A >,'VF%Vff COMMISSION OF THE EUROPEAN CCMVIUNITIES 
C0M(92) 475 final 
Brussels, 25 November 1992 
Proposal for a 
COUNCIL REGULATION (EEC. EURATOM) 
concerning the provision of technical assistance to economic 
reform and recovery in the independent States of the former 
Union of Soviet Socialist Republics and Mongolia 
ig&s^ETMwna/à 
(presented by the Commission) 
- 2 -
EXPLANATORY MEMORANDUM 
The granting of aid under Regulation (EEC. EURATOM) No 2157/91 of 
15 July 1991, concerning the provision of technical assistance to 
economic reform and recovery in the Union of Soviet Socialist 
Republics will come to an end on 31 December 1992. Accordingly, and 
bearing In mind subsequent changes In the situation of the former 
Soviet Union and of certain neighbouring states, as well as the 
Community's experience In providing technical assistance under this 
regulation» It Is necessary to propose a new regulation. This will 
provide the legal basis for the provision of technical assistance in 
the years to come. The Community's experience with technical 
assistance in 1991 and 1992 will be the subject of a forthcoming 
report to the Parliament. Council and Economic and Social Committee. 
The proposed regulation is modelled closely on its predecessor, 
mutatis mutandis. In order to ensure the necessary continuity, changes 
have been kept to a minimum. However, certain necessary modifications 
have been introduced, the most significant of which are as follows: 
1. The title and annex listing the beneficiaries are modified to 
reflect the inclusion of the twelve independent states of the 
former Soviet Union and Mongolia. 
2. Mongolia is added to the list of beneficiaries as its situation and 
needs for assistance are comparable to those of a number of the 
independent states. This country was formerly dependent, 
politically and economically, upon the Soviet Union although not 
formally part of It. Mongolia has now established a democratic 
political system, hetd free and fair elections and begun the 
transition to a market economy. It has signed a trade and 
cooperation agreement with the Community, Including a commitment to 
protect human rights. It has requested support for post-communist 
economic reconstruction, which goes beyond the scope of cooperation 
assistance presently available. The Commission considers it 
appropriate to respond positively to this request within the 
framework of the present regulation. 
3. The priority sectors for technical assistance have been maintained, 
to provide the necessary continuity and to avoid a dispersion of 
effort. The description of these sectors is adapted slightly to 
correspond more exactly with needs. 
4. Multiannual indicative programming is provided for as the Community 
will be offering sustained support to programmes and projects which 
span several years. Within this multiannual approach, the principle 
of annuality in budget allocations is respected. This implies the 
need for action programmes specifying the main projects on a yearly 
basis. 
The indicative programmes and the action programmes will be adopted 
through the management committee procedure. 
- 3 -
5. The regulation makes provision for assistance to be offered, under 
the Community's tendering procedures, by entities either in the 
Community, the beneficiary countries, the Phare recipient states or 
adjacent Mediterranean states. The inclusion of this "triangular1" 
element Is designed to encourage the provision, of assistance by 
countries with specific relevant expertise, based on experience in 
transition to a market economy or on close links with the 
beneficiaries. 
6. The regulation provides for assistance to be reviewed if the 
political situation in a beneficiary state impedes the effective 
implementation of the programme* This provision is based on recent 
experience and provides a necessary element of flexibility In 
difficult circumstances. 
7. in order to prevent unforeseen circumstances from hampering the 
process of recovery in the beneficiary states, the proposed 
regulation provides that up to ten per cent of the total annual 
allocation should be available when necessary for responding to 
humanitarian needs» as with PHARE. 
8. The proposed regulation provides for the preparation of an annual 
progress report. 
In addition to these modifications, the Commission would draw 
attention to the Importance of retaining the provision of the previous 
regulation for the award by restricted Invitation to tender and by 
private treaty for operations up to ECU 300,000. Any heavier procedure 
would introduce excessive delays and Impede the delivery of 
assistance. 
Tne Commission would also draw attention to the importance of the 
provision, retained from the previous regulation, which calls for the 
effective co-ordination, by the Commission, together with the Member 
States, of the technical assistance efforts by the Community and 
Member States on-the basis of information provided by the Member 
States. 
On this basis, the Commission would invite the Council to adopt the 
attached proposal. 
- 4 -
Proposal for a 
concerning the provision of technical assistance to economic reform and recovery 
in the independent States of the former union of Soviet Socialist Republics 
and Mongolia 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, and in 
particular Article 235 thereof, 
Having regard to the Treaty establishing the European Atomic Energy Community, and 
in particular Article 203 thereof. 
Having regard to the proposal of the Commission, 
Having regard to the opinion of the European Parliament, 
Whereas pursuant to the European Council meetings in Dublin and in Rome the 
European Community introduced a technical assistance programme in favour of 
the economic reform and recovery in the former Union of Soviet Socialist Republics; 
Whereas Council Regulation (EEC, EURATOM) No 2157/91 of 15 July 1991 concerning 
the provision of technical assistance to economic reform and recovery in the 
1 
Union of Soviet Socialist Republics lays down the conditions for the provisions 
of this technical assistance and foresaw such operation under the 1991 and 1992 
budgetary periods; whereas since the said reform and recovery in the former Union 
of Soviet Socialist Republics is still underway, it is necessary to continue this 
effort; 
Whereas it is necessary to take express account of the consequences of the 
dissolution of.the Union of the Soviet Socialist Republics, of which Armenia, 
Azerbaijan, Belarus, Georgia, Kazakhstan, Kirghizstan, Moldavia, the Russian 
Federation, Tadjikistan, Turkmenistan, Ukraine and Uzbekistan, hereinafter called 
"the independent States" were part; 
Whereas in view of Mongolia's close traditional links with the former Union of 
Soviet Socialist Republics and of the fact that it is in the 
process of transition to a market economy and hence has 
10J No L 201, 24.7.1991, p. 2. 
- 5 -
need of technical assistance with economic reconstruction, comparable with the needs 
of the independent states, it is appropriate to extend the technical assistance to the state 
of Mongolia; 
Whereas the priority sectors for technical assistance cover the fields of human 
resources development; support for enterprises, including financial services; food 
production, distribution and marketing; transport and energy ; 
Whereas to ensure that unforeseen circumstances do not unduly hamper the process of 
recovery in the independent States and Mongolia, it is necessary to permit a certain 
amount of the financial allocation to be used for humanitarian aid; 
Whereas the requirements of economic reform and restructuring now in progress, and 
the effective management of this programme require a multi-annual approach; 
Whereas assistance for economic reform and recovery may require specific types of 
expertise particularly available in the PHARE beneficiary countries and in certain 
other states; 
Whereas the continued provision of technical assistance will contribute to the 
attainment of the Community's objectives, and the Treaties have not provided, for the 
adoption of this Regulation, powers other than those of Article 235 of the EEC Treaty 
and Article 203 of the EAEC Treaty, 
HAS ADOPTED THIS REGULATION: 
Article 1 
A programme to assist economic reform and recovery in the States listed in the Annex 
(hereinafter called the "beneficiary States") shall be implemented by the Community 
as from 1 January 1993 in accordance with the criteria laid down in this Regulation. 
Assistance shall be concentrated on sectors and, where appropriate, on selected 
geographical areas where it can play a central role and serve as an example in 
support of the reform process. 
The assistance will be reviewed if the political situation in a beneficiary State impedes 
the effective implementation of the programme. 
- 6 -
Article 2 
The budget authority shall determine the appropriations available for each financial 
year, taking into account the principles of sound financial management referred to in 
Article 2 of the Financial Regulation applicable to the general budget of the European 
Communities and with due regard for the financial perspectives. 
Article 3 
1. The programme referred to in Article 1 shall take the form of technical 
assistance for the economic reform under way in the beneficiary States. It shall 
also cover reasonable costs of supplies required in support of the 
implementation of the technical assistance . 
The cost of the projects in local currency shall be covered by the Community 
only to the extent strictly necessary. 
2. The assistance shall also cover costs related to the preparation, implementation, 
monitoring and evaluation of the execution of these operations. 
3. Technical assistance shall give priority to the fields of human resources 
development; support for enterprises, including financial services; food 
production, distribution and marketing; energy and transport. 
4. Operations to be financed under this Regulation shall be selected taking account, 
inter alia, of the recipients' preferences and on the basis of an assessment of 
their effectiveness in achieving the objectives aimed at by the Community 
assistance. 
5. Technical cooperation shall be implemented on a decentralized basis. The final 
recipients of Community assistance shall be closely involved in the evaluation 
and execution of the projects. 
6. At the request of a beneficiary state humanitarian aid and technical assistance 
for its implementation maybe provided. In the first instance such aid shal I not 
exceed 10% of the annual financial allocation to be made available under this 
- 7 -
Regulation. Amendment to either the objectives of such aid or to the percentage 
mentioned above may be made in accordance with the procedure provided for 
in Article 7 (2) and (3). 
Article 4 
1. Community assistance shall take the form of grants which shall be released in 
tranches as projects materialise. 
2. Financing decisions and any contracts resulting therefrom shall expressly 
provide, inter alia, for supervision by the Commission and the Court of 
Auditors to be carried out on the spot, if necessary. 
Article 5 
1. Indicative programmes covering a three-year period shall be established for 
each of the beneficiary States in accordance with the procedure provided for in 
Article 7 (2) and (3). They shall define the principal objectives and orientations 
of Community assistance in the priority areas referred to in Article 3. They 
shall be adopted every three years and may be amended in accordance with the 
same procedure during the period of their application. 
2. Action programmes based on these indicative programmes shall be adopted in 
accordance with the procedure provided for in Article 7 (2) and (3). These 
action programmes shall include a list of the main projects to be financed 
within the priority areas referred to in Article 3. 
Article 6 
1. The Commission shall implement operations in accordance with the action 
programmes referred to in Article 5(2). 
2. Supply contracts shall be awarded by means of open invitations to tender except 
in the cases provided for in Article 116 of the Financial Regulation applicable 
to the general budget of the European Communities. 
Service contracts shall, as a general rule, be awarded by restricted invitations to 
tender and by private treaty for operations up to ECU 300 000. 
- 8 -
Participation in invitations to tender and contracts shall be open on equal terms 
to all natural and legal persons in the Member States and in the benef i c i a ry 
States. 
Participation by natural and legal persons from the countries benefiting from 
PHARE as well as from adjacent Mediterranean countries may be 
authorised by the Commission on a case-by-case basis if the programmes 
or projects concerned require specific forms of assistance particularly 
available in economies in transition or in countries with traditional 
economic or geogrqphical links. 
3. Taxes, duties, charges and the purchase of immovable property shall not be 
funded by the Community. 
4. In the case of co-financing,the participation of third countries in invitations to 
tender and contracts may be authorised by the Commission, but on a case-by-
case basis. 
Article 7 
1. The Commission shall be assisted by a committee composed of the 
representatives of the Member States and chaired by the representative of the 
Commission, to be known as the "Management Committee for Assistance to the 
independent States and Mongolia". 
2. The representative of the Commission shall submit to the Committee a draft of 
the measures to be taken. The Committee shall deliver its opinion on the draft 
within a time limit which the chairman may lay down according to the urgency 
of the matter. The opinion shall be delivered by the majority laid down in 
Article 148 (2) of the EEC Treaty in the case of decisions which the Council is 
required to adopt on a proposal from the Commission. The votes of the 
representatives of the Member States within the Committee shall be weighted in 
the manner set out in that Article. The chairman shall not vote. 
3. The Commission shall adopt measures, which shall apply immediately. 
However, if these measures are not in accordance with the opinion of the 
- 9 -
Committee, they shall be communicated by the Commission to the Council 
forthwith. In that event, the Commission shall defer application of the measures 
which it has decided for a period of six weeks. 
The Council, acting by a qualified majority, may take a different decision 
within the period laid down in the first subparagraph. 
4. The Committee may examine any other question relating to the implementation 
of this Regulation which may be put to it by its Chairman, possibly at the 
request of the representative of a Member State and, in particular, any question 
relating to general implementation, the administration of the programme co-
financing and the coordination referred to in Article 8. 
5. The Commission shall inform the Committee at regular intervals concerning the 
implementation of the technical assistance programme. 
Article 8 
The Commission shall, together with the Member States, ensure the effective co­
ordination of the technical assistance efforts undertaken in the beneficiary states by 
the Community and individual Member States on the basis of the information 
supplied by the Member States. 
In addition coordination and cooperation with the International Financial 
Institutions shall be stimulated. 
Article 9 
At the end of each financial year the Commission shall draw up a progress report on 
the implementation of the technical assistance programme. This report shall be 
addressed to the European Parliament, the Council and the Economic and Social 
Committee. 
Article 10 
This Regulation shall enter into force on the third day following that of 
its publication in the Official Journal of the European Communities. 
- 10 -
It shall be binding in its entirety and directly applicable in all Member States. 
Done at Brussels, For the Council 
The President 
Armenia 
Azerbaijan 
Belarus 
Georgia 
Kazakhstan 
Kirghizstan 
Moldavia 
Russian Federation 
Tadjikistan 
Turkmenistan 
Ukraine 
Uzbekistan - 11 -
ANNEX 
BENEFICIARY STATES 
Mongolia 
- 12 -
FINANCIAL STATEMENT 
SECTION 1: FINANCIAL IMPLICATIONS 
1. Title of operation 
Technical cooperation with the independent states of the former Soviet 
Union and Mongolia 
2. Budget heading involved 
B7-620 Technical cooperation with the independent states of the 
former Soviet Union. 
Mongolia's inclusion in the list of recipient countries will 
require the title of the budget heading to be changed. 
3. Legal basis 
Council Regulation (EEC) No 2157/91 of 15 July 1993, which only covers 
1991 and 1992. 
The attached proposal for a Regulation (from 1993). 
4. Description of operation 
4.1 Specific objectives of operation 
To assist the reform process, in particular by financing or helping 
to finance technical assistance operations aimed at supporting the 
transition towards a market economy, mainly in the field of human 
resources, business support including financial services, 
production, distribution and marketing of food products, energy and 
transport. 
4.2 Duration 
Unlimited 
4.3 Target population 
The population of the former Soviet Union and Mongolia. 
5. Classification of expenditure or revenue 
Non-compulsory 
Differentiated 
6. Type of expenditure or revenue 
100% subsidy 
7. Financial impact 
7.1 Method of calculating total cost of operation (commitment 
appropriations) 
1992 Budget ECU 445 million 
1993 PDB ECU 520 million 
- 13 -
7.2 Breakdown of operation. 
Ten per cent could be used as part of humanitarian aid operations at 
the request of the recipient countries. 
8. What anti-fraud measures are planned in the proposal for the operation? 
Anti-fraud measures are carried out by the delegation staff, who check 
that the proper procedures are followed and work well at each stage of 
the development of the projects, and that the projects are carried out. 
Inspection and audit missions are also planned for the various countries. 
A management information system has been set up to monitor: 
the technical execution of the programmes; 
contracting procedures, and 
expenditure. 
9. Elements of cost-effectiveness analysis 
9.1. Objectives 
The aim of the technical assistance programme for the former Soviet 
Union and Mongolia is: 
(a) to secure their transition to a market economy; 
(b) to modernize their economies. 
It is not possible at this time to determine how long the programme 
will run given the scale of the problems confronting the countries 
concerned. 
9.2. Grounds for the operation 
The operation is part of the implementation of decisions taken by the 
European Council in Rome in December 1990. 
The community aid is intended, by transferring skills and knowledge, to 
achieve a multiplier effect in the five sectors concerned, helping to 
create the conditions for internally-generated economic development in 
the Soviet Union and Mongolia and an attractive environment for foreign 
investors. 
The community•s contribution will be mainly to provide consultants (both 
individual experts and consultancies) and training programmes. 
9.3. Monitoring and evaluation of the operation 
Performance indicators 
The success of the technical assistance operations will be measured by 
the ability of the former Soviet States to take over from European 
experts on programmes run with Community assistance. Every effort will be 
made to ensure that European experts are progressively replaced by local 
staff in the relevant sectors. 
The European experts will be recruited under service contracts containing 
detailed terms of reference, specifying the objectives to be met and the 
time limit for the work, so as to permit their programme to be evaluated 
afterwards. 
- 14 -
Details of evaluation 
Commission staff will draft regular reports on the progress of the 
operations, the problems encountered and how they are to be tackled. 
The experts responsible for the projects will also draft regular reports 
on the execution of their duties. 
The commission will regularly inform the Member states on the progress of 
the programme via a Management Committee for Assistance to the 
Independent States and Mongolia. 
- 15 -
ISSN 0254-1475 
COM(92) 475 final 
DOCUMENTS 
EN u 
Catalogue number : CB-CO-92-586-EN-C 
ISBN 92-77-50853-1 
Office for Official Publications of the European Communities 
L-2985 Luxembourg