ANNUAL REPORT 2003 FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT ON THE EC DEVELOPMENT POLICY AND THE IMPLEMENTATION OF EXTERNAL ASSISTANCE IN 2002

TABLE OF CONTENTS

A. FOREWORD

B. EXECUTIVE SUMMARY

1. STRATEGIC GOALS AND ACHIEVEMENTS

1.1 The framework for the community's external partnerships

1.2 Adapting to Changes in the EU and Global Context during 2002

1.3 Key Achievements during 2002

1.4 The Three Cs: Coherence, Coordination and Complementarity

1.5 Working with Others

1.6 The Path to the Future

2. THE REFORM PROCESS - STEPS FORWARD IN 2002

2.1 QUALITY IMPROVEMENT

2.2 Improving financial management and performance

2.3 Further reunification of the project cycle : EuropeAid co-operation Office's second year

2.4 Deconcentration

3. ONGOING PROGRESS TOWARDS STRATEGIC GOALS

3.1 Monitoring Progress Towards Strategic Goals

3.2 Maximising the impact of EC assistance

3.3 Policy developments in 2002 in priority areas

4. LOOKING FOR RESULTS: MONITORING AND EVALUATION

4.1 Evaluation

4.2 Project results : results-oriented monitoring

4.3 Conclusions

5. HORIZONTAL ACTIVITIES AND MAINSTREAMING

5.1 Mainstreaming Human Rights and democracy issues within the EU

5.2 European Initiative for Democracy and Human Rights (EIDHR)

5.3 Equality between women and men

5.4 Combating drugs

5.5 The environment and tropical forests

5.6 Conflict prevention, rapid response to crisis and fight agains terrorism

5.7 Science and Technology cooperation - policy dialogue and capacity building

5.8 Health, aids and population

5.9 Cooperation with non-state donors including NGOs

6. ACTIVITIES IN 2002

6.1 Western Balkans

6.2 Eastern Europe and Central Asia

6.3 Mediterranean, Near and Middle East

6.4 African, Caribbean and Pacific (ACP) countries and overseas countries and territories (OCTs)

6.5 Asia

6.6 Latin America

7. FEATURE: WATER MANAGEMENT IN EU CO-OPERATION

7.1 The importance of water for development

7.2 Water and the millenmium developemnt goals

7.3 People and water improving access to water and sanitation services

8. FINANCIAL TABLES

8.1. Commitments 2002 Western Balkans

8.2 Commitments 2002 Eastern Europe and Central Asia

8.3 Commitments 2002 Mediterranean, Near and Middle East

8.4 Commitments 2002 - ACP

8.5 Commitments 2002 Asia

8.6 Commitments 2002 Latin America

9. ANNEXES

9.1 Harmonisation of contract and financial procedures

9.2 RAL

9.3 Legal affairs

9.4 Audits

9.5 Transparency and visibility

9.6 EC communications referring to external assistance in 2002

9.7 EC assistance not covered by this report

A. FOREWORD

Poverty, conflict, instability and human misery, wherever they are in the world, affect us all. In this age of globalisation it is in our common European interest, as well as a moral imperative, to address these issues. The EC's external assistance programmes are a response to this reality.

The Commission, on behalf of the European Community, manages one fifth of the EU's overall aid flows (EUR 6.5 billion committed in 2002), which represents over ten percent of global aid. We provide assistance to more than 160 countries, territories or organisations worldwide. We believe in long-term, structured commitments and in building a network of collaborative partnerships.

In pooling resources for this common purpose, EU Member States have shown their commitment to the common values of external assistance, Human Rights, stability, poverty reduction, whose policies and implementation are central to the EU's role in the world.

As administrator of EC External Assistance, the Commission has a unique comparative advantage, drawing on the expertise and transcending the national traditions of the Member States. We are committed to spending European taxpayers' money to deliver high quality programmes of assistance that have a demonstrable impact on the quality of people's lives. We aim to do this with a level of efficiency that meets the highest international standards.

In 2002, this approach was demonstrated notably in the EUR 275 million we committed to Afghanistan: a concrete contribution to the rebuilding of a failed state, supporting a fledgling government to build better lives for ordinary people. The Commission also played a vital role in the Conference on Financing for Development (Monterrey), the World Summit on Sustainable Development (Johannesburg), the Doha Development Agenda, and in the adoption of the Barcelona Commitments and the launching of EU Initiatives on Water/Sanitation and Energy.

This Commission made it a priority to reform the way we deliver the external assistance budget, and 2002 was the year where the first results of this reform could be seen on the ground: The quality of our assistance has been boosted by a huge deconcentration of management responsibilities away from Brussels out into the field, which in 2002 took place for geographical programmes in Europe, the Mediterranean, Asia and Latin America. Following international best practice, we are now not only quicker at implementation - in line now by and large with the performance of national development agencies - but better at trouble-shooting and tailoring our help to meet real needs. These gains have been complemented on the programming side by a new framework of Country strategies that promote policy coherence and donor coordination.

This report provides information on policies and programmes implemented across the world. It responds to the request of the Council and the European Parliament to focus on results and impacts achieved. We recognise that further work is required in the move towards a results based approach. It will take much more time and effort to consolidate and complete the reform and further improve the effectiveness of external assistance. Particular challenges include the need to address specific implementation difficulties faced by the Commission in a number of ACP countries and the imperative to deploy effective financial instruments towards our new neighbours after the enlargement in 2004, in the context of "Wider Europe". We are committed to meeting these challenges and to further improving the performance of EC external assistance, thus contributing to security and prosperity for all.

Chris Patten, Member of the Commission responsible for external relations Chairman of the Board of the EuropeAid Co-operation Office

Poul Nielson, Member of the Commission responsible for development Chief Executive Officer of the Board of the EuropeAid Co-operation Office

Günter Verheugen, Member of the Commission responsible for enlargement Member of the Board of the EuropeAid Co-operation Office

Pascal Lamy, Member of the Commission responsible for trade Member of the Board of the EuropeAid Co-operation Office

Pedro Solbes Mira, Member of the Commission responsible for economy and finances Member of the Board of the EuropeAid Co-operation Office

B. EXECUTIVE SUMMARY

This Annual Report presents an overview of the European Community's activities undertaken in the field of External Assistance. It must be placed in the framework of the reform of the management of EC external aid adopted by the Commission [1]. It is addressed to the European Institutions, other actors in the field, partner countries as well as the general public. This report accounts for the EUR 6.5 billion committed and the EUR 5.2 billion actually disbursed by the EC in 2002.

[1] Communication on the Reform of External Aid Management SEC (2000)814 of 16.05.2000

Chapter 1 of the report presents the state of play of the strategic goals and achievements. Monterrey and Johannesburg summits settled the bases for a new global partnership for poverty eradication and sustainable development. If the EU Member States comply with their pledges, some extra EUR 8.5 billion could be available by 2006. The first generation of Country Strategy Papers has been completed in 2002. They will lead to accrued focus on fighting poverty. A better integration of the international evolving context and of the other EU priorities into development policy and planning will also add to the overall improvement of EU activities in the field. Not to forget the already famous "Three Cs" (coherence, co-ordination and complementarity) where a steady advance can be registered. Within EC policies, they help promote development, poverty reduction and integration of the beneficiary/partner countries into the world economy . This chapter also shows the progress in the field of EC co-operation with other donors. A new framework agreement has been signed with the World Bank, and the revision of the EC-UN Framework Agreement for EC funding of UN projects was completed. Extensive upstream policy dialogues at various levels took place in 2002 with United Nations' agencies, funds and programmes.

The reform of the management of the EC External Assistance starts bearing its fruits: sharper programming, improved quality and delivery timing, greater transparency and accountability, devolution of responsibilities to delegations on the spot, better co-ordination with other donors, especially Member States, and the implementation of a new single management information system Common Relex Information System (CRIS) are amongst its main results in 2002 as shown in Chapter 2.

Chapter 3 outlines the progress the EC is making towards its strategic goals, in particular the Millennium Development Goals (MDGs), working with the rest of the international community. It highlights measures being taken to enhance the effectiveness of the Community's assistance still further, including adapting its approach to different country and regional circumstances, effective targeting of resources, debt sustainability, increased use of sector wide approaches and budget support. It also outlines progress towards focusing the EC's assistance on a more limited number of areas, and key policy developments in these priority areas during 2002. Social sectors like Health and Education, Transport and Food Security have all seen significant progress during the year. On Trade and Development, the Commission adopted a Communication endorsed by the Council in November 2002.

The Commission has worked with an expert group of Member States and other interested parties, including the OECD Development Assistance Committee (DAC), UNDP and the World Bank, to develop a core set of 10 indicators drawn from the MDGs. Of these 10 indicators, six are directly related to the well being of children, while three have a specific gender dimension. The Commission intends to monitor progress against these indicators annually for all developing countries to which it provides assistance. They are:

- Proportion of population below $ 1 per day

- Prevalence of underweight children

- Under-five mortality rate

- Net enrolment ratio in primary education

- Primary education completion rate

- Ratio of girls to boys in primary, secondary and tertiary education

- Proportion of births attended by skilled health personnel

- Proportion of 1 year old children immunised against measles

- HIV prevalence among 15-24 year old pregnant women

- Proportion of population with sustainable access to an improved water source.

Chapter 4 shows the 2002 findings of the Evaluation activities and the Results-Oriented Monitoring (ROM). The chapter summarises the findings and conclusions of the evaluations completed during the reporting period and points out certain emerging broad issues. Launched in 2001, the Results-Oriented Monitoring (ROM) has been extended to all regions in 2002. It ensures that the Commission has comparable data across its external assistance programmes. The chapter shows findings and analysis based on 2002 reports by ROM criteria (Relevance, Efficiency, Effectiveness, Impact and Sustainability) and on the priority development fields.

Results achievement and performance of EC funded projects and programmes have been judged as being generally good. Analysis of the structure of performance suggests some lessons to be learned:

- Flexibility and capacity to adapt to changes tends to enhance the performance of projects. There are also indications suggesting that a review of the project concept, when it actually starts implementation, did foster better performance.

- Good integration in local structures, policy support, and beneficiary involvement clearly foster effectiveness and sustainability and should be given attention in the design of projects.

- Financial sustainability is identified most often as a potential source of problems for projects.

- Timeliness of inputs and activities is suboptimal in many projects, the narrative comments in monitoring reports indicate heavy (EC) procedures and quality of project management as reasons in many cases.

Chapter 5 analyses the "horizontal" or "cross-cutting" issues and their mainstreaming through the general structure of EC co-operation. Human Rights, Equality between men and women, Environment and Conflict Prevention are the main topics of this chapter which also describes the implementation of thematic budget lines such as Food Security, Tropical Forest, Fight against AIDS or Co-financing with NGOs.

Dialogue on Human Rights has continued with China and started with Iran. Regional meetings have been held in two Mediterranean countries with civil society organisations in these countries. Promotion of Human Rights education and Training for ethical review have also been important issues in 2002. The European Initiative for Democracy and Human Rights has committed over EUR100 million this year. Assistance to third countries in the field of Science, Technology and Research, particularly in the New Independent States and the ACP countries, deserves also a place in this chapter.

The Rapid Reaction Mechanism committed EUR 23.5 million in 2002, the most important task being the second phase of stabilisation in Afghanistan and the reconstruction efforts in the Palestinian Territories.

A process of consultation with Non-State actors has been developed in 45 countries during the preparation of Country Strategy Papers. Close to EUR 200 million have been committed for co-financing NGOs projects. Almost 50 million have been committed under the thematic budget lines Environment and tropical Forest.

Chapter 6 focuses on co-operation activities by region:: Eastern Europe and Central Asia, South-eastern Europe, the Mediterranean, Near and Middle East, African, Caribbean and Pacific Countries (ACP) and Overseas Countries and Territories (OCTs), Latin America and Asia. The structure of the presentation is the same for each region, allowing for a "transversal" reading and easy comparison based on similar data. At first, the strategic goals and achievements are presented as well as the programming priorities during the year. Secondly, a section presents the main results of both finalised and ongoing projects, including those for which a mid-term review has been undertaken. Some case studies illustrate concretely the scope of EC activities in each region.

To complete the information on each region, specific sections focus on the implementation of the "Three Cs" (Coordination, Coherence and Complementarity) describing the co-operation with Member States and other donors. Humanitarian Aid (implemented by ECHO) and European Investment Bank (EIB) activities are also highlighted. Conclusions and perspectives for the years to come end each regional contribution.

As regards the Western Balkans, the existence and proper functioning of a market economy is one of the criteria fixed at Copenhagen as basic pre-requisite for EU membership. The coming years will therefore see continued support for the reforms necessary to achieve this objective, including inter alia economic related legislation, budget expenditure management and revenue collection, public procurement and - at the more advanced stages of the process - competition legislation.

Attention will also be focused on public administrations, usually through Public Administration reform programmes, aimed at supporting the process of rationalising, downsizing and streamlining the public sector.

In the area of Justice and Home Affairs, the weak functioning of the judiciary system is recognised as one of the key problems hindering not only the general political functioning of the state, but also the proper functioning of a market economy (e.g. lack of effective economic conflict resolution). Corruption has been identified as another major issue that hinders proper political, social and economic development in the region. It requires decisive action by the International Community, supported by targeted CARDS assistance, to attack the roots of the problem and facilitate sustainable solutions. Nearly EUR 654 million have been committed and more than 617 million disbursed in the region in 2002.

Concerning Eastern Europe and Central Asia countries, almost EUR 430 million were committed and EUR 383 million disbursed ,in 2002. Work has begun to assess the potential impact of enlargement on EU relations with Eastern Europe countries, within the framework of the "Wider Europe" concept, which aims at enhancing stability and narrowing the prosperity gap on the new external borders of the EU. This will lead to increased support for activities that promote cross-border co-operation, particularly with respect to the Western NIS.

In the Caucasus and Central Asia, the EU will continue to prioritise regional co-operation, notably through measures aimed at poverty reduction and economic growth and, where appropriate, conflict prevention.

Concerning the Mediterranean countries, a significant improvement has been achieved on MEDA programme's implementation, with EUR 762 million commitments and EUR 684 million disbursements over the year. The new national Indicative Programmes have been implemented for the first time in 2002. Stability, security and sustainable development continue being EU priorities in the region as well as the completion of the Association agreements with all the Mediterranean partner countries and further steps ahead towards a Euro-Mediterranean internal market.

Co-operation in Legal matters and Home affairs is also becoming an important priority covering issues such as refugees, Asylum rights and fighting against illegal immigration. Middle East situation stays the main concern in the region.

Co-operation with the ACP countries and Overseas Countries and Territories (OCTs) has totalled almost EUR 2.4 billion commitments, and EUR 2.54 billion disbursements (one of the best peformance ever recorded even if slightly inferior to 2001 disbursements). The ratification of Cotonou agreement will allow for evolving EU-ACP relations. The explicit commitment of African countries to strengthening their capacity to deal with conflict, poverty and marginalisation in the context of globalisation and the existence of Poverty Reduction Strategy Papers are two important pillars for the future EC co-operation in the region to base upon. Being the one region in the world that will struggle most to reach the Millennium Development Goals (MDGs), the ACP-EU partnership must improve development assistance, political dialogue and other policies and instruments as in trade-related issues. The launch of the African Union and its adoption of the New Partnership for African Development (NEPAD) may become the most significant fact in 2002 for the near future. Capacity building and crisis solution are also among the most important concepts to deal with in this region.

During 2002, EUR 540 million have been committed and 434 million disbursed in Asia. Through its co-operation activities, the EC strives to make a contribution to reducing poverty and raising the standard of living in Asian countries. Basic health and primary education are priority areas in this regard and will continue to receive at least one third of the available funds. The focus will be on intervention at the sectoral level, fighting poverty through country-owned programmes and enhanced donor-country co-ordination. The role of the Community also extends to achieving an improved relationship between these countries and the EU, to promoting greater democracy and to fostering peace. This involves, for example, supporting the reconstruction and rehabilitation of countries affected by conflicts such as Afghanistan and East Timor, and activities aimed at conflict prevention in the region, such as supporting the peace process in Sri Lanka.

Economic co-operation with Asia will be strengthened, focusing in particular on the business environment while supporting activities in such key fields as energy, environmental technology and bio-diversity.

Dialogue and negotiations have been the key words in EC co-operation with Latin America. Civil society is being consulted on the three sub-regional negotiations (UE-Mercosur, UE-Mexico and UE-Chile). Madrid Summit conclusions may be an important step ahead. The sectoral approach and budget support might give their first results in the region as soon as in 2003. On the other hand, the launching of negotiations with Central American countries and the Andean Community may drive to a full sub regional structure for EU-Latin America relations in the future. In 2002, EC commitments in the region have amounted to EUR 382 million while disbursements reached EUR 272 million.

The "Feature article" (Chapter 7) in this report concerns Water Management, probably the most important challenge for any coherent development policy in the years to come. The Commission Communication of 12 March 2002 as well as the outcome of Johannesburg is the basis of any EU policy in this regard. The EU Water Initiative, launched at Johannesburg, seeks to provide a catalyst for further action to achieve the internationally agreed goals, working in partnership with developing countries. The new international target is now to halve by 2015 the number of people without access to sanitation to complement the target on access to drinking water as per the Millennium development Goals.

Ccomplete financial tables, following DAC nomenclature, make up chapter 8. Breakdowns per budget line, region, country and instrument can be found in these pages. At the same time, each and every project committed in 2002 is mentioned per region and sector of intervention.

Finally, the annexes show the state of play of the main works related to the reform of the management of the external assistance, i.e. harmonisation of procedures, RAL situation (payments backlog), audits carried out, efforts in transparency and visibility as well as a full list of official EC Communications referring to external assistance produced in 2002.

1. STRATEGIC GOALS AND ACHIEVEMENTS

This chapter explains the context for the Community's external partnerships, including the strategic framework and objectives, and outlines the evolution in this during 2002 in response to events both within and outside the EU. It also highlights a number of strategic achievements during the year including the completion of the country programming process, and concrete progress towards improved coherence, coordination and complementarity both within and beyond the EU.

1.1 The framework for the community's external partnerships

The European Community's development cooperation policy is one of three elements within the broader framework of external relations. It sits alongside the Community's external political and economic (including trade and investment) relations.

The European Community has a very substantial role in all three areas. It is the largest trading partner for many developing countries. The EU, as a region, provides more than half of global development assistance: over EUR 28.7 billion in 2002, of which EUR 6.5 billion at EC level. In March 2002, at the time of the international Financing for Development conference, the EU signalled its commitment to play an even larger role in future by further increasing aid volumes. Each EU Member State has pledged to provide by 2006 a minimum of 0.33% of its national income as Official Development Assistance (ODA) so that, collectively, the EU reaches an average ratio of 0.39% (up from 0.33% in 2001). One fifth of the EU's current aid budget - EUR 6.5 billion - is managed by the European Commission on behalf of the Community. These funds come from the Community budget as well as the European Development Fund (EDF), which provides support to African, Caribbean and Pacific countries within the framework of the Cotonou Agreement and to the Overseas Countries and Territories (OCTs) associated with the Community under the Overseas association Decision [2] The geographical span of the Community's assistance programmes is also substantial: from the EU's neighbours to small Pacific islands. In 2002, the Community had programmes with 160 countries and 8 regions. The situation and the key issues in each region and country vary significantly and the Community adapts its approach accordingly.

[2] Council Decision 2001/822, 27.11.2001, OJ L 314 of 30.11.2001

1.1.1 The Strategic Objectives of EC's Development Policy

Whilst development cooperation is part of external relations, it is also a legitimate policy objective in its own right. In addition, the Commission promotes the use of Information and Communications Technologies (ICTs) as a tool to achieve development objectives.

Since November 2000, the Community has had one overall framework to guide its cooperation and partnerships with all developing countries with which it has links. This makes clear that the main objective of the Community's development cooperation policy is to reduce and eventually eradicate poverty, through support for economically, socially and environmentally sustainable development, promotion of the gradual integration of the developing countries into the world economy and a determination to combat inequality. [3] Health targets feature prominently, highlighting the link between overall poverty reduction and investments in health and research. The specific goal related to the fight against HIV/AIDS, malaria and other diseases indicates a strong commitment, acknowledging that without addressing these diseases the central outcome of global poverty reduction will not be met. It also makes clear the core principles on which the Community's assistance is grounded: sustainable, equitable and participatory human and social development, with the promotion of Human Rights, democracy, the rule of law and good governance as an integral part of this. Increasingly, the value of Science and Technology (S&T) capacity building and innovation is recognised as critical to the achievement of the MDGs, both in the different sectors as well as in support of overall economic development.

[3] Council Conclusions of 10 November 2000, Reference 12929/00

The EU has set its development efforts firmly in the global context, and is working with others to achieve the set of Millennium Development Goals endorsed by UN Members at the Millennium Summit. The headline goals are given in Box below.

The Millennium Development Goals

- Achieve universal primary education

- Promote gender equality and empower women

- Reduce child mortality

- Improve maternal health

- Combat HIV/AIDS, malaria and other diseases

- Eradicate extreme poverty and hunger

- Ensure environmental sustainability

The Community has also committed to apply international best practice principles in implementing its assistance. This includes a firm commitment to work in partnership with developing countries and to respect and promote local ownership, as well as participation by non-state actors and other measures such as effective targeting of resources, close working with other donors, and a shift away from projects towards sectoral programmes and budget support where possible (see Chapter 3). This is complemented by the management reform programme also launched in 2000 (see Chapter 2).

In order to maximise its own impact within the global development framework, the Community is focusing its assistance in 6 areas where it can add particular value: the link between trade and development; regional integration and cooperation; support for macroeconomic policies and equitable access to social services; transport; food security and rural development; and institutional capacity building in particular good governance and the rule of law (see Chapter 3). The promotion of Human Rights, equality between men and women, environmental sustainability and conflict prevention are integrated at every stage and within all of the Community's assistance programmes.

1.1.2 Responding to Different Country and Regional Circumstances

The development cooperation policy outlined above applies to all developing countries with which the Community has links. Nevertheless, the Community's relations and assistance programmes in different regions and countries are adapted to the specific challenges facing these.

This ranges from political and economic reform and stability in the Western Balkans, to sustainable economic and social development in the Mediterranean to ensure that this region does not become a geostrategic faultline with a prosperous Europe on one side and predominantly poor countries on the other, coupled with enhanced cooperation on issues like terrorism, the environment, drugs, and demographic change. In Latin America, fighting social inequality and building more cohesive societies are overriding priorities, combined with support for regional integration to increase the competitiveness of Latin American enterprises. Asia is home to two-thirds of the world's poor. Food security, health and access to basic services are pressing issues in the region's lower-income countries, whilst serious disparities of income and opportunity still challenge many middle-income countries. A key focus for EC programmes in Central Asia is institutional, legal and administrative reform and private sector and economic development to tackle problems ranging from widening income disparities and poverty to slow economic and democratic transition including Human Rights issues. African, Caribbean,Pacific countries and Overseas countries and territories, which come together into effect on 1 April 2003, under the framework of the Cotonou Agreement, face many common problems but also differ in some important respects. The Pacific and Caribbean regions contain many small-island states, whilst in Africa several conflicts are exacerbated by the size and fragility of countries. 40 of the 77 ACP countries are Least Developed Countries, marked by a particularly low per capita income and severe infrastructure problems.

The different aspects of the Community's external relations with different regions are framed in a series of cooperation and partnership agreements. Chapter 6 reports on key developments in each of these regions during 2002.

1.1.3 Complementarity between Development and other External Objectives

In many cases, the Community's development and other external objectives are complementary, as are interventions in different areas. The link between conflict prevention and the promotion of Human Rights and democracy is clear, for example, as is the link from these areas to poverty reduction. In the aftermath of violence, concrete Community assistance has helped rebuild society and prevent the recurrence of disputes. Instead of addressing merely the symptoms of conflict, methods must also be developed to identify and tackle their root causes, which many times are assessed to be extreme poverty. The relationship between investments in terms of basic health services and those related to Research and Development (R&D) for new drugs and treatments, especially in the context of the fight against the major communicable diseases linked to poverty, needs also to be underlined.

Given the many external policies and instruments in play and the need to respond to different circumstances, the Community's Country and Regional Strategy Papers constitute an important tool for analysing and suggesting the right policy mix. Interventions undertaken through the Community's horizontal and thematic budget lines, which cover development as well as broader external objectives such as cooperation on drugs, are increasingly being integrated within this framework. The Community is also working to ensure improved coherence at the central policy level.Complementarity between development and research policy is based on the notion of the need for synergies between S&T capacity building and inter-regional research collaboration (North-South, East-West).

1.2 Adapting to Changes in the EU and Global Context during 2002

1.2.1 EU Enlargement and New Political Priorities

In terms of internal EU developments, the groundbreaking decision taken in December 2002 to enlarge the EU in May 2004 from 15 to 25 Members will have a profound impact on the region's future role, including its external and development role. These countries, which have received substantial EU and external support over the past 12 years for their own political and economic transition, will become members of the EU's external policies from the date of their accession. During 2002, the accession countries, the Commission and Member States and the EU's external partners have begun to focus on preparations for this. Although development issues have not been a high profile issue in the context of enlargement, the Commission launched a programme of work in 2002 with accession countries and current Member States. This is focused on 3 aspects: possible implications for the Community's policy and programme processes (such as decision-making processes, priorities, channels of implementation and financial issues); how to help the acceding countries in their preparations for taking on the Community's development policy and their role as emerging donors (re-emerging in some cases); and implications for the Community's development partners. Several studies and fact-finding exercises, as well as a first set of capacity building and awareness-raising activities were launched in 2002 to help define and inform future activities in this area, including a road-map. This work will continue and expand in 2003-2004.

Internal policies and activities in other areas have also affected the context for the Community's development cooperation policy and external assistance, in particular the heightened interest in how to integrate migration issues into the EU's relations with its external partners including developing countries.

1.2.2 The Global Context: Political and Economic Instability

Continued political and economic stability in 2002 has had a major impact on the Community's external relations including its development policy and its external assistance.

Events in different parts of the world starkly highlighted the interdependence between both developed and developing countries. From the economic crisis in Argentina and the slowdown in developed country markets, to the tragedy of the Bali bomb and the ongoing fight against terrorism, to the devastation of new and ongoing conflicts. In 2002, there were positive steps towards peace in countries including Sri Lanka, Angola, and the Democratic Republic of the Congo. The Community launched a programme of long-term assistance to Afghanistan, marking an important transition in its partnership. Unfortunately, the situation in other places deteriorated, including the Middle East, Côte d'Ivoire and Zimbabwe.

These events highlight the vital importance of continued attention to economic and governance issues and, specifically, to conflict prevention and resolution. The Community is already very active in this area, including through its development policy and external assistance programmes, and recognises the need to take a comprehensive and long-term approach. The Community, along with EU Member States, has also taken an important role in the international fight against terrorism.

Greater recognition of the links between developed and developing countries during 2002 has, in turn, underlined the importance of adequate and sustained attention to development issues for the successful achievement of other objectives. Poverty and exclusion, regional conflicts, environmental degradation and AIDS are all potential threats to security. The Community's development cooperation and external assistance policies and programmes, as well as EU policies and activities in other areas, have a vital role to play in this process and a number of new initiatives have been taken during the year. Sweden and France played a key role in 2002 in the launch of a new international Task Force on global public goods, which will be examining over the next 2 years how to ensure that major issues of international concern such as controlling communicable diseases and combating climate change are clearly defined, analysed, and the needs adequately met.

1.2.3 A New Global Partnership for Growth, Poverty Eradication and Sustainable Development

The international Financing for Development Conference in Monterrey, Mexico and the World Summit on Sustainable Development in Johannesburg, South Africa (in March and September 2002 respectively) confirmed the direction taken with the launch of the Doha Development Agenda [4], in terms of a new global partnership between developed and developing countries. At the centre of this is the recognition that success requires action by all countries. The EU worked hard for the success of Doha, Monterrey and Johannesburg, and will do the same for the forthcoming UN World Summit on the Information Society. The EU enlargement and the further increase in EU aid between now and 2006 by all Member States will allow the region to play an even greater role going forward than it does already.

[4] The 'Doha Development Agenda' refers to the agreement reached regarding the agenda for the multilateral trade negotiations launched at the World Trade Organisation Ministerial in Doha, Qatar, in November 2001.

Monterrey and Johannesburg confirmed the central importance of the Millennium Development Goals as the guiding framework for action between now and 2015. The EU strongly supported the addition of new target to halve the proportion of people without access to sanitation by 2015, to go with the existing target on access to water. The international community now has a clear and comprehensive framework for action to achieve growth, poverty eradication and sustainable development. The focus must now turn even more strongly to implementation.

1.2.4. The EU's WSSD Initiatives: Water and Energy

At the World Summit on Sustainable Development (WSSD), the EU launched two major initiatives on water and energy, designed to accelerate progress on implementation towards the MDGs.

The EU's Water for Life Initiative is profiled in the special feature on water in this report (see Chapter 7).

The EU Energy Initiative for Poverty Eradication and Sustainable Development highlights the political will of EU Member States and the Commission to enhance activities in this field. Although there is no specific MDG on energy, the provision of adequate affordable and sustainable energy services in rural, peri-urban and urban areas is essential for the achievement of the MDGs. A reliable and affordable energy supply is however far from the norm in the developing world, where over 2 billion people rely on biomass (wood, waste etc) as their primary energy source, and 1.6 billion people still do not have access to electricity. The EU's energy initiative seeks to contribute to poverty eradication by helping to improve access to energy services, working through a menu of technical options, including rural electrification and decentralised energy systems, cleaner more efficient fossil fuel technologies and use of locally available renewable energy, especially the improved management and use of biomass. Activities will ensure ownership of beneficiaries, and will be developed through partnerships with developing countries and regions, as well as stakeholders from private sector, financing organisations and civil society. Dialogue with partners and stakeholders will be enhanced at national and regional level to implement partnerships on a demand-led basis. Important aspects of the initiative will include the provision of support for institutional capacity building and technical assistance to countries to put in place adequate energy policies. An important role will be given to the development of new research based strategies. The Commission also published a new Communication setting out its strategic approach to energy cooperation with developing countries in July 2002. [5]

[5] COM(2002)408

1.3 Key Achievements during 2002

1.3.1 Continuing improvements in Efficiency and Effectiveness

For the EU, the global framework that has emerged from Doha, Monterrey and Johannesburg reinforces the direction in which the Community has been moving internally since 2000, in terms of both its operational and policy framework.

The continuing progress being made towards efficiency and effectiveness, as part of the management reform programme launched in 2000, is detailed in Chapter 2 of this report. The Commision also simplified and decentralised the EDF financial procedures for the OCTs [6], as requested by the Council in its 2001 overseas decision.

[6] Commission Regulation N°2304/2002, 20.12.2002, OJ L 348, 21.12.2002, p.82

Progress towards development and other external assistance objectives is outlined in Chapter 3, including the results of a cross-regional and cross-country analysis of progress towards the Millennium Development Goals undertaken by the Commission and progress in the 6 priority areas for EC assistance defined in 2000. A major challenge for the Community going forward will be to respond to the emergence of new EU and international priorities without undermining selectivity and focus.

Completion of the Programming Process

A major strategic achievement during 2002 was the completion of the first generation of regional and country strategy papers (RSP - CSP) under the new common framework process begun just two years earlier. A qualitative leap in the Community's programming of external assistance has been achieved and the programming documents will serve as valuable management tools for the years ahead. The CSP Framework has, as intended, proved to be a very useful tool, including for operationalising the objective of giving multi-annual programming greater substance and improving co-ordination and complementarity with bilateral aid provided by EU Member States. The CSP Framework has also made an important contribution to harmonising programming methodology across regions. For the years ahead, it is important to set up a comprehensive mechanism to monitor and review implementation of CSPs and RSPs, so as to maintain the momentum in the CSP process. The process of preparing for Mid Term Reviews, including further work on methodologies, will begin in 2003. The Commission will strive continuously to improve the quality in its programming documents and to firmly integrate the CSP process into the international development effort.

Embedding of the PRSP Approach for Low-Income Countries

In terms of poverty reduction in low-income countries, January 2002 saw the first international review of the results-oriented partnership approach based on nationally owned strategies for poverty reduction (often known as the Poverty Reduction Strategy Paper, or PRSP, approach). The Commission, like many other donors, has committed to use PRSPs, where they exist, as the starting point in designing its own response strategies (CSPs). By November 2002, 45 countries had prepared an interim Poverty Reduction Strategy Paper and 19 had a final PRSP. The Commission has particularly emphasised the importance of implementation tied to a national strategic resource allocation cycle and the key role of national democratic accountability, particularly through national Parliaments, drawing on agreed indicators of results. The Commission has been working particularly closely with the Bretton Woods Institutions on this, following joint consultations in May 2002. A working group between the World Bank and IMF, the European Commission on behalf of the Community and the UK's Department for International Development (DFID) has started to conceptualise the idea of 'the PRSP cycle'. The Commission's efforts were recognised at the January 2002 Conference and its approach has been increasingly widely accepted by others during the year. It promises to form the basis for an even broader consensus as work on the concept deepens during 2003.

1.4 The Three Cs: Coherence, Coordination and Complementarity

Ensuring coherence between the objectives of the EC's development policy and its policies and goals in other areas is an operational priority as well as a legal obligation for the Commission.

Improved coordination and complementarity are essential elements in the process of making the EC's external assistance more effective. At the most basic level, coordination entails greater awareness of what others involved in a particular sector or country or region are doing, combined with efforts to work together more effectively. Coordination is critical in order to avoid overlap or inconsistencies between those seeking to achieve common goals. Complementarity begins with coordination, but it goes further : it implies each actor focusing its assistance where it can add most value, given what others are doing, maximising synergies.

1.4.1 Improving Coherence

The Community has a legal obligation contained in the Treaty to ensure coherence by taking an integrated approach to external relations, security, economic and development policies [7]. This includes the need to take account of development objectives in all activities likely to affect developing countries [8].

[7] TEU Article 3

[8] TEC Title XX Art 178

This notion was reaffirmed in 2002 in the Commission's Communication on the external dimension of the EU's sustainable development strategy [9], and in the Council Conclusions on this Communication and on the EU's preparations for the World Summit on Sustainable Development [10].

[9] 'Towards a Global Partnership for Sustainable Development' COM(2002)82 Final of February 2002

[10] Development Council Conclusions, May 30 2002, 9458/02

1.4.1.1 New Impact Assessment Processes

As part of its efforts to improve coherence, the Commission is increasingly making use of impact assessment processes. During 2002, sustainability impact assessment processes were launched that will be run in parallel with and inform the WTO trade negotiations, as well as the negotiations between the EU and ACP countries on new Economic and Partnership Agreements. In May 2002, as part of the package of measures to improve governance, the Commission outlined proposals for a new impact assessment for all major policy proposals [11]. This will be introduced gradually from January 2003. It is intended to identify in advance potential economic, social and environmental impacts within and outside the EU, and as such may become a major tool for verifying coherence. Such Extended Impact Assessments will be carried out as of 2003 for key policy reforms. Of particular importance for developing countries is the reform of the Common Market Organisation for sugar.

[11] COM(2002)276 of May 2002

1.4.1.2 Adapting EU Policies to Sustainable Development Objectives

The EU has also committed to continue the process of adapting key EU domestic policies to the internal and external objectives of sustainable development. During 2002, the Commission published proposals for alterations to two policies that are acknowledged to play a critical role in coherence: the Common Agricultural Policy (CAP) and the Common Fisheries Policy (CFP).

In the context of the Mid Term Review of the CAP and in line with the orientations already established as part of 'Agenda 2000', the Commission proposed a substantial reorientation of the Common Agricultural Policy to promote greater compliance with income redistribution and sustainability objectives. These proposals were set out in the Commission Communication, 'Towards Sustainable Farming. [12] Not all products were covered by the MTR (notable exceptions included rice, sugar and cotton). Nevertheless, the proposals put forward in 2002 for greater de-coupling of subsidies from production and reduction on guaranteed prices are positive signs of efforts to increase market orientation of the CAP. This, in turn, is likely to reduce its negative impact on third countries and enhance coherence with the Community's development policy. It is expected that the MTR, when applied, will lead to less intensive and more diversified production patterns. Farmers will no longer be remunerated on the basis of quantities produced, and will receive instead an all inclusive income subsidy based on compliance with environmental principles of sound agricultural management.

[12] COM(2002)394 Final of July 2002

The need for coherence between the Community's fisheries policy and development objectives for ACP states has been reinforced in the Cotonou Agreement, which states that, "Any fishery agreement negotiated between the Community and ACP States shall pay due consideration to consistency with the development strategies in this area." [13] In a Resolution on Fisheries and Poverty Reduction of November 2001, the Council further underlined that Fisheries Agreements should include environmental and developmental considerations. [14] Consistent with these requirements, the Commission's 2002 Communication on reform of the CFP [15] and the subsequent Communication on the Community's Fisheries Partnership Agreements (FPAs) with third countries [16] recognised the need to ensure coherence with development objectives, as well as other objectives including sustainability of fish stocks at the global level (addressed in the Plan of Implementation of the World Summit on Sustainable Development).

[13] Article 23 Title I

[14] Council Conclusions of 8 November 2001, Reference 13573/01

[15] COM(2002)181 Final of 28 May 2002

[16] COM(2002)637 Final of 23 December 2002

The Community has bilateral agreements with 15 developing (mainly ACP) coastal states that involve financial contributions from the Community to the authorities concerned. The Communication noted that these agreements generate in Europe and the coastal states important economic activities, both through the exploitation of fishing resources and through the development of associated activities. The Communication proposed a number of new initiatives to enhance the positive impact of the new Fisheries Partnership Agreements (FPAs) on developing countries' local economies going forward. These include sustainability impact assessments for new FPAs and a more concerted effort between the Common Fisheries Policy and the Community's development cooperation policy in order to strengthen the capacity of the local authorities to formulate and implement fisheries policy, including stronger ownership. Also that the financial contribution of the new FPA should make a clear distinction between: the part of the financial contribution given in exchange of fishing possibilities for European vessels; and the other part of the contribution devoted to fisheries partnership actions such as stock assessment, control monitoring and surveillance activities. All these activities should be seen more in terms of the mutual interest of both sides in establishing responsible fishing on a sustainable basis.

The implementation of the Commission's proposals in both cases will depend on the outcome of discussions with EU Member States. The way that the new approach to fisheries has begun to be implemented in the ACP region during 2002, in particular in the context of the new FPA with Kiribati and the Pacific Regional Strategy Paper, is outlined in the ACP regional chapter later in this report.

1.4.1.3 Migration and Development

The Commission's Communication on Migration and Development [17] brought together the different dimensions of this issue. As part of this, it set out the broader context, including the need to take account of the driving forces of international migration, the specific case of people in need of protection and the effects of international migration on developing countries. In integrating migration into the external policy of the Community, the Commission proposed to base further action on the following key principles:

[17] COM(2002)703

- The integration of migration aspects in the external action of the Community must respect the overall coherence of its external policies and actions. The dialogue and actions with third countries in the field of migration must be part of a comprehensive approach at EU level, which must be fundamentally incitative by encouraging those countries that accept new disciplines but not penalising those who are not willing or not capable to do so. The approach must also be differentiated, taking due account of the situation of each individual third country.

- Regarding migration, the long-term priority of the Community should be to address the root causes of migration flows. One should duly recognise the effect of long-term development programmes on migratory flows, in particular in poverty eradication, institution and capacity building, conflict prevention. Development resources should concentrate on this objective. Besides, as part 2 of the Communication demonstrates, the Commission already supports a wide range of specific actions in the field of migration, with a total value of EUR 935 million planned for the period 2002 -2006.

- Migration aspects should, in the first instance, be taken care of in the strategic framework proposed by the Commission and agreed by the Member States (Regional and Country Strategy Papers). The CSP mid-term review offers an opportunity to examine the extent to which greater priority should be given to specific programmes related to migration. This should permit a case-by-case reassessment of migration in third countries and could lead to some reorientation in our priorities and some reallocation of funds within the National Indicative Programme of each country concerned.

- Without prejudging the results of the CSP review, it already seems clear that extra funding will be needed. New tasks are feasible only if new money is made available. The relevant budget line (B7-667: Cooperation with third countries in the field of migration) should be significantly reinforced and should come as a complement to what can be achieved in the CSP review. It should be used to finance specific, targeted actions in the field of migration. These should be complementary to those financed under the more generic assistance lines. This approach should ensure a greater impact and higher profile for migration initiatives, and help avoid duplication and confusion. The relevant budget line must also be managed in accordance with the principles of the RELEX Reform, so as to allow consistency and economies of scale.

1.4.1.4 Untying Aid: Enhancing the Effectiveness of Aid

The practice of 'tying aid' (whereby developing countries receiving aid are restricted to purchasing goods and services with that aid from the donor giving it to them) is an important element of the debate on aid effectiveness and donor credibility. The Commission believes that untying aid is an important factor in a coherent pro-poor development policy. Untying aid can have a substantial practical impact, by significantly increasing the value of development assistance. This is because development partners are free to choose the most appropriate and cost-effective supplies for their needs. Tied aid is estimated to cost on average between 20-25% more than if the goods or services in question were procured through international competition. [18]

[18] Source: DAC. Also World Bank research.

In 2001, the Development Assistance Committee of the OECD formally adopted a Recommendation to untie aid to the Least Developed Countries. In the context of preparations for the Financing for Development conference in March 2002, the European Council agreed to continue discussions in view of further untying. [19] Following on from these two steps, the Commission adopted a Communication on untying in November 2002. [20] This proposed an almost complete untying of Community aid (subject to the agreement of the recipient country and on a reciprocal basis between all donors). Moreover, the Communication recalled that the rules of the internal market apply also to a large part of Member States' ODA, and advised them to respect those rules with regard to their bilateral aid programmes. This Communication also advocated a complete untying of food aid and food aid transport at the international level. Discussions on this issue will continue in 2003.

[19] European Council Conclusions of 14 March 2002 on the International Conference on Financing for Development

[20] COM(2002)639, Communication from the Commission to the Council and to the European Parliament, Untying: Enhancing the effectiveness of aid, 18 November 2002

1.4.2 Strengthening Co-ordination and Complementarity

Promoting co-ordination and complementarity between Member States and the Community in the broader international framework is critical for the effectiveness of the Community's development cooperation policy and programmes. Despite the clear potential benefits, and notwithstanding some encouraging improvements, implementation of EU coordination remains difficult.

A number of positive steps forward were taken in 2002, both within the EU and beyond.

1.4.2.1 A Coordinated EU Input to the Monterrey and Johannesburg Conferences

At the policy level, the EU's preparations for the Conference on Financing for Development in Monterrey, Mexico and the World Summit on Sustainable Development in Johannesburg both proved to be useful opportunities for improving co-ordination. Similar efforts are being made in the context of the forthcoming UN World Summit on the Information Society. The mandate given to the Commission by EU Member States to present a report in preparation for the Monterrey Conference was a positive sign of the confidence that had been built up. This report, and the action taken by Member States, helped to ensure a positive EU contribution to the conference. It clarified a number of issues and explored, through a dialogue with Member States, possible initiatives to address key issues. This included how to close the financial gap between the current level of ODA and the volume necessary to meet the Millennium Declaration Goals (which the World Bank had estimated would require a doubling of current ODA levels [21]). This was instrumental in the EU decision to increase EU ODA levels between now and 2006. Other initiatives related to the effectiveness of aid (including aid untying, discussed above), concrete steps forward on coordination and harmonisation, reform of the International Financial System, trade and development, debt sustainability, global public goods and innovative sources of financing. [22] Following the request of the November 2002 General Affairs and External Relations Council, the Commission will monitor the implementation of these commitments. The EU's two major initiatives launched at the Johannesburg conference in water and energy emphasise operational co-ordination and complementarity, both at the policy level and at the implementation stage. This will be achieved through the development of partnerships with developing countries, other donors, the private sector and civil society. They provide a catalyst for future action to reach the WSSD (World Summit for Sustainable Development) goals related to water and energy.

[21] http://www.worldbank.org/html/extdr/ mdgassessment.pdf

[22] COM(2002)87: Preparation of the International Conference on Financing for Development. Related proposals were developed in COM(2002)82. 'Towards a Global Partnership for Sustainable Development' and COM(2002)81, 'Responses to the Challenges of Globalisation'

1.4.2.2 Commitment to Concrete Steps on Coordination and Harmonisation by 2004

One of the EU's commitments prior to the Financing for Development Conference was to take concrete steps in the co-ordination of policies and harmonisation of procedures before 2004. EU action in this area will also take account of similar efforts being made at the international level by the World Bank and other Multilateral Development Banks as well as by OECD/DAC Task Force on Donor Practices. [23] As one step towards this commitment and at the request of Member States, the Commission launched a pilot initiative focused on four countries, to examine current coordination and complementarity initiatives as well as the scope for further action. The results of a scoping mission in late 2002 should enable the EU to consider and possibly agree during 2003 on practical measures to strengthen the operational co-ordination between what is done by the Commission on behalf of the Community and what is done bilaterally by Member States. They also informed the EU's input to the international High Level Forum on Harmonisation in Rome in February 2003, with the Multilateral Development Banks and the OECD/DAC as co-sponsors.

[23] European Council Conclusions of 14 March 2002 on the International Conference on Financing for Development

The EU Pilot Initiative on Co-ordination and Harmonisation

"Reach concrete steps in co-ordination of policies and harmonisation of procedures before 2004"

In June 2002, the Commission launched with the Member States a pilot initiative to identify pragmatic measures to help to achieve progress in operational co-ordination and harmonisation at EU level. Four pilot missions were conducted in Morocco, Mozambique, Nicaragua, and Vietnam.

The exercise highlighted the increasing demand for more co-ordination and harmonisation from most of the actors present on the ground in these countries, who stressed that flexibility and pragmatism were critical. It also raised expectations of an enhanced EU contribution. In the first half of 2003 and as requested by the Barcelona EU Council in March 2002, the European Union will define a plan of action to achieve real concrete progress in this area before 2004.

1.4.2.3 Monitoring the Synergies of EU policies and Promoting Dialogue

During 2002, the Commission hosted regular informal meetings between Directors-General for Development from all EU Member States. These provided a useful forum for the exchange of views and experiences on best practices and common concerns regarding the effective implementation of existing commitments, especially in the field of co-ordination of policy and harmonisation of procedures as well as the effectiveness of aid. They also helped to facilitate the coordinated EU input to the Monterrey and Johannesburg conferences, noted above. This forum is likely to play a key role in ensuring the smooth and effective integration of the EU's new Member States, following enlargement, within the Community's development policy.

1.4.2.4 Tackling Coherence, Coordination and Complementarity at the Programming Stage

The Country Strategy Papers (CSP), backed up by the work of the inter-service Quality Support Group and the establishment of country teams, have become the central mechanism for strengthening policy coherence with other Community policies at country level and for enhanced co-ordination and complementarity with Member States. In finalising CSPs and RSPs, the Commission made extensive efforts to co-ordinate the CSP process with other actors. A survey carried out by the Commission revealed that EC Delegations in partner countries had played a very active role in the co-ordination process in the field. Of the donors present in the country, all EU Member States were systematically invited to participate in the co-ordination/complementarity exercise and in 55 % of the cases all non-EU donors present were invited as well. This process involved the organisation of consultative fora together with the partner countries and extensive dialogue with Member States. Non-State Actors (NSAs) were, for the first time, directly involved in the programming of Community aid.

Another positive initiative during 2002, from the Council, was the decision to establish common country fact files. These could form the basis for more comprehensive common analysis and joint programming at field level. The purpose is to share information, to facilitate co-ordination and enhance complementarity between Member States and the Community, and between Member States themselves. The intention is to have a document that is short, inclusive but with specific information. The fact file will try to list all EU policies affecting the EU and the country concerned, although emphasis with many countries will be on development co-operation.

1.5 Working with Others

As well as improving coordination and complementarity within the EU, the Commission also recognises the importance of similar efforts with respect to other donors and international organisations.

The OECD Development Assistance Committee recognised that the European Commission can add value to this effort in its 2002 Peer Review of the European Community. [24] The re-enforcement of delegations in developing countries as part of the de-concentration process should enhance the Community's capacity in this area further.

[24] The Peer Review is available from www.oecd.org/DAC

In 2002, development issues were put high on the agenda of the joint EU-Australia, EU-Canada, EU-Japan and EU-USA Summits. This created a better momentum for dialogue, in particular on issues linked to the UN Conferences, the New Partnership for African Development (NEPAD), Afghanistan and about the level and effectiveness of ODA. Specific initiatives launched in 2001 with Norway and Japan, building on previous dialogue, staff exchanges and common assessments, are leading to the definition of operational guidelines.

1.5.1 Harmonising Donor Practices

During 2002, the Commission has continued to actively support international initiatives aimed at harmonising donor practices, which are taking place in several different fora.

In particular, the Commission has welcomed the work of the OECD/DAC Task Force on Donor Practices. This Task Force, set up in 2000 to identify and document donor practices to reduce the burden on the capacities of partner countries to manage aid and lower the transaction costs involved, completed its work on schedule at the end of 2002. The six Good Practice Reference Papers produced by this Task Force set effective benchmarks for improved harmonisation, and cover all phases of the project cycle. [25] They were a major input to the High Level Forum on Harmonisation in February 2003 in Rome, which brought together the work of the DAC Task Force and ongoing work by the Multilateral Development Banks.

[25] The 6 papers are: Framework for Donor Co-operation; Country Analytical Work and Preparation of Projects and Programmes; Measuring Performance in Public Financial Management; Reporting and Monitoring; Financial Reporting and Auditing; and Delegated Cooperation. See: www.oecd.org/DAC

The Commission has also participated in harmonisation initiatives in the G8 context, including the work of the G8 Education Task Force. This has sought to promote harmonisation of procedures through the definition of a Code of Conduct. This Code of Conduct was drawn up by a Group of Experts from EU Member States set up by the Commission, and its implementation was recommended by the Council.

The Commission has also been involved in discussions on harmonisation of procedures surrounding Country Strategy papers, through bilateral contacts with the UNDP, the World Bank and certain EU Member States. Initiatives include the streamlining of strategy documents and procedures (such as analysis of the economic and social situation, donor matrix, indicators), mutual consultation of all key donors in each institution's strategy process, active co-operation in the areas covered by the building blocks common to all CSPs and synchronising the timing of country programming and strategy preparation and review processes.

1.5.2 Enhancing the Partnership with the United Nations

1.5.2.1 Building Strategic Partnerships

Extensive upstream policy dialogues at various levels took place in 2002 with the UN Agencies, Funds and Programmes. Building on the momentum of the Communication on "Building an Effective Partnership with the United Nations in the Fields of Development and Humanitarian Affairs" adopted in 2001 [26], the Commission has increased its involvement with the UN family through the establishment of strategic partnerships with selected UN Agencies, Funds and Programmes. Ongoing work towards selection of strategic partners should be finalised in 2003 and partnership agreements will be established with the selected UN bodies. This should allow the Commission to work with the UN in a more efficient and coherent way in the priority areas of the Community's development policy.

[26] COM(2001)231

1.5.2.2 Improving the working framework

Revision of the 1999 EC-United Nations Framework Agreement for EC funding of UN projects was completed during 2002. The agreed text will be submitted for approval by both negotiating parties and is expected to enter into force in the first quarter of 2003. The revised agreement reflects the new Financial Regulation of the Commission and offers a more flexible instrument for co-operation with the UN system. In particular, it allows funding of multi-donor programmes of the UN, in accordance with the notion of joint management enshrined in the Financial Regulation. This is also one important prerequisite for setting up strategic partnerships.

1.5.3 Scaling Up Collaboration with the International Financial Institutions

Collaboration between the European Community and the World Bank and the International Monetary Fund has become increasingly important for several reasons. Firstly, the Commission is working closely with these bodies in taking forward the PRSP approach, as outlined above. Secondly, in the context of the Doha-Monterrey-Johannesburg Conferences, the Bretton Woods Institutions, together with the UN and the EU, have been a major force for multilateralism. Thirdly, the European Community remains the largest contributor to trust funds administered by the World Bank, including the Heavily Indebted Poor Countries (HIPC) debt relief trust fund. Financing Proposals for contributions to the Global Health Fund and the Afghanistan Reconstruction Fund were prepared in 2002.

1.5.3.1 Adopting a new Framework Agreement with the World Bank Group

The negotiations to revise the EC-World Bank Group Framework Agreement of 2001 were completed in 2002. In parallel to the negotiations, a first set of annual consultations on issues of common interest under the agreement were organised (mainly implementation of World Bank Group trust funds financed by the European Community). There was broad participation on both sides, which allowed for a better communication of Community interests and objectives to the World Bank Group, and a better overview of its plans and priorities for the near future. Similar annual consultations will begin with the UN in 2003.

1.5.3.2 Cooperation on Difficult Partnerships and Financial Management

In October 2002, the Commission co-organised a workshop with the World Bank, the OECD/DAC and UNDP on "difficult partnerships" in Paris, with the aim to improve and harmonise donor responses in situations where the partnership paradigm does not work. For example, countries where the policy environment is poor.

Co-operation on support to public finance gained momentum under the joint Public Expenditure and Financial Accountability (PEFA) programme, which is currently supported by the World Bank, DFID and the Community (also through a Trust Fund).

1.5.3.3 Strategic Partnership with Africa

The Commission has a long-standing involvement in the Strategic Partnership with Africa (SPA), the informal forum set up in 1988 that brings together bilateral and multilateral donors to support Africa-led efforts to reduce poverty. This forum has taken the lead in efforts to streamline donor procedures and monitor adjustment programs for efficacy in poverty reduction, as well as review donor practices in support of reform and provides intellectual leadership on a range of development issues. During the Autumn of 2002, the Commission co-led with the UK Department for International Development three action learning missions to Ethiopia, Rwanda and Senegal. The objective of these missions was to assess and give momentum to the harmonisation of donor support around national poverty reduction strategies and budget cycles. The implementation of this framework will be at the heart of SPA's work in the next few years: the 6th phase of the SPA (2003-2006) has as its main focus the harmonisation of donor support around poverty reduction strategies, in particular budget and sector support.

Strategic Partnership with Africa (SPA) - Action Learning missions: main findings

Countries have made efforts in developing participatory poverty reduction strategies

Donors' alignment behind the Poverty Reduction Strategies (RSs) has been so far disappointing

Need for Governments to operationalise their PRSs, ensure link with budget cycle and sector strategies, and annualise the list of policy measures and indicators

Urgent need for donors to start aligning their programming, reviewing and monitoring processes with the national PRS and budget cycle.

1.6 The Path to the Future

This chapter has highlighted a range of different factors that have affected the context in which the Community's development cooperation policy and external assistance operates during 2002. These have provided new strategic challenges but also new opportunities. In the years ahead, an enlarged EU should be even better placed to play a leading role in taking forward the global agenda for growth, poverty eradication and sustainable development that was confirmed in 2002.

2. THE REFORM PROCESS - STEPS FORWARD IN 2002

On 16 May 2000, the Commission launched a programme of reform of the management of external assistance [27]. Among its main objectives:

[27] SEC(2000)814 of 16 May 2000 - Communication from the 'Relex' Commissioners: Mr Patten (External Relations), Mr Nielson (Development), Mr Verheugen (Enlargement), Mr Lamy (Trade) and Mr Solbes Mira (Economic & Monetary Affairs)

- Improve the quality of projects and programmes;

- Reduce the time needed for implementation;

- Ensure that procedures for financial, technical and contractual management conform to the highest international standards

The nature of the task requests considerable efforts as the several programmes the EC must deal with have, each of them, a different character and specific focus, according to the specific regulation of the programme. Within these limits, significant measures have been launched and implemented in 2002 in order to improve the quality of the EC managed assistance programmes and projects. The different "Quality Support Groups", the improved financial management and, more particularly, the advance of the deconcentration process are among the important steps taken in 2002.

2.1. QUALITY IMPROVEMENT

Programming is now centred on Country/Regional Strategy Papers (CSP/RSP) which set out a 'strategic framework' for the EC's co-operation priorities in a given country or region [28].This is the first time that the Commission has set up a coherent framework for its relations with third countries covering both development assistance and other essential relevant Community policies (the 'policy mix').

[28] SEC(2000)814, SEC(2000)1049 of 15 June 2000, and Conclusions of 10 November 2000 Development Council

In 2001, the Commission initiated the process of establishing Country and Regional Strategy Papers (CSP) and Regional Strategy Papers (RSP) for partners in all concerned regions (ACP, ALA, CARDS, MEDA, TACIS). These new strategies have been developed in collaboration with national governments, Member States, other bilateral multilateral donors and, wherever possible, with representatives of civil society [29]. The CSP process has a very broad and ambitious scope and covers more than 160 partner countries and 8 partner regions. As of the end 2002, the Commission had finalised and made public 102 new CSPs and 14 RSPs (available on the Internet [30]). A number of additional strategies are well advanced in the drafting process and will be published shortly. These programming documents show how the Commission's external assistance is to be implemented over the period 2002 - 2004/07 (applicable time period depending on the region).

[29] Consultation of Civil Society is an obligation under article 2 of the Cotonou Agreement

[30] CSPs and RSPs for ACP Countries: http://europa.eu.int/comm/development/ strat_papers/index_country_fr.htm http://europa.eu.int/comm/development/ strat_papers/index_region_fr.htm CSPs and RSPs for ALA, MED, CARDS, TACIS: http://europa.eu.int/comm/ external_relations/sp/index.htm

A Progress Report on the Implementation of the Common Framework for Country Strategy Papers ("CSP Framework") [31] was prepared at the request of the Council [32] and was presented in November 2002. It covers the drafting process of the "first generation" of CSPs/RSPs. Special attention is paid to co-ordination with the Member States (both in the field and in Brussels).

[31] Commission Staff Working Paper, SEC (2002) 1279, 26.11.2002

[32] Council conclusions on the Common Framework for Country Strategy Papers of 10 November 2000, point IV

Challenges ahead include:

- putting in place a comprehensive CSP review mechanism,

- taking into account new EC/EU policy initiatives (e.g. anti-terrorism, migration issues and initiatives emerging from the Doha process and follow-up to the World Summit for Sustainable Development)

- improving the focus on results and performance and

- reducing transaction costs for partner countries by working towards the harmonisation of donor procedures surrounding country strategies.

An inter-service Quality Support Group (iQSG) has been created. Its main task has been to screen and assess draft Country and Regional Strategy Papers and Indicative Programmes and propose any necessary improvements in order to ensure a consistently high quality. In order to achieve maximum impact, the iQSG intervenes at an early stage in the programming process. This screening revealed that even though a qualitative leap in multiannual programming has taken place, all the possibilities that the new Framework provides were not fully developed. Certain typical difficulties in the CSP process were to achieve sufficient concentration of aid, to make a fully-fledged policy coherence analysis, operationalising the concept of "Linking Relief, Rehabilitation and Development", identifying performance indicators and mainstreaming policies for governance and Human Rights, gender and environment.

The iQSG has also drafted Guidelines on the implementation of the Common Framework for Country Strategy Papers, organised various training seminars on programming and established a website on the Commission's Intranet to improve the internal communication between all involved in programming.

EuropeAid Co-operation Office has put in place various Quality Support Measures geared at ensuring that work is of good quality, fulfils the procedural and substantive requirements and embodies state of the art approaches in the relevant fields. Some of the key measures adopted in 2002 are the creation of the Quality Support Groups at regional level, the establishment of ten (10) Thematic Networks on the relevant priority areas identified by Commission and Council and the development of guidelines and other operational documents. These are also being translated in training programmes available both at headquarters and Delegations. In 2002, the Budgetary Support Thematic Network has successfully contributed to the development of a Methodological Guide and its related training programme. In addition to the Guide on Budgetary Aid, a Guide on Sector Approaches has been finalised in 2002.

2.1.1. Orientation debate Commission/Council

The reform process has been accompanied by the search for an improved match between political priorities and budgetary allocations. Discussions began at the September 2000 informal meeting in Evian and continued at the January 2001 GAC meeting. The discussion in 2002 evolved around such questions as integrating development and foreign policy objectives, improving flexibility and responsiveness to new situations, balancing the need for speedy delivery of external assistance and the quality of such assistance, and how to improve the impact of the Union's external action in different regions. It was particularly suggested that the Commission should continue to reflect on the concept of regional strategies, the development of Country Fact Files and the strenghtening of the role of the EC delegation by the "decentralisation" process.

2.2. Improving financial management and performance

The 16 May 2000 Communication envisaged a specific initiative to screen all commitments made prior to 1995 and all dormant commitments dating from 1995/96/97.

The total stock of opened commitments (budgetary and EDF commitments) has been reduced at the end of 2002 to the equivalent of 3.8 times the annual budget in terms of payments compared to 4.7 times at the end of 1999. Only part of the total stock of RAL has been considered as abnormal (this part represented 14% at the end of 2002 and 21%, if measured at 1st January 2003, with budget year 1997 added to "old commitment".

Budgetary commitments : By the end of 2002, the level of budgetary commitments made prior to 1995 (old commitments) had been reduced to EUR224 million (a reduction of 80%) compared to EUR1,092 million on 23 November 1999,when a first inventory of old commitments was made. . Moreover, by the end of 2002, the level of dormant commitments (including those from 1999) had been reduced to EUR634 million (compared to EUR1350 million on 31 December 2000).

EDF commitments : the level of EDF commitments made prior to 1995 had also been reduced from EUR901 million on 31 December1999 to EUR363 million by the end of 2002 (a reduction of 60%). The situation of dormant commitments had been reduced to EUR449 million on 31 December 2002 (compared to EUR536 million on 31 December 2000).By 1 November 2002, the level of budgetary commitments made prior to 1995 had been reduced by 76% compared to 23 November 1999 (when a first inventory of old commitments was made), a reduction of some EUR831 million. Moreover, by 1st November 2002 the level of dormant commitments (including those from 1999) had been reduced to EUR722,28 million (compared to EUR1350 million on 31 December 2000). EDF commitments made prior to 1995 had also been reduced from EUR901 million in 1999 to EUR432 million by November 2002.

In order to reduce the time lag between commitments and payments and rationalise the execution of the budget, one of the main actions undertaken by EuropeAid Co-operation Office has been to try to spread its operations more evenly across the financial year. Important progress has been reached in 2002 in this field. About 41% of the available credits have been committed in the last quarter of the year which represents a substantial improvement compared to 2001 result when around 50% of the credits were committed in the last 3 months of the year.

2.3. Further reunification of the project cycle : EuropeAid co-operation Office's second year

Since 1st January 2001, the geographic Directorates-General (DG External Relations and DG Development) are in charge of programming and strategy whilst EuropeAid Co-operation Office is responsible for the remainder of the project cycle (from identification of projects to ex-post evaluation). This reorganisation has led to a corresponding transfer of staff and responsibilities. An Interservice Agreement was signed in June 2001, which clarifies the roles and responsibilities of the three Directorates General most closely involved in the management of external assistance.

The EuropeAid Co-operation Office operates under a Board of Directors composed of the five Relex Commissioners [33]. The Board meets at least once every quarter. The Board approves the Office Mission Statement, the annual working plan (the Management Plan 2003 of the EuropeAid Co-operation Office was approved in January 2003), the annual budget programming, and the annual activity report. Furthermore, it has specific responsibilities in the field of evaluation: it approves the annual evaluation programme, takes stock of evaluation results and formulates recommendations.

[33] Mr Patten (Chairman), Mr Nielson (Chief Executive Officer), Mr Verheugen, Mr Lamy and Mr Solbes Mira (Members of the Board)

All managerial posts in the EuropeAid Co-operation Office have been filled, as have most other vacancies following a large-scale recruitment exercise in February 2001. During 2002, due to human turnover, 7 managerial posts have been filled and 215 officials were recruited.

The Commission took on responsibility for those tasks previously carried out by the 49 Technical Assistance Offices (TAOs), whose contracts were terminated in 2001 or were not renewed. This required the recruitment of 260 additional auxiliary staff to work in Headquarters and 70 individual experts to work in Delegations. Furthermore, the EuropeAid Co-operation Office was still benefiting in 2002 from the services of 3 Technical Assistance Offices, for the management of individual experts throughout the world and of European Customs Officers in the Balkans. In 2002, the decision was taken to dismantle these TAOs and to internalise the management, to comply with the new rules on outsourcing and in anticipation of the new Financial Regulation. Some 30 auxiliary staff were recruited in September and October 2002 to work in Headquarters on the preparation of the take over from the 3 TAOs in order to be fully operational in January 2003. This management is done locally with the support of the Delegations, which have been reinforced with 26 local agent posts as far as the management of individual experts is concerned. As from 1st January 2003, there are no more Technical Assistance Offices working for EuropeAid.

The profiles of the official and contractual staff recruited cover the whole range of expertise needed by headquarters and delegations to implement external aid in accordance with the objectives of quality and speedy delivery set by the Reform (development economists, sectoral experts, finance and contract professionals, support staff, etc.). A training package centred on programme management has been developed and implemented to improve the skills of current staff.

The EuropeAid Co-operation Office has developed a series of indicators aimed at measuring progress in implementing the principal elements of the reform programme: improved execution of the budget (for example, 75% of invoices paid within 60 days), reduction in old and dormant commitments, rationalisation of budget lines, deconcentration, etc. These indicators are used to compile a regular progress report on the management of the EuropeAid Co-operation Office, which is presented to the Board.

2.3.1. Budget and EDF implementation

Overall results of 2002 budget implementation are very satisfactory. Since the beginning of the year, EUR3877 million have been committed (compared with EUR3641 million in 2001) and EUR3327 million paid (an increase of EUR152 million compared with 2001).

With regard to the EDF, the results are in line with the latest forecasts, the level of commitments amounting to EUR2114 million and of payments to EUR1902 million.

The stock of opened commitments has been stabilised in absolute terms, at the level of EUR19,8 billion (- EUR40 million compared with 2001). Expressed in payment years, this stock remains stable at the level of 3,8 years, compared to 4,6 years at end 1999.

2.3.2. Simplification and harmonisation of contractual and financial procedures

In addition to these measures, the EuropeAid Co-operation Office has implemented simplified and harmonised contracting procedures (reduced in number from 46 to 8) through the production of the Practical Guide to EC external aid contract procedures. Standard documents have also been created, and should now be applied to all Community programmes. A new general framework has been adopted for the European Development Fund that is very similar to the one used for projects financed from EC funds. These measures have reduced the time needed to complete the tendering process and facilitated the implementation of projects. Significant progress has been made towards greater transparency. After an initial surge of interest, the EuropeAid Web site now consistently achieves around 1 million successful page requests per month. The site includes information about contracts and procedures for all the external aid programmes. A survey of those accessing these pages launched before the end of 2001 has shown a high level of satisfaction among users.

Furthermore, a framework agreement was concluded with the World Bank, and a revised framework agreement negotiated with the United Nations, in order to enhance the co-operation with these institutions.

The 16 May Communication also foresaw an harmonisation of budget lines, and these have now been reduced from 64 (in 2000) to 53 (in 2002). This effort has been pursued in 2002, and the Commission proposed in the PDB 2003 a further reduction to 49 budget lines. However, the Parliament did not accept all Commission proposals and also decided to create 4 new budget lines. Eventually, the number of lines to be managed by the Office will be slightly increased.

In 2002, the EuropeAid Co-operation Office has established a Finance Guide for the external actions financed from the General Budget of the EC and updated the User Guide to the financial procedures of the 7th and 8th EDF. Finally, the new Financial Regulation [34] was adopted by the Council on the 25 June 2002 and came into application on 1 January 2003. Among other changes, the new provisions in the section on external actions introduce a "sunset clause" requiring that all contracts implementing a Financing Agreement, except those concerning audit and evaluation, are signed within three years from the date of adoption of the budgetary commitment.

[34] Council Regulation EC n° 1605/2002 of 25.06.2002

2.3.3. Management systems : CRIS

During 2002, the EuropeAid Co-operation Office completed the integration of the numerous information systems used for the programmes financed via the budget into one single harmonised system - CRIS (Common Relex Information System). Therefore, as from January 2003, the management of all programmes financed via the budget is supported by one management system. CRIS is not just containing financial data - but also a wealth of non-financial information of relevance for the implementation and is therefore superior to the previous information systems used. It links up electronically Headquarters and Delegations and allows for on-line registration, communication and reporting of data. CRIS will significantly facilitate the Commission's ability to provide on-time financial data to Council and Parliament. Data that will be fully DAC compatible. The transfer of data from the old systems into CRIS was not only technically complex but also very resource intensive because the quality of the historical data in many cases had to be verified, corrected and completed in view of the stricter requirements of CRIS. With this, one of the key initiatives of the reform of the external assistance has been successfully completed. Efforts will continue in 2003 to integrate also the European Development Fund in CRIS.

2.4. Deconcentration

The deconcentration of the management of external aid to the Delegations of the Commission is a key element of the reform of the management of the external assistance. The principle is that what can be better managed and decided on the spot, in the country concerned, should be done there, and not in Brussels.

The Commission has set itself an extremely tight timetable. The objective is to extend deconcentration to all the Delegations before the end of 2003, in three successive waves: 21 Delegations have been covered in 2001, 26 to be covered in 2002 and the remaining 30 Delegations in 2003, all of them in ACP countries.

2.4.1. Preparing for Deconcentration

During the first quarter of 2001, a harmonised concept of deconcentration was defined, covering all the geographical programmes. The principles on which this was based remain valid and are recalled below:

- in time, deconcentration will concern all programmes;

- deconcentration will concern all the phases of the project cycle;

- deconcentration requires the provision of substantial additional resources (human and material);

- the role of Headquarters will evolve towards a role of co-ordination, quality supervision, management control, technical support and improvement of working practices.

At a practical level, deconcentration involves the following changes for the Delegations:

- a more active contribution to programming, although final responsibility will remain with the External Relations or Development DGs according to the geographical area;

- direct responsibility for identification and appraisal stages, with methodological and technical support by the EuropeAid Co-operation Office, which will also be responsible for final quality control on financing proposals and for taking these through the decision process (management committee procedures, etc);

- direct responsibility for contractual and financial implementation - this is subject to the strict respect of procedures, and requires secure access to the financial and accounting management systems at Headquarters;

- direct responsibility for technical implementation requiring technical expertise on the spot and the possibility to call on more specialised advice from headquarters.

Much of what has been done to render the first phase operational will also serve to facilitate the extension of the process to the remaining Delegations, such as the adaptation of information systems for deconcentrated management, developing or updating manuals of procedures, developing guidelines on financial circuits and putting in place training programmes. However, much preparatory work will be specific to each Delegation to be deconcentrated, such as the testing of secure computer connections, ensuring suitable office accommodation, and adoption of an organisation chart.

2.4.2. Deconcentration towards the 21 First Wave Delegations

The ambitious objective for 2001 - to carry out deconcentration in 21 Delegations [35] - covered all the geographical areas and therefore programmes of a very varied nature. This was a major exercise, involving the recruitment and training of over 300 staff, finding new office space in all but two Delegations and installing secure computer connections in 19 Delegations. This objective has been fully met and deconcentration is now fully operational in all these Delegations. However, it is worth mentioning that, from October 2002, 114 posts have been made available to launch the second wave and some of these posts may still be used to strengthen first wave Delegations where necessary.

[35] The 21 "first wave" Delegations are: EUROPE: Croatia, Russia ASIA: Indonesia, Thailand, India, China Latin America: Nicaragua Bolivia, Argentina, Mexico, Brazil Africa/ACP: South Africa, Senegal, Ivory Coast, Kenya, Mali, Dominican Republic

2.4.3. Preparation of the Second Wave 26 Delegations and the EC Office in Kabul

The list of 26 Delegations [36] to be deconcentrated in 2002 was established in September 2001. Preparatory work started immediately thereafter and hearings took place from early January.

[36] The "2nd wave" Delegations are :

The outcome of this process for the second wave Delegations can be summarised as follows:

- A total of 418 staff had to be selected, recruited and trained before their posting to the 26 Delegations;

- 24 out of the 26 Delegations have either had to move office or to rent additional office space;

- 18 out of the 26 had no secured computer connection in order to get access to Commission accounting and management information systems.

Despite the magnitude of the operation, the process is on track. 23 Delegations have started to operate in a deconcentrated way in late 2002 or will be ready to start early in 2003 with the new budget year. In the 4 remaining Delegations, problems are mainly of a logistical nature and efforts are under way to resolve these by March 2003.

Deconcentration to the Commission Office in Kabul has also progressed satisfactorily with everything in place to commence deconcentration in January 2003.

As was the case in the first wave, it appears that the timely availability of sufficient office space represents, in many instances, the binding constraint for the start of deconcentration. This is particularly true when temporary solutions for the installation of a secured computer connection cannot be found. In some cases there has been a shortage of suitable candidate particularly for official posts in the finance and contract sections.

2.4.4. Preparation of the Third Wave of 30 Delegations [37]

[37] The "3rd wave" Delegations are ACP: Angola, Barbados, Botswana, Burundi, Central African Republic, Rep. Congo Democratic Republic of Congo, Eritrea, Fiji, Gabon, Ghana, Guinea-Bissau, Guyana, Haiti, Jamaica, Lesotho, Malawi, Mauritius, Mauritania, Mozambique, Namibia, Nigeria, Uganda, Papua New Guinea, Rwanda, Sierra Leone, Sudan, Chad, Zambia, Zimbabwe

Attention will now shift to the third wave delegations, for which technical workshops took place in July 2002 with the Heads of Delegations concerned. Staffing requirements, accommodation capacity and IT issues were analysed in detail. Lessons learned from the 1st and the 2nd waves of deconcentration will be taken into account in the 3rd wave.

With the ratification of the Cotonou Agreement and the finalisation of a strategy to provide sustainable financing for deconcentration to ACP Delegations, the first Delegations of the third wave are expected to start operating under deconcentrated modalities by the end of 2003.

2.4.5. Deconcentration of thematic and horizontal budget lines

Progress has also been achieved on the deconcentration of the thematic and horizontal lines. The Commission services have recently adopted modalities for the deconcentration of the Food Security budget lines and have agreed on the corresponding human resources needs. Deconcentration to all Delegations concerned [38] is scheduled to be implemented between March and December 2003.

[38] Kenya, Bangladesh, Burkina Faso, Ethiopia, Georgia, Madagascar and Niger

Preparatory work on the deconcentration of the Human Rights micro-projects has begun and effective deconcentration can be expected by April 2003.

For rehabilitation and refugee budget lines, the decision to deconcentrate has been taken in December 2002 and preparations are in hand to render this effective as quickly