the deadline for winding up the Agency set in Article 13.

3. The Commission may also entrust the Agency with following up (including carrying out monitoring, evaluation and auditing) decisions regarding support for UNMIK taken within the framework of Regulation (EC) 1080/2000.

Article 3

The Agency shall have legal personality. It shall enjoy in each of the Member States the most extensive legal capacity accorded to legal persons under their laws; it may, in particular, acquire or dispose of movable and immovable property and be a party to legal proceedings. The Agency shall be non-profit-making.

The operational centre of the Agency, which shall have a considerable degree of management autonomy, shall be established initially in Pristina in order to embark on the reconstruction work in Kosovo, drawing on the Agency's general services located at its seat in Thessaloniki.

Article 4

1. The Agency shall have a Governing Board composed of one representative from each Member State and two representatives of the Commission.

2. The Member State representatives shall be appointed by the Member State concerned, paying due regard to experience and qualifications relevant to the Agency's activities.

3. The term of office of representatives shall be thirty months.

4. The Governing Board shall be chaired by a Commission representative. The Chairman shall not vote.

5. The EIB shall appoint a non-voting observer.

6. The Governing Board shall adopt its rules of procedure.

7. The Commission and Member State representatives on the Governing Board shall each have one vote.

Governing Board decisions shall be adopted by a two-thirds majority.

8. The Governing Board shall determine by unanimous decision the rules governing the languages used by the Agency.

9. The Governing Board shall be convened by the Chairman whenever necessary, and at least three times per year. It shall also be convened at the request of the Agency's Director or at least a simple majority of its members.

10. (a) The Governing Board shall examine the assistance strategy framework, presented by the Commission, on which the annual programme for reconstruction is to be based.

(b) Using as a basis this strategy framework and the Commission guidelines relating to it, the Director shall present to the Governing Board a draft annual programme for reconstruction. The draft programme shall set out for the operational year in question the aims being pursued, the fields of action and the budget provided for. Once the Governing Board has delivered an opinion on the draft annual programme for reconstruction, the Director shall forward the latter to the Commission.

(c) On a proposal from the Director, the Board shall decide on:

(i) proposals for programmes by other donors for possible implementation by the Agency;

(ii) setting the multiannual contractual framework with the provisional authority responsible for the administration of Kosovo, for implementation of the assistance referred to in Article 1(3) of Regulation [CARDS];

(iii) whether representatives of the countries and organisations delegating implementation of their programmes to the Agency should be present as observers on the Governing Board.

11. The Governing Board shall present a draft annual report to the Commission by 31 March each year at the latest on the Agency's activities in the previous year and how they were financed.

The Commission shall adopt the annual report and submit it to the European Parliament and the Council.

Article 5

1. The director of the Agency shall be appointed by the Governing Board on a proposal from the Commission for a term of office of thirty months. The term of office may be terminated by the same procedure.

The Director shall be responsible for:

(a) preparing the draft annual programme for reconstruction referred to in Article 4(10)(b);

(b) preparation and organisation of the work of the Governing Board;

(c) day-to-day administration of the Agency;

(d) preparation of the statement of revenue and expenditure and execution of the Agency's budget;

(e) preparation and publication of the reports specified in this Regulation;

(f) all staff matters;

(g) implementation of the Governing Board's decisions and guidelines laid down for the Agency's activities.

2. The Director shall be accountable to the Governing Board for his activities and shall attend its meetings.

3. The Director shall be the legal representative of the Agency.

4. The Director shall hold the power of Appointing Authority.

5. The Director shall present a quarterly activity report to the European Parliament.

Article 6

1. Estimates of all the Agency's revenue and expenditure shall be prepared for each financial year, which shall correspond to the calendar year, and shall be shown in the Agency's budget, which shall include an establishment plan.

2. The revenue and expenditure shown in the Agency budget shall be in balance.

3. The Agency's revenue shall comprise, without prejudice to other types of income, a subsidy from the general budget of the European Union, payments made as remuneration for services performed and funding from other sources.

4. The budget shall also include details of any funds made available by the recipient countries themselves for projects receiving financial assistance from the Agency.

Article 7

1. The Director shall establish each year a draft budget for the Agency covering administrative expenditure and operational expenditure for the following financial year, and shall submit it to the Governing Board.

2. On this basis, the Governing Board shall adopt a draft budget for the Agency by 15 February of each year at the latest, and shall submit it to the Commission.

3. The Commission shall assess the draft budget of the Agency having regard to the priorities it has established and the overall financial guidelines for reconstruction assistance for Kosovo.

It shall establish on this basis and within the proposed limits of the overall amount to be made available for aid to Kosovo, the indicative annual contribution to the Agency budget to be included in the preliminary draft of the general budget of the European Union.

4. The Governing Board, after receiving the opinion of the Commission, shall adopt the budget of the Agency at the beginning of each financial year, adjusting it to the various contributions granted to the Agency and to funds from other sources. The budget shall also specify the number, grade and category of staff employed by the Agency during the financial year in question.

Article 8

1. The Director shall implement the budget of the Agency.

2. The competent departments of the Commission shall be responsible for financial checks.

3. By 31 March each year at the latest, the Director shall submit to the Commission, the Governing Board and the Court of Auditors the detailed accounts of all revenue and expenditure from the previous financial year.

The Court of Auditors shall examine the accounts in accordance with Article 248 of the Treaty. It shall publish a report on the Agency's activities every year.

4. On a recommendation from the Council, the European Parliament shall give a discharge to the Director in respect of the implementation of the Agency's budget.

Article 9

The Governing Board, having received the agreement of the Commission and the opinion of the Court of Auditors, shall adopt the Agency's Financial Regulation, specifying in particular the procedure to be used for drawing up and implementing the Agency's budget, in accordance with Article 142 of the Financial Regulation applicable to the general budget of the European Communities.

Article 10

The Agency's staff shall be subject to the rules and regulations applicable to officials and other servants of the European Communities. The Governing Board, in agreement with the Commission, shall adopt the necessary implementing rules.

The Agency's staff shall consist of a strictly limited number of officials assigned or seconded by the Commission or Member States to carry out management duties. The remaining staff shall consist of other employees recruited by the Agency for a period strictly limited to its requirements.

Article 11

The Governing Board shall decide on the Agency's accession to the Interinstitutional Agreement on internal investigations by the European Anti-Fraud Office (OLAF). It shall adopt the provisions necessary for the conduct of internal investigations by OLAF.

Financing decisions and any implementing instrument or contract arising therefrom shall expressly provide that the Court of Auditors and OLAF may, if necessary, carry out on-the-spot checks on recipients of Agency funds and on the intermediaries distributing them.

Article 12

1. The contractual liability of the Agency shall be governed by the law applicable to the contract in question.

2. In the case of non-contractual liability, the Agency shall, in accordance with the general principles common to laws of the Member States, make good any damage caused by the Agency or its servants in the performance of their duties.

The Court of Justice shall have jurisdiction in disputes relating to compensation for any such damage.

3. The personal liability of servants towards the Agency shall be governed by the relevant provisions applying to the staff of the Agency.

Article 13

Once the Commission considers that the Agency has fulfilled the mandate described in Article 1, it shall submit to the Council a proposal for the winding up of the Agency. In any event, at least six months before this Regulation expires, the Commission shall submit a proposal to the Council on the status of the Agency.

Article 14

The translation services necessary for the operation of the Agency shall, as a rule, be provided by the Translation Centre of the bodies of the European Union.

Article 15

This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Communities.

It shall apply until 31 December 2004.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President