EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 22.12.2008 
SEC(2008) 3075 
  
COMMISSION STAFF WORKING DOCUMENT 
ANNEXES TO 
 
2007 ANNUAL REPORT ON PHARE, TURK EY PRE-ACCESSION INSTRUMENT, 
CARDS AND TRANSITION FACILITY 
  
COUNTRY SECTIONS & ADDI TIONAL INFORMATION 
  
[COM(2008) 880 final] 
 
EN 2   EN TABLE OF CONTENTS 
List of Acronyms............................................................................................................... ......... 5 
Part I: Country section........................................................................................................ ........ 7 
1. Albania ..................................................................................................................... .... 7 
1.1. The year in review........................................................................................................ 7 
1.2. Financial assistance in 2007....................................................................................... 10 1.3. Results and impact ..................................................................................................... 12 2. Bosnia and Herzegovina ............................................................................................ 15 2.1. The year in review...................................................................................................... 15  
2.2. Financial assistance in 2007....................................................................................... 18 2.3. Results and impact ..................................................................................................... 21 3. Bulgaria.................................................................................................................... .. 24 
3.1. Summary ................................................................................................................... . 24 
3.2. Phare/pre-accession financial and Transition assistance in 2007 .............................. 24 
3.3. Results and Impact ..................................................................................................... 27 4. Croatia..................................................................................................................... ... 29 
4.1. The year in review...................................................................................................... 29  
4.2. Pre-accession in 2007................................................................................................. 29 4.3. Results and impact ..................................................................................................... 31 5. Cyprus ...................................................................................................................... .. 35 
5.1. Summary ................................................................................................................... . 35 
5.2. Pre-accession financial and Transition assistance in 2007 ........................................ 35 
5.3. Results and Impact ..................................................................................................... 35 6. Czech Republic .......................................................................................................... 37 6.1. Summary ................................................................................................................... . 37 
6.2. Pre-accession financial and Transition assistance in 2007 ........................................ 37 
6.3. Results and Impact ..................................................................................................... 37 7. Estonia..................................................................................................................... ... 39 
7.1. Summary ................................................................................................................... . 39 
7.2. Pre-accession financial and Transition assistance in 2007 ........................................ 39 
7.3. Results and Impact ..................................................................................................... 40 8. The former Yugoslav Republic of Macedonia........................................................... 41 8.1. The year in review...................................................................................................... 41  
8.2. Financial assistance in 2007....................................................................................... 41 
8.3. Results and impact ..................................................................................................... 44 
 
EN 3   EN 9. Hungary..................................................................................................................... . 45 
9.1. Summary ................................................................................................................... . 45 
9.2. Pre-accession financial and Transition assistance in 2007 ........................................ 45 
9.3. Results and Impact ..................................................................................................... 46 10. Kosovo (under UNSCR 1244/99) .............................................................................. 47 10.1. The year in review...................................................................................................... 4 7 
10.2. Financial assistance in 2007....................................................................................... 48 10.3. Results and impact ..................................................................................................... 51  
11. LATVIA..................................................................................................................... 54 
11.1. Summary .................................................................................................................. .. 54 
11.2. Pre-accession financial and Transition assistance in 2007 ........................................ 54 
11.3. Results and Impact ..................................................................................................... 54  
12. Lithuania .................................................................................................................. .. 55 
12.1. Summary .................................................................................................................. .. 55 
12.2. Pre-accession financial and Transition assistance in 2007 ........................................ 55 
12.3. Results and Impact ..................................................................................................... 56  
13. Malta ...................................................................................................................... .... 57 
13.1. Summary .................................................................................................................. .. 57 
13.2. Pre-accession financial and Transition assistance in 2007 ........................................ 57 
13.3. Results and Impact ..................................................................................................... 58  
14. Montenegro ................................................................................................................ 5 9 
14.1. The year in review...................................................................................................... 5 9 
14.2. Financial assistance in 2007....................................................................................... 60 14.3. Results and impact ..................................................................................................... 62  
15. Poland..................................................................................................................... .... 65 
15.1. Summary .................................................................................................................. .. 65 
15.2. Post-accession financia l assistance in 2007 ............................................................... 65 
15.3. Results and Impact ..................................................................................................... 65  
16. Romania .................................................................................................................... . 66 
16.1. Summary .................................................................................................................. .. 66 
16.2. Phare/pre-accession financial and Transition assistance in 2007 .............................. 66 
16.3. Results and Impact ..................................................................................................... 69  
17. Serbia..................................................................................................................... ..... 71 
17.1. The year in review...................................................................................................... 7 1 
17.2. Financial assistance in 2007....................................................................................... 73 
 
EN 4   EN 17.3. Results and impact ..................................................................................................... 77  
18. slovakia ................................................................................................................... ... 79 
18.1. Summary .................................................................................................................. .. 79 
18.2. Pre-accession financial and Transition assistance in 2007 ........................................ 79 
18.3. Results and Impact ..................................................................................................... 80  
19. Slovenia................................................................................................................... ... 82 
19.1. Summary .................................................................................................................. .. 82 
19.2. Pre-accession financial and Transition assistance in 2007 ........................................ 82 
19.3. Results and Impact ..................................................................................................... 83  
20. Turkey ..................................................................................................................... ... 84 
20.1. The year in review...................................................................................................... 8 4 
20.2. Pre-Accession in 2007................................................................................................ 84 Part II: Additional information on implemen tation and programme management issues ....... 89 
21. Technical and Financial assistance ............................................................................ 89 21.1. Twinning ................................................................................................................. ... 89 
21.2. TAIEX.................................................................................................................... .... 90 
21.3. SIGMA.................................................................................................................... ... 92 
22. Information on multi-country and horizontal programmes........................................ 92 
22.1. Political Criteria ....................................................................................................... .. 92 
22.2. Economic Criteria: IFI Cooperation and Competitiveness ........................................ 98 22.3. European Standards.................................................................................................. 101 22.4. Monitoring and Interim Evaluation.......................................................................... 108 22.5. Ex-post evaluation.................................................................................................... 109  
22.6. Other activities of the monito ring and evaluation function ..................................... 109 
Part III: Financial data....................................................................................................... ..... 110 
23. Phare, Turkey pre-accession and trans ition facility funds by year 1990 – 2007 ..... 110 
24. Phare, Turkey pre-accession and transition facility funds by country 1990–2007.. 112 25. Cards funds by year 2000 – 2007............................................................................. 112 26. Cards funds by country 2000 – 2007 ....................................................................... 113 
 
EN 5   EN LIST OF ACRONYMS  
AC Acceding Country 
BSP Business Support Programme CAP Common Agricultural Policy CBC Cross Border Cooperation  CC Candidate Country  CEB European Development Bank CFCA Central Financing and Contracting Agency CFCD Central Financing and Contracting Department CFCU Central Finance and Contracts Unit CFP Common Forestry Policy CMO Common Market Organisations CPER Country Phare Evaluation Review CPMA Central Programme Management Agency CSO Civil Society Organisation DIS
 Decentralised Implementation System 
EAG Evaluation Advisory Group EAGGF European Agricultural Guidance and Guarantee Fund 
EBRD European bank for reconstruction and development EC
 European Communities 
ECR  European Commission Representation 
EDIS  Extended Decentralised Implementation System 
EFTA European Free Trade Association EIB European Investment Bank ENPI European Neighbourhood a nd Partnerships Instrument 
ESC Economic and Social Cohesion ESF European Social Fund EU European Union FDI Foreign Direct Investment  FIFG Financial Instrument for Fisheries Guidance GDP Gross Domestic Product IA Implementing Agency IACS Integrated Administration and Control System 
IB Institution Building 
 
EN 6   EN IFI International Financial Institutions 
IPA Instrument for Pre-Accession IT Information and Telecommunication JHA Justice and Home Affairs JMC Joint Monitoring Committee KIDSF Kozloduy internati onal decommissioning fund 
MAP Multi Annual Programming MEDA Euro-Mediterranean Partnership NAO National Authorising Officer NAC National Aid Coordinator NDP National Development Plan NF National Fund NGO Non-Governmental Organisation NPA National Programme for the Adoption of the Acquis NP National Programme NPP Nuclear Power Plant OLAF European Antifraud Office 
OP Operational Programmes 
PAO Programme Authorising Officer PAP Pre-Accession Programme PIFCA
 Public Internal Fina ncial Control Agency 
QSG Quality Support Group REACH Registration, Evaluation a nd Authorisation of Chemicals 
RTA Resident Twinning Advisor SF Structural Funds SIGMA Support for Improvement in Governance and Management SME Small and Medium Sized Enterprises SMSC Sector Monitoring Sub-Committee TA Technical Assistance TAIEX Technical Assistance In formation Exchange Unit 
TSE Transmissible Spongiform Encephalopathy UIBE Unallocated Institution-Building Envelope UNDP United Nations Development Programme VAT Value Added Tax  
 
EN 7   EN PART I: COUNTRY SECTION  
1. ALBANIA  
1.1. The year in review 
Political developments  
In 2007, Albania made some progress on democracy and the rule of law, even though the 
political climate remained tense overall.  
Albania's parliament fulfilled its constitutional role and a new president was elected, but 
political parties' lack of will to co-operate con tinued to hold back reforms, particularly in the 
electoral and judicial fields. Albania made some progress in strengthening its government 
structures to implement its EU commitments a nd to address its development needs. There was  
less turn-over in Albania's public administratio n, but there remained widespread weaknesses 
in human resources management. 
In the field of justice, the procedures for evaluating judges improved, the court system was 
rationalised and the execution of judgeme nts somewhat accelerated. However, the 
performance of the judiciary remained poor ove rall. The government took a more strategic 
approach to the fight against co rruption. Anti-corrupti on investigations led to the arrest of a 
number of high-level officials. Howe ver, corruption remained widespread. 
Regarding human rights and the pr otection of minorities, formal instructions to prosecutors 
and judicial police were passed, underlining the need to respect human rights in criminal 
proceedings. Some improvements were made to conditions in detention facilities and most 
pre-trial detainees were transferred to new dedi cated sections in prisons. However, prisons 
remained overcrowded and detention standards poor.  
Albania made some progress on freedom of expression. An action pl an to develop new 
broadcasting legislation was agreed. Steps were  taken to ensure that the public radio and 
television steering committee includes civil society representatives. However, better 
implementation of existing legislation is required. 
Despite a favourable legal framework for civ il society organisations , civil society groups 
remained weak and not sufficiently involved in policy-making. There was some progress on 
strengthening children's and wome n's rights through new legisla tion. Social services improved 
somewhat. Measures to support socially vulne rable people and people with disabilities 
remained limited. As regards property rights, the government adopted a strategy which links 
the processes of initial registra tion of real estate, restitution, compensation and legalisation of 
informally constructed buildings. Better management of restitution and compensation 
accelerated the processing of claims so mewhat, but it remained slow overall.  
Albania took some measures to fulfil its co mmitments on the protection of minorities but 
further improvement was hindered by the lack of sound data on the size and situation of 
minorities. The Roma people continued to face difficult living conditions and discrimination. 
Regarding regional issues and international obligations, Albania continued to foster good 
relations with other Western Balkan and ne ighbouring EU countries, both multilaterally and 
bilaterally. It maintained a constructive position in relation to the Kosovo issue. 
Macroeconomic developments and structural reforms  
Political consensus on the esse ntials of economic policy was generally maintained in 2007. 
Macroeconomic stability was largely achieved.  Economic growth continued to be strong 
despite energy shortages. Inflation remained low. The level of registered unemployment 
 
EN 8   EN (around 15%) continued to decline. Fiscal reve nue performance was broadly in line with 
targets and budget implementation improved. Public  finance reforms advanced further, but 
fiscal risks remained. In general, the macr oeconomic policy mix was adequate. Following 
significant delays in 2006, privatisation gain ed new momentum in 2007. The privately-owned 
banking sector continued to grow. Credit expansion rema ined strong. The regulatory 
framework for banking supervision is well de veloped. Trade integration with the EU 
remained fairly high. 
However, external deficits widened further, mainly due to difficulties in the energy sector. 
Some progress was made as regards the enforcem ent of court rulings and the establishment of 
property rights, but the shortcomings in the j udicial system and law implementation hindered 
the business climate. While company regi stration procedures started to improve, 
administrative inefficiencies hampered market entry and exit. Some pr ogress was achieved in 
the area of supervising financial actors othe r than banks, but there remains scope for 
strengthening it, in particular regarding th e pension industry. Structural unemployment 
persisted. Shortages of qualified staff and poor in frastructure held back  the development of a 
private sector that should make a sustained contribution to the count ry's development. The 
large informal sector, fuelled by persistent w eaknesses in law enforcement and the regulatory 
framework, reduced the tax base, hampered  the government's capacity to implement 
economic policies and negatively aff ected the business environment. 
Progress in meeting the acquis communautaire  
Albania continued to align its legisl ation, policies and capacity with the acquis .  
In the area of the free movement of goods, progr ess in adopting standard s and in accreditation 
was good overall. Capacity for metrology and market surveillance was strengthened, but 
legislative improvements remained pending.  On consumer prot ection the necessary 
improvements to handle complaints and to deal with the settlement of disputes were not achieved. Uncertainties related to property right s continued to discourage establishment.  
Progress was made on customs co mputerisation. This helped Albania to implement trade-
related provisions of the SAA more effectiv ely. Customs revenue continued to rise. The 
administration of taxation was rationalised and progress was made on co mputerisation and on 
handling of taxpayers' appeals. Howeve r, tax collection remained low.  
The Competition Authority (ACA) was strengthene d. It assessed several merger notifications 
and imposed fines for violation of competition rules. The State Aid Department was given 
independence from the Ministry of Economy as  regards reporting. New public procurement 
legislation, more in line with EU standards, was approved. The Public  Procurement Agency 
was strengthened but its administrative cap acity requires further upgrading. Regarding 
intellectual property rights (IPR) , enforcement remained weak.  
In the field of employment and social policie s, the institutional and regulatory framework 
improved with the adoption of a law on labour in spection. However, the capacity of the labour 
inspectorate remained limited and occupationa l health and safety, poor. Budget provisions for 
education were markedly increased. Implemen tation of the national strategies for pre-
university education and vocati onal training started and a ne w law on higher education was 
approved. 
Regarding industry and SMEs, a National Registra tion Centre was estab lished to facilitate 
business registration, and a strategy to promote SME competitiveness was approved. An updated action plan was established to address the informal economy and to remove administrative barriers to investment. Progress on agriculture was limited. Some incentives to 
increase production were introduced, but the competitiveness of the farming sector remained 
 
EN 9   EN low. Compliance with EU veterinary and phyto sanitary standards, required in order for 
Albania to benefit from SAA and Interim Agreement trade concessions, remained poor. 
Regarding environment, some progress wa s made on horizontal legislation, but 
implementation remained weak.  
Progress in the field of transport was lim ited. Albania ratified the European Common 
Aviation Area Agreement and started the implemen tation of the first transitional phase. The 
improvements required as regards the safety of maritime transport were not carried out. In the energy sector, Albania was not able to ensure secu rity of electricity suppl y. This hampered the 
social and economic development of the country. Considerable efforts ar e required to meet 
the requirements of the Energy Community Treaty. 
Market liberalisation in the areas of electr onic communications and information technologies 
remained at an early stage. Regarding financial control, a new law on internal audit was adopted, but an appropriate inspection service was not developed. Progress was reasonable in 
the field of statistics. Most major statistical cl assifications are in place  and comply with EU 
standards. 
In the field of justice, freedom and securi ty, progress was made in some areas. An EU-
Albania visa facilitation agreement was signed. The issuing of  biometric passports in line with 
EU standards and the amendment of the Law on foreigners are issues that remain to be 
tackled. 
New infrastructure, extension of IT links and better inter-agency and cross-border police co-
operation led to improved border control. An integrated border management strategy was 
adopted. Border crossing point infrastructur e nonetheless remained below EU standards. 
Laws on asylum comply with international standards but implementation remained weak. 
Migration checks at borders were somewhat more  effective, but there is still considerable 
room for improvement. 
The banking system was better used to figh t money laundering; most  public administration 
salaries are now paid through banks. However, concrete results in the fight against money 
laundering remained insufficient. Regarding the fight against drugs, co-operation with foreign 
partners improved and the cons truction of proper storage infr astructure for seized drugs 
began. Significant quantit ies of drugs were seized but were still low compared with the 
amounts which are estimated to be trafficked through Albania.  
A new state police law was adopt ed which should help de-politicise the police. The South 
East Europe Police Co-operation Convention, now  ratified, and a strategic agreement with 
Europol provided for intensified internati onal co-operation. Success in investigation and 
prosecution remained hampered by poor commun ication between police and prosecutors.  
Organised crime remained a serious problem, ev en though a number of high-profile organised 
crime arrests were made and police response to serious crim es improved. New tactical and 
investigative equipment was introduced. Co-opera tion with Interpol also improved. However, 
many international arrest requests were not gi ven proper follow up. Effo rts against organised 
crime remained hampered by corruption and w eak witness protection. Albania continued to 
investigate and prosecute traffi cking in human beings vigorousl y. However, Albania remained 
a significant transit country. Few victims were willing to testify against traffickers, due to 
weak witness protection. Poor co-ordination hampered implem entation of the national anti-
trafficking strategy. 
Counter-terrorism structures in the police and the intelligence service co-operated better and 
co-operation with international actors was good. However, equipment and training for counter-terrorist analysts and i nvestigators remained insufficient.  Efforts to revise the law on 
 
EN 10   EN protection of personal data star ted, but legislation and structur es do not yet meet European 
standards. 
1.2. Financial assistance in 2007 
Programmes launched  
As from 2007, the CARDS instrument has b een replaced by the new Instrument for Pre-
accession Assistance (IPA). No new CARDS programmes were launched. 
Overview of programmes implemented  
In 2007, particular emphasis was given to progress in the implementation of the 2004 
programme in order to finalise contracting for this programme before the contracting deadline 
in September 2007. By its expiry date in September 2007, 94% of CARDS 2004 funds had 
been contracted.  
The area of Justice and home Affairs remain ed an important area of focus. Programmes 
supported the renovation of the St ate Publication Centre, the de velopment of investigation 
techniques for the benefit of law enforcement bodies, the provision of modern equipment to 
the Serious Crimes Court and the High Council of  Justice, the establishment of a Juvenile 
Justice System and investments to improve c onditions in Albanian pr isons. Support was also 
provided to the training of cour ts on commercial matters, th e renovation of Border Control 
Points and the strengthening of the capacity of the Albanian police forces. Substantial 
technical assistance in the fi eld of justice, police and customs was provided through 
PAMECA, EURALIUS and CAFAO respectively.  
Assistance in the area of democratic stabilisation  concentrated its efforts on the creation of a 
modern Civil Registry system in  close cooperation with the Or ganisation for Security and Co-
operation in Europe, the Council  of Europe, Norway and the US. Further programmes were 
implemented to support the development of civil society and the integra tion of marginalised 
persons. 
As regards administrative-capacity building , the programme continued to support the 
implementation of public administration reform a nd the external audit ca pability. Assistance 
was provided to the Ministry of  European Integration in or der to build capacity for the 
coordination of the Stabilisation and Asso ciation Agreement. CARDS assistance also 
provided support to line minist ries for EU programming and updating the National Plan for 
the implementation of the SAA. 
As regards economic and social development , the local community development programme 
helped improve the living conditions of the target ed rural population of Al bania, in particular 
in the less developed region of Kukes in North East Albania. Through the internal market 
programme, assistance was provi ded to support standards, cer tification, accre ditation and 
metrology, complemented by activities to impr ove market surveillance and consumer 
protection in Albania. 
Support was also provided for vocational education and training (VET) and higher 
education  in order to improve the quality of trai ning opportunities availa ble. CARDS assisted 
the preparation of a separate VET strategy in order to improve the quality of VET and the implementation of a new Albanian Qualificati ons Framework Law. Investments were also 
made in equipment and infrastructure to im prove regional vocational training centres and 
schools. Assistance was also provided to hi gher education through the TEMPUS programme 
in order to modernise governance at universi ty level, improve curr icula and develop the 
quality of higher education. 
 
EN 11   EN In the area of environment and natural resources , the development of environmental 
monitoring systems, the improvement of h azardous waste management systems and the 
establishment of a plan for the sustainable a nd integrated development of the Tirana-Durres 
region were the priorities. 
At the end of 2007, contracting rates for th e CARDS 2005 and 2006 programmes had reached 
45% and 11% respectively.  
Cards management performance  
In 2007, a total of € 52.3 million was contracted  and a total of € 26.3 million was paid.  
The performance in implementing the 2004 CARDS programme was overall satisfactory in 
2007, as a very significant part of the progr amme was contracted in 2007. However, this 
effort led to rather limited contracti ng for the 2005 and 2006 CARDS programmes with 
contracting rates for CARDS 2005 of  45 % and for CARDS 2006 of 11 % 
Albania: Status of financial assistance at  the end of December 2007 (in million €) –
CARDS/IPA annual national programmes  
        
  Allocated  Contracted RAC  % contracted Paid  RAL  % paid
CARDS 2001 33.5 30.72 2.78 92% 29.16 4.34 87% 
CARDS 2002 42.9 42.42 0.48 99% 38.61 4.29 90% 
CARDS 2003  38.5 38.26 0.24 99% 30.32 8.18 79% 
CARDS 2004  62.0 58.02 3.98 94% 21.56 40.44 35% 
CARDS 2005  40.2 18.15 22.05 45% 8.63 31.57 21% 
CARDS 2006  42.5 4.61 37.89 11% 1.41 41.09 3% 
Total  259.6 192.18 67.42 74% 129.69  129.91 50% 
The implementation of CARDS Information and Communication Programmes, 
Neighbourhood Programmes and Evaluation and Audit Programmes proceeded smoothly.  
In 2007, € 9.2 million were recovered from expi red PHARE programmes. An action plan for 
2008 was prepared in order to  continue this exercise. 
Institution Building highlights  
Support provided to the police sector through the Police Assistance Mission of the EU to 
Albania (PAMECA)  brought the Albanian State Police clos er to EU standards. The mission 
was composed of technical assistance draw n from EU Member States and led to 
improvements in particular as regards: 1) the operation of police struct ures fighting organised 
crime and terrorism, 2) the functioning of the Po lice Academy, 3) the use of IT systems, 4) 
the implementation of the Integrated Border  Management (IBM) strategy and Action Plan, 
and 5) the effectivenes s of community policing. 
Twinning High Council of Justice : Since late 2006 this Twinning (IT/ES) has aimed at the 
enhancement of the independence and performa nce of the country’s judiciary system by 
 
EN 12   EN providing support to the High Counc il of Justice (HCJ) and its In spectorate. Strengthening the 
organisational structure and administrative proce dures of the HCJ and its Inspectorate allows 
better fulfilment of the HCJ constitutional and legal obligations in line with the European 
standards and the requirements of the Stabilisation and A ssociation process. 
A Twinning project to support the Supreme A udit Institution (SAI) commenced in January 
2007. The project aims at the approximation of the SAI to EU standards in  the area of external 
audit, including in preparation for th e future decentralis ation of EU funds. 
Local Community Development Programme : In the light of combining socio-economic 
development needs with European requirements,  this project has been  part of the overall 
regional development strategy revision. The main objective is to improve the living conditions 
of the population in selected re gions through the rehab ilitation of physical, social and cultural 
infrastructure to be implemented in the fram e of the planned sustainable and integrated 
economic and social development. As this proj ect is implemented in a decentralised manner 
by the Albanian authorities, it can  be considered that it also brings benefits in terms of 
improving Albania's implementation capacity and constitutes a test for the future implementation of the Decentralised  Implementation System (DIS). 
1.3. Results and impact 
M&E Reports in 2007 - Lessons Learned
 
During the course of 2007 monito ring of CARDS projects continued to take place. In addition 
to this, an evaluation of selected projects/programmes wa s launched with the aim of 
identifying strengths and wea knesses in their design, perfor mance and management. These 
projects/programmes were selected as a repr esentation of key actions managed by the EC 
Delegation in various sectors. In terms of "l essons learnt", the fo llowing conclusions were 
reached: 
Lessons learnt in relation to projects’ relevance : 
• Relevance was closely linked to adequacy of  basic needs assessment and sustainability 
prospects.  
• The integration of a bottom-up approach and a stronger, more tangible Albanian 
engagement in realising the objectives  would increase relevance of actions. 
Lessons learnt regarding effectiveness : 
• Effectiveness was strongly related to  institutional effect and impact.  
• Good communication and relation ships are indispensable, pa rticularly if focused on 
potential to realise sustainability. 
Lessons learnt regarding efficiency : 
• Efficiency can be improved through setting pr econditions towards beneficiaries (i.e. staff 
being engaged and trained in the course of a project/ programme)  
• Efficiency can be improved through closer  cooperation between the various actors. 
Lessons learnt related to impact : 
• The impact should me measured and measurable  continuously during the life-time cycle of 
projects in order to avoid the fading away of the natural result oriented pressure.  
 
EN 13   EN • Impact can increase if beneficiaries rea lise sustainable improve ments (i.e. through. 
transparent recruitment and selection proce dures and by minimizing massive changes of 
staff) 
Lessons learnt in the domain of sustainability : 
• Sustainability highly depends on quality of the (preferably) joint project/programme 
design, as well as the receptiveness a nd preparedness of beneficiaries.  
• Preconditions should ideally be set to be met prior to and during implementation, 
especially on implementation process after technical assistance provision. 
Lessons learnt in the domain of management : 
• Stronger ownership should be encouraged thro ugh engaging Albanian beneficiaries in the 
management: The “responsibility pays” approach.  
• Use of the Log Frame Methodology as a con tinuous (not as an ad-hoc or merely 
preliminary) managerial tool is indispensable for committed, objective, strict and fair 
management.  
• Managerial assistance should have a coaching character. 
Experiences with the decentralisation of EU fu nds showed that appropriate, timely planning 
and to take due account of the implementation capacities are elements of  crucial importance. 
If this is not done properly, it has detrimental effects on quality of implementation and on the expected results. 
The Local Community Development Programme  (the only CARDS pr ogramme in Albania 
implemented under the decentralised implemen tation system) achieved high commitment and 
disbursement rates and had a significant impact.  
Sectors with positive results
 
Justice, Liberty and Security 
Some progress was achieved as regards police, with the approval of the police law and 
Integrated Border management strategy as major achievements. J udiciary progressed in 
particular as regards juvenile justice reform. Assistance was provided to court administrators. 
Investments under CARDS programme focused on upgrading the penite ntiary and court 
infrastructure (Korca, Vlora).  
European standards 
Albania has continued to make progress in European standard s fields such as customs, 
competition, certification and standardisati on, banking and public procurement. Sustained 
institution building efforts under CARDS have c ontributed to this progress. In the area of 
standardisation, support was provided to increa se administrative and technical capacity to 
prepare the National Standardisation Body to fu lfil the 9 conditions for full membership in 
CEN and CENELEC. Nearly 80% of European No rms were adopted as national standards.  
Vocational Education and Training (VET) 
The capacity of the national, regional and lo cal VET partners was strengthened while VET 
laws have been adopted. A National Qualific ation Framework in line with the Copenhagen 
Process was established and the capacity to  develop curricula was improved with 6 new 
curricula prepared and started to be implemented. A new VET centre was established and is 
properly functioning.  
 
EN 14   EN Success story  
Can you breathe? EU "filters" the oxygen that goes in the lungs of Albanians 
Early in the morning, as he shows up in the window of his home in Kombinat, the eastern 
neighbourhood of Albania’s cap ital, Ergys Baruti, 21 year s, doesn’t struggle enough  to find 
the dump in Tirana. He just follows with his eyes  the trail of this noxi ous white smelly smoke. 
What he believes in these very moments is what  local media say, his city, Tirana is estimated 
to be one of the most polluted cities in the world, behind New Delhi and Beijing. In these very 
moments he understands why his fa ther doesn’t like his brother, Henri, to often play outside 
and he realises that in a few years the inhabi tants of Tirana, including himself will have 
disastrous problems with their lungs. 
Although no reliable data exists, experts said th at deaths due to illnesses caused by pollution 
have increased by 20 percent in Tirana in the pa st two years. According to the Institute for 
Statistics, respiratory system diseases came th ird on the list of causes of death last year. 
As Albania gears up to join the European Uni on, pollution troubles get in the way. Albania is 
facing a humanitarian catastrophe due to grow ing pollution, 10 times above the tolerance 
level set by the World Health Organizations (W HO), according to experts in the country.  
"The biggest guarantee I see for environmental improvement is the politi cal pressure exerted 
by the European Union to improve the policy ma king in this field", said Ermal Dizdari, 
reporter of “Panorama” newspaper on environmental issues.  
To the extent that the quality of data aff ects the quality and formulation of policies, the 
importance of reliable data is clear. The issu e of ill-informed policie s in the environmental 
ambit of Albania is addressed by the EU-funded project “Strengthening of the Environmental 
Monitoring System in Albania”.   
The project aims at building capacities with in the Albanian institutions involved in 
monitoring activities, and to establish an Inte grated System (IEMS) for Albania in line with 
the requirements from the EU, in particular  the reporting requirements of the European 
Environmental Agency (EEA). To this end, 63 monitoring stations have been built all around 
the country checking all aspects of the environment, air, water and soil. Furthermore, the 
setting-up of a national institutional network, en visioning a National Reference Centre and six 
National Laboratories to servi ce the Integrated Environment Monitoring System is at an 
important implementing phase.  
The project is especially active in capacity build ing with respect to these institutions which is 
being pursued in a way as to provide sustainabil ity. Team leader of the project, Gunnar Pritzl, 
emphasises the keenness towards students’ i nvolvement and practical training during 
fieldwork as a means to that end.  
Apart from wanting to leave behind sustainable institutions in terms of human resources, the 
project also aims at financial sustainability and a lesser depe ndence on governmental funds. In 
this respect, the certification and accreditation of these institutions fashioned to operate in 
accordance to EU norms and standards does not only  grant them an authoritative voice in their 
subject matter but also provides them with acce ss to EU and other relevant international 
bodies’ funds.  
The project vastly contributes to Albania’s ad option of the environmen tal acquis, and thus 
consequently to the success of the Stabilisation-Associ ation process.  
 
EN 15   EN  
2. BOSNIA AND HERZEGOVINA  
2.1. The year in review 
Political developments  
In 2007, Bosnia and Herzegovina's progr ess slowed down. Complex institutional 
arrangements, disregard for the Dayton/Pari s peace agreement and nationalist rhetoric 
undermined the country's reform agenda. Lack of  progress on this and other important issues 
continued to delay the signature of the Stabil isation and Association Agreement (SAA), even 
though some positive developments in November allowed the initialling of the Agreement on 
4 December. 
Bosnia and Herzegovina's system of governance continued to involve si gnificant international 
presence. The Office of the High Representati ve/EU Special Representative (OHR) worked 
closely with the European Commission to brin g Bosnia and Herzegovina closer to the EU. 
However, the authorities of Bosnia and Her zegovina did not demonstrate capacity to take 
further political ownership and responsibility. The Peace Implementation Council decided to 
postpone the closure of OHR. 
Following the elections in October 2006, which we re generally in line with international 
standards, the government of Republika Srpska  was formed in November 2006, but the state-
level government and that of th e Federation of Bosnia and He rzegovina needed more than 
four months to be constituted. Little progress was made in improving state-entity co-ordination, and overall performance of the execu tive and legislative institutions remained 
poor. The prevailing political climate led discu ssions on constitutional reform to a stall. 
The public administration reform co-ordinator's office was strengthened and initial steps were 
taken to implement the public administration reform strategy. An EU supported public administration reform fund was set up. Rega rding the judicial system, Bosnia and 
Herzegovina reduced its dependence on the in ternational community through the replacement 
of international judges and pr osecutors by local ones. Howeve r, the fragmentation of the 
judicial system and disparities in the legal fr amework continued to hamper the operation of 
the judiciary. Bosnia and Herzegovina's co-ope ration with the International Criminal Tribunal 
for the former Yugoslavia (ICTY) improved and reached a generally sa tisfactory level.  
Bosnia and Herzegovina achieved limited progr ess in the fight against corruption. The 
National Anti-Corruption Strategy was not properly implemented.  
As regards human and minority rights, full compatibility of Bosnia and Herzegovina's 
legislation with the European Convention of Human Rights was not achieved, as this is 
dependent on a reform of the Constitution. Shor tcomings remained as regards the prevention 
of ill-treatment by law enforcement bodies, the fi ght against impunity, the prisons system and 
the access to justice and equality before the law.  Religious intolerance remained an issue. In 
the field of freedom of expression and media,  the Federation public broadcasting law was not 
adopted during 2007. However it was finally adopted in 2008. Bosnia and Herzegovina made progress in addressing the backl og of human rights-related cases , but court rulings were not 
always properly implemented. 
Overall implementation of legislation protectin g the rights of women, children and socially 
vulnerable people was poor. The complex system of government and the fragmentation of 
legislation across the country c ontinued to hamper social dialogue. Some progress was made 
 
EN 16   EN as regards the support provided by the authorit ies to civil society de velopment, even though 
the sector remained weak overall. 
Intolerance and ethnic discrimination remained present, and the minorities-related legislation 
was not always properly implemented. Many refugees and internally displaced persons did not benefit from basic pension and health pr ovisions and socio-economic integration of 
returnees remained a problem. The implementati on of the national strategy for the Roma was 
limited and the Roma minority continued to face difficult living conditions and discrimination.  
On the whole Bosnia and Herzegovina's rela tions with its neighbou rs were good, although 
certain strains appeared in particular in relation to the ruling of the International Court of Justice on Bosnia and Herzegovina's lawsuit ag ainst Serbia and Montenegro for genocide. 
Little progress was made in addressing th e outstanding trade and border-related matters. 
Macroeconomic developments and structural reforms
 
In 2007, economic growth remained high and accelerated, while the external balance 
improved. The currency board arrangement continued to underpin macroeconomic stability and inflation receded to the low levels recorded  before the introduction of the VAT in January 
2006. The introduction of VAT increased fiscal revenue. Foreign direct  investment (FDI) 
increased significantly and helped finance the exte rnal deficit. The fina ncial sector developed 
rapidly while price competitiveness was to a large extent preserved. 
However, the overall political climate and weak domestic co nsensus on the fundamentals of 
economic policy led to a slow-down of reforms bot h at entity and other levels of government. 
Despite robust economic growth, unemployment re mained very high. Pub lic spending, and in 
particular social spending, rose significantly, we akening the quality of fiscal adjustment and 
adding to fiscal risks. Significan t structural rigiditi es continued to hamper the functioning of 
the labour market. The restructur ing of state-owned enterprises advanced slowly and progress 
in the liberalisation of network industries was limited. The business environment remained 
affected by significant administrative ine fficiencies, weak enforcement of creditor and 
property rights and sizeable in tervention of the state in th e productive sector. The large 
informal sector hampered the government's capacity to implement economic policies and 
affected negatively the business environment. 
Progress in meeting the acquis communautaire
 
Overall, Bosnia and Herzegovina made limited pr ogress in aligning its le gislation and policies 
with the acquis.  
Preparations in the field of st andardisation, certification and market surveillance advanced, 
though slowly. A lack of conformity assessmen t bodies and procedures continued to hinder 
export capacity. The establishment of a market  surveillance structur e based on appropriate 
product legislation and the phasing out of pre-mark et controls was not carried out. In the area 
of services, right of establishment and comp any law, registering bus inesses and obtaining 
licenses remained burdensome. Banking supervis ion was not brought to the State level and 
remained an Entity responsibility. 
No significant further developm ent took place in the area of free movement of capital, but 
Bosnia and Herzegovina's prepar ations in this area are on tr ack. Limited additional progress 
was made in relation to customs rules where, in particular, rules of orig in, valuation and free 
zones would have needed more attention. As for taxation, VAT collection was higher than 
expected, but no system for the reallocation of the collected revenue to the Entities and the 
Brčko District was agreed.  
 
EN 17   EN Bosnia and Herzegovina is progressing steadily  in the area of anti-trust control. Some 
progress was also been made with regard to state aid through the establishment of a 
preliminary state aid inventory. The Public Pr ocurement Agency and the Procurement Review 
Body saw their operation improved. Little progre ss was made regarding the enforcement of 
intellectual property rights. 
Social and employment legisl ation and policies remained fr agmented. Some progress was 
made in the field of education, notably th rough the adoption of a higher education law 
supporting the participation in the Bologna proc ess. Separation of children in schools along 
ethnic lines remained an issue. 
Little additional progress has b een made towards ensuring the existence of a real internal 
market within Bosnia and Herzegovina. In this context, the State laws  on obligations, leasing 
and pharmaceutical products have not been adopted. 
The industry policy strategy and the SME Development strategy were not adopted. Little 
progress was made in the field of agricu lture. The development of a comprehensive 
agricultural strategy was not ach ieved, although some steps we re taken to establish the 
necessary State-level legal framework. Implem entation of the food safety, veterinary and 
phytosanitary legislation remained poor. In the fi eld of environment, the long expected State-
level environmental law to create the framewor k for a nationwide, harmonised environmental 
protection was not adopted and the stat e environment agency was not set up. 
Sustained, albeit slow, progres s continued regarding Bosnia and Herzegovina’s involvement 
in developing the trans-European transport ne twork. Bosnia and Herzegovina advanced in the 
implementation of the first transitional phase the European Common Aviation Area Agreement (ECAA).  
In the electricity sector, tran smission was unbundled. Reforms in th e gas sector saw particular 
delays. A country-wide energy strategy remained pending. The requirements of the Energy Community Treaty were  only partly met. 
As regards information society and media, some  progress was made in terms of liberalisation 
of the telecommunication sector and approximati on of audiovisual legislation with the acquis 
by the Communications Regulatory Agenc y. However the independence of the 
Communications Regulatory Authority was cha llenged by the difficulties in appointing the 
Director General. In the field of statistics, the co-operation agreement between the country's 
statistics institutions at State and Enti ty level was not properly implemented.  
In the area of justice, freedom and security, the lifting of visa requireme nts for all EU citizens 
was confirmed and the readmission and visa fac ilitation agreements at EU-level were signed. 
Further progress was in the areas of asylum and migration. As regards the fight of money 
laundering, the staff of the Financial Intelligen ce Unit increased and so me progress was made. 
An office for the prevention of the abuse of narcotics was esta blished, but a State-level drug 
policy in line with EU standa rds remains to be developed. 
Implementation of tools such as computer-based investigations, criminal analysis systems and 
forensics contributed to the wo rk of the police. A strategic agreement with Europol was 
concluded. However, little progress was made to  implement the overall police reform aiming 
at unifying police forces in the country. 
There is still room for improvement in fighting organised crime. The 2005-2007 national 
action plan for combating trafficking in hum an beings was implemented, but no follow-up 
strategy was ready by the end of 2007. Incons istencies between state- and entity-level 
legislation continued to hinder prosecution of  serious crimes. Bosnia and Herzegovina's 
 
EN 18   EN resources to counter terrorism remained insuffici ent. The State agency for data protection was 
not established. 
2.2. Financial assistance in 2007 
Programmes launched  
As of 2007, the CARDS programmes were repla ced by the new Instrument for Pre-accession 
Assistance (IPA). No new CA RDS programmes were launched. 
Overview of programmes implemented  
Contracts were awarded by the EC Delegation in Bosnia and Herzegovina in 2007 for a value 
of EUR 44.6 million, of which EUR 34.9 m illion under CARDS regional and national 
programmes, EUR 4.1 million under the European  Initiative for Democracy and Human 
Rights as well as the Anti-P ersonnel Landmine programme. 
The largest share (EUR 12 million) was spent for supporting the Economic Development and 
Social Protection, as well as in the Justice and Home Affairs area (EUR 9.7 million). In the 
Good Governance and Institution Building sector , the EC remained the main donor in BiH 
(EUR 6.8 million). The EC was involved in se veral other sectors as well – Infrastructure, 
Education, Environment, Cross-cu tting sectors, and to a lesser extent in Agriculture and 
Forestry, and Local Governance. 
For years, the EU has provided fi nancial and political support for Legal and Judicial Reform , 
first to the Independent Judici al Commission and then to the Hi gh Judicial and Prosecutorial 
Council (HJPC). Indeed, the establishment of this  single HJPC was the first Feasibility Study 
priority that BiH fulfilled. As part of th is assistance, the EC has invested around 
EUR 5.6 million in Information Communication Technology (ICT), cent ralised within the 
HJPC. EU support has also included the provision of  state-of the-art equipment, now in use in 
all courts and prosecutor's offices throughout the country. An upcoming action will purchase 
legal texts and publications for the Courts and Ministry of Justice. 
In 2007, the EC continued to support the Registry for War Crimes and Organized Crime, 
Economic Crime and Corruption. In addition, th e EC has contributed EUR 3.5 million to the 
transfer of war crime cases from the Inte rnational Criminal Tribunal for the former 
Yugoslavia (ICTY) to the BiH courts. The EC’s  financial assistance has been a crucial 
contribution to this multi-donor effort. 
In the Agricultural Sector , the EC has focused on institution building. In 2007, the EC 
provided support for the creation of structures to ensure that BiH is capable of absorbing rural 
development funds under IPA. The EC’s areas of  focus in 2007 were: 1)  institution building, 
helping to create of administrative structur es; 2) assistance for the adoption of the acquis and 
the implementation of standards (veterinary, food safety and phyto-sanitary); and 3) work on 
enhancing access to agri cultural information. The EC supports Small and Medium Enterprises 
(SMEs) and job creation through a number of programmes, including the enhancement of 
Regional Development Agencies (RDAs) and thei r institutional strengthening. RDAs provide 
services directly to SMEs for increasing their competitiveness as well as support for regional growth. Grants were also provided for busine ss infrastructure support,  the facilitation of 
market information, and tourism development. 
In the Education Sector , the EC has supported the developm ent of the legislative framework 
and the adoption of laws. In 2007, almost all pro posed educational laws were adopted. Thanks 
to the EC’s support, three important laws were  passed and the fourth one will soon be. Since 
the main problem in Education is the fragme ntation and division al ong ethnic lines, the EC 
proposed that all cantonal and entity ministers be brought together in a Conference of 
 
EN 19   EN Ministers and that this newly formed body report  to the Prime Minister ’s Cabinet. The EC 
assisted the government in developing the instituti ons that are foreseen in the laws, such as an 
agency for pre-primary, primary and secondary  education, an agency for higher education, 
and an agency for diploma recognition. These w ill be responsible for the standardization and 
assessment of education (general and vocational education training), curriculum development, 
common certification, and more.  
In 2007, the EC carried out a functional review of the Health Sector  and made 
recommendations for PAR in this field. The EC has continued to support the implementation of these recommendations. It has also supported the strengthening of the Health Department 
in Ministry of Civil Affairs (MoCA) and has he lped to develop normative acts for the sector. 
Thanks to EC funding, there are now 8 to 9 core staff within the Health Department. 
In the area of media and communication , the EC supports the formal  adoption of the Public 
Broadcasting Service (PBS) reform. The EC al so provides technical assistance (equipment 
and training) to the Communi cations Regulatory Agency, in order to adopt European 
standards in the re gulatory framework. 
The EC was also active in the field of export promotion . It provided technical assistance (TA) 
to the Ministry of Foreign Trade and Econo mic Relations (MoFTER). This TA helped 
establish the Export Promotion Agency in the Foreign Trade Chamber. The Agency will be 
capable of providing expert ad vice and recommendations to the CoM, as well as support to 
companies in exploring market linkages. The EC’s support entails the development of export 
policy papers for the development of  a strategy, and on the job training. 
CARDS management performance
 
The performance in managing CARDS progr ammes was overall sa tisfactory. 2001-2004 
CARDS national programmes can be considered as fully c ontracted. Contracting and 
payments for CARDS 2005 and 2006 are on track. As a result, the IPA 2007 Annual Programme adopted on 20 December 2007 will st art without any significant backlog from 
CARDS. 
Bosnia and Herzegovina: Status of financial assistance at the en d of December 2007 (in 
million €) – CARDS annua l national programmes  
        
  Allocated  Contracted RAC % contracted  Paid  RAL  % paid  
CARDS 2001 105.2 98.58 6.62 94% 92.06 13.14 87% 
CARDS 2002 60.5 59.30 1.20 98% 56.53 3.97 93% 
CARDS 2003  50.6 49.94 0.66 99% 45.09 5.51 89% 
CARDS 2004  62.1 61.84 0.26 100% 50.07 12.03 81% 
CARDS 2005  44.0 39.71 4.29 90% 32.21 11.79 73% 
CARDS 2006  43.8 29.25 14.55 67% 13.30 30.50 30% 
Total  366.2 338.62 27.58 92% 289.26 76.94 79% 
 
EN 20   EN In the framework of the 2006 CARDS regiona l programme, a total of € 3.5 million was 
provided to support the Office of  the High Representative (OHR) in 2007. 95% had been paid 
by the end of the year. 
The implementation of CARDS Information and Communication Programmes, 
Neighbourhood Programmes and Evaluation and Audit Programmes proceeded smoothly.  
Institution Building highlights  
For the preparation of decentralised implementation  of IPA in BiH, the EC Delegation 
embarked on a coaching and training programme fo r the BiH authorities to  get ready to take 
over responsibility for planning, programming a nd implementing financial assistance. While 
until recently, the EC was covering  the project cycle alone, w ith little involvement of the 
government, the EC Delegation has had a stra tegy of transfer of 'ownership' of the 
programmes to the BiH authorities. This pr ocess prepares the decentralisation of the 
management of assistance, and includes:  
– Coaching and training the Directorate of Eur opean Integration (DEI) on strategic planning, 
project preparation and assessment 
– Setting up a structured network of count erparts for project planning, design and 
implementation in all line ministries and st ate agencies, the Senior Programme Officers 
(SPO's) 
– Anticipating IPA obligations by helping setti ng up a National Fund and a Central Finance 
and Contracting Unit (CFCU) in the Ministry of Finance and Treasury – 10 BiH officials 
have now been appointed and fully trained. 
This action of the EC Delegati on has been cited as one of tw o Success Stories in the recent 
audit report of the Euro pean Court of Auditors on the ma nagement of the Cards Programme 
2001-2006. 
Public Administration Reform  (PAR) was one the sixteen priori ties in the Feasibility Study 
and is one of the six key European Partnershi p priorities. The EU assists the BiH government 
in PAR through strengthening th e systems of public administra tion and through administrative 
capacity building of selected key sectors. The EU has supported the PAR Coordinator’s 
Office (PARCO) with the design and implemen tation of a national PAR Strategy and Action 
Plan. A range of EU-funded actions has strength ened the systems of public administration. 
The General Secretariat (GS) of the Council of  Ministers (CoM) receives support to work 
towards full national responsib ility for policy formulation a nd decision-making, and to help 
strengthen policy coordination between all levels of governme nt. An e-government project 
aims to enhance the efficiency of the CoM through comprehensive and crosscutting IT, while 
a Human Resources Management Information System aims to create a single personnel 
database for the Civil Service Agencies (CSAs). 
Donor co-ordination  has been ensured throughout the enti re project management cycle from 
project design to implementation. Recently, the role of the ECD has changed whereby the 
Delegation is seen more and more as the le ad donor in the countr y. In particular, the 
Delegation is a core donor involved in setti ng up donor coordination mechanisms through the 
following activities: 
– Support to the BiH Ministry of Finance, Directorate for European Integration and 
Directorate for Economic Planning to set up an Aid Coordination Committee (together 
with DFID), 
 
EN 21   EN – Key member, and regular Chair, of the Donor  Coordination Forum, which gathers the 
international Donor Community on a quarterly basis, including contributions to an Annual 
Donor Mapping report (together with UNDP) 
– Monthly Coordination meetings with the EU Member States 
At sector level, this is particularly evident in  the agricultural, regional,  and SME portfolios. In 
the agricultural sector for example, the World Bank will design its new programmes in line with the structures  required under the acquis . 
2.3. Results and impact 
M&E Reports in 2007 - Lessons Learnt
 
Lessons learnt derived from m onitoring of projects in 2007 can be summarised as follows: 
• There has been a lack of cooperation between  regional and national projects. Information 
to local beneficiaries should be improve d in order to avoi d possible overlaps. 
• In order to have successful natio nal projects it is essential to  involve beneficiaries, as soon 
as possible, from the design phase. The highest  the involvement of the beneficiaries, the 
higher the level of 'ownership' in country. 
• Project design should be linked not only to  EU strategic documents, but also to 
country/national strategies. Sometimes the fram ework where project exists is rather weak. 
• European Integration projects are change in struments to develop the country. Political 
consensus is required as to which level of authority is best fit to implement required 
changes. Where there is a comparative advant age to work at State level for coordination 
purposes, Entities should contribut e more actively and positively. 
• During the project design it is highly important to take into consideration absorption 
capacity of the local institution. Sometimes projects have too many components, or 
objectives and expected results are beyond the absorption capacity of the local institution. 
• Preconditions for project implementation are of utmost importance. If they are not met by 
the time the projects should start, this may jeopardise the results expected. This has been 
the case for example in the case of the constr uction of border crossing points, where vested 
interests prevented the timely implementatio n of pre-requisites fo r construction and 
derailed the projects. BiH should take on such issues with more determination. 
• The political environment sometimes do not follow  the same strategic direction, i.e. state 
and entity strategies are often not compatible with each other, 
• Most projects designed for harm onisation and approximation of the acquis  face difficulties 
due to different approaches on di fferent BiH levels of authority. 
• Donor coordination does exist in BiH but it is not always effective, as it is carried out by 
the international commun ity itself, and not by the government. BiH author ities need to take 
the lead in aid co-ordinati on, especially in the wake of the new IPA instrument. 
• Internal organization analysis required by the institution for the good project design is still 
weak. This calls for furthering assistance in  the area of public administration reform. 
• Twinning projects have done ve ry well. Absorption capacity  remains weak however and 
twinning light projects or technical assistance  may still be a preferred tool when the BiH 
counterpart administration is not ye t fully equipped and up and running. 
 
EN 22   EN • Financial sustainability is the most important. Sustainability is better achieved where 
political support is matched w ith BiH financial contributions. 
Sectors with positive results  
Some of the recent successes achieved include:  establishment of Quality infrastructure 
institutions at the state-leve l, supporting BiH to join CEFT A, establishment of the Export 
Promotion Agency, development of animal di sease programme, supportin g BiH in attaining 
approval to export fish and fish products to th e EU, implementation of waste recycling pilot 
programs, development of investment priority lists  in the water sector, rehabilitation of wild 
land fills, support to th e civil aviation agency to develop air traffic strategies which are 
subsequently being implemented with EBRD loan funds.  
In spite of the complex structure of the c ountry and the difficult political environment 
important successes could be achieved especially  in the fields of Public Administration 
Reform (PAR), justice and migration, asylum and visa: 
A functional system of coordination of PAR activities  on State and Entity level could be 
established with the driving s upport of the EC. The Office of PA R on state level and the PAR 
coordinators nominated by the Entities' gove rnments and District Brcko create a common 
forum on working level where activities, prog ress and projects are de signed and discussed. 
The PAR Strategy and the Action Plan adopted in 2006 by the governments of all levels in 
BiH build a common framework. The PAR Fund, which pools the donor  funds of several 
donors, provides a financial tool to implement proj ects in the field of PA R and to ensure full 
local "ownership".  
In sectors of health and education  functioning of public ad ministration was improved 
through establishment of conferen ces of ministers in both sector s. Process of coordination and 
decision making has been considerably improve d. In education sector a set of laws was 
adopted providing legislative framework for esta blishment of three agencies that are going to 
be responsible for development of standard s in education, assessment of outcomes of 
learning, accreditation and diplom a recognition. Process of estab lishment of the agencies is 
ongoing.  
With the establishment of High Judicial and Prosecutorial Council , the establishment of a 
modern Case Management System and a data  network connecting all courts, prosecutor's 
offices and cadastre offices in the country  and the intensive tr aining of judges and 
prosecutors, the EC coul d actively support the judicial sector  and is clearly the leading donor.  
With EC support, the sector of law enforcemen t agencies could be substantially modernised 
by providing modern equipment, training and the establishment of the country-wide SDH 
system which provides a modern data communi cation network between all law enforcement 
agencies and their offices and its link to judiciary. 
The EC helped to install a modern Immigration Management System  (IMS) which 
modernised the whole procedure and management of  visas and permits of stay for foreigners.  
Success story  
A wealth of economic opportunities 
The potential for economic growth As a result of continuous pol itical problems since the 1990s in Bosnia and Herzegovina, 
overall economic performance has either stagna ted or declined. Consequently, unemployment 
has remained persistently high, productivity is less than 50% of that in central European 
countries, and financial sector reform  and privatisation has been slow.  
 
EN 23   EN Nevertheless, since 2001 there have been signs of a gradual recovery. The improved 
economic performance is being at tributed to indicati ons that preliminary structural reforms 
are beginning to bear fruit in a region which is  now considered to be capable of significant 
growth. In a concerted effort to capitalise on this potential, the European Union Regional 
Economic Development (EU RED) project was se t up in Bosnia and Herzegovina in March 
2003. 
Working together for success 
Working closely with newly cr eated Regional Development Agen cies (RDAs), The project is 
aiming to improve the economic environmen t by creating a framework for sustainable 
economic development in the country. The key stakeholders include new and existing RDAs, 
local authorities and state gove rnments, the business sector, educational establishments, 
international bodies and NPOs ( non-profit organisations). The proj ect is working closely with 
all these main actors to revive and strengt hen the economy, thereby preparing Bosnia and 
Herzegovina for integration into the EU’s Stru ctural Funding scheme and eventual accession. 
The project has five main objec tives: 1) the creation of 5 Regi onal Development Agencies; 2) 
the development of regional econo mic strategies; 3) the establ ishment of a National Regional 
Development Forum; 4) the management of a grant Fund; 5) overall project management. 
What can the regions offer? 
As a first step, regional profiles were devel oped for the five proposed  regions. The North-
West, offering high-quality agricu ltural land, forests and natural resources, can support agro-
processing, wood processing and tourism. The Sout h- West – currently experiencing a tense 
political situation between rival Serbs, Mu slims and Croats – is promoting aluminium 
processing, engineering, agriculture, forestry and textiles. The Cent ral region, previously 
known as the industrial basin of Bosnia a nd Herzegovina, is now an area of high 
unemployment despite its coal, steel, engineerin g, wood and leather industries. The Sarajevo 
region is one of the most developed with its airport, university, banking, tourism, 
manufacturing industries and trad e. Finally, the North-East is best known for its salt mines 
and chemical industry, both of which are now in decline, hence the high unemployment rate there. 
Shared concerns 
The project will play a leading role in developing integr ated regional strategies in co-
operation with RDAs, municipalities, business a ssociations and other relevant players. The 
ultimate aim is to establish a network of RDAs  able to interact with the National Forum on 
Regional Development to promote coherent re gional economic policy at national level. The 
National Forum will be made up of experts whose mission is to influence and promote regional policy at national level, to discuss sh ared economic concerns of regional and national 
significance, and to promote more  effective and relevant regional policies and actions. One of 
the main components of the project is to set up and run a Fund to provide targeted grant 
support for regional development projects. Prior ity areas include creating the right economic 
conditions for small and medium-sized enterp rises (SMEs) to develop; supporting export-
related opportunities, and mobilising labour supply  and skills training. Examples of the type 
of projects suitable for funding include the se tting up of business centres incubators and 
technology parks; advising SM Es; developing regional branding for agriculture and 
horticulture; devising trade and investment pr omotion schemes; and establishing vocational 
training services. These grants, as well as th e technical assistance to RDA’s and Local 
Development Agencies (LDAs), are crucial in supporting and accelera ting the process of 
social and economic reform in a region which badly needs it. 
 
EN 24   EN 3. BULGARIA1 
3.1. Summary 
In 2007, Bulgaria implemented both pre-accessi on and post-accession assistance to address 
the remaining needs related to IB  for the implementation of the acquis , in line with the 
Extended Decentralised Implementation System (EDIS). 
Since July 2007 implementation is carried out u nder the entire responsibili ty of the Bulgarian 
authorities applying national pr ocurement rules. Four implementing agencies are fully 
responsible for daily implementation of projects. 
The National Aid Coordinator (NAC) continued to exercise the programming function for the 
Transition Facility programme and monitoring of both Pre-accession and Transition Facility 
Programmes. The National Authorizing Officer (NAO) carries out the financial supervision. 
3.2. Phare/pre-accession financial a nd Transition assistance in 2007 
The Transition Facility has been established by the Act of Accession to fund certain IB 
actions in Bulgaria to address the continued need for strengthening institutional capacity in 
certain areas through actions wh ich cannot be financed by th e Structural Funds or by the 
Rural Development Fund. As such, this is an extension of the assistance provided until 
accession under the Phare programme. The implem entation of EU assistance available under 
the TF is managed by the Memorandum of Understanding on the Implementation of the 
Transition Facility signed between the Bulgar ian authorities and th e European Commission on 
21 June 2007.  
Programming  
A total of €31,487,600  was allocated to Bulgaria unde r the 2007 TF budget for Bulgaria. 
This programme is mainly based on the Comm ission's 2006 Monitoring Report on the state of 
preparedness for EU membership for Bulgaria a nd Romania that identifies a number of areas 
where improvement is needed regarding implementation and enforcement of the acquis . 
Supplementary information was provided throu gh the outcome of peer  reviews, monitoring 
missions, and expert reports. The programme w ill also assist the Bulgarian administration 
with the implementation and enforcement of new acquis . Moreover, it takes into account the 
need for further progress towards the achievement  of the benchmarks in the areas of judicial 
reform, the fight against corruption and organi sed crime set out in the Commission Decision 
of December 2006 establishing a mechanism for cooperation and verification of progress in 
Bulgaria 1 as well as the findings of the Report on Bulgaria's  progress on accompanying 
measures following Accession. To this end,  an Unallocated Institution Building and 
Cooperation and Verification Mechan ism Envelope has been created to assist Bulgaria to take 
into account the findings of the Report and to ensure follow-up under the cooperation and 
verification mechanism.  
The Phare Management Committee approved  the Transition Facility 2007 National 
Programme for Bulgaria on 5 October 2007. Th e programme was then approved by the 
Commission through its Decisi on C(2007) 5277 of 5 November 2007, which was notified to 
the national authorities on the same day. 
                                                 
1 Information refers to the reporting period 2007. Serious implementation difficulties appeared in early 
2008 and the accreditation of two implementing agen cies (CFCU, Ministry of Regional Development 
and Public Works was temporarily withdr awn in July 2008. See: COM(2008)496). 
 
EN 25   EN The Transition Facility 2007 Nationa l Programme for Bulgaria provides €31,487,600  for: 
POLITICAL CRITERIA : €1.5301 million 
– Civil Society Development in th e area of anti-co rruption fighting 
– Further Strengthening of Policies, Practices and Capacity towards Roma Integration in 
Bulgaria 
INTERNAL MARKET : €0.690 million 
– Strengthening the capacity of the National Enquiry Point within the State Agency for 
Metrological and Technical Surveillance 
– Further strengthening the admini strative capacity of the Fina ncial Supervision Commission 
aiming at the efficient implementation of the acquis 
AGRICULTURE AND FOOD SAFETY : €1.944 million 
– Improvement of phytosanitary control 
– Strengthening the official control of feeding stuffs by the National Grain and Feed Service 
– Improvement of the administrative capacity of the "Monitoring and coordination of Paying 
agency activities" Unit within MAF to implement its functions  in compliance with Council 
Regulation (EC) 1290/2005 and (EC) 885/2006 
– Improvement of the diagnostic and laboratory system for animal health control against 
classical swine fever and high pathogenic avian influenza 
– Improving the efficiency of FADN via building up of an integrated IT system for data 
entry, control, validation and us e at national and regional level 
– Strengthening the capacity of St ate Fund "Agriculture" for elect ronic data exchange in its 
role as a Paying agency and establishment of interface between the PA systems and DG 
Agriculture information systems 
– Support for the implementation of the Common Ma rket Organisations in the meat sector 
ENVIRONMENT : €5.0195 million 
– Strengthening the capacity of the water manage ment authorities for the implementation of 
economic instruments for water management according to the 
– Water Framework Dire ctive (WFD) 2000/60/EC 
– Strengthening the administrative capacity with the aim to ensure the efficient enforcement 
of the EU waste management acquis 
– Implementation and enforcement of Directiv e 2007/105/EC amending Directive 96/82/EC 
(Saves II Directive) on the control of major accident hazards involving dangerous 
substances 
– Implementation and enforcement of Di rective 2006/21/EC amending Directive 
2004/35/EC on the management of wa ste from extractive industries 
– Strengthening the administrative capacity for pr actical implementation of legislation of the 
management of waste in the fields of elec trical and electronic equipment (WEEE) and 
batteries and accumulators at national and regional level 
– Strengthening the institutional capacity for th e implementation of the Nature Protection 
acquis 
 
EN 26   EN – Further development of the Executive Environm ent Agency's (EEA) calibration laboratory 
and quality control system for am bient air quality measurements 
JUSTICE AND HOME AFFAIRS : €11.68 million 
– Enhancement of the administrativ e capacity of the police in count eraction to drug crimes at 
national and regional level 
– Enhancement of the Ministry of Interi or's capacity to fight organised crime 
– Development of the institutional capacity of th e Ministry of Interior for building up the 
VIS national interface for connecting the border c ontrol system and visa system to the EU 
Visa Information System and for connec ting the visa system  to VISION Network 
– Further strengthening of the Ministry of Inte rior through unification an d standardisation of 
the vocational training of the officer s of the Ministry of Interior 
– Enhancement of the capacity of the Bulgarian police through the introduction of European 
models and methods for crime analysis 
– Strengthening the uniform application of th e new procedural legislation in Bulgaria 
– Strengthening the public management of the judiciary and court administration 
– A further step towards higher qual ity of training in the judiciary 
– Further strengthening the forensic capacity of the expert services  of the Ministry of Interior 
for collection and examination of ma terial traces for crime scenes 
– Improving and extending the level of training in  the field of countering organised crime in 
the Bulgarian Ministry of Interior 
– Effective implementation of the EU acquis in the field of migration policy and further 
strengthening the Migration Directorate’s institutional capacity 
– Elaboration and strengthening of the Huma n Resources Management system in the 
Ministry of Interior in the fight  against corruption among its personnel 
– Strengthening the role of the Bulgarian Prison Service 
CUSTOMS AND FINANCE : €3.22 million 
– Further computerisation of the Bulgarian Cu stoms Administration in line with the EU 
Electronic Customs Initiative 
– Enhancement of the implementation mechanisms  of the Intrastate System in Bulgaria 
– Interim Evaluation of Phare a nd Transition Facility Programmes 
– Development of a national system for admini stering the excise duty entirely by the 
Customs Administration 
ADMINISTRATIVE REFORM AND CAPACITY : €6.586  MILLION  
– Strengthening the legal and administrativ e capacity for Mental Health Reform 
– Strengthening the capacity of the Ministry  of Culture to secu re development and 
implementation of a National Audiovisual Policy, including c opyright protection 
– Unallocated Institution Building and Coopera tion and Verification Mechanism Envelope 
EMPLOYMENT , SOCIAL POLICY AND EDUCATION : €5.0195  million  
 
EN 27   EN – Strengthening the capacity of the Agency for Social Assistance through trainings of 
experts, working in the field of  child protection and experts wo rking in the Inspectorate of 
the Agency 
Implementation  
– Phare 2004 – finalisation of payments 
At the end of the period for execution of cont racts for the 2004 Phare programme 68.20 % of 
the funding has been disbursed. There are se veral projects whose pe riod of execution of 
contracts has not expired yet according to the corresponding Financing Agreements. 
Furthermore the Bulgarian authorities have re quested extensions of the execution period for 
the 2004 programme which have been approved. 
– Phare 2005 – rate of contra cting (EDIS extensions)  
At the end of the contracting period for the 2005 National programme on 30 November 2007, 
73.40% of the programmes had been contracted. However, the contracting period of several 
projects has been extended and was on-going. 
– Institution Building highlights 
As of 1 July 2007, the responsibility for the implementation of the twinning projects was 
taken over by the Administrative Office, while the overall coordination for twinning is carried 
out by the NCP of the Ministry of Finance. 
In 2007, a number of projects continued to be  implemented through the twinning instrument. 
The projects funded from the Phare programme in cluded inter alia assist ance to the Ministry 
of Justice on various subjects involving the judici ary reform process, the Ministry of Interior 
on border control systems, asylum and Scheme Information System SIS II, the Ministry of 
Health on surveillance systems of communicable diseases and healthcare for vulnerable 
groups, the Ministry of Labour a nd Social Policy on social dial ogue, the Ministry of Finance 
on Structural Fund preparation, tax harmonisa tion, the Ministry of Transport regarding 
cohesion fund preparation for transport infrastruc ture projects and other institutions such as 
the Bulgarian Statistical Office, the Persona l Data Protection Comm ission, the Financial 
Supervision Commission, the En ergy Efficiency Agency.  
In addition, several new twinni ng contracts were prepared in  2007 for approval mainly with 
the Ministry of Interior as a beneficiary on border police, crime victims support and probation 
service.  
As to the 2007 Transition Facility Programme for Bulgaria, twinning remains an important 
instrument for implementation. Altogether th e Programme includes a total of 22 standard 
twinning projects and 5 twinning li ght projects in areas such as Agriculture, Environment, 
Justice and Home Affairs with the majority of pr ojects in the field of reform of the judiciary, 
police, organised crime, but also in the area of border matters and migration issues, and social 
policy. 
In 2007, Twinning continued to remain a successful  instrument in Bulgaria in many areas and 
has helped the Bulgarian admini stration to further strengthen its capacities to implement and 
enforce EC legislation 
3.3. Results and Impact 
State of play for JMC / SMSC development  
The JMC continues to supervise progress of  EU-funded assistance in  2007 and to provide 
recommendations on the management of Phare and Transition Facility programmes. In 2007, 
 
EN 28   EN the JMC meeting took place in May 2007. It was the first meeting chaired by the Bulgarian 
authorities. At the meeting issues such as fu rther improvement of project management and 
reporting were discussed and proposals for remedial actions were made.  
Each monitoring sector is covered by the relevant Sectoral Monitoring Sub-Committee 
(SMSC). Each SMSC session normally meets tw ice a year in accordance with the annual 
schedule agreed within the JMC. Two rounds of SMSC meetings took place in 2007, the first 
round took place in April and May, the second  round was organised between October and 
November 2007. The ten monitoring sectors cover: Public Sect or/Development of 
administrative capacity, Public Finance, Justi ce and Home Affairs, Economic Development, 
Agriculture, Environment, Tr ansport, Social Development 
M&E Reports in 2007 (lessons learned)  
Overall responsibility for monitoring the Ph are and Transition Facility programmes in 
Bulgaria lies with the NAC servi ces within the Ministry of Fina nce. Activities in this area 
were carried out on the basis of the Action Plan on decentr alisation of monitoring and 
evaluation, which was endorsed by the EC in  May 2007. The contract for carrying out the 
Interim Evaluation for the year 2007 was signed in December 2006 for 12 months. 
In 2007, one Consolidated Monitoring Report was issued for the JMC meeting in May 2007. 
The report provides a consolidated country review  of the findings of the Interim Evaluations 
finalized in 2007. The report concludes that most  of the projects have a positive impact and 
positively supported Bulgaria's accession process, but the efficiency needs further close attention. The report also in cluded recommendations concerning improvement of the 
implementation system. The NAC has taken relevant steps to address the issue. 
 
EN 29   EN 4. CROATIA  
4.1. The year in review 
Political developments  
EU accession negotiations began with Croatia on 3 October 2005 and are progressing well.  
Implementation of strategies for reformi ng the judiciary and fighting corruption has 
continued. The case backlog before the courts  has been reduced. Some first results are 
appearing in the fight against corruption. Croatia has taken furt her steps to address problems 
of minorities and, to a lesser extent, refugee return. Full cooperation with ICTY has 
continued. Croatia ratified the new Central Eu ropean Free Trade Agreement (CEFTA), and 
has continued to participate ac tively in regional cooperation, for example in the establishment 
of the new Regional Cooperation Council.  
However, considerable challenges remain in ke y areas, such as reform of the inefficient 
judicial system, public administration refo rm and fighting corruption, which remains 
widespread. Increased attention needs to be paid  to minority rights, especially refugee return. 
The prosecution of war crimes requires further a ttention. Further regional cooperation is vital, 
as are efforts to solve outsta nding bilateral problems with neighbours, especially on border 
delimitation. 
Macroeconomic developments and structural reforms  
Economic growth has increased and macroeconomic stability was maintained. The general 
government deficit was reduced significantly. In flation remained low. Private investment 
picked up further. Employment rose and the bus iness environment improved. The stability of 
the financial sector increased. The governme nt's economic policy capacity was further 
strengthened. 
However, rising external imbalances can beco me a risk. Structural reforms, including the 
restructuring of the shipbuilding and steel  sectors moved forward only slowly. State 
intervention in the economy remained significant. Inefficiencies in public administration and the judiciary continued to hamper private sector  development. The extern al debt has not been 
reduced, highlighting the need for tighter fiscal policies.  
Progress in meeting the acquis communautaire
 
Croatia has improved its ability to take on the ob ligations of EU membership. Preparations for 
meeting EU requirements are moving forward at a steady pace and alignment with EU rules is 
high in some sectors. However, significant effo rts lie ahead in order to reach full alignment. 
In most areas there has been some progress, pr incipally in terms of legislative alignment but 
also as regards administrative capacity buildi ng. In some chapters such as transport and 
environment, good progress made in previous year s has been sustained. In  other chapters such 
as public procurement and taxation, progress has remained limited. As regards the overall 
level of alignment and administrative capacity, mu ch remains to be done. In the chapter of 
information society and media good progress made  in previous years has been sustained.  
4.2. Pre-accession in 2007 
Programmes launched  
As of 2007 the Phare pre-accession programmes were replaced by the new Instrument for Pre-
Accession Assistance. No new programmes were launched. 
Overview of programmes implemented  
 
EN 30   EN The Commission decided to confer the manage ment of Phare and CARDS programmes to the 
Croatian institutions under the authority of th e National Authorising Officer on 7 February 
2006 while maintaining the ex-ante control requ irement for tendering and contracting. This 
decision also allowed for the further decentr alisation of elements of CARDS 2003 and 2004. 
Throughout 2007, further contracting of CARDS 2004, Phare 2005 and Phare 2006 (CBC 
programmes), and further disbursement of CARDS 2002, 2003 and 2004, and Phare 2005 and 
Phare 2006 (CBC programmes) took place.  
The CARDS 2002 programme amounts to a total of €59 million consisting of €3 million of 
centralised funds for the Tempus programme, €48.5 million of deconcentrated funds managed 
by the EC Delegation in Zagreb and €7.5 million of funds under decentralised (DIS) management. Under deconcentrated manageme nt, the contracting rate was 96.4% with a 
disbursement rate of 91.8% at the end of 2007. Under DIS, these rates were respectively 
93.8% and 84.7%. 
The CARDS 2003 programme amounts to a total of €62 million consisting of €3 million of 
centralised funds for the Tempus programme , €29,633,585 of deconcentrated funds managed 
by the EC Delegation and €29,366,415 of funds  under DIS. Under deconcentrated 
management, the contracting rate was 99.2% with a disbursement rate of 69.4% at the end of 
2007. Under DIS, these rates were respectively 97.7% and 69.5%. 
The CARDS 2004 programme amounts to a total of €81 million consisting of €4 million of 
centralised funds for the Tempus programme , €30,426,370 of deconcentrated funds managed 
by the EC Delegation and €46,573,630 of funds  under DIS. Under deconcentrated 
management, the contracting rate was 99.96% with a disbursement rate of 66.1% at the end of 
2007. Under DIS, these rates were respectively 94.6% and 20.2%. 
The Phare 2005 national programme amount s to a total of €71,500,000 and is fully 
decentralised except for the TEMPUS an d Community program mes funds. Out of 
€62,882,000 of decentralised funds, 88.34% had been contracted, and 13.92% had been paid 
by the end of 2007. 
In addition to the Phare 2005 national program me, the Phare 2005 Nuclear Safety programme 
amounts to €641,000 and is fully decentralised. By the end of 2007, 66.53% of funds had 
been contracted. Disbursement had not yet started. 
Also under Phare 2005, the Cross-border progr ammes (CBC) Croatia-Italy and Croatia-
Slovenia-Hungary amount to €3 million each and are fully decentralised. By the end of 2007, 
60.39% had been contracted and 27.98% paid  for CBC Croatia-Italy, and 90.72% had been 
contracted and 61.92% paid for CBC Croatia-Slovenia-Hungary. 
Under Phare 2006, the national programme, the Nuclear Safety programme and the Cross-
border programme (CBC) Cr oatia-Italy amount respectively to €61,062,000, €1,649,000 and  
€3 million, are fully decentralised (except for the TEMPUS and Community programmes 
within the national programme envelope), and contracting had not yet started by the end of 
2007. The Phare 2006 Cross-border programmes (CBC) Croatia-Slovenia-Hungary amounts 
to €3 million, of which 72.68 % had been contr acted and 15.57% had been disbursed by the 
end of 2007. 
CARDS and Phare management performance
 
Although the results of  projects programmed show that the interventions reflected well the 
needs under the political and economic  criteria as well as  the ability to assume the obligations 
of membership, there have been serious effici ency problems as regards absorption 
 
EN 31   EN capacity  as well as timeliness  and quality of the submitted tendering and contracting 
documents,  resulting in last-minute commitment, as it has been the case with the Phare 2005 
programme. Besides, physical implementation of the Phare 2005 programme will only be ensured within an extended disbursement period.  
Also weak administrative capacity  in several Croatia’s public ad ministration bodies, lack of 
ownership by the Programme Implementation Units  (PIUs) on their own projects, insufficient 
co-ordination among stakeholders, as well as insufficient control on the process by the CFCU 
(Central Finance and Contracting Unit) hampered the effectiveness of EC assistance.  
The follow-up audit on DIS conducted by ELAR G in 2006 highlighted these deficiencies 
resulting in the aforementioned weak absorption and administrative capacities that need to be 
remedied. 
In light of the above, ELARG decided in December 2007 to temporarily suspend the 
endorsement of contracts under the Phare na tional programme 2006 till the Commission 
is satisfied about improvements j udged against a set of benchmarks .  
NDPs – State of Play
 
The Croatian Government adopted a national development strategy entitled Strategic 
Development Framework 2006-2013  in August 2006, which identif ies a series of priorities 
that should promote Croatia’s social and econo mic development. The Strategic Development 
Framework remained valid in 2007. 
In addition, the Croatian Government adopted in 2007 the  National Programme for the 
Accession of the Republic of Croatia into the EU (NPAEU)  which is the fifth annual 
programme which contains activities to be unde rtaken on the way towards EU integration, as 
well as short and mid term priorities in the harmonisation of Croatian legislation with the 
acquis . 
Institution Building highlights  
One of the main challenges facing the candidate countries is the need to strengthen their 
administrative and judicial capacity to implement and enforce the acquis . The European 
Commission mobilises significant human and financial resources to help them with this 
process, using the mechanism of twinning  administrations and agencies with the ones from 
the Member States. 
During 2007, 26 new twinning contracts (includi ng 'twinning light') for a total amount of 
approximately €22.2 million were signed, including 12 contracts under CARDS 2004 
programme and 14 contract s under Phare 2005 programme. 
In addition to these newly started projects, there were, by the end of  2007, 4 running twinning 
projects which had started in 2006, for a total amount of approximately €3.5 million: 3 projects under CARDS 2003 programme a nd 1 project under CARDS 2004 programme. 
Moreover, 10 twinning projects for a tota l amount of approximately €7.9 million were 
finished during 2007: 1 under CARDS 2002 programme, 7 under CARDS 2003 programme, 
and 2 under CARDS 2004 programme. 
4.3. Results and impact 
State of play for JMC/SMSC development
 
Two series of six Sectoral Monitoring Sub-Co mmittee (SMSCs) meetings each were held in 
May and November 2007. These meetings consid ered the state of pl ay for a total of, 
respectively, 99 and 90 decentralised CARDS and Phare projects. The six sectors covered by 
 
EN 32   EN the SMSCs were: Public Administ ration Reform, Public Finance & Statistics; Internal Market, 
Competition & Agriculture; Economic & Soci al Cohesion; Energy & Environment; and 
Social Sector, Civil Society & Minority Rights. 
This process culminated in the Joint M onitoring Committee (JMC) which took place on 10-11 
December 2007. The JMC reviewed the financial status of programmes as of 1 December 
2007 (tender launches, contra cting, payments). It discussed a JMC Synopsis Report 
containing conclusions, recomm endations and follow-up actions, as well as the CARDS 
interim evaluation report, a summary of 2007 in ternal audit findings related to CARDS and 
Phare, a summary of irregular ities reporting, and the 2008 mon itoring and interim evaluation 
plan. 
The JMC also conducted a thorough review of the functioning of DIS.  In light of the 
aforementioned difficulties encountered, the Co mmission decided to temporarily suspend the 
endorsement of contracts under the Phare national programme 2006 till the Commission is satisfied about improvements judged against a set of benchmarks (see section 4.2 CARDS and 
Phare management performance). 
M&E Reports in 2007 - Lessons Learned
 
An ad-hoc independent evaluation  report covering decentralised CARDS assistance from the 
2003 and 2004 national programmes was released in December 2007. This report 
encompasses four sector clusters: "Social", "Internal Market, Competition and Agriculture", "Justice and Home Affairs", and "Other". Thes e clusters are drawn from five monitoring 
sectors and based on a sample of 16 proj ects (12 from CARDS 2003 and 4 from CARDS 
2004). All projects are being implemented under DIS. The total amount of assistance 
evaluated in the report is €20.25 million. 
The report provided the following lessons that ca n be drawn as regards CARDS assistance:  
• Although largely relevant, CARDS support  has been hampered by weaknesses in 
project design . To maintain relevance, the assistance in  some clusters has been the subject 
of significant changes to thei r original funding and implemen tation arrangements, largely 
due to obsolete original designs and contracting requirements.  
• The uneven efficiency of the assistance is a result of delays , mixed beneficiary 
performance and the generally good work  of contractors and twinning experts . The 
performance of the assistance in the preparator y stage, characterised by extensive delays, 
has negatively influenced ove rall efficiency. The performa nce of many (but not all) 
beneficiaries and PIUs has also been less than  optimal, although this has been offset by the 
generally good work of contractors,  twinning partners and suppliers.  
• The assistance is expected to be largely e ffective, with many outputs already delivered 
and in use by beneficiaries.  Nearly all the interventions will deliver their planned outputs. 
This is largely thanks to the work of the contractors and twinning partners, whose work 
have in nearly all cases been effective a nd which in a number of cases have already 
resulted in tangible improvement s in beneficiary performance.  
• Prospects for impact are, on balance, positive . This is most likely where policy 
objectives are clear and support for their implem entation evident at senior level, or where 
assistance complements ongoing be neficiary efforts. More co mplex projects that promote 
intra-institutional change or wider reform ag endas are likely to face greater challenges in 
delivering impact.  
• Prospects for sustainability are mixed.  This is due in part to factors that are outside the 
direct control of the benefici aries, or where those institu tions charged with implementing 
 
EN 33   EN project results are under-resour ced. Otherwise, conditions to ensure the future use of 
investments are generally in place, while st aff turnover has been noted in only some 
institutions. 
As regards Phare programmes, an Interim Evalua tion Scheme was launched in the second half 
of 2007. Sectoral and thematic reports are expected to be issued in 2008. 
Sectors with positive results  
• Based on the aforementioned evaluation of CARDS assistance, positive results were 
achieved in 2007, notably in the following sectors:  
• In the "Social" cluster, Higher Education and Good Governance I/II projects, inter 
alia, are expected to be effective. The former has provided the benefici aries with the tools 
for membership of the European Quality A ssurance Network in Higher Education. The 
grantees of the latter intervention are on schedule to deliver their planned results that will contribute towards improving civic engagement  in the grant scheme’s target areas.  
• Interventions evaluated under "Internal Market, Competition & Agriculture"  show 
signs of having the positive impact intended. The system established under the Plant 
Health  project  is already functional and contribute to  the plant health sector meeting EU 
requirements. The Phytosanitary Inspection project has  developed the basis for the 
introduction of key measures in the sector such as a pilot passport system and a plant 
health register. 
• Within "Justice and Home Affairs" , the Border Management II  project is expected to be 
effective in introducing EU sta ndards in the field of border checks and in preparing Croatia 
to implement the Schengen acquis . The criminal intelligence system developed under the 
Criminal Intelligence II  project will support the delivery of planned results. The 
Combating Money Laundering  project has been particular ly effective and has already 
delivered some important outputs, princi pally the protocol on cooperation between 
government agencies operating in this field. 
The list of aforementioned sectors providing pos itive results is not exhaustive. Other sectors 
include, inter alia , assistance with Administrative Decentralisation and Water Management 
which is expected to  provide outputs that fit in with  ongoing strategic and legislative 
developments.  
Implementation of Phare assistance is relatively t oo recent to assess results in specific sectors. 
Success story
 
"Support to National Deve lopment Planning" Project 
The purpose of this CARDS 2003 project was to set foundations for the management of 
structural instruments in Croatia by establis hing structures and systems for programming and 
management of IPA components III and IV. 
IPA was designed to prepare the candidate co untries for the management of funds post-
accession. In order to utilise full potential of the new financial instrument, candidate countries 
were expected from the outset to define an  institutional setup for components III and IV 
which would continue to manage structural  instruments after ac cession. Since Croatian 
authorities had no experience on which they coul d build such a strategic decision, the project 
supplied a wealth of e xperiences from other countries incl uding analysis of advantages and 
disadvantages of each of them for Croatia, wh ich allowed the Government to design the IPA 
implementation system and appoint responsible persons even before the IPA legal basis was 
completed. 
 
EN 34   EN In addition, the project supported the NIPAC, Strategic Co-ordinat or and Operating Structures 
with multi-annual programming for componen ts III and IV. Further to the National 
Development Plan in force the project enabled the inter-minis terial co-ordination group to 
make selection of operations and investme nt projects to be funded between 2007 and 2009. 
Project experts worked closely with the bene ficiaries in drafting th e Strategic Coherence 
Framework and four operational pr ogrammes. Independently from those activities, the project 
also provided the expert team which carried  out ex ante evaluation of the operational 
programmes and ensured country-wide consu ltations based on the EU regional policy 
partnership principle. After th e Commission accepted the three- annual funding of the OPs, the 
project worked on the development of the monitoring and evaluation system for IPA 
components III and IV and prepar ed the institutions for meet ing visibility requirements. 
In 2007 the project was particularly  active in consolida ting the capacity of th e beneficiaries in 
order to pave the way for introduction of stru ctural instruments at accession. In order to do 
that it drafted the Structural and Cohesion Funds Readiness Strategy and Action Plan, which 
allowed Croatia to meet the opening benchm ark for negotiations under Chapter 22. The 
working methods of the project were such to en gage the beneficiaries as  much as possible so 
that in few years they can take part in th e programming and management of structural 
instruments relying much more on their own capacity. 
 
EN 35   EN 5. CYPRUS  
5.1. Summary 
In 2007, Cyprus continued to implement successfu lly the post-accession assistance to address 
the remaining needs related to IB  for the implementation of the acquis , in line with the 
Extended Decentralised Implementation System (EDIS). 
Since July 2004 implementation is carried out unde r the entire responsibility of the Cyprus 
authorities applying national procurement rules. A number of implementing agencies are fully 
responsible for daily implementation of projects. 
The National Aid Coordinator ( NAC) continued to exercise th e monitoring of both Phare and 
Transition Facility Programmes. The National Authorizing Officer (NAO) carries out the 
financial supervision. 
Since the closure of the Phare Transition Team in  the Representation in Nicosia as of end July 
2005, DG Enlargement continues to exercise the residual functions related to the Commission 
responsibilities (monitoring, payments, closure, etc.) in line with th e Financial Regulation. 
5.2. Pre-accession financial and Transition assistance in 2007 
Implementation  
– TF 2004 – finalisation of payments 
At the end of the period for execution of c ontracts for the 2004 TF programme 78.76 % of the 
funding had been disbursed. The Cypriot author ities did not request any extension for the 
2004 programme. The payments can still be executed  within 6 months afte r the expiry of the 
contracts execution period. 
– TF 2005 – rate of contracting  
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 98.35% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €19 million of post-accession assistance from national allocation (not 
including horizontal and multi-country programmes) has been allocated to Cyprus from Transition Facility programmes (2004-2006). 
During the period, there was substantial over all progress towards the achievement of 
objectives and results of the EU assistan ce. The projects under TF 2004 projects were 
successfully completed and achieved its results, which further contribute d to the enhancement 
of Cypriot public administration. However, under TF 2004 there was one exception under project "Capacity Buildi ng in the Field of Metrology in C yprus", where not all the results 
were achieved. This will be rectified by the Cypriot authorities from national funds.  
There were quite substantial savings under TF 2005 programme, which were reallocated into 
Unallocated Institution Building Facility. The UIBF was successfully contracted and has 
proven to be an effective tool in  meeting the remaining needs of acquis -related issues. 
5.3. Results and Impact 
State of play for JMC / SMSC development
 
In 2007, one Joint Monitoring Committee (JMC) meeting took place in March 2007, in line 
with the revised JMC Mandate introduced in the new Member States in May 2004, which 
 
EN 36   EN established an integrated monitoring a nd evaluation system over the programmes under 
implementation. The second one was implemen ted by written proce dure in October 2007. 
The JMC meeting was fruitful and helped to address the problems concerning implementation 
of the ongoing projects, to discuss horizontal/s ystemic issues and to identify possible 
solutions. The ISRs were of good quali ty and provided a sound basis for a 
discussion/feedback.  
In the year 2007, the monitoring sy stem was reorganised in Cypr us. It was affected due to 
simplified procedures introduced  by the European Commission and due to the rather small 
number of projects under TF 2005 and 2006 programmes.  
Within this reorganisation, a Programme Mon itoring Committee (PMC) was established as a 
main coordinating body that meets twice a year  and is chaired by the NAC. The PMC assesses 
progress towards the objectives and targets of th e projects by reviewing actual output, the rate 
of implementation, financial flows, etc. a nd makes relevant recommendations. The PMC's 
discussion is based on the Quarterly Progress Repor ts of the projects as well as the Monthly 
Financial Reports.  
M&E Reports in 2007 (lessons learned)  
Overall responsibility for m onitoring and evaluation of th e pre-accession and Transition 
Facility programme in Cyprus lies with the Planning Bureau, as th e executive body of the 
NAC.  
In 2007, two evaluation reports were released, both prepared by the external contractor. The 
Interim Evaluation Report was issued on 02 Fe bruary 2007 and covered Transition Facility 
2004 and 2005. The Country Summary Evaluation Report was released  in June 2007 and 
covered 2003 Pre-Accession programme, TF 2004 and 2005. 
The reports conclude that most of the projects have a positive impact and are rated as 
satisfactory, but more should be  done in terms of efficiency, though it has improved compared 
to previous reports. Serious risks have been de alt with, certain proces ses have been speeded 
up and deliverables have been under close scrutin y. In terms of impact, there is a potential for 
wider beneficial impact beyond the immediate obj ectives of the projects. The realization of 
this potential will however, require appropriate follow-up actions 
 
EN 37   EN 6. CZECH REPUBLIC  
6.1. Summary 
In 2007, the Czech Republic continued to implement successfully the post-accession 
assistance to address the remaining needs related to institution building for the implementation of the acquis , in line with the EDIS. 
Since December 2004 implementation is carried out under the entire responsibility of Czech 
authorities applying national pr ocurement rules. The Central Finance and Contract Unit 
(CFCU), the Civil Society Development Foundati on (NROS), Czech Invest (CI), the National 
Training Fund (NTF) and the Centre for Region al Development (CRD) are fully responsible 
for the daily implementation of the projects. 
The National Aid Coordinator (NAC) continues to  exercise the monitoring of both Phare and 
Transition Facility Programmes. The National Authorizing Officer (NAO) carries out the 
financial supervision.  
Since the closure of the Representation's Phar e Transition Team in Prague in July 2005, DG 
Enlargement exercises residual functions re lated to the Commission responsibilities 
(monitoring, payments, closure, etc.) in  line with the Financial Regulation. 
6.2. Pre-accession financial and Transition assistance in 2007 
Implementation
 
– TF 2004 – finalisation of payments 
At the end of the period for execution of cont racts for the 2004 Transition Facility programme 
91.40 % of the funding has been disbursed. The Czech authorities requested no extension for the 2004 programme. The payments can still be ex ecuted within 6 months after the expiry of 
the contracts execution period. 
– TF 2005 – rate of contracting  
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 86.91% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €32 million of post-accession assistance from national allocation (not 
including horizontal and multi-country programmes)  has been allocated to the Czech Republic 
from Transition Facility programmes (2004-2006).  
Implementation of Transition Facility in th e Czech Republic is considered generally 
successful in areas such as Nuclear Safety, Justice & Home Affairs, Social Protection & 
Health, Environment, Agriculture and Finance & Banking & Internal Market. 
As regards twinning, the Czech Republic has ta ken advantage to a limited extent of the 
Twinning instrument, since three Twinning Light projects were unsuccessfully circulated and 
subsequently not contracted. 
6.3. Results and Impact 
State of play for JMC / SMSC development
 
In 2007, one Joint Monitoring Committee (JMC) meeting took place in June 2007, and the 
second one was carried out through written proce dure in winter 2007 in line with the revised 
JMC Mandate introduced in the new Member States in May 2004, which established an 
integrated monitoring and evaluation syst em over the programmes under implementation. 
 
EN 38   EN The JMC meeting was fruitful and helped to address the problems concerning implementation 
of the ongoing programmes, to discuss horizonta l/systemic issues and to identify possible 
solutions. Several immediate actions were agreed upon and deadlines set for their 
implementation. 
In the year 2007, two rounds of Sector Mon itoring Sub-Committee (SMSC) meetings took 
place (in April and October). There are six sect ors to be monitored in the Czech Republic: 
Social protection and health, Agriculture/Environment, Civil Society Development, Nuclear 
Safety, Justice and Home Affairs and Internal Market, Finance and Banking. 
M&E Reports in 2007 (lessons learned)  
Overall responsibility for monitoring and eval uation of Phare and the Transition Facility 
programme in the Czech Republic li es with the Ministry of Fina nce (MoF). Activities in this 
area were carried out on the basis of the Acti on Plan on decentralisation of Monitoring and 
Evaluation, which was endorsed by the EC in May 2005.  
In 2007, 5 IE reports, two C ountry Evaluation Summary Repor ts on Transition Facility 
programmes in the Czech Republic were issued. 
The Phare Country Evaluation Summary report provi des a consolidated country review of the 
findings of the Interim Evaluation Reports th at were prepared between April and May 2007 
and September and October 2007. It concludes that the efficiency of the use of Phare 
assistance continues to be threat ened by high staff turnover, a re sulting lack of institutional 
memory, and insufficient staff numbers. The Tr ansition Facility Country Evaluation Summary 
report identifies projects manage d by the Ministry of Health as problematic, due to their poor 
institutional ownership.  
 
EN 39   EN 7. ESTONIA  
7.1. Summary 
In 2007, Estonia continued to implement successfu lly the post-accession assistance to address 
the remaining needs related to institution building for the implementation of the acquis , in line 
with the EDIS. 
Since November 2004 implementation is carrie d out under the entire  responsibility of 
Estonian authorities applying national procuremen t rules. The Ministry of Finance, Central 
Financing and Contracting Department (CFC D) is fully responsible for the daily 
implementation of the projects. 
The National Aid Coordinator ( NAC) continued to exercise th e monitoring of both Phare and 
the Transition Facility Program mes. The National Authorizing Officer (NAO) carries out the 
financial supervision.  
Since the closure of the Phare Transition Team in the Representation in Tallinn as of July 
2005, DG Enlargement continues to exercise the residual functions related to the Commission 
responsibilities (monitoring, payments, closure, etc.) in line with th e Financial Regulation. 
7.2. Pre-accession financial and Transition assistance in 2007 
Implementation  
– TF 2004 – finalisation of payments 
At the end of the period for execution of cont racts for the 2004 Transition Facility programme 
85.18 % of the funding has been disbursed. The Es tonian authorities requested no extension 
for the 2004 programme. The paymen ts can still be execu ted within 6 months  after the expiry 
of the contracts execution period. 
– TF2005 – rate of contracting 
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 86.54% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €18 million of post-accession assistance from national allocation (not 
including horizontal and multi-country programmes) has been allocated to Estonia from Transition Facility programmes (2004-2006). 
In 2007, Estonia made very good progress in im plementing the Transitio n Facility 2004 and 
2005 projects. TF 2004 projects were all comple ted by the execution deadline, some even far 
prior to it. On the other hand, some of the projects faced very tight implementation period 
because of changes needed to be introduced in the project fiches for various reasons. 
However, in conclusion it can be said that a ll projects contributed to meeting the remaining 
needs of acquis  and enhanced the Estonian administrative system.  
The projects under TF 2005 are also progress ing well and no major problems have been 
encountered. Some of them had been al ready completed during 2007 or earlier. 
In 2007 there were quite significan t changes in the structures of  the Ministry of Finance of 
Estonia, which were related to the EDIS syst em and implementation of the TF programmes. 
These changes however did not affect the im plementation of the projects under Transition 
Facility Instruments. 
 
EN 40   EN 7.3. Results and Impact 
State of play for JMC / SMSC development  
In 2007, one Joint Monitoring Co mmittee (JMC) meeting took place in February 2007, in line 
with the revised JMC Mandate introduced in the new Member States in May 2004, which 
established an integrated monitoring a nd evaluation system over the programmes under 
implementation. The second one was by written procedure in June 2007. 
In 2007, no Sector Monitoring Sub-Committ ee (SMSC) meetings have taken place. 
Monitoring reports have been prepared tw ice during the year and approved via written 
procedures by the SMSC members. There are ei ght sectors to be monitored in Estonia: 
Justice, Home Affairs, Finance, Environment, Internal Market and Transport, Agricultural, Social sector, and Education. 
M&E Reports in 2007(lessons learned)
 
Overall responsibility for monitoring and evalua tion of the Phare programme in Estonia lies 
with the Ministry of Finance (MoF). Current ly, the Foreign Financing Department provide 
services to the NAC in the State Budget Depart ment. Activities in this area were carried out 
on the basis of the Action Plan on decentralis ation of monitoring and Evaluation, which was 
endorsed by EC in February 2005. 
In 2007, Thematic Evaluations were introduced. Th e topics of these could be selected by a 
country but should have been approved by DG Enlargement. A contract for evaluation with 
external contractor was signed in 2007. The following evaluati on reports were prepared and 
released during the year:  
(1) Transition Facility Interim Eval uation Country Summary Report VI 
(2) Interim Evaluation Report of 2004 Transition Facility Programme 
(3) Utilizing Phare/TF evaluation recommendations 
In addition, Phare Interim Evaluation Report on Home Affairs Sector was prepared and 
released in August 2007.  
The main recommendations were related to th e need for creating a sustainable knowledge 
base so that the experience and knowledge acquired from the proj ects would not be lost; best 
practice should be more widely spread, increa sing the role of Steer ing Committees, involving 
IT experts from the start of the project (in the future) if the projects are technically 
complicated, more active application of the re commendations of previous evaluations. Also, 
in order to become a Twinning provider, syst em should be put in place and a respective 
strategy should be created, which addresse s organisational and operational aspects.  
 
EN 41   EN 8. THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA  
8.1. The year in review 
Political developments  
The pace of reforms in the former Yugoslav Re public of Macedonia was, on the whole, slow 
for most of the year. The country ma de some progress in addressing the political criteria. 
However, frequent tension and problems in achieving constructive dialogue between major 
political actors undermined the effective function ing of the political institutions and led to a 
slowdown in reforms. 
However, following publication of the 2007 Progr ess Report there were signs of reforms 
gaining momentum. Improved cooperation among political parties and between the Prime 
Minister and the President has led to incr easing consensus on EU-related reforms. These 
include appointments to the Judicial Council by  Parliament and the adoption of laws on the 
Public Prosecutor's Office, on the Council of Public Prosecutors and on the Composition of 
the Committee on Inter-ethnic Relations. Progress has also been made in police reform and 
decentralisation. Ensuring good neighbourly rela tions and finding negotiated and mutually 
acceptable solutions to unresolved issues with neighbours, in line with the Council conclusions of December 2007, remains essential. 
Macroeconomic developments and structural reforms
 
The economy of the former Yugoslav Republic of  Macedonia registered a markedly 
accelerated growth. Macroeconomic stability has b een maintained and structural reforms have 
further progressed, but the pers istence of very high unemploym ent remains a major cause of 
concern. Institutional weaknesses and deficiencies in the rule of law still hamper the smooth functioning of the market economy and affect the business climate. 
Regarding the economic criteria , the former Yugoslav Republic of Macedonia is well 
advanced in, and has further moved towards establishing a functioning market economy. It 
should be able to cope with competitive pressure s and market forces within the Union in the 
medium term, provided that it vigorously implements its comp rehensive reform programme in 
order to reduce significan t structural weaknesses. 
Progress in meeting the acquis communautaire
 
The former Yugoslav Republic of Macedonia ha s made further efforts to improve its ability 
to assume the obligations of membership . There was some progress in the fulfilment of the 
short term priorities of the European partners hip. The country still faces major shortcomings 
in implementing and effectively enforcing le gislation. Adequate human and financial 
resources to fully implement th e SAA are lacking. Large scale replacement of qualified staff 
following political changes hampered effo rts to improve administrative capacity. 
8.2. Financial assistance in 2007 
Programmes launched  
As of 2007, the CARDS programmes were repla ced by the new Instrument for Pre-accession 
Assistance. No new progr ammes were launched. 
Overview of programmes implemented  
During 2007, the CARDS programme was the ma in programme delivering the needed 
assistance for addressing the European prio rities of the country. The implementation 
concerned the annual programmes from 2002 until 2006. 
 
EN 42   EN The former Yugoslav Republic of Macedonia r eceived a total allocation of €231 million under 
CARDS programmes between 2002–2006. This alloca tion concentrated on several sectoral 
objectives referring to the priorities identified in the Progress Report and the European Partnership for the former Yugoslav Republic of Macedonia. These priorities translated into 
the following financial allocations by priority: 
• Democracy and the rule of law: €56.6 million 
• Economic & social development: €59.2 million 
• Justice and home affairs: €62.6 million 
• Environment and natural resources: €6.3 million 
• Other: €35.3 million 
The key programming documents for CARDS 2002-2006 were the CARDS Country Strategy 
Paper 2002-2006, Multi-annual Indicative Progr ammes of 2002-2004 and of 2005-2006 and 
annual action programmes for each annual progra mming cycle. The programming documents 
were prepared with reference to  the Stabilisation and Associa tion Agreement, annual progress 
reports, European Partnership, and the Nati onal Plan for the Adoption of the Acquis. 
The CARDS Programme was mainly managed by the European Agency for Reconstruction. 
Starting its operations in 2002, th e EAR took over responsibility  for the previous programmes 
and took forward the implementation of CARDS. 
In the year 2007 procurement processes were u nderway for the completion of the contracting 
of the CARDS assistance.  
Strengthening the public administration 
Assistance was provided in the set-up of the Di rectorate for Personal Da ta Protection as an 
independent and legitimate state body. A separa te twinning programme partnering officials 
from the Macedonian and Dutch finance minist ries is aimed at improving transparency, 
effectiveness and efficiency in the use of public funds.  
Helping bring about economic reform 
To further the country's economic developmen t, the EU commenced a new Human Resources 
Development Fund programme seeking to improve  the level of compet ence of managers in 
the business community through improved access to  training and services  and to increase the 
competences of local business service pr oviders. Through a separate EU-supported 
programme to the SME Development, the aim is  to support economic growth and improve the 
business climate in the country by fostering the development and performance of SMEs.  
Aligning environment rules with EU best practices 
In order to promote environment friendl y management, the National Strategy for 
Environmental Approximation was developed. With the help of EU  funding, the project 
provided gap analyses of 19 relevant environm ental directives and broad analyses of the 
remaining legislation. Additi onally, new environment projects were put in place in the 
following areas: elimination of industrial hots pots, municipal waste water management and 
healthcare risk waste management. The aim is to  catalyse IFI funding in the relevant fields.  
Supporting police reform 
Under a twinning arrangement, the Ministry of Interior received assistance from the Police 
Academy of Brandenburg (Germany) for the im plementation of the Law on Police. Under a 
separate initiative with a member state (Fran ce), international police e xperts were deployed to 
 
EN 43   EN support the implementation of the National Polic e Reform Strategy at the regional and local 
levels.  
Towards a more independent judiciary 
The IT Centre for the Judiciary was established in securing an efficient and independent 
judicial system and to contri bute to better communi cation among the judici al institutions. In 
penitentiary reform, a grant arrangement was launched with the Council of Europe with a 
focus on the full implementation of professi onal standards in prison administrations.  
Increasing trade opportunities 
In an effort to boost the country’s agricult ural sector, the EU c ontinued to support the 
National Animal Identification System aiming to complete the establishment of an integrated 
animal identification, holding re gistration and movement control system for small ruminants. 
In a separate programme, the EU provided as sistance for the establishment of a National 
Vineyard Monitoring and Management System.  
Strengthening the civil society 
A platform was established among the civil so ciety organisations in  the country. The EU 
assistance programme targeted civil society orga nisations to help them  assess the quality and 
accountability of the governance system. In  furthering social cohesion, a Roma 
Representative Body was establis hed to lobby on behalf of th e Roma community for greater 
participation of the Roma community in public life.  
Preparing the country for new IPA funding 
The European Agency for Reconstruction played an  important role in translating the priorities 
into project ideas in the framework of the newly launched Instrument for Pre-Accession 
Assistance. The Agency committed eight differe nt service contracts funded under CARDS to 
assist the country with the programming of the Instrument for Pre-accession Assistance (IPA). 
To support the programming of IPA, the drafting of the compulsory documents (16 of them) 
was completed and assistance was provided in tendering the first projects under IPA. 
CARDS management performance  
The CARDS programme implementation duri ng 2007 concerned the programmes 2002 till 
2006. The objectives for CARDS delivery for 2007 were completion of payments for the 2002 and 2003 programmes, completion of the c ontracting for the 2004 programmes, and 
contracting bulk of allocations  for the 2005 and 2006 programmes. 
In 2007, a total of 41 contracts - 4 works contract s, 10 supply contracts, 18 service contracts 
and 9 grants - were signed fo r a total value of €37.1 Million.  
In 2007, a total of €39.3 Million was paid. Payments for the 2002 programme were 
completed. 
The Agency portfolio in the former Yugos lav Republic of Macedonia amounts to some 
€326.5 million. It covers projects financed  under CARDS (2002-2006), projects financed 
under Phare (1997-2000) and the Emergency Res ponse Programme (2001). As of 14 April 
2008, 97% of these funds have been contra cted of which 92% have been paid.  
Please see Table below: Key figur es at a glance, 21st April 2008 
  1997-2000  2001  2002  2003  2004  2005  2006  Total  
Allocation* 79.5 56.5 33 36 53.5 34.5 33.5 326.5  
 
EN 44   EN (€ million) 
Committed/ 
Allocated % 100% 100% 100% 100% 100% 95% 72% 97%  
Paid/ 
Committed % 100% 100% 100% 99% 85% 82% 49% 92%  
Institution Building highlights  
The twinning mechanism  was extensively used during 2 007 in many priority areas and 
helped the country prepare for the implementa tion of EU policies a nd laws. In 2007 two new 
twinning projects were launched: public internal  financial control with the Netherlands and 
harmonisation of labour legislation with Slova kia. In 2007, we completed twinning projects 
conducted by Germany on police reform processe s and competition aut hority. The twinning 
project with the Netherlands and Hungary was also completed during 2007 tackling drugs 
related crimes. The twinnings on the police education with the Netherlands, on statistics with 
Germany and Slovenia, on air quality with Fi nland and Austria, on money laundering with 
Spain, and on Prosecutor’s office with Italy continue d with their operations. To date, a total of 
11 fully-fledged twinning projects for a total amount of €13.2 million have been financed out 
of the CARDS Programme. In addition, a further 1 fully fledged twinning project (on energy) 
and 4 twining light projects (on policy planning, on insurance supervisio n agency, on public 
revenue office and on decentralised implementation system) were programmed during 2007 under IPA’s component I. The selection pr ocess is underway for most of them. 
Grants  awarded to eligible EU member state institutions has been used as additional 
instrument for institutions bu ilding specifically targeting the policing reforms in the country. 
In 2007 one grant project (with France) wa s launched under CARDS funds. The year 2007 
saw the completion of a grant project with Ge rmany taking forward the implementation of the 
police reform priorities. To date, a total of 3 grant projects for a total amount of €10 million 
have been financed out of the CARDS Programme.  
Other institutions building instruments have included technical assistance (service contracts), 
direct award grants to specialised internatio nal organisations and gr ants to civil society 
organisations. 
8.3. Results and impact 
M&E Reports in 2007 - Lessons Learned
 
The step-by-step establishment of the administrative structure for decentralised management 
of EU funds and the requirements for the mana gement of IPA are leading elements in the 
evolving organisational set-up for the progra mming and subsequent management of EU 
funded projects. While it rema ins a challenge to allocate both sufficien t resources to the 
management structures and to develop and implement th e appropriate regulations, 
improvements can be noted in the involvement  of different government agencies in the 
development of the projects. 
Despite a general improvement, significant disp arities between different government bodies 
persist. Where the Ministry of Interior for instance is taking a more leading role in both project development and project management, ot her ministries continue to face serious 
difficulties in assuming their (c ontractual) responsibilities. Continued support to build 
capacities in project development and management will remain necessary. 
 
EN 45   EN Further structural improvements in public ad ministration remain a priority. Three core 
functions stand out. Firstly the budget planning process needs to ensure that sufficient resources are allocated to the ministries and de partments to maintain the investments and – in 
some cases – appropriately implement core work processes. Secondly, human resource 
management does not only need to guarantee sufficient staff to implement the relevant mandate, but also sufficiently qualified staff and a stable staff establishment. And thirdly, the 
activities of an individua l ministry or department do not only need to refer to a sector strategy, 
but also be well coordinated with other stake holders in the process, which include other 
departments in the same ministry, other governme ntal bodies as well as the support activities 
of the international community. 
Although addressing these structural public admi nistration issues through capacity building 
projects will remain necessary, highlighting these issu es in the sub-committees proves to be 
an excellent tool to focus attention. 
Sectors with positive re sults - Success story
 
Higher education gets a boost: EU committed €2.37 million to extend the  campus of South 
East European University  
The South East European University (SEEU) wa s established in Tetovo in October 2001, and 
soon became a strong promoter of interet hnic relations and understanding, by offering a 
tolerant, multi-lingual, multi-cultu ral approach to teaching and sc ientific research. Today the 
University has a student popul ation of 8,000 in 12 undergrad uate and 13 post-graduate 
programmes. To help the univers ity cope with its fast growt h, the EU, through the European 
Agency for Reconstruction pr ovided €2.37 million to  extend the univer sity campus and 
provide additional teaching and office space and administration se rvices. The extension of the 
campus was supported by the EU following a speci al decision of the European Commission. 
The SEEU was able to contribute €0.47M to th e costs of construction. The new premises of 
the Business Centre for Education and Post-g raduate Studies at the South East European 
University (SEEU) were opened on 17 September 2007.  
9. HUNGARY  
9.1. Summary 
In 2007, Hungary continued to implement su ccessfully the post-accession assistance to 
address the remaining needs related to inst itution building for the implementation of the 
acquis , in line with the EDIS. 
Since June 2004 implementation is  carried out under th e entire responsibil ity of Hungarian 
authorities applying na tional procurement rules. The CFCU -Central Finance and Contract 
Unit, the ESF-European Social Fund Agency  and the VATI-Hungarian Public Company for 
Regional Town Planning are fully responsible fo r the daily implementation of the projects. 
The National Aid Coordinator (NAC) continues to  exercise the monitoring of both Phare and 
Transition Facility Programmes. The National Authorizing Officer (NAO) carries out the 
financial supervision.  
Since the closure of the Phare Transition Team in  the Representation in Budapest as of July 
2005, DG Enlargement continues to exercise the residual functions related to the Commission 
responsibilities (monitoring, payments, closure, etc.) in line with th e Financial Regulation. 
9.2. Pre-accession financial and Transition assistance in 2007 
Implementation  
 
EN 46   EN – TF 2004 – finalisation of payments 
At the end of the period for execution of cont racts for the 2004 Transition Facility programme 
67.41 % of the funding has been disbursed. The H ungarian authorities requested no extension 
for the 2004 programme. The paymen ts can still be execu ted within 6 months  after the expiry 
of the contracts execution period. 
– TF 2005 – rate of contracting 
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 88.56% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €36 million of post-accession assistance from national allocation (not 
including horizontal and multi-country progra mmes) has been allocated to Hungary from 
Transition Facility programmes (2004-2006).  
Implementation of Transition Facility in Hungary  is considered successful in most areas, 
where most projects are reaching foreseen obj ectives and the assistance provides real value 
added to scarce public funds. 
As regards twinning, Hungary has taken advant age to a limited extent of the Twinning 
instrument, since three Twi nning Light projects were unsuccessfully circulated and 
subsequently not contracted. 
9.3. Results and Impact 
State of play for JMC / SMSC development  
In 2007, two JMC meetings took place in Februa ry and June 2007, in line with the revised 
JMC Mandate introduced in the new Member States in May 2004, which established an 
integrated monitoring and evaluation syst em over the programmes under implementation. 
In the year 2007, following the Commission's simplification proposal regarding the JMC 
functioning, in Hungary the Se ctor Monitoring Sub-Committee (SMSC) meetings and reports 
were abandoned. However, monthly implem entation review meetings (IRM) were 
strengthened and evaluations aligned and adap ted to the simplified monitoring scheme. IRM 
became the central tool of the monitoring system . The monitoring sectors were reduced to the 
following: Agriculture, Social  and Health, Political Criteria, Environment, Internal 
Market/Transport, Public Finance and Customs, Justice and Home Affairs. 
M&E Reports in 2007 (lessons learned)  
Overall responsibility for monitoring of the Phare and Transition Facility programmes lies 
with the National Aid Coordinato r (NAC) in the National Development Agency. Activities in 
this area were carried out on the basis of the Evaluation Plan on decentralisation of 
Monitoring and Evaluation contracted by the N DA on the ground of the requirements of the 
European Commission. 
The independent evaluator prepared Interim Eval uation reports in order to evaluate all Phare 
sectors in 2007. The evaluator prepared al so the Country Summar y Evaluation Review 
(CSER) for the JMC of February and June 2007. 
The conclusions available from the Interim Eval uation reports are that, on the whole, the EU 
assistance has been well implemented, and this  assistance has satisfactory supported the 
institution building related to the accession process.  
 
EN 47   EN Depending on the sector, the effectiveness wa s considered satisfactory and management 
efficiency to overcome delays adequate. Th e contracting and impl ementation were still 
lagging behind the originally planned schedule.  
10. KOSOVO (UNDER UNSCR  1244/99) 
10.1. The year in review 
Political Developments  
In November 2005, former Finnish President Martti Ahtisaari was appointed the special 
envoy of the UN Secretary General (UNSG) to pr epare a proposal for the future status of 
Kosovo. Following a number of status consulta tions and a final high-level meeting between 
Belgrade and Pristina on 10 March 2007, Mr Ahtisaari deliver ed a Comprehensive Proposal 
for the Kosovo Status Settlement to the UNSG on 15 March. The UNSG forwarded Mr Ahtisaari's Proposal to the UN S ecurity Council. Belgrade and Pristina maintained divergent 
positions as to whether Kosovo should be independe nt or be an autonomous part of Serbia; 
whereas the Kosovo Assembly confirmed its satis faction with the Ahtisaari Proposal , it was 
rejected by Serbia. On 1 August, the UNSG endorsed a ne w initiative on determining 
Kosovo's status via further negotiations, mediat ed by an EU-US-Russia troika. Direct talks 
between Pristina and Belgrade unde r the auspices of the troika started on 28 September. On 
10 December 2007, the troika reported to the UNSG that the negotiations had failed to bring 
about an agreed outcome. 
Macroeconomic developments and structural reforms
 
Kosovo's official GDP per capita was 1118/year  in 2006. Growth estimates for 2007 stood at 
3.5%. Inflation remained low until 2007 (1,6 in 2006) but could well peak to 12% in 2008. 
The level of unemployment is substantial (4 7% in 2006), and growing. The size of the 
informal economy is significant although no estim ates are available. As a result, actual 
expendable revenue per capita could be higher and is boosted by remittances from abroad. 
Public finances in Kosovo were healthy, with  the budget showing a surplus of 6,5% of GDP. 
The Euro is the de facto curr ency of Kosovo. Fiscal policy is  conducted on the basis of the 
Medium Term Expenditure Framework. As concer ns foreign trade, the balance of payments 
showed a deficit of 24% of GDP. FDI has grow n steadily from less than  1% of GDP in 2004 
to 12% in 2007. However, this would include  investment in small scale commercial 
undertakings, with limited value added and re presenting a modest c ontribution to GDP. No 
bilateral trade agreements ex ist with the EU. Kosovo benef its from autonomous trade 
preferences granted to the count ries of the region, allowing for free access to the EU market. 
Kosovo is part of CEFTA. Membership of th e IMF would open the door  to involvement of 
IFIs. The EBRD and EIB only have a limited presence in Kosovo. 
Progress in meeting the acquis communautaire  
Kosovo is participating in the Stabilisation and Association Process (SAP). Meetings of the 
SAP Tracking Mechanism were held in Marc h and November 2007 (check). In March 2007, a 
new structure of sectoral meetings for th e STM was established in the areas of good 
governance, economy, internal market, innovation and infrastr ucture. The new structure 
provides the mechanism for a more detailed analys is of the conformity of the legislation, 
practices and policies in Kosovo in European standards. The EU provides guidance to the 
authorities on reform priorities through the European Partnership. Progress on these reform 
priorities is encouraged a nd monitored through the STM. 
 
EN 48   EN 10.2. Financial assistance in 2007 
Programmes launched  
As of 2007 the CARDS programmes were repla ced by the new Instrument for Pre-accession 
Assistance. No new progr ammes were launched. 
Overview of programmes implemented  
While 2007 is the first year of a new financial assistance programme, the Instrument for Pre-
Accession (IPA), the European Agency for Reconstruction (EAR) remained responsible for the implementation of the ongoing EC assistance  under the CARDS instru ment, amounting to 
some €170 million and involving over 80 projects. 
The main developments of the CARDS progr amme managed by the European Agency for 
Reconstruction in 2007 include the following: 
Enhancing economic and social sustaina bility of minority communities  
The CARDS funds are supporting employment generation and community development in 
disadvantaged minority communities, directly assisting the returns process in coordination with the Kosovo government and United Nations Mission in Kosovo (UNM IK). This requires 
a direct involvement at the field level, prov iding direct support for the resettlement and 
stabilisation of returnees in their communities.  At the same time, it is also necessary to 
provide assistance at the central level, building the institutional capacity of the Ministry of 
Communities and Returns to effectively coordina te the process. A special emphasis was put 
on assisting the reconstruction of Kosovo’ s religious sites damaged in March 2004.  
Building democracy through media and civil society 
The CARDS Programme contributes to strengt hen skills and professional standards of 
journalists and media operato rs in Kosovo through an ad hoc  programme aimed at developing 
the media sector to operate as an independe nt, responsible and efficient service for all 
Kosovo’s communities. The civil society progra mme aims to build the capacity of civil 
society organisations (inclu ding local NGOs, the social partners, and community and 
professional associations) to play a key role in the deve lopment of the economic and 
democratic governance.  
Guiding Kosovo on the path towards Europe 
CARDS Programme continues to build the institutional capacity of the PISG (Assembly, 
ministries, and municipalities) to more eff ectively perform their gov ernance roles and to 
strengthen the rule of law, in  line with European Partnershi p priorities and EU  best practice 
approaches, while also taking into account the i ssues arising from the gradual transfer of 
competencies from UNMIK. Prio rity interventions focused on:  providing further support to 
the Agency for European Integration; building the professionalism of the civil service; improving public finance management; providing sector support to build up institutional capacity in the justice sector; re forming the juvenile justice sy stem; and further strengthening 
border and boundary management. 
Fighting poverty through sustainabl e industrial and rural development 
The CARDS economic and social development programme aims to promote sustainable 
development as a key step in combating poverty.  Assistance is provided to increase domestic 
and foreign direct investment; develop a quality standards infrastructure to improve industrial 
competitiveness and exports; support enterprise  development in disadvantaged areas and 
among marginalized groups; strengthen corpor ate finance; proceed on the privatisation 
process and incorporate public ow ned utilities. The development of rural economy is targeted 
 
EN 49   EN through further institution building support to the Ministry of Agriculture, Forestry and Rural 
Development, and the support to improve natural resource management. The EU's commitment towards economic sustainability is tackling two more key sectors: as concerns 
Kosovo’s transport policy, CARDS programme s upported the preparation of a strategy based 
on the multimodal transport approach; the establishment of a demand-driven system, based on closer ties with the business sector, is inst ead driving the Agency’s effort assisting the 
Vocational Education and Training sector. 
Shaping Kosovo’s participation in the En ergy Community of South East Europe 
The rehabilitation of the energy sector re mains a key pre-condition for the economic 
development of Kosovo. The CARDS Programme in th is field is tackling different aspects at 
the same time: assisting the Ministry of Ener gy and Mining and the Energy Regulatory Office 
to formulate and implement energy policies; st rengthening the capacities of the independent 
Transmission System and Market Operator (TSMO)  to be a reliable partner of the south-east 
Europe energy community; provi ding support to initiatives aimed at expanding production 
capacities (like the World Bank’s Power Lignite In itiative). At the same time the Agency is 
providing both capacity building assistance to strengthen the human resources’ quality and 
skills, as much as conc rete technical support to complete  the physical reha bilitation of the 
infrastructural and mechanical resources of the energy company KEK. 
Strengthening local government to  support democratic governance 
The CARDS support to local govern ance follows a cross-sector a pproach. Projects providing 
assistance to local government institutions can be found in different operation sectors, 
reflecting the multi-faceted res ponsibilities increasingly assumed by local authorities. The 
programme assisted 21 of the 30 Kosovo municipa lities in preparing th eir local development 
strategies, with a specific em phasis on the rural development aspect. Rural development was 
also the objective of two pilot pr ojects run in cooperation with municipalities to test modern 
market-based approaches to land consolidation. Reconstruction of physical  infrastructures is 
the main objective of several municipal deve lopment projects under implementation in all 
municipalities that achieved se nsitive progresses in fulfilling the UN Standards for Kosovo. 
At the central level, the CARDS Programme is building the institutional capacity of the 
Ministry of Local Government to effectivel y perform its mandate and providing hands-on 
advice directly to the municipalities to improve  service delivery to c itizens. The development 
of an integrated Public Inve stment Programme is also provi ding support to local government 
reforms and will ultimately improve the delivery of public services at the local level.  
CARDS management performance 
The assistance provided by the European Uni on - including the CARDS programme is aimed 
at facilitating Kosovo’s progress towards th e creation of a democratic and multi-ethnic 
society. During 2007 the EAR with the support of  the European Commission has managed to 
contribute to the achievement of this overarc hing objective through the projects mentioned 
above. Only in 2007 EAR managed to contract more than € 70  million and disburse more than 
€ 51 million of the CARDS Programme. The cumulative portfolio managed by the EAR in 
Kosovo amounts to €1.1 billion.  As of 31 December 2007, 99% of these funds had been 
contracted and 93% paid. Almost 87% of th e CARDS 2006 programme has been contracted, 
thus showing the Agency’s capacities to deliver,  quickly and effectivel y, quality assistance in 
line with EU priorities for Kosovo. 
Challenges & other issues 
The Agency for European Integration  
as a co-ordination body for EU integration matters 
still needs support to devel op its administrative capacity.  
 
EN 50   EN Efficiency of Public Administration  in Kosovo is gradually in creasing, however, the overall 
performance still remains weak in relation to policy-making, and foregoing strategic planning, 
and legislation implementation and enforcement.  
There are several gaps identified limiting  Access to Justice  for vulnerable groups. The report 
assessing the “Access to Justice for Minority Co mmunities in Kosovo”, released in July 2007, 
while praising the good legislative framework existing in Kosovo to grant protection of 
minorities’ rights, underlines that the implementati on of the relevant norms is still quite low.  
Institution Building highlights  
The CARDS programme during 2007 has continue d supporting the institutions of Kosovo by 
building their capacity to effectively perform th eir mandates. Some of the highlights covering 
the reporting period include: 
• In close coordination with the EU Police and Justice Planning Team  in Kosovo, the 
CARDS Programme is providing support to the Ministry of Justice , with a view to 
develop and strengthen the just ice structure in order to gua rantee an area of freedom, 
security and justice for all Kosovo citizens,  in accordance with EU standards and best 
practices;  
• Supporting the Ministry of Internal Affairs  (MoIA) to facilitate a smooth transfer of 
powers from UNMIK to the Ministry establis hed by the end of 2005. In cooperation with 
UNICEF a joint project was launched to reform of the juvenile justice system . The 
project is aimed at establishing a juvenile ju stice system based on ch ildren’s rights and to 
promote a juvenile crime prevention programme; 
• Improving border/boundary management  in Kosovo in order to facilitate the flow of 
goods and people in the region, while comba ting trans-national crime and improving the 
level of inspection and border/bound ary control, in line with the  Guidelines for Integrated 
Border Management in the Western Balkans . This includes establishing the Integrated 
Border Management (IBM) system  and infrastructure works at three border police 
stations;  
• Assisting local institutions to combat financial and economic crime  including; money 
laundering; financing of terrorism; and confiscating the proceeds of crime;  
• The Modernisation of Kosovo Courts  which rolled out a Case Management Information 
System to all minor offence, district and municipal courts, the Supreme Court and the 
Public Prosecutors Offices; 
• Rehabilitation of the Dubrava Detention Centre and building new workshops to be used 
for training detainees, possibly helping them to return to a gainful employment after their 
time in the centre;  
• Support to the Statistical Office of Kosovo  (SOK) through several components: to 
further improve the regular production a nd dissemination of re levant, accurate and 
comparable official statistic s and support to SOK to prepar e for the population and housing 
census. CARDS funds are also supporting vi a a grant to the Council of Europe the 
International Monitoring Operation chaired by Eu rostat to observe and provide guidance in 
all phases of the census 
• Support to local government institutions  can be found in differe nt operation sectors, 
reflecting the multi-faceted responsibilities increasingly assumed by local authorities. 
Complementary to this is the €15 million pr ogramme to upgrade the social and economic 
infrastructure of a number of  municipalities throughout Kosovo; 
 
EN 51   EN • Support to the public finance management sector  including the second phase of the project 
to support the Office of the Auditor General  (OAG) of Kosovo;  
• Support to Kosovo’s institutions to implement a coherent public investment programme 
to further strengthen the capabilities of th e Ministry of Economy and Finance and the 
budget organisations in all ministries and mu nicipalities to better manage and control 
public spending; 
• Support to the Public Procurement System contributed to the establishment of a 
professional and efficient public procuremen t system, in line with the EU acquis; 
• Supporting the Public Internal Financial Control and Internal Audit  with a view to 
increase the capacity of the internal audit f unction of Kosovo Government and to improve 
the effectiveness and efficiency of public spending;  
• Supporting Kosovo on the path towards Eu rope by building the capacities of the 
government to more effectively perform thei r governance in line with  the EU partnership. 
This includes the project called Capacity Building on European Integration  (CBEI) 
which aims at strengthening the capacity of Kosovo institutions to implement EU 
compatible reforms and the Young Cell Scheme project which provides scholarships for 
Kosovo graduate students  to attend Master’s degrees in  European Studies at some of 
Europe’s most prominent universities. 
10.3. Results and impact 
Monitoring and Evaluation Reports in 2007 - Lessons Learned  
The EAR / Advisor for Monitoring and So cial Development Programming and Quality 
Assurance Division, has produced a thorough paper on lessons learned from Monitoring 
(covering the period from 2004-200 6) since the adoption of th e Monitoring Action Plan in 
September 2004. 
The paper was compiled based on careful stu dy of all Monitoring Re ports/Fiches produced 
since September 2004, and the lessons introduced  there focus on those problems which are 
both recurrent (as they have been coming up  repetitively in a num ber of projects) and 
structural (in the sense that they permeate a diversity of sectors and are encountered in a 
number of Operational Centres, in cluding Pristina Centre as well). 
The Monitoring Reports and Project Fiches prod uced in 2007 for the projects implemented in 
Kosovo have been thoroughly st udies by the MN& E team in Pristina and they have come up 
with a conclusion that a considerable improveme nt has been achieved in most of the issues 
addressed in the above mentioned paper, while  some others remain still valid without 
significant changes. It is wort h to emphasise the very good progress done in some of the 
projects in the treatment of cross-cutting issu es (CCIs). Besides the CCIs treatment, other 
issues which have been substantially improve d in the past months are: the quality of 
contractor’s reporting, vi sibility, even ToRs which have b een drafted in a more reasonable 
manner. This is mainly a contribution of the monitors’ permanent recommendations to Programme Manager and Task Managers to th e relevant issues, including here proper 
integration of cross-cutting issues. 
Sectors with positive results
 
Return and Reintegration 
The Agency facilitated the return of 27 families belong ing to the Roma, Ashkali and 
Egyptian communities to their rebuilt houses in the Kline/Klina municipality. 
 
EN 52   EN An additional 78 projects were approved to receive grants aimed at securing or creating 
jobs within minority communities  through the programme supporting Stabilisation of 
Communities (SSC), bringing the total to 152 approved projects. 
Justice and Home Affairs 
The EAR managed programme supporting the Mini stry of Justice released two reports 
assessing the “Access to Justice in Gender related cases” and the  “Access to Justice in 
Environment related cases” . While the first report praised the efforts made by the 
Government of Kosovo to promote gender eq uality, the second found that citizens lack 
sufficient knowledge about the exercise of thei r environmental rights. It also found that 
lengthy and expensive legal pro cedures are preventing the mo st vulnerable groups from 
bringing environmental legal di sputes before the courts. 
The project to establish an Integrated Border Management system  was completed in 
December. It will strengthen the fight agains t trans-border crime while  facilitating legitimate 
border flows. 
The project to modernise Kosovo’s courts was completed by the end of December. Thanks to 
the project, all Courts’ and Prosecutors’ offices  are now using new software for registering 
and tracking cases facilitating an improved and faster processing of judicial cases . 
Rural Development 
A new primary school located in Fush ë Kosovo/Kosovo Polje was inaugurated  at the 
beginning of November. The new building can ac commodate 322 pupils in conditions that are 
appropriate for educating children. 
The Marketing Support Project aiming at establishing a financially sustainable and 
practical Marketing Information Syst em in the Kosovo agribusiness sector  was 
successfully completed in December. The projec t was implemented in close cooperation with 
the Ministry of Agriculture, Forest ry and Rural Development (MAFRD). 
The magazine “Forbes”, one of the world’s lead er source of financial information and news, 
included the “Kreditimi Rural i Kosove” LLC (formerly Rural Finance Project of Kosovo) 
amongst the “World’s Top 50 Microfinance Institutions”.  The “Kreditimi Rural i Kosove” 
is a beneficiary of EC-fu nded technical assistance. 
Success story  
There are a number of projects under the CARD S programme which could be considered as 
successful stories based on some of the issues raised in the lessons learned document produced by the monitoring team. There are a few of them which are characterised by an 
excellent up-take and mainstreaming of CCIs. Below are three brief descriptions on three 
projects which are considered to be success stories in 2007. 
Support to the Assembly 
The Parliament is the bulwark of any demo cracy. Since 2000, the EU has provided some €3.5 
million to support the Assembly of Kosovo, strengt hening its ability to take on its important 
role in a participatory and tran sparent way and in close cooperation with civil society. An EU-
funded project being implemented  in 2007 is bringing the experi ence of EU parliaments to 
Kosovo. Under the project, officials from the Ko sovo Assembly, the Prime Minister’s Office 
and the Ministry of Labour recently complete d training on drafting legislation and on 
harmonising laws with the EU. The €1.5 million, two-year project started in January 2006 and 
is implemented by a consortium composed of fo ur European Parliaments: France’s Assemblée 
 
EN 53   EN Nationale, Germany’s Bundestag, the Chambre des Représentants de Belgique and the 
National Assembly of Slovenia, plus the Inst itute International de  Paris La Défense. 
Construction of three border police station buildings 
The EU has completed the €1.3 million construction of three border police station buildings at 
border crossings with Albania. Th e construction of the three stat ions (Qafa e Prushit and Qafa 
e Morines in Gjakova/o municipality, and Vermni ca in Prizren municipality) is part of the 
effort to improve overall border management in  Kosovo. Upgrading infrastructure at border 
crossings is one of three components prepared u nder an EU project to support the transfer of 
responsibilities from internati onal to local police, develop bo rder management in accordance 
with Schengen standards and review  current applicable legislation. 
Fund for agro-processing and Indu strial revitalisation (FAIR) 
Fighting unemployment remains a major ch allenge in Kosovo, with the EU providing 
substantial aid for the least developed areas. The Fund for Ag ro-processing and Industrial 
Revitalisation (FAIR) offers financial and tec hnical support to entrepreneurs, selected through 
a competitive application process. Both ex isting and new businesses may apply for FAIR 
grants ranging from 50,000 to 200,000 EUR fo r technological investments in the 
manufacturing sector. The propos ed investment must be located in the northern part of 
Kosovo, specifically the municipalities of  Mitrovicë/Mitrovica, Zveçan/Zvecan, 
Vushtrri/Vucitrn, Zubin Potok and Leposavic/Le posaviq. The entrepreneurs selected will also 
receive professional advice in areas such as finance, produc tion, marketing and management. 
FAIR is funded by the European Union, co-f unded by the Grand Duchy of Luxembourg and 
implemented by the International Organisation for Migration (IOM). 
 
EN 54   EN 11. LATVIA 
11.1. Summary 
In 2007, Latvia continued to implement succe ssfully the post-accession assistance to address 
remaining needs related to institution building for the implementation of the acquis , in line 
with the Extended Decentralised Implementation System (EDIS).  
Since May 2004 procurement is ca rried out under the entire re sponsibility of the Latvian 
authorities applying national procurement rules. The Ministry of Finance, Central Financing 
and Contracting Agency (CFCA) and the Societ y Integration Foundation are fully responsible 
for the daily implementation of the projects. 
The National Aid Coordinator (NAC) continued to exercise the programming function for the 
Transition Facility programmes and monitori ng of both Phare and Transition Facility 
Programmes. The National Authorizing Officer ( NAO) carries out the financial supervision.  
Since the closure of the Phare Transition Team in the Representation in Riga as of July 2005, 
residual functions related to the exercisi ng of Commission responsibilities (monitoring, 
payments, closure, etc.) have been fully  exercised by the Commission headquarters. 
11.2. Pre-accession financial and Transition assistance in 2007 
Implementation  
– TF 2004 – finalisation of payments 
At the end of the period for execution of cont racts for the 2004 Transition Facility programme 
72.59 % of the funding has been disbursed. The La tvian authorities requested no extension for 
the 2004 programme. The payments can still be ex ecuted within 6 months after the expiry of 
the contracts execution period. 
– TF 2005 – rate of contracting 
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 92.07% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €19 million of post-accession assistance from national allocation (not 
including horizontal and multi-country programmes) has been allocated to Latvia from Transition Facility programmes (2004-2006).  
Phare and Transition Facility assist ance continue to be successful in the fields of civil society 
and society integration, with long term impact on cooperation among different ethnic groups 
and civil society non-government stakeholde rs. Other institution building sectors with 
satisfactory results include projects related to  police training and some institutional fine 
tuning in the area of health and safety at work with the strengthening of several related 
institutions and the Cent ral Statistical Bureau.  
In 2007, Twinning continued to be the main imp lementing instrument in many areas of the 
acquis  in Latvia and has helped the Latvian admi nistration to further strengthen its capacities 
to implement and enforce EC legislation. On the whole Latvia has made good use of Phare 
and Transition Facility assistance. Instituti on building with the support of Phare and the 
Transition Facility and investment w ith Phare assistance progressed well. 
11.3. Results and Impact 
State of play for JMC / SMSC development
 
 
EN 55   EN In 2007, one Joint Monitoring Committee (JMC) meeting took place in January 2007, in line 
with the revised JMC Mandate introduced in the new Member States in May 2004, which 
established an integrated monitoring a nd evaluation system over the programmes under 
implementation. The second JMC meeting was by written procedure in September 2007. 
Each monitoring sector is covered by the relevant Sectoral Monitoring Sub-Committee 
(SMSCs). Each SMSC normally meets twice a y ear in accordance with the annual schedule 
agreed within the JMC. Two rounds of SMSC  meetings took place in 2007, the first round 
took place in April and May 2007, the second round was organised in October 2007. The 13 
monitoring sectors cover: Civil Society; Society Integration; Justice; Home affairs; CBC; 
Agriculture; Environment and nuclear safety; Energy and Market and Anti-trust surveillance; 
Public Finance; Statistics; Regional developm ent; Social matters; Health sector. For each 
sector a monitoring report is produced. 
M&E Reports in 2007 (lessons learned)  
Overall responsibility for monitoring and evaluation of the Phare programme in Latvia lies 
with the Ministry of Finance (MoF). A new contract with the independent evaluator was 
signed in August 2007 for a duration of 12 months. 
In 2007, two consolidated monitoring reports we re issued – one for the JMC meeting in 
January and one for the JMC in September. The reports provide a consolidated country review 
of the findings of the Interim Evaluations finalised in 2007. Two c onsolidated reports 
concluded that Transition Faci lity assistance has supported successfully Latvia's accession 
process. Transition Facility assistance is in Latvia highly relevant , the projects are well 
adapted to beneficiaries' needs, and they corres pond to the needs in the sectors. The efficiency 
of projects' implementation needs some furt her attention; however, the impact of the 
evaluated projects is significant. 
12. LITHUANIA  
12.1. Summary  
In its third year of accession, Lithuania c ontinued to implement successfully the post-
accession assistance to address the remaining n eeds related to institution building for the 
implementation of the acquis, in line with the EDIS. 
Since May 2004 procurement is carried out under the entire responsibility of the Lithuanian 
authorities applying national procurement rules. The Ministry of Finance, Central Programme 
Management Authority (CPMA) is now responsible for ex-a nte control and twinning. The 
CPMA is fully responsible for the da ily implementation of the projects. 
The National Aid Coordinator ( NAC) continued to exercise th e monitoring of both Phare and 
Transition Facility Programmes. The National Authorizing Officer (NAO) carries out the 
financial supervision.  
Since the closure of the Phare Transition Team in the Representation in Vilnius as of July 
2005, residual functions related to the exercising of Commis sion responsibilities (monitoring, 
payments, closure, etc.) have been fully  exercised by the Commission headquarters. 
12.2. Pre-accession financial and Transition assistance in 2007 
Implementation  
– TF 2004 – finalisation of payments 
 
EN 56   EN At the end of the period for execution of cont racts for the 2004 Transi tion Facility 70.64 % of 
the funding has been disbursed, while one pr oject has been extended and was on-going. The 
payments can still be executed within 6 months afte r the expiry of the contracts execution 
period. 
– TF2005 – rate of contracting 
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 97.33% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €36 million of post-accession assistance from national allocation (not 
including horizontal and multi-country programmes) has been allocated to Lithuania from Transition Facility programmes (2004-2006).  
During the period, there was substantial over all progress towards the achievement of 
objectives and results of the EU  assistance. TF 2004 projects we re successfully completed and 
mostly achieved its results. The Unallocate d Envelope under the TF 2005 programme was 
successfully contracted, 8 projects were a pproved. Assistance has been provided and 
knowledge shared in the fields of social securi ty, sustainable agriculture, customs, maritime 
safety etc. 
12.3. Results and Impact 
State of play for JMC / SMSC development
 
In 2007, two JMC meetings took place in March and October 2007. At these meetings issues 
such as further improvement of project ma nagement and reporting were discussed and 
proposals for remedial actions were made. 
Each monitoring sector is covered by the relevant Sectoral Monitoring Sub-Committee 
(SMSCs). In 2007 1 round of SMSC meetings  took place from February until August 2007. 
The sectors cover Agriculture and Fisheries, Justice and Home Affa irs, Nuclear Safety, 
Energy and Transport, Public Administration, Public Finance and Customs, Environment, 
Internal Market and Statistics. For each  sector a monitoring report is produced. 
M&E Reports in 2007 (lessons learned)  
Overall responsibility for monito ring and evaluation of the Phar e/TF programmes in Lithuania 
lies with the NAC Office which is in the Ministry of Finance.  
The final report of the project 2004/016-925-05 -01 'Evaluation of EU funded programmes 
(2006-2007)' states that the IE of Phare and TF  assistance in 2006-2007 sh owed more than 2/3 
of the recommendations were fully or largel y implemented, less than 1/4 were partly 
implemented and a small part of recommendati ons lost their releva nce or there were no 
information on their status. The largest number of partly implemented recommendations was 
in the sector of Agriculture. 
The Country Evaluation Summary Report, prepar ed in February 2007, indicated that taking 
into consideration the implementation results of  the Phare and Transition Facility Programmes 
it can be concluded that the overall programme  implementation performance is good. Taking 
into account that no interim evaluations of th e programmes were fores een in this reporting 
period, it has been agreed to replace the pr eparation of the CSR by conducting the interim 
evaluation of the Agriculture sector which covers quite a big number of projects under 
implementation. 
 
EN 57   EN 13. MALTA  
13.1. Summary 
In 2007, Malta continued to implement successf ully the post-accession a ssistance to address 
the remaining needs related to institution building for the implementation of the acquis , in line 
with the EDIS. 
Since June 2004 implementation is carried ou t under the entire responsibility of Maltese 
authorities applying national procurement rules.  The Department of Contracts (DoC) within 
the Ministry of Finance is fully responsible for the daily implementa tion of the projects. 
The National Aid Coordinator (NAC) continued to exercise monitoring of both Pre-accession 
and Transition Facility Programmes. The Nationa l Authorizing Officer (NAO) carries out the 
financial supervision.  
Since the closure of the Phare Transition Team in  the Representation in Valletta as of January 
2005, DG Enlargement continues to exercise the residual functions related to the Commission 
responsibilities (monitoring, payments, closure, etc.) in line with th e Financial Regulation. 
13.2. Pre-accession financial and Transition assistance in 2007 
Implementation  
– TF 2004 – finalisation of payments 
At the end of the period for execution of cont racts for the 2004 Transition Facility programme 
80.36 % of the funding has been disbursed. The Maltese authorities requested no extension 
for the 2004 programme. The paymen ts can still be execu ted within 6 months  after the expiry 
of the contracts execution period. 
– TF 2005 – rate of contracting 
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 87.29% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €21 million of post-accession assistance from national allocation (not 
including horizontal and multi-country programmes) has been allocated to Malta from Transition Facility programmes (2004-2006).  
In 2007, Malta continued the implementation of Transition Facility projects. Overall, the 
implementation has been rather successful and many remaining needs as regards the 
application of acquis were ad dressed. The projects also c ontributed to the enhanced 
administrative capacity in Malta's public service.  The TF support involved  projects in the area 
of market surveillance, health and safety, intell ectual property, border control, assistance to 
the Malta Maritime Authority and justice sector , social security coordination, improving air 
quality, food safety, information security, etc.  
In the context of implementation and ach ievement of results the project 2004/16762.05.01 
"Capacity Building in the Food and Veterina ry Regulation Division, MRAE" should be 
highlighted, as according to external monitoring  experts, this was a very successful project 
and was one of the best examples of the EU Twinning exercise.  
Regarding Unallocated Institution Building Faci lity, Malta has fully absorbed the funds 
available under TF 2004, and partially under TF 2005 . The small-scale projects, implemented 
 
EN 58   EN under this facility have proved to be very e fficient and have generated good and sustainable 
results.  
13.3. Results and Impact 
State of play for JMC / MSC development  
In 2007, two JMC meetings took place in May and November 2007. In connection with the 
monitoring simplification pro cedure, a new JMC mandate was introduced in Malta in 2007, 
which established an enhanced monitoring a nd evaluation system over the programmes under 
implementation. 
For the year 2007, two rounds of Monitoring S ub-Committee SMSC) meetings have taken 
place in March and October 2007. Due to sm all number of programmes, the Maltese 
authorities have abolished the sector-appro ach and review each project separately.  
M&E Reports in 2007 (lessons learned)  
Overall responsibility for monitoring and in terim evaluation of th e Pre-Accession and 
Transition Facility programmes in Malta lies w ith the NAC services located at the Office of 
the Prime Minister (OPM). Activities in this area were carried out on the basis of the Action 
Plan on decentralisation of monitoring and Evaluation, which was endorsed by EC in 
February 2005.  
In 2007, two evaluation reports were released : Country Summary Evaluation Report on 30 
April 2007 and Second Interim Evaluation report  2007 of on-going projects on 9 November 
2007. Due to the small size of th e Malta programmes, the interi m evaluation is carried out on 
the overall programmes and not  on a sector basis.  
According to the reports in terms of relevance, the projects were  assessed to be satisfactory. 
Overall, the projects were acquis  related, built on prev ious support, addressed the needs of the 
beneficiary in terms of reinforcing technical an d administrative capacities. Project efficiency 
has been assessed as satisfactory and has impr oved during the evaluation period compared to 
the previous reporting periods. This is much due  to the enhanced cooperation of the different 
counterparts. On the other hand, delays in tendering and contra cting have still affected the 
efficiency. Effectiveness was rated as satisfactor y as the majority of the projects had achieved 
or would achieve its overall objective. A small number of projects encountered some 
difficulties, mainly due to external factors, wh ich meant some activities could not be realised. 
It should be mentioned that one project impl emented by the Ministry  of Health and two 
projects implemented by the Ministry of Financ e were rated as highly satisfactory. However, 
in some cases staff turnover still had an adve rse effect on the effec tiveness. Impact and 
sustainability have been rated as satisfactory. The most important bene fits include acquisition 
of knowledge and skills in implementation of the acquis  and drafting the legislation, manuals 
and guidelines and equipping various institut ions in order to enforce and implement acquis -
related obligations.  
However, it should be mentioned that the Maltes e authorities have made continuous efforts to 
ensure sustainability of the results. In this direction meas ures have been undertaken to hire 
necessary staff, to build necessary  premises or to follow that the strategies or other legislative 
documents prepared within the projects will be adopted on an appropriate level.  
 
EN 59   EN 14. MONTENEGRO  
14.1. The year in review 
Political developments  
Following political developments in 2006 mark ed by the independence of Montenegro and 
Parliamentary elections, 2007 was characterised by intensive Eur opean integration activities 
and debates on the country’s new Constitution.  The Constitution was adopted in October 2007 
and is broadly in line with European standard s. The Stabilisation and Association Agreement 
with the EU was signed on 15 October 2007; an Interim Agreement was also signed which entered into force in January 2008. However,  compliance with the requirements of the 
Agreement suffers from a weak administrative capacity across most s ectors. Progress on these 
reform priorities is encouraged and mon itored by the enhanced permanent dialogue.  
In January 2007, the firs t political dialogue meeti ng between the EU (tro ika) and Montenegro 
was held. In September 2007, the EU and Monteneg ro signed agreements on visa facilitation 
and readmission. The new arrangements will simplif y procedures for issuing visas to certain 
categories of citizens of Montenegro, including students, scholars, business people, journalists 
and tourists. 
Macroeconomic developments and structural reforms
 
Thorough analysis of Montenegro’s economy is hi ndered by weak statisti cs and a large grey 
economy. 
The general government balance surplus increased from 3.4% of  GDP in 2006 to a surplus of 
8.5% in 2007. Surplus and privatization recei pts amounting to 3.2% of GDP led to an 
equivalent increase in government deposits with the banking system and further reductions in 
government arrears, as well as to a re duction of domestic and foreign debt. 
The trade deficit declined to almost 60% of GDP in 2007, from 40% in 2006. However, a 
surge in net foreign direct investment (fro m about €500 million to €700 million) helped close 
the gap in the balance of paymen ts. Significant inflows of foreig n direct investment (FDI) and 
rapid credit growth have caused a large curr ent account deficit, increasing the risk of 
macroeconomic instability in the near to medium term.  
The major sectors driving economic  activity are construction, fina ncial services and tourism, 
with FDI playing a major role in each.  
Progress in meeting the acquis communautaire  
The SAA agreement  and the Interim Agreement between  the EU and Montenegro were 
signed on 15 October 2007. Sustained effort is needed for the strengthening of the 
administrative capacity to perform commitments as  from the entry into force of the Interim 
Agreement. In May 2007 the government adopted an Action Plan for the implementation of 
the European Partnership and started implementation.  
Support has been provided to relevant gove rnment institutions to assist in legal 
harmonisation  in key areas relevant to the acquis , e.g. data protection, intellectual property 
rights, telecommunications, veterinary, fisheries. 
Progress has been made towards the environmental  requirements of the acquis  following the 
establishment of an institutional structure for an independent Environmental Protection 
Agency which, when it becomes operational, will assume responsibility for inspection, 
permitting, enforcement and dissemination of environmental data. 
 
EN 60   EN The legal framework in the domain of public procurement  has been reviewed and the 
administrative capacity of the Public Proc urement Commission has been strengthened. 
Training has been provided to governmental pr ocurement units in the application of the new 
public procurement legislation, system and pr ocedures, which have been independently 
assessed as being well-aligned with the acquis . 
Initial progress has been made on the de velopment of the infrastructure for metrology, 
standards, testing and quality  (MSTQ) in compliance with the acquis  and WTO 
requirements.. 
Support to the fisheries  sector has established adequate ad ministrative structures which move 
towards acquis  goals and advance the competitiveness of the sector. 
14.2. Financial assistance in 2007 
Programmes launched  
As of 2007, the CARDS programmes were repla ced by the new Instrument for Pre-accession 
Assistance (IPA). No new CA RDS programmes were launched. 
Overview of programmes implemented  
Democratic stabilisation 
Internally Displaced Person (Refugees) return  
Technical assistance to help the Commissariat  for Displaced Persons (MCDP) addressed the 
problems facing IDPs.  
Civil society  
The following programmes are implemented: tec hnical assistance for trade unions to enhance 
their capacity to play a cons tructive role in public administration reform; support for 
partnership projects to addr ess the priorities of the Development and Poverty Reduction 
Strategy Action Plan , including the elderly, raising awareness abou t women’s reproductive 
issues; increasing employment opportunities of th e disabled and integrating Roma in schools; 
training to Trade Union or Ci vil Servants and Judiciary.  
Good governance and institution-building 
Judiciary Judicial reform strategy supported by EU assistance was adopted by the government. A 
Probation Service was established in the Ministry  of Justice with EU and Council of Europe 
support; funding was allocated to the construc tion of a forensics centre while widening 
training capacity of the Police Academy; a draf t Law on data protection was prepared with the 
Ministry of Interior and rele vant governmental departments. 
Border crossings 
Follow up was given to the improvement of the IT system of the Ministry of Interior; a new 
border control facility at Scepan Polje on the border with Bosnia and Herzegovina has been 
completed; access roads to Scepan Polje and the border crossing with Croatia have been upgraded. 
Public administration 
The following activities are implemented: a ssistance to the Human Resource Management 
Authority; fostering local govern ment decentralisation ; assist ance to the Ministry of EU 
Integration, International Economic Relations a nd to the Secretariat for EU Integration for 
 
EN 61   EN IPA programming ; assistance to the Monteneg rin Statistical Office (MONSTAT) focused on 
the National Accounts and GDP compilation in accordance to ESA 95 Standards; support to 
telecommunications regulatory agency ; tec hnical assistance for “Implementation of 
Budgetary and Salary system Reforms” to the Ministry of Finance, Ministry of Internal 
Affairs and Public Administration and Hu man Resources Management Authority  
Economic and social development 
Energy EU experts helped prepare a mid-term energy efficiency action plan now under 
implementation;  
Economy 
Support was provided to the updating of governme nt’s Private Sector Development Strategy 
covering the period from 2007 to 2010; Turn Around Management and Business Advisory 
Services programmes provided as sistance to small and rural bu sinesses and other target 
groups, i.e. women, minorities  and disadvantaged groups in less developed regions  
Environment 
Support has been provided during th e preparation of the first majo r project to be funded by an 
EIB loan of €57 million; and upgrading of Podgor ica’s wastewater treatment plant has been 
completed. Additional rehabilitation of the coastal region sewerage system is ongoing; 
institutional model has been agreed for an Environmental Protection Agency and a Project 
Implementation Unit, pending formal adoption of relevant legislation. 
Transport 
CARDS-funded (€3 million) road improvement pr ojects have been completed. Additional IFI-
funded (€20 million) road and rail infrastr ucture projects are under implementation. 
Agriculture and fisheries 
Support to the fisheries sector in Serbia and Monten egro has assisted the public and private 
sectors to implement the National Fisheries St rategy; physical facilitie s in the food safety 
laboratories have been upgraded.  
Internal market 
Support has been given to the harmonisation of the legal and in stitutional framework of the 
public procurement system; in addition, coor dination between the bodies in charge of 
metrology, standards, testing and quality (MSTQ) under a common reform agenda was 
achieved.  
Labour market and education 
The first EU-funded project in s upport of labour market reform has attained major milestones: 
(i) a draft National Employment Strategy (NES ) aligned with the EU 2005 Guidelines for 
Growth and Jobs; (ii) a discussi on paper (White Paper) on what  sort of competences, skills 
and attitudes the workforce in Montenegro would have to have by 2017.  
Cross-border cooperation 
Two grant contracts under the INTERREG III B CADSES and fourteen under the 
INTERREG III A Adriatic were awarded during 2007.  
CARDS management performance
 
 
EN 62   EN In 2006, the European Agency for Reconstruction  was given responsibil ity for a further €19.5 
million in Montenegro, bringing its cumulative portfolio of EC assistance programmes to 
€129 million.  
By year-end 2007, 96% of this cu mulative total had been cont racted, and 88% spent; and 78% 
of CARDS 2006 was contracted.  
Institution Building highlights  
Supporting public administration reform  and EU integration structures 
The Agency provided support for civil serv ice training through the Human Resources 
Management Authority. It also offered assist ance to EU integration structures in the 
Secretariat for EU integration and in line ministries for training on EU programming. 
14.3. Results and impact 
Sectors with positive results  
Helping refugees and IDPs 
An EU assistance programme targeting Roma  Internally Displaced  Persons (IDPs) from 
informal KONIK settlements facilitated th e return of 22 Roma, Ashkalia and Egyptian 
families to Kosovo (the Municipality of Pec/ Peja). The Programme also aimed at supporting 
social inclusion of RAE disp laced persons by or ganised literacy and Albanian language 
courses for a total of 80 youths and regular  health-related counsel ling for 80 RAE adults, 
mostly women. 
Within a housing and economic livelihood assistance programme worth €2.4 million, 
displaced persons in Montenegro have been pr ovided with alternative housing solutions and 
income generation support. The project cons tructed 24 prefabricated houses for 27 Roma 
families living in the municipality of Berane and delivered building material and income generation support to some 60 displaced persons.  
Economic Development  
Direct business advisory services have been pr ovided to a total of 10 medium sized and more 
than 80 small enterprises through the Turn Around Manage ment Assistance (TAM) and 
Business Advisory Services (BAS) programmes in cooperation with EBRD. More than two 
thirds of the beneficiaries were SMEs from the less developed rural regions of the country, 
and women, and SMEs owned a nd managed by women or repres entatives of minorities and 
other disadvantaged groups.  
Energy  
In the field of energy, the Government has d ecided to unbundle the electricity utility EPCG 
following the advice of European experts into 5 legally separate companies, in line with the 
most recent EU directives and policy on the su bject. A completely independent Transmission 
Company will be established and operational by the end of 2008, while the Generation, 
Distribution and Supply companies will be first established as legally independent companies 
by May of 2008 within a holding structure, and will become completely independent 
companies during 2009. In turn, the Energy Regulat ory Agency has successfully implemented 
the first phase of the tariff refo rm of the electricity sector. 
Environmental infrastructure  
The wastewater treatment plant serving the capital city of Podgorica has been fully 
rehabilitated, with a view to minimising po llution of the Moraca Rive r and the ecologically 
sensitive waters of Skader Lake. The qualities of Adriatic coastal waters have also been 
 
EN 63   EN improved following the successful rehabilitation of  sections of the sewerage system of the 
coastal region. 
Transport Infrastructure 
Traffic congestion during the tourist season ha s been reduced on the Ad riatic coastal roads 
following the completion of 6km of third lanes at  critical sections betw een Petrovac and Bar. 
Catalysing IFI funding 
Support to developing the project implementation capacity of the Minist ry of Transport and 
the Ministry of Environment has been instrument al in attracting additio nal IFI funding of €70 
million. The additional funds will be used to upgrade the rail and environmental infrastructure. 
Agriculture and rural development 
Major actions in the fishery sect or and in animal identification and registration (bovines) have 
been undertaken during 2007, with this being th e baseline for improved food safety levels. 
These actions will benefit cons umers and improve the competitiv eness of the agriculture and 
food sectors.  
Supporting civil society  
EU assistance significantly cont ributed to the development of a legislative framework dealing 
with employment, vocational e ducation and training for the di sabled. It enabled access to 
employment opportunities for the disabled coupled with public campaign and advocacy 
among employers.  
Internal market 
As a new sector of cooperation within the Agency’s remit in th e country, the first actions in 
the Internal Market area have had a medium or small scope, pa ving the way to the large scale 
operations foreseen for 2008 in key domains such as quality infrastructure, trade, competition, 
state aid, consumer protection and public procurement.  
Labour market and education 
First actions have been taken in this fundamental area of so cial policy, which has made the 
EU the leader in the area of employment a nd human resource development policies. The 
action included the enhancement of the educat ional aspects under the EU Charter of Small 
Enterprises and the furtherance of labour market statistics. 
Cross-border cooperation 
Two grant contracts under the INTERREG III B CADSES and fourteen under the 
INTERREG III Adriatic were awarded by the Agency during 2007. These are the first 
projects in the area of cross bor der cooperation in Mont enegro. They will ce rtainly contribute 
to the preparation of further projects, which are to meet the demanding standards of the 
upcoming IPA calls for proposals for bilatera l borders and multilateral actions with the 
participation of EU Member States. 
Success story
 
Animal Identification System 
Development of the agriculture and food sector is one of the corner-s tones of Montenegro’s 
economic development strategy. Significant s upport has been provided to the sector, 
exemplified by implementation of an animal identification system. Approximately €1 million of EU financial support in consultancy serv ices and €0.7 million in supplies (IT hard and 
 
EN 64   EN software, office equipment and ve hicles) assisted the Veterinary  Directorate and the Ministry 
of Agriculture to set up and operate the system for the identification and registration of cattle. 
In the European Partnership, cattle identificati on and registration is ma rked as a short term 
priority that has now been accomplished. The S AA equally refers to the identification and 
registration of sheep, goats and other animals as  medium and long-term priority – this being 
the baseline for better animal health and f ood safety, thus benefiting consumers and the 
development of the market economy in the agri culture and food sectors. The action has been 
decisive in enabling Montenegro to go faster than any other country in the region towards a 
sound identification and registration system, incl uding a central electronic database. No other 
EU Member State or Western Balkan Country was able to build up its I& R system in less than 
two years, which should be assessed as a good omen  for the future operati ons in the veterinary 
and food safety domains. 
 
EN 65   EN 15. POLAND  
15.1. Summary 
In 2007, Poland continued to implement successfully  the post-accession assistance to address 
the remaining needs related to institution building for the implementation of the acquis , in line 
with the EDIS. 
Since February 2005 implementation is carried out under the entire re sponsibility of Polish 
authorities applying national pr ocurement rules. The Central Finance and Contracts Unit 
(CFCU), the Polish Agency for Enterprise Development (PAED) and the Implementing 
Authority for European Programmes (formerl y Implementing Authority for Phare Cross-
Border Cooperation Programmes, IA-CBC) are fu lly responsible for th e daily implementation 
of the projects. 
The National Aid Coordinator (NAC) continues to  exercise the monitoring of both Phare and 
Transition Facility Programmes. The National Authorizing Officer (NAO) carries out the 
financial supervision.  
Since the closure of the Phare Transition Team in the Representation in Warsaw as of July 
2005, DG Enlargement continues to exercise th e residual functions related to Commission 
responsibilities (monitoring, payments, closure, etc.) in line with th e Financial Regulation. 
15.2. Post-accession financial assistance in 2007 
Implementation  
– TF 2004 – finalisation of payments 
At the end of the period for execution of cont racts for the 2004 Transition Facility programme 
75.45 % of the funding has been disbursed, while one project has been extended by 4 months 
and was on-going. The payments can still be execute d within 6 months afte r the expiry of the 
contracts execution period. 
– TF 2005 – rate of contracting 
At the end of the contracting period fo r the 2005 Transition Facility programme on 
15 December 2007, 86.13 % of the programme had been contracted.  
– Institution Building highlights 
A total of around €115 million of post-accession a ssistance from national allocation (not 
including horizontal and multi-country programmes) has been allocated to Poland from Transition Facility programmes (2004-2006).  
Implementation of Transition Facility in Pola nd is considered generally successful and 
projects provide notable value added. 
In order to address unforeseen needs, addition al assistance from the Institutional Building 
unallocated envelopes was provided  for projects mainly in Pub lic Administration, Justice and 
Home Affairs and Agriculture sectors. 
15.3. Results and Impact 
State of play for JMC / SMSC development
 
In 2007, two JMC meetings took place in June and December 2007, in line with the revised 
JMC Mandate introduced in the new Member  States in May 2004, which establish an 
integrated monitoring and evaluation syst em over the programmes under implementation. 
 
EN 66   EN The JMC meetings were fruitful and he lped to address the problems concerning 
implementation of the ongoing programmes. In  particular, issues such as further 
simplification of the monitoring system, impr ovement of project management and reporting 
were discussed and proposals for remedial actions were made. 
In the year 2007, two rounds of Sector Mon itoring Sub-Committee (SMSC) meetings have 
taken place. The first round of SMSC meetings  took place in March-April and second round 
in October. There are six sectors to be m onitored in Poland: Environment and Transport; 
Agriculture; Internal Market; Justice and Ho me Affairs; Public Ad ministration; Regional 
Programmes (Cross-Border Co-operation, and Economic and Social Cohesion). 
M&E Reports in 2007 (lessons learned)  
Overall responsibility for mon itoring of the Phare and Transi tion Facility programmes in 
Poland lies with the NAC department within  the Office of the Committee for European 
Integration (UKIE). Activities in this area were carried out on the basis of the Action Plan on 
decentralisation of monitoring and Evaluation, which was endorsed by EC in February 2005. The contract for carrying out the Interim Evalua tion in the Transition Facility programmes in 
the year 2007 was signed on 17 August 2006 and expired on 15 December 2007.  
In 2007, two Consolidated Monitoring Reports were  issued - one for the JMC in June and one 
for the JMC in December. The reports provide a consolidated country review of the findings 
of the Interim Evaluations and Thematic/Ad Hoc evaluations finalized in 2007. Two consolidated reports concl uded that TF assistance has successfully supported Poland’s 
accession process. TF assistance is in Poland hi ghly relevant, the projects have been well 
adapted to beneficiaries' needs, and they co rrespond to direct needs in the sectors. The 
efficiency of projects implementation needs some  further attention; however, the impact of 
the evaluated projects is significant. The repor ts included also recommendations concerning 
improvement of implementation system. 
The main conclusion available from the Them atic/Ad Hoc reports is that the indicators 
applied in the projects implemented under the Tr ansition Facility Programmes need to be 
improved in many projects. The NAC has taken relevant steps to a ddress the issue.  
16. R
OMANIA  
16.1. Summary 
In 2007, Romania implemented both pre-accessi on and post-accession assistance to address 
the remaining needs related to IB  for the implementation of the acquis , in line with the 
Extended Decentralised Implementation System (EDIS). 
Since January 2007 implementation is carried out under the entire responsibility of the 
Romanian authorities applying national procurement rules. Three implementing agencies are 
fully responsible for daily implementation of pr ojects (two of them accredited in December 
2006 and one in April 2007). 
The National Aid Coordinator (NAC) continued to exercise the programming function for the 
Transition Facility programmes and monitori ng of both Pre-accession an d Transition Facility 
Programme. The National Authorizing Officer ( NAO) carries out the financial supervision. 
16.2. Phare/pre-accession financial a nd Transition assistance in 2007 
The Transition Facility has been established by the Act of Accession to fund certain IB 
actions in Romania to address the continued need for strengthening institutional capacity in certain areas through actions which cannot be fina nced by the Structural funds or by the Rural 
 
EN 67   EN Development Fund. The implementation of EU a ssistance available under the TF is managed 
by the Memorandum of Understa nding on the Implementation of the Transition Facility 
signed between the Romanian authorities and the European Commission on 5 September 
2007.  
Programming  
A total of €46,500,000  was allocated to Romania under the 2007 TF budget for Romania. 
Although the most urgent  needs as regards acquis implementation have been addressed before 
Accession, the Transition Facility  provides further support in order to consolidate the 
functioning of administrative stru ctures on par with those of other Member States. The 2006 
Commission Comprehensive Monitoring Reports for Romania and the continuous monitoring 
process by the Commission of the Romania prep aration for accession constitute the main 
sources of information for identification of  institutional weaknesses that the Transition 
Facility could assist in addressing. 
Following accession, priority sectors and actions were identified in consultation both with 
national authorities and Commission services on the basis of the relevant follow up actions 
from pre-accession monitoring as well as other needs for reinforcing institution building where shortfalls are still perceived. Particular account was taken of results of the Mechanism 
for Cooperation and Verification of progress in Romania to address spec ific benchmarks in 
the areas of judicial reform  and fight against corruption. 
The Phare Management Committee approved  the Transition Facility 2007 National 
Programme for Romania in 5 October 2007. Th e programme was then approved by the 
Commission through its Decisi on C(2007) 5793 of 2007, which wa s notified to the national 
authorities on 30 November 2007. 
The Transition Facility 2007 Nationa l Programme for Romania provides €46,500,000  for: 
J
USTICE FREEDOM AND SECURITY : €8.75 million 
– Unification of the Jurispr udence of Courts and Pros ecutor Offices in Romania 
– Strengthening the Public Ministry’s Institutional Capacity 
– Strengthening the Capacity to Fight Cyber Crime 
– Strengthening the Capacity to Fi ght Economic and Financial Crime 
– Improving the System of Roma nian Judicial Statistics 
– Strengthening the Romanian Probation System  and the Inter-Inst itutional Cooperation on 
Victim Protection 
– Support for Strengthening the Insolvency Mechanism 
– Assistance for Enhancing the Respect of Human Rights in Prisons and Improving the 
Efficiency of the Romanian Penitentiary System 
– Enhancement of National Anticorruption Department Investigative Capacities 
– Bringing anti-corruption capacitie s in Ministry of Internal Affairs up to EU Standards 
– Building civil society su pport against corruption 
– Improving the Management of Human Resources of the Romanian Police 
– Improving the Witness Protection Capacity 
– Fight against Money Launderi ng and Terrorism Financing 
 
EN 68   EN – Improving the Administrative Capacity in  the Field of Migration and Asylum 
– Integrated IT system for the Inte rnational Police Cooperation Centre 
AGRICULTURE : €4.87 million 
– Strengthening the institutional capacity of Na tional Sanitary Veterinary and Food Safety 
Authority (NSVFSA) 
– Efficient operation of IACS/LPIS 
– Support for Common Agricu ltural Policy adaptation 
– Improving the Farm Accountancy Data Network in Romania 
– Implementation of the milk quota system 
SOCIAL POLICIES AND EMPLOYMENT : €4.75 million 
– Supporting the Development of O ccupational Health Services 
– Reform of the Mental Health Care System 
– Integration of Youth from Minorities and Disadvantaged Groups into the Romanian 
Society 
ENVIRONMENT : €2.52 million 
– Further implementation and enforcement of the environmental acquis in the IPPC and 
SEVESO II sectors 
– Support in developing the administration capaci ty to manage the National Green House 
Gases (GHG) Emissions Registry 
– Setting-up the National Integrated Registry on flora, wildfauna species and Romanian 
natural habitats of Community interest 
– Support to National Environmental Guard administration to ensure appropriate 
enforcement of the environmen tal legislation at EU border 
CUSTOMS AND PUBLIC FINANCES : €10.09 million 
– Reinforcement of the Customs Administration 
– Public Finance Management 
– Tax administration reform 
– Strengthening the Administrative Capacity in Implementing the EU Acquis within the 
Public Procurement Field 
ENERGY AND NUCLEAR SAFETY : €3.07 million 
– Promotion of market based instruments for E-RES, energy efficiency and emission rights 
– Strengthening the effectiveness of th e operation of the electricity market 
– Strengthening Security of Energy Supply in Romania 
– Radiological Safety in Uranium Mining and Milling Facilities 
– Support to ANDRAD to develop technical and technological solutions for a new 
radioactive waste treatment facility 
ADMINISTRATIVE CAPACITY : €12.45 million 
– Administrative capacity a nd Cooperation and Verification Mechanism Facility 
 
EN 69   EN Implementation  
– Phare 2004 – finalisation of payments 
At the end of the period for execution of contracts for the 2004 pre-accession programme 
62.17 % of the funding has been disbursed. Ther e are several projects  whose period of 
execution of contracts has not expired ye t according to the corresponding Financing 
Agreements. Furthermore the Romanian author ities have requested extensions of the 
execution period for the 2004 Phare progr amme which have been approved. 
– Phare 2005 – rate of contra cting (EDIS extensions)  
At the end of the contracting period for the 2005 National programme on 30 November 2007, 
84.88% of the programmes had been contracted. However, the contracting period of several 
projects has been extended and was on-going. 
– Institution Building highlights 
Following the accreditation for EDIS granted on 14 December 2006, the responsibilities and 
the tasks related to twinning have  been officially taken over by the Administrative Office, the 
twinning team within CFCU, DG Enlargement being responsible for issuing the Steering 
Committee Opinion on twinning contracts. 20 such  opinions have been issued during 2007 for 
2006 twinning contracts which con tinue to be useful in many priority areas and helped 
Romania to prepare for the implementation of EU policies and laws. 
In order to address unforeseen needs, addition al assistance from the Institutional Building 
unallocated envelopes 2005 and 2006 continues to be provided for projects mainly in Public 
Administration, Finance and Audit sectors.  
16.3. Results and Impact 
State of play for JMC / SMSC development  
In 2007, two JMC meetings took place in July and December 2007, in line with the revised 
JMC Mandate introduced in the new Member States in May 2004, which establishes an 
integrated monitoring and evaluation syst em over the programmes under implementation. 
In the year 2007, two rounds of Sector Mon itoring Sub-Committee (SMSC) meetings took 
place in spring and autumn. There are 10 sector s to be monitored: SMSC 1 – ESC and CBC, 
SMSC 2 – Justice, SMSC 3 – Home Affair s, SMSC 4 – Finance, SMSC 5 – Public 
Administration, SMSC 6 – Agriculture SMSC 7 – Internal Market  SMSC 8 – Social 
(including minorities) SMSCs 9 and 10 – Environment and Transport. 
M&E Reports in 2007 (lessons learned)  
The overall responsibility for m onitoring of the Phare programmes in Romania lies with the 
Central Evaluation Unit within the Authority for the Coordination of Structural Instruments in 
the Ministry of Economy and Fina nce. Activities in this area we re carried out with the support 
of an Interim Evaluation Phare external contractor which started the effective implementation of the contract in May 2007, on the basis of the Interim Eval uation workplan approved in 
December 2006. Two extra activities as thematic evaluations were included in the contract, 
over the revision of indicators and on procurement.  
During 2007, one consolidated Country Summary Ev aluation Report was issued, for the Joint 
Monitoring Committee in December, to suppor t decision making. Th e reports provide a 
consolidated country review of the findings of the Interim Evaluations finalized until October 
2007 (Internal Market, Social, Environment, Tran sport, Public Administration, and Finance) 
 
EN 70   EN and the Thematic Evaluation  of Phare procurement procedures and practices (proposed in 
response to concerns over the performance of contracting). 
The Country Summary Report concluded that th e overall performance is positive. Phare 
supported programmes are successfully implemente d, generally deliver the expected results 
and contribute to the impacts that are so ught. However, the delays in reaching the 
implementation stage are undermining the effi ciency and have a de grading effect on 
relevance, effectiveness and impact.  
The main conclusion available from the Thema tic report on procurement is that Romania was 
not well prepared for the implementation of Ph are projects under national public procurement 
rules at the time of EDIS accreditation at the end of 2006. While a number of issues have been 
solved during 2007, some serious st ructural and process issues n eed to be urgently addressed. 
The implementation practices of the nation al public procuremen t rules are heavily 
bureaucratic leading to less competition in publ ic tenders. The majority of Phare funds are 
still contracted immediately before the e nd of the commitment period leaving often 
insufficient time for the implementation of projects. 
 
EN 71   EN 17. SERBIA  
17.1. The year in review 
Political developments  
Parliamentary elections took place in 21 January  2007 and were conducted in accordance with 
international standards. However, the ensu ing period highlighted sharp divisions among 
political parties. This led to a slow-down in  the overall pace of reform. The Kosovo issue 
continued to dominate the political agenda. Fo llowing several months of uncertainty a new 
reform-oriented government was formed in Ma y 2007. It achieved early positive results on 
cooperation with the ICTY, which enabled th e Commission to finalise negotiations on a 
Stabilisation and Association Agreement (S AA). The SAA was initialled on 7 November 
2007. 
In the area of  democracy and the rule of law there was some progress in implementing the 
new constitution  which entered into force in November 2006. A constitutional law was 
adopted, however several provisions, in part icular, on the judiciar y still need to be 
implemented in line with European standards. 
The work of the parliament  has been hindered by the political s ituation. The first sitting of the 
parliament after its inauguration following the January 2007 elections was adjourned for 
almost three months due to the protracted nego tiations to form a government. Delays in the 
formation of the government and sharp poli tical divisions had a negative impact on 
parliamentary activities. 
As regards  regional issues and international obligations , Serbia played a positive role in 
improving regional co-operation, including notably the South East Europe Co-operation 
Process (SEECP), the Regional Co-operation Council (RCC) and the amended Central European Free Trade Agreement (CEFTA).  
The government, in its programme, gave a clear  commitment to fulfil its international 
obligations. The Serbian authorities subseque ntly improved co-opera tion with the ICTY, 
leading to the arrest of two indictees and th eir transfer to The Hague. A National Security 
Council was established. The National Council for Co-operation with ICTY was also 
reinstated. However, Serbia did not achieve fu ll co-operation with the ICTY that should lead 
to the arrest of the remaining fugitives.  
Serbia participated in 2007 in discussions under the auspices of the UN Secretary General's 
Envoy for Kosovo on the future status of Kosovo. Serbia however rejected its 
recommendations and has maintained that Kos ovo should remain an integral part of the 
country, whilst offering substantial autonomy. Se rbia continued to discourage Kosovo Serbs 
from participating in the provisi onal institutions of self-govern ment and elections in Kosovo.  
Visa facilitation and readmission  agreements have been concluded between the European 
Union and Serbia . The visa facilitation agreement will foster people-to-people contacts and 
increase opportunities for tr avel, especially for the you nger generation. The agreement 
contains a joint declaration from  the parties to start a discu ssion on visa liberalisation and a 
statement that the agreement should be seen as a first concrete step towards full visa 
liberalisation. The Readmission Agreement set out  clear conditions and procedures for the 
authorities of both Serbia and the EU Member States for taking back people who are illegally 
residing on their territories. The effective im plementation of the agreements, as well as 
progress in key areas such as border manageme nt, document security and the fight against 
organised crime, will open the way towards a visa-free regime. 
 
EN 72   EN Macroeconomic developments and structural reforms  
Serbia’s economy  continued to grow strongly but prog ress in macroeconomic stabilisation 
was mixed. The reversal of fi scal consolidation added to fi scal and macroeconomic risks. 
Much needed structural reforms continued slowly and the high level of unemployment 
remained a major challenge. 
As regards the economic criteria , Serbia made some progress towards establishing a 
functioning market economy. Further reform efforts must be pursued to en able Serbia to cope 
in the medium term with the competitive pressures and market forces within the Union. 
The authorities to a large extent maintained the main elements of a sound economic policy. 
The economy continued to expand strongly. The inflow of foreign capital remained 
significant. Declining inflation contributed to a stable environment for economic actors. The 
budget remained in surplus and investment activity improved markedly. 
The privatisation of state-owned banks is well advanced and competition among banks is 
strong. The new government has shown limite d willingness to revive the process of 
privatising state-owned companies. The SME s ector grew in importance. Foreign trade and 
investment continued to grow and econo mic integration with the EU advanced. 
However, despite strong economic performan ce, unemployment remains very high. Further 
progress in privatisation is needed and a co mpetitive and dynamic private sector has not yet 
been fully established. Fiscal policy turned  expansionary in 2007. Public sector wages 
increased substantially. This contributed to a si zeable increase in expenditures as a percentage 
of GDP in 2007 and added to external imbalances  and inflationary pressures. The lack of 
flexibility in the labour market remains an obstacle for job creation. I nvestment was hampered 
by excessive bureaucratic requirements and complex legislation. Commercial courts 
continued to suffer from limited capacity and expertise. The large informal sector, fuelled by weaknesses in law enforcement and the regulato ry framework, reduces the tax base, hampers 
the government's capacity to implement economic  policies and affects negatively the business 
environment. 
In general terms, Serbian economy performed we ll. However, there were a number of major 
imbalances mainly inflation, unemployment and the growing balance of payment deficit. 
Progress in meeting the acquis communautaire
 
The government placed emphasis in its programme  on European integration, but the results 
were mixed. In August 2007 the government a dopted an action plan on harmonisation with 
the acquis  in an attempt to acceler ate the reform process . The Serbian administration 
participated in SAA negotiations in a profe ssional manner and this helped to improve 
coherence among the various Ministries and ag encies. Policy co-ordination, however, needs 
to be further improved. 
As regards European Standards , SAA negotiations showed  that Serbia has the 
administrative capacity to progress towards the EU. Serbia will be well placed to implement a 
future SAA if this capacity is properly utilised. 
Serbia made some progress in addressing Pa rtnership priorities in the areas of the internal 
market . Serbia has shown progress in approximati ng with European standards on a number 
sectoral polices . In the area of industry and SME  Serbia is fully committed to the process of 
the European Charter for Small Enterprises. Serbia's preparations progressed well in the area of agriculture . However, efforts need to be maintain ed and expanded into a number of more 
specific areas such as veterina ry and phytosanitary issues and food safety. Progress was made 
on improving the quality and reliability of statistics  on labour market an d business activities, 
 
EN 73   EN whilst further progress is needed on agricultur e statistics and streng thening administrative 
capacity. 
Some progress was made in meeting European  Partnership prioriti es in the area of transport. 
There were some improvements in the energy  sector, notably in liberalising the internal 
energy market. There has been l ittle progress in the area of information society and media .  
There has been some progress in the field of justice, freedom and security.  Visa facilitation 
and readmission  agreements have been concluded be tween the European Union and Serbia. 
There have been some improvements in the area of border control  including the handover of 
state borders from the Serbian military to the Ministry of Interior. Th ere have been improved 
results in tackling illegal migration  but there has been little progress in the area of asylum. 
Money laundering  constitutes a serious problem in Serbia.  
Some progress was made in fighting organised crime  and important cases were brought to a 
conclusion, including the convictions and senten cing of those found guilty of the murder of 
former Prime Minister Djindjic. However, or ganised crime continues to pose a serious 
problem for Serbia and more concerted efforts are needed.  
Progress was made in combating trafficking human beings  through improved regional co-
operation and the adoption of  a national strategy. Serbia  has been recognised  as a source, 
transit and destination country. Se rbia is still at an early stag e in developing a comprehensive 
approach to combating terrorism. The ratification of a number of  international conventions is 
still pending. There was little progress in the area of protection personal data and current 
legislation is not in line  with European standards 
17.2. Financial assistance in 2007 
Programmes launched  
As of 2007, the CARDS programmes were repla ced by the new Instrument for Pre-accession 
Assistance (IPA). No new CA RDS programmes were launched. 
Overview of programmes implemented  
Democratic stabilisation Refugees and IDPs  
• A programme to support minorities, anti-d iscrimination legislation and mediation 
launched.  
• 2nd phase of institution-building support to the Commissariat for Refugees and IDPs 
launched. 
• A new assistance project (€1.5 million) aimi ng at providing durable solutions for the 
displaced through the provision of housing solutions and income-generation support 
started.  
• 24 families - a total of 142 people - moved to a new block of 44 apartments built in the 
eastern Serbian town of Petr ovac and 10 new apartments were handed over to IDPs who 
had lived in a collectiv e centre in Jagodina. 
• €1 million contract with the OSCE to provide targeted assistance to the Roma community 
in Serbia. 
 
EN 74   EN • The Government of Serbia adopted a decisi on to sign a Council of Europe Development 
Bank (CEB) loan agreement to build 1,000 flats for refugees. It will be implemented with 
the support of a Programme Implemen tation Unit financed by the EC.  
Civil Society 
• Under the Media Fund , 18 contracts with media outlets ha ve been signed for a total of €1.8 
million. The objective is to support quality production and investigative reporting.  
• In May, the Agency launched a project to prov ide technical assistance to Radio Television 
Serbia . The project aims to support high-quality journalism, management and training of 
RTS staff.  
• A €2 million project supporting the restorati on, conservation and access to the Yugoslav 
Film Archive started.  
Good governance and institution building 
Judicial System 
• The SENA software application for case manage ment has been installed in Serbian courts. 
• Following the delivery in 2006 of  a DNA testing laboratory , training for laboratory 
personnel has been completed. 
• A twinning project with the Mi nistry of Justice assisted in EU law approximation.  
Police 
• A twinning project with the Orga nised Crime Directorate of th e Ministry of the Interior 
helped to modernise investigative techniques. 
• The installation and testing of communication and IT equipment for the Organised Crime 
Directorate (€2.5 million) and Juvenile Deten tion Centres (€1 million) was completed. The 
delivery of equipment for prisons (€2.5 million) is ongoing.  
• An international conference was held to di scuss effective methods  of prevention and 
combat of World Wide Web crime. 
Border Crossings 
• A new twinning project is assis ting the Ministry of the Interi or to improve its internal 
strategic planning capab ilities, cross border policing and im plementation of the Integrated 
Border Management Strategy. 
• Works to reconstruct the Preš evo crossing (border with FYRO M) started in the autumn, 
whilst the contract for the Dimitrovgrad railway  station site (border with Bulgaria) was 
awarded and works will start in early 2008. 
Public Administration  
• A study visit to Slovenia took place in Sept ember for employees of the Human Resource 
Management Service, High Civil Service C ouncil and Appeal Board of the Government. 
• A review of pay and grading options was car ried out and recommendations presented to 
the Ministry of Labour, Employment and Soci al Affairs, togeth er with proposed 
amendments to the draft Public Service Pay Law.  
 
EN 75   EN • A preparatory study to support the reform of  the pension system in Serbia has been 
launched.  
• A €2 million project is assisting the Ministry  of Finance to improve the budget planning 
and preparation process. 
• A €1.8 million twinning project has been la unched to strengthen the capacity of the 
Ministry of Economy and Regiona l Development to create, ne gotiate and implement trade 
policy and to negotiate international trade agreements. 
• A €1.5 million assistance project on Consumer protection started.  
• Phase III of the Policy and Legal Advice Cent re project will continue to provide legal 
advice to the Serbian administration on such i ssues as public procurement, state aid and 
financial services.  
• An assistance project to the Serbian Statisti cal Office has been comp leted by the Italian 
Statistical Office. 
Health 
• The Agency celebrated €100 million of EU funds contracted for the Serbian health sector 
since the beginning of the Agency’s work in Belgrade.  
• A capacity building project assisting the Mini stry of Health to implement a €50 million 
emergency EIB health loan closed successfully.  
• The project “Improving preventive serv ices in Serbia” cl osed successfully. 
• The €2.5 million project “Support to the implemen tation of Capitation Payment in Primary 
Health Care in Serbia” started in September. 
• As part of a project to develop a modern H ealth Information System  for basic health and 
pharmaceutical services, pilot tests in Pancevo ha ve led to customisations of patients’ basic 
Electronic Health Records.  
• A €4 million service contract for “Training in Health Service Management” has been 
awarded. 
• The Agency awarded contracts to supply e quipment worth a total of €3.55 million to the 
public health laboratories.   
Local Government 
• Under the Municipal Infrastructure Support  programme, projects totalling €34 million have 
been completed or are underway in 9 municipalities across the country.  
• The Agency launched a €20 million programme to assist local authorities in the north-east 
of Serbia, to modernise municipal administration.  
• Technical Assistance projects s upported the Ministry of Public Administration and Local 
Self Government in finalising laws on decentralisation. 
Economic and social development 
Enterprise Development  
 
EN 76   EN • The national strategy for Foreign Direct Invest ments prepared by the Ministry of Economy 
and Regional Development has been developed with the assistance of experts provided by 
the programme. 
• The €4.5 million programme “Support to Enterp rise Development and Entrepreneurship” 
closed. This included the financing of 26 projects by a dedicated fund. 
• An EU-funded project is supplying accurate di gital maps to the Serbian Geodetic Authority 
for its updating of the land  register (cadastre). 
• An Integrated Socio-economic Development Plan based on the Rehabilitation of the 
Middle Danube River Basin and Inland Waterway Syst em of Serbia has been completed.  
Vocational education and training  
• In the context of the implementation of an EIB loan of €25 million for the education 
sector , an EAR technical assistance project pr ovided intensive trai ning to build loan 
management capacity within the Ministry of Education. 
• Contracts have been signed to supply sp ecialised IT equipment to VET schools  worth 
€3.64 million. Deliveries are ongoing.  
• Two twinning projects on Modernisation of  the National Employment Service (€1.5 
million) and Support to Development of National Employment Policy (€1.5 million) 
started.  
Agriculture 
• 125 vans (worth €880,000) were handed over to the Serbian Veterinary and Phytosanitary 
Directorates  together with basic equipment worth €700,000 for performing  veterinary and 
phytosanitary inspections at 14 border posts.  
• A new €1.4 m twinning initiative between the Se rbian Ministry of Agriculture and the 
province of Rioja will  support the Serbian  wine sector. 
• A draft Rulebook for food establishments other than slaughterhouses has been produced, as 
well as an action plan for phased alignment with the Acquis  of animal waste disposal 
practices and infrastructure.  
• More than 30 staff of the Veterinary Direct orate of the Ministry of Agriculture underwent 
training in drafting legislation aligned with the Acquis .  
• A procedures manual for preparation of th e national rural development programme has 
been drafted. 
Infrastructure and energy 
• A capacity building project for the transport sector was completed in January, with the 
delivery of a draft Strategy and Policy for this sector. 
• The Agency awarded the contracts to supervis e rehabilitation works of the (i) Belgrade 
Gazela Bridge across the Sava River and (ii) of the E-75 motorway Belgrade – Novi Sad 
along the Corridor X. The works will be financed by an EIB/EBRD loan. 
• The first of the major environmental improvement  projects in thermal power stations – air  
filters for Kostolac A power plant (€ 5 million) – was successfully completed. 
 
EN 77   EN • A contract has been signed for the procurement of the  Capacity Allocation System  for the 
electricity transmission system operator, and implementation is underway. Hardware and 
software for the System has been delivered to the beneficiary EMS – Elektromreža Srbije. 
• Works for the second major environmental projec t - ash disposal in Nikola Tesla B power 
plant, with a budget of €30 million – are ongoing. 
• The pre-feasibility study for Stavalj Coal Mine and Therma l Power Plant was successfully 
completed. 
• The first season of works on the modernisation of District Heating in five cities (€20 
million) has been concluded. 
• The supply of hardware and software for the Se rbia electricity market (market management 
system) has been completed, and all tests finalised. 
Environment 
• The Agency launched a project to provide technical assistance for medical  waste 
management. It includes the installation in hospi tals of equipment for treatment of medical 
waste.  
• An Action Plan for the Water Management Information System  (WMIS) has been 
prepared. 
• Action plans and feasibility studies for the reme diation of three heavily  polluted sites have 
been prepared. 
• Training was provided on EU accession and coordination with the environmental Acquis  
for staff of the Ministry of Science and inter-m inisterial coordinators from other ministries. 
Regional Cooperation 
• Under the Neighbourhood Programmes (NP) with  Hungary and Romania - Implementation 
of 72 projects is ongoing. 
• Under the CADSES programme – seve n projects are under implementation. 
• Under the Italy Adriatic Neighbourhood Pr ogramme 2004-2006 - 17 projects are under 
implementation and two more are in the contract preparation stage. 
CARDS management performance  
The cumulative portfolio of CARDS programmes in Serbia is €1.288 billion. By the end of 
the year, 90% of this total had been contracted and 77% had been spent. 
Institution Building highlights  
The Serbian Development and Assistance Coordina tion Unit (DACU) that deals with EU and 
other external funds was transferred from the former Serbian Ministry of International and 
Economic Relations to the Ministry of Finance.  
The Government established DIS working group which started to prepare an Action Plan for 
implementation of Decentralized  Implementation System in. It  receives support from SIGMA 
and other donors.  
17.3. Results and impact 
M&E Reports in 2007 - Lessons Learned  
 
EN 78   EN  List of conducted and planned evaluations 2007 (status on 31 December 2007) 
Type/ 
Code (X) Project- 
Programme Sector/ 
Location Status 
Final/Mid-term 
Evaluation 
 on of the contribution by 
Serbia’s participation in the 
Energy Marke t Energy/ 
Serbia, Kosovo, Montenegro Final Report 
Jan 08 
Mid-term/Final 
Evaluation ICB support Serbia Public Administration/ 
Institutional Capacity Building 
 Ongoing 
Evaluation 
Report on CCI 
Seminar Cross-Cutting Issues all 
Centres Cross-Cutting Issues (generic)  Final Report 
May 07 
Mid-term 
Evaluation TAM/BAS programmes in 
Serbia SME Sector Development/ 
All Centres  Ongoing 
One of our main concerns regarding the implemen tation of the assistance is the pace of public 
administration reform at central government le vel. Serbia continued to exhibit weak inter-
ministerial relations which undermined the im plementation policy crucial to addressing key 
socio-economic challenges (unemployment, high tr ade deficit) and the demands of European 
integration (implementation of regulatory and policy reforms supported under the CARDS 
programme). We have learnt that alignment of  external assistance with Serbia strategic 
planning cycles, and budgeting processes is essential. 
The European Agency for reconstruction had to  work in a rapidly changing environment and 
needed to adapt swiftly to new challenges. Th is was addressed through training – in technical 
subjects such as economic reform, in administra tive issues such as the development of skills, 
and not least in applying instruments such as Twinning. Other useful le sson was to realise the 
usefulness of reacting promptly and properly to a udits, either by the Cour t of Auditors or by 
the EC’s Internal Audit Service, and to cont inually monitor and evaluate our programmes and 
projects.  
Sectors with positive results –Success stories 
EC support for environment, transport, heal th, energy, trade and support to minorities was 
successful. (See some examples below). 
One billion euros of EU fundi ng contracted in Serbia 
With the signature of a million-Euro contract  for a road construction feasibility study in 
January, the total amount of EU-funded contracts signed by the European Agency for Reconstruction in Serbia passed the one-billion-euro mark. 
Solving the problem of ash disp osal in Serbian power plants 
The majority of Serbia power stations burn coal, and Nikola Tesla power plant (“TENT B”) 
near Belgrade, produces 1.7 million tons of ash every year. The use of outdated methods of 
disposal causes serious pollution to both air and groundwater. A €28 million project will 
improve the system for transporting and depositin g the ash, with positive effects on the health 
of the local population. The project was officially launched on 3 October. 
 
EN 79   EN District heating projects in Serbia 
Five Serbian cities have signed agreements w ith the EAR to reconstruct, improve and extend 
key parts of the central heating systems. The pe ak demand for electricity in Serbia is driven 
by the use of electricity for space heating in housi ng, so increasing the share of district heating 
has the effect of reducing that peak demand.  
New equipment for Public Health Institutes  
New equipment for laboratories in Serbian pub lic health institutes was delivered. The 
equipment, worth €1.4 million, will improve th e routine laboratory work and enhance the 
quality of services in 30 public health laboratories. 
Facilitating trade flows 
A €1.8 million twinning project will strengthen Se rbia’s capacity to create, negotiate and 
implement trade agreements. The project began in November and supports Serbia in enforcing foreign trade law, implementing the Stabilisation and Association Agreement (SAA), and speeding up the country’s entry into th e World Trade Organisation (WTO).  
Modernising Serbia’s southernmost border crossing  
Building works have started at the Preševo bor der crossing between Serbia and the Former 
Yugoslav Republic of Macedonia. The first phase of works will cost €5.6 million and will last 
14 months. The crossing is located on the E75 – a key part of European transport corridor X.  
Targeted assistance to the Roma community in Serbia 
A €1 million contract with OSCE to provide targ eted assistance to the Roma community in 
Serbia started. The programme is consistent with the Poverty Reduction Strategy of the 
Government and the developmental goals pur suant to the Decade of Roma Inclusion, 2005-
2015. 
18. 
SLOVAKIA  
18.1. Summary  
In 2007, Slovakia continued to implement su ccessfully the post-accession assistance to 
address the remaining needs related to inst itution building for the implementation of the 
acquis , in line with the EDIS. 
Since October 2004 implementation is carried ou t under the entire resp onsibility of Slovak 
authorities applying national procurement rule s. The Central Finance and Contracting Unit 
(CFCU), the Regional Development Support Agen cy (RDSA) and the National Agency for 
Development of Small and Medium Enterpri ses (NADSME) are fully responsible for the 
daily implementation of the projects. 
The National Aid Coordinator (NAC) contin ues the monitoring of both Phare and TF 
Programmes. The National Authorizing Officer ( NAO) carries out the financial supervision.  
Since the closure of the Representation's Phar e Transition Team in Bratislava in July 2005, 
DG Enlargement exercises residual functions re lated to the Commissi on responsibilities 
(monitoring, payments, closure, etc.) in  line with the Financial Regulation. 
18.2. Pre-accession financial and Transition assistance in 2007 
Implementation  
– TF 2004 – finalisation of payments 
 
EN 80   EN At the end of the period for execution of cont racts for the 2004 Transition Facility programme 
87.82 % of the funding has been disbursed. The Sl ovak authorities requested no extension for 
the 2004 programme. The payments can still be ex ecuted within 6 months after the expiry of 
the contracts execution period. 
– TF 2005 – rate of contracting 
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 89.89% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €29 million of post-accession assistance from national allocation (not 
including horizontal and multi-country progra mmes) has been allocated to Slovakia from 
Transition Facility programmes (2004-2006).  
Implementation of Transition Facility in Slovaki a is considered generally successful in and 
projects provided notable added value. 
The Twinning instrument continues to be used successfully in many priority areas and helped 
Slovakia to prepare for the implem entation of EU policies and laws. 
18.3. Results and Impact 
State of play for JMC / SMSC development  
In 2007, two JMC meetings took pl ace in January and July 2007, in line with th e revised JMC 
Mandate introduced in the new Member States in May 2004, which established an integrated 
monitoring and evaluation system over the programmes under implementation. 
Further to the simplification of the monitori ng system in Slovakia,  the SMSCs were not 
abandoned, since they were consid ered as an effective tool w ith higher level of members’ 
decision-making power. The decreased amount of ESC projects effected the merging of two 
sectors, which resulted in the following monitori ng sectors: Justice, Home and Social Affairs 
and Cross-border Cooperation. 
M&E Reports in 2007 (lessons learned)  
Overall responsibility for monitoring and eval uation of the Phare and Transition Facility 
programme in Slovakia lies with  the Aid Co-ordination Unit, as the executive body of the 
NAC, at the Office of the Government. Activities in  this area were carrie d out on the basis of 
the Action Plan on decentralisation of monito ring and Evaluation, which was endorsed by the 
EC in March 2005. 
The work of the external contractor for the in terim evaluation of Transition Facility projects 
started in April 2006 and last ed until November 2007. The last  Country Interim Evaluation 
report was issued in June 2007 and covered 3 s ectors: JHA, Internal Market and ESC. The 
conclusions that were made were the following:  Most of the Transition Facility Programmes 
remain relevant, even when looking at them from an early ex-post perspective. In addition to 
the accession to the Schengen agreement, the Fi ght against Corruption has been re-introduced 
in the priority areas of the Transition Facility assistance. The key problem of efficiency 
remains the delay in programme implementation, though measures have been taken to improve the situation. The evaluation of effectiveness was mostly based on the 2004 projects, 
as almost none of the 2005 or 2006 ones was at th e implementation stage at the time of the 
report. Some early tangible effect s could be reported, for instan ce in the improved work of the 
General Prosecution, the implementation of th e National Programme for the Fight against 
Drugs or the Public Finance Management Reform. Evaluation of sustainability and impact is 
 
EN 81   EN rather positive. Most of the Tr ansition Facility interventions shoul d be sustainable, such as in 
the sub-sectors of agriculture, judici al support, finance or customs.  
 
EN 82   EN 19. SLOVENIA  
19.1. Summary 
In 2007, Slovenia continued to implement su ccessfully the post-accession assistance to 
address the remaining needs related to inst itution building for the implementation of the 
acquis , in line with the EDIS. 
Since 17 September 2004 implementation is carried  out under the entire  responsibility of 
Slovenian authorities applying na tional procurement rules. The Ministry of Finance, Central 
Financing and Contracting Department is resp onsible for ex-ante control and twinning. The 
Ministry of Finance, Central Financing an d Contracting Department (CFCD) is fully 
responsible for the daily implementation of the projects. 
The National Aid Coordinator (NAC) continues to  exercise the monitoring of both Phare and 
Transition Facility Programmes. The National Authorizing Officer (NAO) carries out the 
financial supervision.  
Since the closure of the Phare Transition Team in  the Representation in Ljubljana as of July 
2005, DG Enlargement continues to exercise the residual functions related to the Commission 
responsibilities (monitoring, payments, closure, etc.) in line with th e Financial Regulation. 
19.2. Pre-accession financial and Transition assistance in 2007 
Implementation  
– TF 2004 – finalisation of payments 
At the end of the period for execution of cont racts for the 2004 Transition Facility programme 
68.78 % of the funding has been disbursed. The Sl ovak authorities requested no extension for 
the 2004 programme. The payments can still be ex ecuted within 6 months after the expiry of 
the contracts execution period. 
– TF 2005 – rate of contracting 
At the end of the contracting period for the 2005 Transition Facility programme on 15 
December 2007, 82.92% of the programmes had been contracted.  
– Institution Building highlights 
A total of around €17 million of post-accession assistance from national allocation (not 
including horizontal and multi-country progra mmes) has been allocated to Slovenia from 
Transition Facility programmes (2004-2006).  
In 2007 the implementation of the Transition Facility projects in Slovenia proceeded 
reasonably well. There were no major problems  with the implementation of the Transition 
Facility projects. The value added and the impact of the TF was much larger in the previous 3 
years when the majority of the projects were implemented. 
 
EN 83   EN Implementation of Transition Facility is cons idered successful in the following areas: 
Agriculture, Justice and Home Affa irs, Agriculture, Internal Market. 
19.3. Results and Impact 
State of play for JMC / SMSC development  
In 2007, two JMC meetings took place in June a nd in December 2007, in line with the revised 
JMC Mandate introduced in the new Member States in May 2004, which established an 
integrated monitoring and evaluation syst em over the programmes under implementation. 
In the year 2007, two rounds of Sector Mon itoring Sub-Committee (SMSC) meetings took 
place. The first round of SMSC meetings took place in March-April and second round 
between September and October. In Slovenia the following sectors are monitored: Agriculture, Economic and Fina ncial Issues, Internal Market , Justice and Home Affairs, 
Environment, Energy and Transport. 
M&E Reports in 2007 (lessons learned)
 
Overall responsibility for monitoring of the Phare programme in Slovenia lies with the 
National Aid Coordinator (NAC) with the Govern ment Office for European Affairs (GOEA).  
Only the projects related to Economic and financ ial issues, Internal Market, Agriculture and 
Justice and Home Affairs sector s were subject to interim eval uation in 2007. The government 
Office for European Affairs signe d a contract with an external  evaluator on 25 October 2005 
to perform interim evalua tions in years 2006 and 2007.  
The independent evaluator also prepared tw o Country Evaluation Summary Reports (CSER) 
in May and in November 2007.  
The conclusions available from the Interi m Evaluation reports ar e that, overall the 
implementation of the evaluated Transition Facili ty assistance was rated satisfactory and there 
were no major problems or critical situati ons. However, the implementation of 2 of the 
evaluated projects was rated as unsatisfactor y, 12 as satisfactory and 5 were rated highly 
satisfactory.  
 
EN 84   EN 20. TURKEY  
20.1. The year in review 
Political developments  
Turkey continues to sufficiently fulfil the Copenhagen political criteria . Following the 
constitutional crisis in spri ng, early parliamentary elections were held in full respect of 
democratic standards and of th e rule of law. However, li mited progress was achieved on 
political reforms in 2007. Significant further effo rts are needed in particular on freedom of 
expression, on civilian control of  the military, and on the rights of non-Muslim religious 
communities. Further progress is also needed on the fight against corruption, the judicial 
reform, trade union rights, and women's and children's rights. 
Macroeconomic developments and structural reforms  
The Turkish economy  continued to grow rapidly, with high inflows of foreign investment. 
The monetary and fiscal policy mix was broadl y adequate. Inflationary pressures, growing 
external imbalances and weaker fiscal discip line in 2007 may affect macroeconomic stability. 
Structural reforms have slowed down and labour  market rigidities hamper job creation. 
As regards economic criteria, Turkey can be regarded as a functioning market economy. It 
should be able to cope with competitive pressure  and market forces within the Union in the 
medium term, provided that it implements its comprehensive reform programme to address 
structural weaknesses. 
Progress in meeting the acquis communautaire  
Turkey improved its ability to take on the obligations of membership.  Progress was made 
in most areas, in particular in the chapters  on free movement of goods, financial services, 
trans-European Networks, and science and resear ch. Alignment is advanced in certain areas, 
such as free movement of goods, intellectual property rights, anti-t rust policy, energy, 
statistics, enterprise and industrial policy, co nsumer and health protection, and science and 
research. However, alignment needs to be pursued, in particular in areas such as, free movement of services, state aid, agricultu re, fisheries, food safety, veterinary and 
phytosanitary policies, and environment. A nu mber of obligations by Turkey under its 
Customs Union with the EU remain unfulfille d. Turkey's administrative capacities to cope 
with the acquis need further improvement. 
20.2. Pre-Accession in 2007 
Programmes launched
 
Financing Agreements for two further components of the National Programme 2006  (Parts 
Ib and II) were signed on 19.07.2007 after conditions  for the strengthening of certain DIS 
institutions had been met. The June 2007 Joint Monitoring Committee confirmed the 
establishment of absolute deadlines for the su bmission of procurement files for the ECD ex-
ante control and the subsequent  launching of tenders and public ation of calls for proposals, 
the non-respect of which will resu lt in the loss of the related EU funding. If adhered to by the 
DIS institutions, these deadlines will lead to  a further acceleration of procurement under NP 
2006 compared to NP 2005. The established procurement deadlines under NP 2006 were by and large adhered to in the course of 2007.  
As of 2007, the Turkish pre-accession instrument was replaced by the Instrument for Pre-
Accession Assistance (IPA).  
Overview of programmes implemented
 
 
EN 85   EN At the endof 2007, €1281 million of EU funds were  under implementation in Turkey (incl. 
National Programmes/NP 2002-2006 EADP, Admi n Coop, PCP which were funded under 
MEDA). At the end of the year, the contrac ting deadline for the following funds was over:  
The NP 2002 amounted to €126 million, of whic h €112 million (89%) were contracted and 
€105 million (83%) were disbursed. 
The NP 2003 amounted to €144 million, of whic h €122 million (85%) were contracted and 
€113 million (79%) were disbursed. 
The NP 2004 amounted to €236 million, of whic h €194 million (82%) were contracted and 
€169 million (72%) were disbursed. 
The NP 2005 (97% under DIS) amounted to €278 million, of which €234 million (84%) were 
contracted and €87 million (31%) were disbursed. 
In addition to the Turkey Pre-Accession Instru ment, the implementation of other programmes 
was continued: The MEDA Programmes ( 1996-2001), EIDHR/Gender and Environment 
Programmes, Communication Strategies (2002-2006), ATA (2002-2007), FEMIP, Small 
Projects Programme. Excluding MEDA, these programmes together amounted to €36 million, 
with the inclusion of the de -concentrated part of the NP 2005 which is amounting to € 8.45 
million . 
At the end of 2007 the contracting deadlin e was outstanding for the following funds: 
The NP 2006 (parts I and II, both fully under DIS) amounted to €442 m illion, of which €86 
(including PCP) million (20%) were contra cted and €62 million (14%) were disbursed. 
In addition, the Euro-Med Youth Progra mme, the 2006 Avian Influenza programme, 
Communication Strategies, Audit & Evaluation, ATA, EIDHR mi cro projects, as well as 
EMPL/REGIO-SSTA were ongoing. Together, these programmes amounted to €28 million. 
Pre-Accession management performance  
The risk of a suspension of th e decentralised implementation system in Turkey was averted by 
the Turkish authorities through a set of measur es tackling the weakne sses of the CFCU and 
the line ministries.  
Following a mission carried out in January 2007 , a highly critical follow-up audit report on 
the functioning of the DIS in Turkey was fi nalised at the beginning of June. Through 
reinforcement of the staffing of the CFCU a nd the adoption of legisl ation strengthening the 
CFCU, the imminent suspension of DIS could be averted. Other critical shortcomings 
identified for urgent addressing through an Ac tion Plan by Turkey conc erned the insufficient 
supervision of line ministries through the PAO, a flawed practice of dealing with 
irregularities, a sub-standard qua lity control of procurement f iles through the PAO, as well as 
late procurement and contracting. Significant pr ogress was achieved in strengthening DIS in 
the second half of 2007, including acceleration of contr acting, the reinforcement of the CFCU 
and the assertion of the authority  of the PAO over the SPO stru ctures in the line ministries. 
Important weakness persist, nevert heless, notably lack of leadersh ip at the centre and lack of 
capacity of the NAO office. 
Preparations for IPA accredita tion should not deflect attenti on from further progress in 
improving the DIS structure, such as the need to  ensure appropriate st affing and skill levels, 
ensuring adequate preparation for the progr amming phase, accelerating procurement, 
monitoring capacity both at programme and at pr oject level, avoiding last minute contracting 
and reducing rejection rate s during ex-ante control 
 
EN 86   EN No improvements were observed as to the mon itoring functions of the EUSG and there was a 
lack of clear segregation of duties and project management capacity in the case of the projects 
where the EUSG is the programme benefi ciary. The staffing of the EUSG remains 
insufficient. 
NDPs – State of Play  
The 9th Development Plan has been drafted with  a view to provide the main strategic basis 
for Turkey's accession to the EU. The period and the definition of the major axis are inspired by IPA. The strategic approach is welcome. It s EU accession vision is appreciated. However, 
the plan provides little guidance with respect to the priorities  under each policy field and does 
not set out a coherent strategy of alleviatin g the regional disparities in Turkey. The 
comparatively limited resources available under IPA cannot compensate for this and would need to be embedded into a comprehensive framework. 
Institution Building, an example
 
Strengthening the Accountability, Efficiency and Effectiveness of the Turkish National 
Police  
The strengthening the accountabi lity, efficiency and effectiven ess of the Turkish National 
Police Twinning project, which started its implementation in February 2005 and had a 
duration of 24 months, addresses the needs for improvement of qua lity of police services to 
the public and respect for human rights in the discharge of poli ce tasks, pre-service and in-
service training, community polic e facilities and personnel syst em including promotions and 
appointments and working conditions of the Poli ce. The project with a total volume of €2,6 
million was carried out with the Spanish Ministry of Interior, General Directorate of Security 
and the Turkish Ministry of Interior, Genera l Directorate of Secu rity. About 3000 police 
officers have been trained on issues such as human rights and community policing within the 
framework of the project. A code of ethics for police officers was developed.  
20.3. Results and impact 
State of play for JMC/SMSC development  
In 2007, two JMC meeting (June 6 and December 18) as well as thirteen SMSC meetings 
were held to monitor the implementation of pre-accession assistance up to 2006: Political 
Criteria; Civil Society Dialogue; Intern al Market, Customs Union, Energy and 
Telecommunications; Public Finance, Statisti cs and Accession Proce ss Support; Environment, 
Transport, Regional Competitiveness; Human Resources Development; Rural Development. 
The quality of monitoring repor ts remains variable, and the f unctioning of the SMSC system 
is unsatisfactory as a result of lack of meeting preparation on the side of the line Ministries 
and the lack of an adequate participation at decision-making level. The December 2007 JMC 
has discussed the continuing w eakness of the monitoring system  and has requested the EUSG 
to report to the next JMC meeting on measures aimed at its strengthening. 
M&E Reports in 2007 - Lessons Learned  
Overall, EC assistance to Turkey has generally been evaluated to be relevant  to key 
accession-related issues. Only assistance to the tr ansport sector was moderately unsatisfactory 
due to a weak design of projects, overl y complex implementation arrangements and 
insufficient budgetary allo cations. In terms of efficiency , assistance in many sectors has been 
weak, in particular due to slow  contracting. Once started, im plementation has been improving. 
Overall effectiveness  has been mixed, with better result s in the internal market sector, 
improving trends in the environment sector, but problematic results in the transport sector. 
Impact  is generally quite positive an d visible, in particular in the environment, transport and 
 
EN 87   EN internal market sectors, less so in the energy sector. Also sustainability  was moderately good 
over the sectors, with relative ly good prospects in the enviro nment and the transport sectors 
and problematic prospects in the economic and social cohesion, the infrastructure and the 
energy sectors. 
The evaluations of EU pre-accession assistance to Turkey show that particular attention 
should be given to mitigating the risks associated with: 
– absence of adequate planning documents and sectoral strategies  resulting in weaknesses 
in needs analysis; 
– insufficient attention to horizontal public administration reforms  in the support for the 
development of administrative  and judicial capacity; and 
– weaknesses in programme management  resulting from understa ffing and instability of 
the DIS institutions. 
Sectors with positive results  
Positive results have been achieved notably in the social development sector, but also in the 
environment and the internal market sectors.  
The environment sector appears to show ge nerally the most satisfactory results, while 
assistance to the transport, en ergy and infrastructure sector s encountered most problems. 
Success story  
İzmit Handicapped Production Centre 
Bizimköy Handicapped Production Centre is one of the projects under the Marmara 
Earthquake Rehabilitation Programme (MERP) , with a total budget of 28.0 Million Euros 
including the co-financing of th e Turkish Government and the relevant municipalities (EC 
contribution is 20.0 Million Euros) , provided in the aftermath of the earthquakes which took 
place in Marmara region in 17 August 1999. In this project, €1,3 million covered the construction of 6 facilities toge ther with the Bizimköy Handi capped Production Centre which 
were included in the Programme for the us e of handicapped adults, handicapped children, 
orphans, women and young people at İzmit, Düzce, Bolu and Gölcük municipalities. The 
construction works were completed as of end 2005 and the centres became operational as 
from spring 2006. 
The objective of MERP is to he lp restore the living conditions in the region affected by the 
earthquake, support economic recovery and growth  and to develop an institutional framework 
for disaster risk management and mitigation. 
As a result of this project, a complete pr oduction centre is construc ted, 230 job opportunities 
for handicapped are created, a model was formed in which the employer is a foundation and employees are handicapped and thus the project  has concretely contributed to the social 
and economic rehabilitation of handicapped people in Turkey. 
Şanl ıurfa Drinking Water Project  
Şanl ıurfa municipality, with it s population around 500,000, had seve re water shortage both in 
terms of quantity and quality due to the lack of adequate wate r supply system. The high rate 
of occurrence of waterborne di seases proves the inadequate wa ter supply system. Most people 
had access to water not more than few hours pe r a week. This €21 million-EC grant project 
funded the construction of over 35 kilometres of  large diameter water transmission pipelines, 
water reservoirs with a total capacity of more than 100,000 m3, and three pumping stations. 
The facilities will be able to provide wate r for almost 1.5 million people – the projected 
 
EN 88   EN population of the city in 2020. Th e significant improvements in wa ter delivery and quality in 
the city bring substantial hea lth and environmental benefits , as cleaner water means less 
disease and better protecti on of the environment.  
 
EN 89   EN PART II: ADDITIONAL INFORMATION ON IMPLEMENTATION AND PROGRAMME 
MANAGEMENT ISSUES  
21. TECHNICAL AND FINANCIAL ASSISTANCE  
21.1. Twinning  
Twinning has been designed and developed by th e Commission as the main instrument for 
Institution Building. It aims at  helping Candidate and Potentia l Candidate countries in their 
development of modern and efficient administ rations, with the structures, human resources 
and management skills needed to implement the acquis communautaire so as to reach the 
same standards throughout the Union but also  to benefit fully from European Union 
membership.  
This major Institution building initiative ha s managed to mobilise significant human and 
financial resources of the Comm ission as well as of the Member States and the beneficiary 
countries to achieve this administrative overhaul. Twinning projects are based on the 
secondment of EU public sector experts (Mem ber state officials or  mandated body experts), 
known as Resident Twinning Advisors (RTAs) who are made available to the beneficiary 
country administrations for a period of at least one-year in order to assist these 
administrations to obtain the mandatory result de fined for each and any twinning project. To 
that effect, the Resident Twinni ng Advisors provide technical advi ce and are in charge of the 
day-to-day implementation of the twinning projects. 
They are supported by a senior Project Lead er in their home admi nistration, who is 
responsible for ensuring the overall thrust of the twinning project implementation and for co-
ordinating all other inputs from the Member  State administration or mandated body which 
provides the twinning expertise. In order to achieve the aforem entioned mandatory results, it 
is indeed necessary to combine different means of assistance, including short-term expertise, 
training, and other services (such as translation and interpreting) in addition to the Resident twinning Advisor.  
More than 1,400 twinning projects have al ready been funded by the Community since 
twinning was launched in 1998. Each twinning pr oject has an average budget of €1 million. 
Almost one half of these projects concerns Jus tice, Freedom and Security issues, and Public 
Finance and internal market matters .Other area s prioritised include Agriculture and fisheries, 
Environment and Social policy. 
During the calendar year 2007 the following project fiches were circulated with financial 
means coming from Phare, CARDS or Transition Facility envelopes:  
Number of Phare, CARDS and Transition Facility Twinning 
projects launched
 in 2007 
 
Albania 5
Bosnia Herzegovina 1
Bulgaria 22
Czech Republic 1
 
EN 90   EN Croatia 5
Estonia 1
former Yugoslav Republic of 
Macedonia 1
Latvia 1
Romania 22
Serbia 2
Turkey 2
Total 63
In addition, the Candidate Countries and Potent ial Candidate Countries are being offered the 
possibility of drawing on twinning expertise through “Twinning Light”, in order to address 
well-circumscribed projects of limited scope. In  2007, this instrument has been continuously 
used by the beneficiary administrations.  
21.2. TAIEX 
TAIEX2 started operations in 1996 as a follow-up to the Commission’s White Paper on the 
preparation of the associated countries fo r integration into the internal market.  
Since then, TAIEX has evolved in to an instrument providing s hort-term technical assistance 
to facilitate the approxima tion, application and enforcem ent of the EU legislation.  
Apart from the Western Balkans and Turkey part ners, the TAIEX instrument also covered the 
10 new Member States, the Tu rkish Cypriot community and the countries covered by the 
European Neighbourhood and Part nership Instrument (ENPI). 
TAIEX support consists of expert missions, wo rkshops, peer assessments, study visits and 
training programmes designed on the basis of specific requests and needs of beneficiary 
institutions. TAIEX is demand-driven and it deliv ers services on a "first come, first served" 
basis.  
TAIEX also facilitates the access to several databases (CCVista, Progress, JurisVista, VetLex, 
PhyroLex and Avis) that provide translation of legislative texts and information on the 
alignment of legislation. 
The TAIEX operation continued to develop in a positive and dynamic manner in the course of 
2007. The total number of incoming requests rose sharply from 1,049 in 2006 to 1,591, an 
increase of 52%. The major part of applicatio ns came from the Western Balkans and Turkey 
(45%), followed by the 10 new Member States  (26%) and the ENPI countries (14%). 
During the year, a total of 1,282 events were organised, representi ng an increase of 16% 
compared with 2006 and about the same level as 2005. Out of these events 467 were organised for Phare beneficiary countries. 
                                                
 
2 Technical Assistance Information Exchange Instrument  
 
EN 91   EN The number of participants at TAIEX events  went up by some 4% to 36,971 in 2007, while 
the experts engaged went up by  5% to 4,148. Out of those 16,095 participants came from 
Phare countries and 2,231 experts were involved in projects related to Phare beneficiary 
countries. 
The positive results and the increasing demand fo r assistance clearly demonstrate the need 
and usefulness of TAIEX as an instrument of  know-how transfer an d exchange of best 
practice.  
TAIEX continued to play an important role  in supporting the Turkish Cypriot community. 
Out of the Financial Aid Re gulation (Council Regulation No  389/2006) the instrument was 
allocated €11 million to encourage the econo mic development of the Turkish Cypriot 
community with particular emphasis on the ec onomic integration of the island, on improving 
contacts between the two communities and with the EU, and on preparation for the acquis 
communautaire . In 2007 assistance focused on the preparation and launching of the 
Programme for the Future App lication of the Acquis (PFAA), which was finally agreed in 
October 2007 and which will concentrate on 12 EU policy areas. Notable progress have been achieved so far in the sector of environment (creation of basic conditions for the drafting of main framework legislation), the Green li ne Regulation (Council Regulation No 866/2004) 
and the statistical sector (prepa ration of a "Master Plan” and of a statistical law). Basic work 
has been done to prepare strategies for the agricu ltural sector as well as  for the reform of the 
Customs system.  
2007 was the first full-operational year for the ENP countries and Russia. TAIEX has 
received more than 200 applications from these countries against some 50 in seven months of 
operations in 2006. In the same period, over 3,000 pa rticipants from the administrations of 
these partner countries have been trained. 
The share of ENPI applications has increased from  5% to 14% of the total. For the majority of 
events the subjects covered topics related to in ternal market issues: this is understandable 
considering that the ENP is not offering a prospect of accession, but rather –as stated in all 
Action Plans- "a stake in the EU's internal market ". However, also subjects related to the rule 
of law, to agriculture and to health and safety have received significant attention. 
TAIEX offers access to a range  of databases. The Progress database organises all EU 
legislation in a format that allows a continuous  exchange of up-to-dat e information on newly  
adopted acts and on the harmonisation of nationa l legislations. All data collected via the 
Progress Database are shared with the European commission services and delegations, country missions and the concerned national aut horities. CCVista constitutes a repository of 
all translations of EU legisl ation produced by the Translat ion Coordination Units of the 
beneficiary countries. It is a vi tal source of information to a ll internet users who wish to 
consult legislation translated in to various languages of the bene ficiary countries. The database 
is currently being used by the candidate and West ern Balkan countries. By the end of the year, 
CCVista database contained more  than 5,000 translated EU acts from Croatia and over 2,000 
from the former Yugoslav Republic of Macedonia . This represents over 55,000 OJ pages in 
the case of Croatia and almost 30,000 OJ pages in the case of the former Yugoslav Republic 
of Macedonia. The JurisVista Database is a libra ry of translations of key judgements of EU 
jurisprudence; it is mainly used by the judici ary, academic institutions such as new Member 
State universities and others such  as law firms. VetLex offers direct access to consolidated 
versions of all EU veterinary legislation, simplifying the daily ta sks of veterinary inspectors, 
border post officials and others . Similarly, PhytoLex offers co nsolidated versions of EU 
phytosanitary legislation, while Avis is a database dedicated to  animal diseases. 
 
EN 92   EN The TAIEX Expert Database (ED) represents a key-instrument in the daily work of TAIEX 
assistance tasks. Launched in October 2004, the ED  registers public officials from all the EU 
Member State national administra tions covering a large number of fields of the EU legislation 
body and interested to participate in TAIEX ac tivities. In 2007 more than 3,800 experts were 
present in the ED, a signifi cant increase in comparison with 2006 (with around 2,600 public 
officials signed in). Additionally, more than 550 "institutional" contact points that play a 
coordination role within every ministry of the Member States have been added into the 
database. The Expert Database is contributing to a better identification of appropriate key-
experts in a given field and a smoother and rapid response to bene ficiaries' requests. 
Several Commission Financing De cisions were adopted in 2007 to ensure the continued 
funding of the TAIEX operation. They consisted of € 6,83 million from the Transition Facility 
for Bulgaria and Romania, € 9,28 million from the Instrument of Pre- Accession Assistance 
(IPA) and € 5,0 million from the Pre-Accession Assistance Funds for Kosovo. Funding also included €1,5 million from MEDA and €1,5 mi llion from TACIS and €2 million from the 
ENPI through sub-delegation from DG AIDCO. 
An ex-post evaluation report on  TAIEX was completed in 2007. It  concluded that TAIEX is 
an important instrument in supporting the ac cession process that ha s performed well in 
providing short-term, demand-driven assistance and a large number of output s. In this context, 
the speedy mobilisation and the handling of ad ministrative details were in particular 
appreciated on the recipients' side. The report recommended that TAIEX should focus more 
on networking opportunities, further increase cost-e ffectiveness and sustaina bility of actions.  
21.3. SIGMA  
Since 1992, this Institution building instrument for assistance in horizo ntal areas of public 
management (Public administrative reform, public procurement, public sector ethics, external 
and internal financial control) is implemen ted by the OECD through a contribution agreement 
which is funded by the Commission. 
In 2007, SIGMA has worked with the two new EU Member States and th e three EU candidate 
countries as well as with potenti al candidate countries in the Western Balkans. Within this 
context a total of 57 concrete project assi gnments have been approved by the European 
Commission and carried out by OECD: 24 in Bulg aria, Romania, Croatia and Turkey and 33 
in the Western Balkan countries. All of these pr oject activities were car ried out under distinct 
contracts, funded both under the Transition facility and CARDS. 
In the course of 2007, preparations were st arted to launch a new global contract for the 
continuation of SIGMA programme under the ne w financial Instrument for Pre-Accession 
Assistance (IPA). This new contract will be nefit all Candidate and Potential Candidate 
countries 
22. I
NFORMATION ON MULTI -COUNTRY AND HORIZONTAL PROGRAMMES  
22.1. Political Criteria 
Participation in Community progr ammes, Agencies and Committees 
Under the CARDS Regional Programme 200 5 (€2.5 million) in 2007, several Grant 
Agreements were awarded to Community Agen cies the main objective of which were to 
enable Western Balkan countries to participate in  and to familiarise themselves with the work 
of these Agencies whose role is to pr epare for their adoption of the Community acquis and 
consequent upgrading of their administ rative capacity where necessary:  
 
EN 93   EN • the Agency for Safety and Health at the Workplace (ASHW),  
• the European Environment Agency (EEA),  
• the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA),  
• the European Monitoring Centre for Racism and Xenophobia (EUMC),  
• the European Maritime Safety Agency (EMSA), 
• the European Aviation Safety Agency (EASA).  
Agencies received grants up to a value of 95% of  the total eligible project costs. Contracts 
with EEA and ASHW were concluded in D ecember 2006 and the contracts were awarded 
during 2007. 
Return of refugees  
Three projects under CARDS 2002 regarding ref ugee return and local integration continued 
during 2007 and were due to  end in early 2008. Main  results were: 
• Contract 132-144 (€250,000, Help): Provision of 30 income-generating grants and 
organisation of basic business training; construction of 8 ap artments; implementation of a 
community project proposed by the host co mmunity in Herceg Novi (Montenegro). 
• Contract 132-245 (€202,000, IAN): provision of informational assistance (status issue, 
access to social rights, regulation of property issue…) to 1,000 beneficiaries, provision of 
legal assistance (complaints, claims, accelera tion requests) to 400 refugees, provision of 
personal documents (birth, citizenship and marriage certificates) for 400 persons. This 
project was particularly su ccessful in that the achieved results went well beyond the 
expected results for all the activities and the quality of the reporting was excellent. In October 2007, Commissioner Spidla  visited this project.  
Within CARDS 2006 there was one project under discussion: 
• Contract with UNHCR (€1 million): the projec t regarding the application of the "3x4" 
initiative continued according to schedule and the preparation of the third phase (financing 
proposal to be adopted in June 2008) was being discussed between D3 and 
UNHCR/Brussels. 
Social inclusion. 
"Social inclusion of and access to human right s for Roma, Ashkali and Egyptian communities 
in the Western Balkans " (Contract 148-352: CARDS 2006: €1  million). The overall objective 
is to ensure social inclusi on, protection and return-related activities to the Roma people, 
internal displaced persons and other margina lised groups. A call for proposals was published 
in early 2007 and a contract was made to UNHCR in February. 
Social security coordination 
The "Social Institution Support Programme"  with the Council of Europe (CARDS 2003, 
contract 085-023: €2 million) came to an end in February. It was renewed for a further three 
years under IPA 2007 (q.v. IPA report). 
Justice, freedom and security 
There were eight projects under implementation during 2007: 
• CARDS 2002-2003: "Support to and Coordination of Integrated Border Management 
Strategies in the Western Balkans"  implemented by a consortium led by the  French 
 
EN 94   EN Ministry of Interior, General Directorate of National Police, Department of International 
Police Cooperation (SCTIP) (contract 081-242: €1.99 million). The project come to an end 
in April and the final report was submitted within the contractual deadline and final 
payment made accordingly.  
• CARDS 2002-2003: "Establishment of an Inde pendent, Reliable and Functioning Judiciary 
and the Enhancing of the Judicial Cooperati on in the Western Balkans", implemented by a 
consortium led by the Ministry  of Justice of Austria (cont ract 082-231: €5 million). The 
project came to an end in May. The final report was submitted in November and final payment made in December. 
• CARDS 2002-2003: "Development of Reliabl e and Functioning Policing Systems and 
Enhancing of Combating main Criminal Activ ities and Police Co-operation", implemented 
by a consortium led by the Council of Europe  (contract 079-524: €4 million). The project 
came to an end on 30 June but the final report had not been submitted by the end of 2007. 
• CARDS 2002: "Development of  a reliable and functioni ng prison system respecting 
fundamental rights and standards and enhanc ing of regional cooperation in the Western 
Balkans", implemented by the Council of Europe (contract 132-165: €0.82 million), continued throughout 2007 and was due to end in  March 2008. It was agreed to extend the 
implementation period by three months (to Ma rch 2008) and to increase the resources 
available for implementation which should allo w the Council of Europe to pursue a much 
more intensive implementation schedule during the second half of the project. 
• CARDS 2005: “Second Expert Working Group Meeting”  implemented by CECOFORMA 
(contract 140-045: €29,082); 
• CARDS 2005: “Third Expert Working Group Meeting”  implemented by BS Europe 
(contract 142-429: € 24,197); 
• CARDS 2005: “Fourth Expert Work ing Group Meeting”  implemented by BS Europe 
(contract 144-534: € 28,886); 
• CARDS 2005: “Fifth and Sixth Expert Working Group Meeting”  to be implemented in 
January 2008 by APRI Internati onal (contract 14 6-607: € 59,978). 
The evaluation of the pr oject proposals CARDS 2006 "Support to the Prosecutors' Network"  
was still continuing at the end of the year . The call for proposals had been published in 
August. 
In December 2007 was published the open  call for proposals under CARDS 2005 
"International law Enforcement Co-ordination Units"  (ILECUs). The purpose of the action is 
to create ILECUs and thereby strengthen inte rnational police cooperation with a view to 
supporting the exchange of information in inte rnational investigati ons and to facilitate 
contacts on an operational level. 
Public administration 
A contribution agreement of €2.5 million was signe d with OECD to implement the first phase 
of the development of ReSPA. The agreement in cludes the cost of the operation of the ReSPA 
Secretariat, the development of training a nd other activities related to its future 
institutionalisation. During 2007, Danilovgrad in M ontenegro was selected to be the seat of 
the Regional School for Public Administration and all legal preparatory work is in progress. 
The initial task of the ReSPA team at  the OECD was to determine demand for 
training  in the 
Western Balkans region. In agreement with the European Commission, the OECD would 
design and manage contractors from within EU Member Countries. Ten activities were 
 
EN 95   EN developed to implement the Work Programme (WP) approved by the Steering Committee in 
January. Additional modules were incorporated in the WP after the first meeting of the 
ReSPA Steering Committee in Apr il, and after the first meeting of the heads of Schools and 
Institutes of Public Administ ration in Ljubljana in June.  
The modules developed and delivered covered:  
• Three Training of Trainers modules in S kopje, Podgorica and Pristina on negotiation 
techniques in a European environment in cooperation with EIPA; 
• One module of Training of tr aining managers in Athens in cooperation with EKKDA3; 
• One module of Training junior diplomat s at the Dubrovnik Summer School on the 
promotion of Foreign Direct Investments in th e Western Balkans, in cooperation with the 
Diplomatic Academy of Croatia; 
• One module of Training Policy advisers on a dvisory techniques, in cooperation with 
NISPAcee4; 
• Second ReSPA annual conference, Durres, Albani a, on making strategies work and the use 
of adequate legal instruments to implement strategies; 
• Regional training initiative on Public Procurement, in coop eration with Sigma and ILO-
ITC5; 
• Training of Senior Budget Officials on the im pact of the adoption of an organic Budget 
Law on the work of Government, in cooperation with the ENA, Paris.  
A module on Human Resources Management and in particular on the prof ile of the European 
Senior Civil Servant was initially planne d for November 2007 but postponed to March 2008 
at the request of the Italian co-organiser, SSPA6.  
The ReSPA team at the OECD contacted the NISPAcee, IASIA, EGPA and IIAS secretariats 
in order to gain formal membership for ReSPA to those professional networks. Full 
membership will only be possible once ReSPA has been formally and legally established. 
Finally, organising and co-organising ReSPA modules with established EU Schools and 
Institutes of Public administration, also contri bute to the inclusion of ReSPA into professional 
networks.  
Four activities were carr ied out to implement the Institution Building  dimension of ReSPA:  
• Steering Committee: the ReSPA team at the OE CD has organised three sessions of the 
Steering Committee. The Rules of Procedure of  the Steering Committee have been drafted 
and approved by the Steering Committee Member s, and the sessions function along the 
lines agreed initially.  
• The ReSPA team at the OECD worked on a series of papers and held a number of 
meetings with EC officials to advise on the institutionalisation of ReSPA phase 2 and the 
where ReSPA should be located in the West ern Balkans. The Commission agreed in 
principle with the EIPA in October that it would support the further institutionalisation of 
ReSPA in Phase 2. The ReSPA team advised the Commission on the future location of 
ReSPA in November 2007.  
                                                 
3 Greek School of Public Administration 
4 Network of Schools and Institutes of Public Administration in Central and Eastern Europe 
5 International Training Centre of the International Labour Office 
6 Italian School of Public Administration 
 
EN 96   EN • Implementation of staffing policy: the initial contract between the OECD and EC foresaw 
the establishment of a projec t team at the OECD composed  of one OECD Administrator 
and three experts from the Western Balkans who would be the future core staff of ReSPA. 
At the 2nd Steering Committee, the Regional members asked for a revision of this scheme 
and suggested that one resource person should be contracted by OECD  per signatory party 
of the protocol of cooperation. The ReSPA t eam at the OECD developed a proposal which 
was accepted by the 4th Steering Committee in April 2007. The implementation by the 
ReSPA signatories of this option took much longer than initially envisaged. The first 
resource was contracted in Ju ly and the last one in Novemb er 2007. It was noted at the 5th 
Steering Committee in November th at only some resources had been delivered on time and 
at the required level of quality. The Chai rman invited Steering Committee Members and 
the ReSPA team at the OECD to develop wa ys to improve the functioning of the in-
country resource persons.  
• The ReSPA website was developed initially under the technical auspices of the OECD IT 
Services and later developed and hosted outsi de the OECD. This was done in order to 
facilitate the eventual port ability of the ReSPA website and content to Danilovgrad.  
 
EN 97   EN Support to interim civilian admini strations and to Stability Pact 
• UNMIK . Throughout 2007, Unit D3 remained respons ible for the commitment of funds 
and implementation of contracts to support the running costs of UNMIK Pillar IV. From 
early 2008, financing for the runni ng costs of UNMIK Pillar IV is to be provided under the 
Stability Instrument (DG RELEX) and the EC Liaison Office would be  responsible for the 
management from March 2008. 
• OHR . A Contribution Agreement aiming to  fund 53% of the OHR budget for the 
remaining period of its operation (contract  managed by the EC Delegation in BiH); 
Budget: €1 million 
• Stability Pact . Support to the Stability Pact was maintained in 2007 and due continue until 
June 2008 when it would be replaced by the Regional Cooperation Council (RCC). 
Cross-border cooperation (CBC) 
There was one project under implementation namely "Cross-Border Institution Building"  
(CBIB) under CARDS 2003 and it s extensions under CARDS 2005. Phase I (CBIB-1) was 
extended for one further year as from 23 December 2007. 
CBIB-1 had been launched at the end of 2005 w ith the objective of preparing beneficiary 
countries to implement the IPA CBC programmes at internal Western Balkans borders. The 
project allocation came from Regional CARDS 2003 (budget: €1.75 million) and its 
extensions by end December 2007 under Regi onal CARDS 2005 (budget: €0.875 million). In 
2007, the project started by helping governments to put into place CBC structures and to 
recruit the necessary staff. There followed tr aining for the drafting of eight programmes, 
which were submitted to and approved at the IPA Committee of December 2007.  
During two Steering Committees organised in the region, it was made clear that the CBIB 
project was already of great benefit not only in terms of regional cooperation and 
reconciliation but also for build ing ownership and capacity of th e beneficiaries to draft and 
manage the EU programming exercise. The CBIB project is now being continued to train 
beneficiaries in the implementation of the progr ammes, i.e. the procurement phase, as well as 
to provide training to facilitate the preparati on of projects by potential  beneficiaries (mainly 
applicants for calls for proposals).  
Civil Society Dialogue and Development 
CARDS Regional Programme 2006: "Civil Society Dialogue and People to People" - a call 
for proposals was launched in December 2007 and it was expected that about seven contracts 
would be signed by mid-2008. 
There were two programmes under im plementation at the end of 2007: 
• CARDS 2002 Democratic Stabi lisation, Support to the Rule of law, Good Governance, 
Public Accountability and Freedom of Opini on. Two Grants contracts supporting "Albania 
Women's Leadership Programme" (060-191) and "Good Governance for Areas of Special 
State Concern in the support of NGOs" (060-25 6) ended and the final report approved. For 
the former, the last payment was initially su spended due to the lack  of audit report and 
miscalculation, but the problem was later se ttled. For the second, a recovery order was 
initiated by the Financial Unit but the transfer  of ownership requested was still missing at 
the end of the year. 
 
EN 98   EN • CARDS 2003 Democratic Stabilisation, Support to Civil Society Development and 
Network to Network and media.  Several Grants contracts7 started in 2005 and contributed 
to support the local development of CSOs and their contribution to the democratic process 
in the region through:  
– Strengthening Civil Society Organisations th at Operate in the Agricultural Sector;  
– Engaging Civil Society in Decision Making Process for Arms Control and 
Community Safety;  
– Development of Multi Level Capacity Building Programme;  
– Cooperation, Integration and Commun ity Empowerment of Ethnic Minority 
Groups;  
– Women Resource for the Local and Democratic Development; 
– Law of Action for Deve loping Civil Society; 
– Involvement of Citizens in the Local Democratisation Process; 
– Capacity Building of Disabled People's Organisations. 
The final reports of five projects (108-450, 108-452, 108-453, 108-458 and 108-459) were 
still pending at the end of the year and it was expected that they would end in 2008. 
The CARDS 2003 Programme also allocated funds to support nine projects (budget €1 
million) to increase independence and development of media sector. Five (073-340, 123-315, 123-317, 123-321, 123-323, 123-734) finished during th e year having cooperated in TV 
Media co-productions by creating new partnershi ps, exchanging best practices and enhancing 
understanding about issues considering of great  importance in the region, as well as raising 
awareness on the function of the ICJ, ICC and ICTY. In June 2007, all contractors were 
invited to attend the Rhodes Film Festival to present documentaries, share experiences and do 
some networking. 
In December, the call for propos als was launched for the project "Consolidating Partnership 
between Civil Society Organisations and Public Au thorities for Raising Minority Rights in the 
Region"  (CARDS 2006: €2 million).  
Phare business support programme (BSP) 
One programme was being implemented in 2007: the third Phare Business Support 
Programme  (BSP-3: budget €10 million). It addresses the needs of Business Representative 
Organisations (BROs) in Bulgaria, Romania,  Croatia and Turkey by strengthening their 
corporate function and by providi ng training in the relevant acquis communautaire  and to 
implement remedial measures where necessary. Following two calls for proposals, 18 projects 
were selected for funding. All proj ects had started their activities by the end of the year and 
were expected to continue until mid-2009.  
22.2. Economic Criteria: IFI Coop eration and Competitiveness 
SME
 finance facility (SMEFF) 
The object of the SMEFF is to persuade financial intermedia ries, i.e. banks and leasing 
companies in beneficiary countries, to expand a nd sustain their financing operations to SMEs. 
                                                 
7 Civil society development: 100-744, 100-760, 100-770, 100-777, 100-820, 100-834, 100-847, 100-873, 
100-923, 100-926, 100-927, 100-987, 100-944; Network to network: 108-450, 108-452, 108-453, 108-
458, 108-459. 
 
EN 99   EN SMEFF is implemented by the EBRD, EIB and the Council of Europe Development Bank 
(CEB) in cooperation with KfW. The latest  SME programme, amounting to €53 million, was 
launched in 2006 and covers Romania and Bulgaria  for the last time. At the end of December 
2007, projects were still being selected for the 2005 and 2006 programmes and the total 
amount of EU incentives earmarked for projects was €300 million. 
The approval of new projects and amendments to existing projects continued apace. Eight 
projects were processed: fi ve under the SMEFF and three under the Equity Window of 
SMEFF. The first project in Turkey was submitted by KfW under SMEFF. 
The Equity Window: the programme launched in 1999 has not been successful and equity 
investments have been below expectations. Following discussions with the EBRD, some 
amendments were made to the programme. The limit to the size of investment was removed 
(previously capped at €1 million), the invest ment period was extended by one year for the 
Bulgarian and Romanian Fund and the terminati on date was also extended by one year for the 
Baltic Fund. There was still an issue about  the management fees and DG ECFIN was 
analysing the file.  
Investment promotion /business climate 
Two projects were being implemented from CARDS 2005, having been launched in March 
and April respectively: 
• “Defining and Strengthening Sector Specific S ources of Competitiveness in the Western 
Balkans region”  (contract 131-329: budget €1 million) ; co-financing with OECD and 
implemented by the OECD Investment Comp act with the objective of developing and 
implementing a regional sector-focused i nvestment strategy. Du ring 2007 the OECD 
Investment started with the an alytical work and country missi ons necessary to develop the 
regional sector-focused investme nt strategy. The initial work s howed that the sectors with 
most growth potential for the region were  automotive components, textiles, business 
process outsourcing and information, and comm unication technologies. The first phase of 
the project will end in June 2008, when a region al sector focused investment strategy will 
be presented to the region with recommendati ons for policy reforms in those sectors.  
• “Invest in the Western Balkans Programme”  (contract 133-455): budget €1 million; co-
financed by bilateral donors and implemented by FIAS/IFC8 (World Bank Group) with the 
objective of promoting the region among fore ign direct investors mainly the through 
promotion and marketing events and through ca pacity building of the region's investment 
promotion agencies. Although the initial cont ract had been signed in March with MIGA9, 
due to an internal reorganisation within th e World Bank Group, the project team entrusted 
with the implementation of this project was tr ansferred to the respons ibility of FIAS under 
the responsibility of the IFC. 
During 2007 FIAS/IFC activities focused on marketing and investment facilitation 
programmes in the following sectors: automo tive components, food and beverages sectors, 
Information and Communication Technologi es, Business Services and Textiles.  
In 2007, six investments worth €12.7 million and 14 site visits were generated. Regional 
outreach events were implemented in various EU Member States. On-the-job training for 14 
staff from Investment Promotion Agencies in  the Western Balkans at outreach events took 
place and Investment Promotion Agen cy staff were trained locally.  
                                                 
8 FIAS: Multi-Donor Investment Climate Advisory Se rvice; IFC: International Finance Corporation 
9 Multilateral Investment Guarantee Agency 
 
EN 100   EN Preparatory work commenced to design an on-lin e tool to allow foreign investors to compare 
18 locations within and selected  locations outside the region. Some country-specific activities 
were implemented such as an auto compone nts marketing campaign in Germany together 
with "Invest in Macedonia", an initiative on  tourism infrastructure in conjunction with 
Albinvest, Invest Macedonia, th e Montenegro Investment Agen cy (MIPA) and FIPA (Bosnia 
and Herzegovina) and an initiat ive on industrial zones with Al binvest, Invest Macedonia and 
MIPA. 
It is expected that both projects  will end in 2009. The next step  will be to involve the Regional 
Cooperation Council and encourage it to take a lead ing role in developing a regional 
initiative. The cost of this new initiative is  estimated at €3.8 million covering three years of 
implementation. 
Energy efficiency finance facility (EEFF) 
The EEFF was launched in 2006 in response to th e Energy Efficiency Green Paper and the 
Directive on Energy Performance of buildings. It aims at stimulating energy efficiency 
investments in all types of building and in th e industry sector by maki ng appropriate financing 
available to end-borrowers. The overall results of the programme will be savings in energy 
and a significan t reduction of CO 2 emissions. The implementation of the programme started 
in April 2007 and the first projects were a pproved in December 2007 for a total amount of 
incentives of €13.65 million. 
At the last Steering Committee of the IFI Facilities, it wa s decided to introduce a more 
flexible approach to make the EEFF program me easier to implement in the beneficiary 
countries where awareness of en ergy efficiency was still weak  and technical expertise was 
still necessary to implement the progr amme not always locally available. 
Municipal finance facility (MFF) 
The MFF, operated in cooperation with the E BRD, CEB/KfW and the EIB, aims at deepening 
and strengthening the municipal credit mark ets in beneficiary countries. A new MFF 
programme amounting to €17.8 million that had been launched in 2006 was being implemented with two sponsors only, and covered Romania and Bulgaria for the last time. At the end of December 2007, the total amount of  EU incentives committed into projects was 
€60 million.  
Municipal infrastructure facility (MIF) 
The MIF was developed in 2002 in response to the Nice European Council. An analysis had 
revealed that the lack of adequate transport and environmental infrastructure in the beneficiary countries’ border regions with the EU was a persisting problem to regional 
development. At the end of 2007, the Ph are allocations from the 2002 and 2003 budgets 
(€39.9 million) had been fully earmarked for 24 municipal projects. 
Infrastructure Projects Facility (IPF) 
The IPF was announced to all pot ential candidate countries/terr itories and all beneficiaries 
were informed at regional meetings. A first id entification of projects  to be supported by IPF 
(transport, energy, environment and social infras tructure) indicated very  good potential of the 
instrument also in complementarity with IPA national programmes. The sum of €16 million was allocated to the IPF under the CARDS 2005 and 2006 programmes and a restricted 
service tender was launched in September. The evaluation was due to take place in early 2008 
for the contractor to be in place by May when the first projects to be supported were expected.  
 
EN 101   EN The programming of additional resources under the IPA 2008 Multi-beneficiary programme 
was well advanced (q.v. IPA report). 
Education and youth 
Two programmes under CARDS 2006 were being prepared: 
• Erasmus Mundus,  
• Tempus 
The Call for Proposals for Erasmus Mundus  was launched in December with a short deadline 
of February 2008 for both the "External Cooperation Window" and the "Western Balkan Window". An "Erasmus Mundus Day" was organise d in most countries/te rritories covered by 
the programme in order to make familiar the universities as well as the students with the 
components of the programme and the procedur es to follow. The Evaluation Committees of 
the "Western Balkan Window" and "External Cooperation Window" w ould take place during 
the first quarter of 2008. 
The Call for Proposals for Tempus IV  was due to be launched in January 2008 with a deadline 
for applications for April. A meeting would ta ke place in early 2008 with all the Tempus Joint 
European Projects representatives  to inform them about the ne w components of Tempus IV 
and about the new procedures to be respect ed. "Tempus Days" would also be organised. 
22.3. European Standards 
Quality infrastructure 
One project was under implementation in 2007, financed under CARDS 2006: “Quality 
Infrastructure in the Western Balkans" (contract 138-543: budget €1 million). In addition 
EFTA contributed €50,000. The contract with th e Comité Européen de Normalisation (CEN) 
was signed in April 2007 for eighteen months . The project was progressing according to 
schedule. 
The purpose of the contract is to  improve the capabilities of qua lity infrastructure bodies to 
offer industry services to provide  the tools to trade in the EU and EFTA market, as well as in 
the markets of the Beneficiaries. The main activities under this project are: 
• Assessment reports about the state of techni cal regulations, standa rdisation, accreditation, 
testing-certification-in spection, metrology and market surveillance.  
• A further series of intensive hands- on training ev ents will be run in quality infrastructure 
field.  
• Regional proficiency testing exercises (int er- laboratory comparisons) will be run. 
Three steering committees took place in 2007 and the final Steering Committee will be held in 
July 2008. 
Transport 
In 2007, the following projects were being pr epared and/or implemented under CARDS: 
• “Support to the SEETO Secretariat”  (contract 086-526: €1.79 million, CARDS 2003) 
which ended in June, to be followed by its  sequel in 2008 (€1 million under CARDS 2006) 
which would be a contract for 16 months c ontinuing support to the development of the 
South East Europe Transport Core Netw ork through a renewed technical assistance 
contract to be signed in mid-  2008 for a period of 16 months with a focus on road safety 
and railways. 
 
EN 102   EN • “Technical Assistance to the impl ementation of the ECAA Agreement”  (budget €1 million, 
CARDS 2006): preparation of the project to gi ve assistance to the Western Balkans Civil 
Aviation administration to support the impl ementation of the European Common Civil 
Aviation Area Agreement in each beneficiary country/territory starting in May 2008. The 
previous project (contract 072-517 with Eurocontrol under CARDS 2002) only partially 
filled expectations thus leaving the new pr oject to undertake some further areas of 
intervention. 
 
EN 103   EN Energy 
The project undertaken in 2007 was "Contribution to the budget of the Energy Community" : 
budget €2.5 million, of which CARDS 2006 (€1.2 million: contract 148-620) and IPA 2008 (€1.3 million: contract 154-260). The EC contri butes 98.1% of the budget of the Energy 
Community. 
"EC Contribution to the budget of the Ener gy Community for the second half of 2007"  
(budget €1.22 million). This project is being fi nanced from CARDS 2006 (contract 141-814)  
Project ended/concluded in 2007: "Support to the establis hment of the Energy Community Secretariat"  (budget €3.5 million: 
grant contract 100-231. This project was finan ced from CARDS. The implementation period 
of the project ended in June.  
Activities in 2007: 
• All Contracting Parties drafted a national plan to implement Directive 2001/77/EC on the 
promotion of electricity produced  from renewable energy sources in the internal electricity 
market and a plan to implement Directive 2003/30/EC on the promotion of the use of 
biofuels or other renewable fuels for transpor t, as requested by Article 20 of the Treaty. 
The plans were endorsed by the Minister ial Council on 29 June  2007 in Montenegro. 
• Preparation of national “Statements on moni toring of security of supply”, by each 
Contracting Party (except by the former Yugos lav Republic of Macedonia – still missing) 
and Romania as former Contracting Party by  30 June 2007. The statements were presented 
at the PHLG meeting on 28 June 2007. 
• According to Article 21 of the Treaty, the iECS drew up a list of Generally Applicable 
Standards in the European Community for elect ricity and respectively gas, on the basis of 
information provided on the relevant web pages.  This list was endorse d by the Ministerial 
Council in its meeting of 29 June 2007. 
• The iECS prepared two further reports in  the course of the Grant Contract: the Report on 
Regional Gas Market Design (unsolicited) and the Final Report on Compliance with 
Electricity Benchmarks that reflect also the progress of the Energy Community with the 
development of the national and re spectively regional energy markets. 
• For the occasion of the 5th PHLG meeting and the 2nd Ministerial Council meeting on 28-
29 June 2007, the iECS drafted the Report on the Implementa tion of the Treaty 
Establishing the Energy Community which serves as an extended explanation of the 
findings provided in the much shorter (5 pages) Annual Report on the Activities of the 
Energy Community to the European Parliament and the National Parliaments . The 
Ministers authorised the Secretariat to submit it as the 1st Annual Report in accordance with Article 52 of the Treat y (see Ministerial Council conc lusion no. 6 of 29 June 2007). 
• An important step to improve integration of S outh East Europe countries into the Internal 
Energy Market was registered when the TS Os of 27 European countries reached a 
voluntary agreement on Inter-TSO Compensation for Transit (ITC) for April - December 
2007, in June. The new agreement was signed by a ll signatories of the previous agreement, 
except the TSO companies of the Czech Republic  and Slovakia; a number of new states 
(Albania, Bosnia and Herzegovina, Croatia, Estonia, the former Yugoslav Republic of 
Macedonia, Montenegro and Serbia) have d ecided to join the mechanism this year. 
• Some progress was also registered with the general design of the SEE Regional Balancing 
Mechanism for which the ECRB/SETSO SG BM prepared with the support of SEETEC, 
 
EN 104   EN Forum a Common Position Paper , which was presented at th e 10th Athens Forum for 
discussion. 
• TERNA Italy and APG Verbund Austria prepared and presented at the 10th Athens Forum 
the Business Plan for the set up of the “SEE Auction Office Ltd.” The further development 
of the Dry-run Coordinated Auction Tool (D rCAT) will be supported by the iECS, which 
will finance the second stage, through a co ntract to be concluded between Energy 
Community and APG Verbund early July 2007. 
Regular meetings as follows: 
• The 5th PHLG meeting and the 2nd Minister ial Council Meeting, on  28 June 2007 and 
respectively 29 June 2007 in Be cici, Montenegro. The 3rd ECRB meeting will be held on 5 
July 2007 in Athens. 
• The Seminar Electricity Investments in the Energy Community: Challenges and 
Opportunities , and the 10th Athens Forum were  organised in April 2007, on 23 and 
respectively 24 -25, in Athens 
• The 2nd Gas Mini-Forum was held in Vienna on 11 May 2007. 
• The Memorandum of Understanding (MoU) for the development of a social pillar of the 
Energy Community was a topic for discussion in th e 5th PHLG meeting where two 
Contracting Parties have announced  that are ready to  sign it: the former Yugoslav Republic 
of Macedonia and Serbia. At the Ministerial Council meeting, the decision was to open the MoU for signature from October 2007 possibly during a Conference on the Social Aspects 
of the Energy Community (see also Ministerial Council Conclusion No. 10 of 29 June 
2007) . 
In the 2nd Quarter 2007, the tran sition process of the Energy Co mmunity Secretariat from the 
initial phase of an interim body, to the inte rnational organisation registered significant 
progress on 29 May 2007 with the signing of the Headquarter Agreement between the Republic of Austria and the Energy Community. The final step is the ratification of the 
aforementioned Headquarter Agreement, wh ich is pending as of the report date. 
Customs and Taxation 
The programming and implementation of the s upport to Customs and Ta xation is gradually 
being taken over by the Geographi cal Units and Delegations and it is expected that the 
involvement of Elarg/D3 will substantially di minish during 2008 and disappear altogether in 
2009. Nevertheless, there was much activ ity on the regional level in 2007. 
The first contract
10 with Eurocustoms (CAFAO-1) for the management of the Customs and 
Fiscal Assistance Office (CAFAO)  programme in the Western Balkans came to an end on 
30th June. A second contract (CAFAO-2), also w ith Eurocustoms, lasting for eight months 
from 1st July, was financed partially from national CARDS 2006 funds11 and partially from 
national IPA 2007 funds 12.  
CAFAO-2 continued from  CAFAO-1 to provide technical as sistance to the Customs and Tax 
Administrations in Albania, BiH, fYRoM, Montenegro, Se rbia and Kosovo. Substantial 
progress was made in the objectives and activiti es by continuing institutional strengthening 
                                                 
10 contracts 116-590 et seq. 
11 contracts 141-688, 141-696, 141-698 
12 contract 141-748 
 
EN 105   EN and the capacity building of beneficiary administrations and aligning their legislation to the 
EU acquis . 
Operationally speaking, CAFAO-2 ended on 31st D ecember. The contract was to continue for 
a further two months into 2008 so as to ensure  a smooth transfer of activities to the new 
TACTA project to be financed wholly fr om national IPA 2007 budgets (q.v. IPA report). 
Transfer agreements of equipment were dr awn up by the Commission for signature by the 
eventual recipients of the equipment, much of  which would be put at the disposal of the 
TACTA project. 
During the reporting period, several equipment supply tenders  were managed by DG ELARG 
in parallel with CAFAO. They were launched centrally in Brussels on behalf of the respective beneficiary administration to procure special ised equipment (IT, communication and search 
equipment, laboratory equipment etc): 
• EuropeAid/120836 'Supply of equipment for the Customs Administrations of Serbia and 
Montenegro' which was launched at the end of 2006: 
– Serbia: contracts 124-819, 124-821, 124-822, 124-825 totalling €726,835; 
– Montenegro: contracts 124-811, 124-815, 124-816, 124-817 totalling €233,404.  
• EuropeAid/122812 'Supply of IT equipment for the Cust oms Administration of the former 
Yugoslav Republic of Macedonia'  was launched and contract s signed (contracts 142-777 
and 142-812 totalling €269,905).  
• EuropeAid/126035 'Supply of Laboratory, IT /Communication & Search Equipment and 
Vehicles for the Customs Administration of the former Yugoslav Re public of Macedonia' 
was launched at the end of the year, with a budget of about €900,000 and contracts were due to be signed in early 2008. 
An additional Customs and Taxation project was under preparation at the end of the year, to 
be known as " SEMS "
13 (contract 154-684: budget €471,000) whic h would be financed from 
the balance of the CARDS 2005 Serbia & Montenegro State Union Action Programme. 
SEMS had formed an integral part of CAFAO but could not be included in TACTA because 
at the time when the tender for TACTA was launched in late 2007, DG TAXUD had not yet 
decided whether SEMS should continue to be  developed. Consequently no IPA budget was 
set aside to cover SEMS. Later, DG TAXUD re quested that SEMS be maintained at its 
current level for a further twelve months pendi ng a definitive decisi on regarding its (SEMS') 
future. Since no IPA budget existe d to continue SEMS, recour se was made to remaining 
CARDS funds. It was arranged that the contract  would be a direct ag reement with Agenzia 
delle Dogane, the contractor of TACTA and complementary to that project. 
Statistics 
One project was under implemen tation at the end of 2007: “Statistical Co-operation in the 
Western Balkans”  (contract 122-506) financed from  CARDS 2003. The contract continued 
throughout the year and was due to end in March 2008. The main activities of this project are: 
• Regional pilot projects in the ar ea of labour market statistics, migration statistics, external 
trade statistics, purchasing power parities statistics 
• Training activities in the countries, inte rnships in Eurostat and EU-countries 
                                                 
13 South-east Europe Monitoring System 
 
EN 106   EN • Participation in working groups 
• Harmonised data collection 
A final steering committee meeting was to be held in March 2008. 
Environment 
The following CARDS projects were being implemented in 2007: 
• “Pilot River Basin Plan for Sava River - Croatia, BiH, Serbia and Montenegro”  (contract 
076-751: €2.14 million): CARDS 2003. The scope of  the project was to provide technical 
assistance aimed at supporting the governme nts of BiH, Croatia and Serbia and 
Montenegro in implementing the Water Framewor k Directive in these countries in general 
and in the Sava river basin in particular, with pilot projects in Vrbas River s ub-basin (BiH), 
Dobra River sub-basin (Croatia) and Kolubara  River sub-basin (Serbia and Montenegro). 
• “Support to the implementation of the Regional Environmental Reconstruction 
Programme” (REReP) (contract 125-235: €1 million): CARDS 2005; 
• A joint management Contribution Agreem ent with the Regional Environmental 
Centre (REC) was entered into during the first Quarter of 2007 and the new 
REReP leaflet was prepared and publishe d at the beginning of October. The 10th 
Task Force meeting took place with the EC  in Brussels in November. The final 
topics of regional workshop and study vis its were agreed u pon and confirmed by 
the beneficiary institutions at the 7th ELAN meeting in November in Skopje. The 
searchable web-based Matrix was upgraded  with the aim to become more user-
friendly and is available on the project websit e. The list of EC di rectives subject to 
progress monitoring was updated to reflect legislative changes in the EU since the last progress monitoring. 
• The first Regional Priority Environmental Investment Programme  (PEIP) 
meeting took place on 26 November in Br ussels. The meeting focused on the 
following topics :  
• EC approach towards financing infrastr ucture projects – new initiatives and 
project preparation facilities;  
• EC Project Preparation Faci lities (including DABLAS) a nd their implications for 
candidate and potential candidate countries; 
• Progress on financing priority investment projects in Croatia, fYRoM and Turkey; 
• Benefits of compliance with the acquis in potential candidate countries; 
• The Work Plan for 2008 was discussed a nd presented at the REReP Task Force 
meeting on 27 November 2007. 
• “Support to the 'Environmental Compliance and Enforcement Network for Accession”' 
(ECENA) (contract 131-659): CARDS 2005.  
• ECENA is a network of environmental inspectors and experts of the Western 
Balkans and Turkey to exchange 'best pr actice' in the field of following up 
compliance with the transposed acquis communautaire  in the field of 
environment. In addition to establishi ng a network among speci alists the project 
arranges training of specialists on selected segments of the acquis , in particular on 
new additions to the environmental acquis.  A joint management Contribution 
Agreement with REC was entered in to during the first Quarter of 2007. 
 
EN 107   EN • "Danube regional investment support facility"  (DISF) (contract 071-310: €3.64 million): 
CARDS 2002 (This project ended in June 2007).  
• "Environmental project preparation facility"  (EPPF) (contract 123-894: €1.79 million): 
CARDS 2003 
Two Phare programmes were sub-delegated to DG Environment: 1/ Phare 2005
: 
• “Developing the capacity of e nvironmental authorities, thr ough transfer of best practice 
and training to support effective use of financial resources”: the Final report was submitted and approved but the contractor had encountered  difficulties in coll ection of data from 
some countries;  
• “Capacity building in implemen tation of the environmental acquis  at the local and 
regional level ”, the project was extended until July 2008. 
2/ Phare 2006
:  
• “Support for Investment preparation under the Danube-Black Sea (DABLAS) Task 
Force” . The project is progressing well and according to schedul e. Pilot projects re being 
prepared in the beneficiary countries and methodological guidance on project preparation 
is being supplied. 
• “Supporting the enforcement of environmenta l legislation in Acceding and Candidate 
countries through IMPEL and ECENA networks”.  
• “Monitoring transpos ition and implementation of the EU environmental acquis”.  
• “Developing the capacity of environmental NGOs , through transfer of best practices from 
NGOs in the EU25” . Twelve grant agreements were signed in 2007, but there were some 
minor changes to be made in grant activities. 
• “NGO Forum”.  
• “Service contract for twinning grants for NGOs”.  A service contract was signed in 2007, 
which was giving support to the implemen tation of twelve grant agreements.  
Nuclear safety and radiation protection 
There were two programmes under impl ementation at the end of 2007:  
• CARDS 2005 Nuclear Safety  programme (2005/017-532), 
• Phare 2006 Nuclear Safety Programme (2006/018-412), 
The service contract  123-776 concerning "Management of medical radioactive waste in 
Bulgaria, Croatia and Romania"  was completed and the final dr aft final report approved. The 
last payment was initially suspended due to the l ack of audit certificate, but situation has since 
been settled.  
A centralised project entitled: 'Technical back-up to PHARE/ IPA nuclear activities" (contract 
143-474, budget €279,000) is being implemented. The project has been contracted in 2007 
through an administrative agreement with the Pe tten establishment of  the Joint Research 
Centre (Institute of Energy). The project consists of provid ing technical support to DG 
ELARG in the implementation of th e Phare and IPA nuclear projects. 
 
EN 108   EN Programme Management Issues - Monitoring and Evaluation  
22.4. Monitoring and Interim Evaluation 
The sectoral interim evaluations of Phare prog rammes as well as of pre-accession financial 
instrument for Turkey are essentially pr ogramme management tools which provide 
programme managers with a regular performance assessment of the activities in all sectors. 
Recommendations are systematically put forw ard in the reports for improving management 
and delivery of evaluated pr ogrammes/projects and discusse d at debriefing and Joint 
Monitoring Committee (JMC) meetings for follow-up actions. The monitoring and interim evaluation system in the new Member States al so provides for the feedback of monitoring and 
evaluation results to decision -making through the Implementati on Status Reports that are 
discussed for corrective actions at the JMC meetings. Moreover, thematic, country and 
consolidated interim evaluations provide recommendations on the design of future 
programmes. 
The Interim Evaluation Scheme for Turkey ge nerated one comprehensive country evaluation 
report for Turkey (TPAER) as well as two sector Interim Evaluation reports.  
The key messages derived from the country summary evaluation of Turkey were the 
following: 
• The overall assessment of EU support to Turkey is that, wh ile much has been achieved, a 
relatively small additional investment in human  resources in key DIS institutions would 
have facilitated better use of  EU funds, and a significantly higher level of tangible impact. 
Given that DIS capacity did not  develop as envisaged, EU assistance was too ambitious. 
• The shortcomings in DIS capacity resulted in poor design of assistan ce due to absence of 
relevant sectoral strategies, and detailed, syst ematic needs analysis. Moreover, the lack of 
programming readiness was affected by insufficien t progress in key legi slation such as the 
Public Administration Framework Law. 
• With the notable exceptions of Justice a nd Home Affairs and So cial Development, 
assistance was not efficiently implemented. Poor coordination between key institutions, 
persistent understaffing in the CFCU and th e EUSG, tender and contractual documents of 
low quality, as well as rushed, last minute contracting of much assistance seriously 
constrained the benefits  of EU assistance.  
• Efficiency has also been undermined by lack of  effective monitoring wh ich fails to provide 
useful information, and in many cases, rema ins practically non- ex istent. A noteworthy 
development in this respect is the prepara tion of a Common Monitoring Manual for grant 
schemes. 
• As a result of this ineffici ent implementation, overall effect iveness has been limited. Only 
three out of eighteen sector ev aluations were rated as fully satisfactory, notably Justice and 
Home Affairs, Economic and Social Cohesion, and Social Development.  
• Overall sustainability is at risk due to high le vels of turnover of staff, and slow progress in 
public administration reform. But prospects fo r sustainability improved somewhat as a 
result of good levels  of commitment, well- planned dissemination of activities, and 
recognition of the need for sust ainability at the design stage. 
No Interim Evaluation reports were  issued for Croatia during 2007.  
 
EN 109   EN 22.5. Ex-post evaluation 
The findings of the ex-post evaluation Consolidat ed Report identified as a key risk factor 
several weaknesses in formulating the stra tegies and objectives for the pre-accession 
assistance. Specifically the findings of this report pointed to the need to rebalance pre-
accession support through increased attention and broader support to the political criteria 
including good governance, PAR, civil society and fight agains t corruption. Since these key 
messages were echoed in the 2007 Enlargement Strategy Paper, the key messages on the political criteria in these two reports were mu tually reinforced. Additionally, the evaluation 
report's proposal for a broader a pproach to public sector reform  was very much welcomed by 
beneficiaries, World Bank, OECD , Council of Europe and Tran sparency International.  
22.6. Other activities of the monitoring and evaluation function 
The monitoring and interim evaluation system involves successive decentralisation of the 
responsibilities for monitoring and interim evaluation to the Candidate Countries. In 
conjunction with DIS accreditati on, the responsibility for monito ring is decentralised to the 
Candidate Country (but the Commission remain s ultimately responsible for monitoring), 
whereas the interim evaluation (IE) function rema ins centralised until the Candidate Country 
has developed satisfactory monitoring and evaluation capacities. 
All the new Member States had their decen tralised monitoring a nd Interim Evaluation 
functions set up since 2005. Croatia and Turkey  have decentralised monitoring function, and 
once evaluation capacity is sufficiently built and following conferral of management under 
IPA, it is expected that decentralisation of Interim Evaluation will follow for these countries. 
As regards FYROM, DIS is expected to be introduced by end 2008/ spring 2009. 
During 2007, the Commission started to prepare the taking over of the evaluation function 
from the EAR. 
 
EN 110   EN  
PART III:  FINANCIAL DATA  
23. PHARE , TURKEY PRE -ACCESSION AND TRANSITION FACILITY FUNDS BY YEAR 1990  
– 2007 
Financial Overview and Performance  
The following chart shows the breakdown year by year of the funds committed in the period 
1990-2007 (€ million): 
Year Funds Committed 
1990 475.3
1991 769.7
1992 979.6
1993 966.1
1994 946.1
1995 1,114.0
1996 1,207.8
1997 1,135.1
1998 1,153.9
1999 1,481.7
2000 1,651.5
2001 1,635.4
2002 1,695.1
2003 1,698.1
2004 1,240.5
2005 1,353.9
2006 1,772.2
2007 78.2
In 2007, total Phare and Transition Facili ty commitments amounted to € 78.2 million, 
comprising: 
Transition Facility Programmes : € 78 million euros, of which 
 
EN 111   EN Bulgaria 31.5 million 
Romania 46.5 million 
Horizontal programmes and others : € 0.2 million 
 
EN 112   EN 24. PHARE , TURKEY PRE -ACCESSION AND TRANSITION FACILITY FUNDS BY COUNTRY 
1990–2007 
Total Phare, Turkey and Transition Facility  commitments, contracts and payments, in € 
million 
Partner 
Country Commitments Contracts  Payments  
Bulgaria 2,359.6 1,786.3 1,522.9 
Czech republic 917.2 836.4 824.2 
Croatia 144.6 61.4 9.6 
Cyprus(*) 338.0 101.8 71.7 
Czechoslovakia 230.5 231.8 228.9 
East Germany 34.5 28.9 28.9 
Estonia 346.8 311.3 307.8 
Hungary 1,480.1 1,376.8 1,356.5 
Latvia 423.6 381.2 376.8 
Lithuania 810.3 760.9 743.7 
Malta 57.1 46.4 41.6 
Multi-country programmes 3,357.0 2,829.4 2,178.2 
Poland 3,996.0 3,657.5 3,607.4 
Romania 3,670.0 2,942.8 2,344.4 
Slovakia 717.6 661.8 656.0 
Slovenia 360.3 326.7 321.5 
Turkey 1,861.9 1,219.6 922.7 
Total 21,105.3 17,561.0 15,542.7 
25. CARDS FUNDS BY YEAR 2000  – 2007 
 
Financial Overview and Performance  
 
EN 113   EN The following chart shows the breakdown year by year of the funds committed in the period 
2000-2007 (€ million): 
 
 
           
26. C
ARDS FUNDS BY COUNTRY 2000  – 2007 
 
Total CARDS commitments, contracts and payments, in € million 
 
Partner Country Commitments  Contracts  Payments  
Albania 292.3 245.2 183.4  
Bosnia & 
Herzegovina 481.8 460.2 411.6  
Croatia 196.1 180.0 172.4  
Former Yugoslav 
Republic of Macedonia 299.2 287.6 264.1  
Kosovo 1030.3 1025.3 977.8  
Montenegro 90.4 126.8 122.1  
Serbia15 1390.6 1353.8 1192.2  
                                                 
14 Figures include re-use of recoveries from previous years (and therefore may be above the original 
budgetary allocations) Year Funds Committed 
2000 836.2
2001 686.5
2002 620.4
2003 531.0
2004 549.3
200514 500.5
2006 513.1
2007 0.0
 
EN 114   EN Regional 
Programme16 456.5 421.4 375.4  
Total 4237.1 4100.2 3699.1  
 
                                                                                                                                                         
15 Includes Montenegro in 2000-2001; includes funds fo r the Serbia and Montenegro State Union (2005).  
16 Includes interim civilian administrations