Amended proposal for a COUNCIL REGULATION on assistance for Albania, Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and the former Yugoslav Republic of Macedonia and amending Regulation (EEC) No 3906/89, Decision 97/256/EC and Regulation (EEC) No 1360/90

(presented by the Commission pursuant to Article 250(2) of the EC-Treaty)

EXPLANATORY MEMORANDUM

1. INTRODUCTION

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

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

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

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

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

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

2. PROGRAMMING

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

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

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

3. COMITOLOGY

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

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

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

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

4. OTHER CHANGES

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

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

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

*Other changes include:

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

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

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

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

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

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

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

2000/0111 (CNS)

Amended proposal for a

COUNCIL REGULATION

on assistance for Albania, Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and the former Yugoslav Republic of Macedonia and amending Regulation (EEC) No 3906/89, Decision 97/256/EC and Regulation (EEC) No 1360/90

THE COUNCIL OF THE EUROPEAN UNION,

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

Having regard to the proposal from the Commission, [1]

[1] OJ C

Having regard to the opinion of the European Parliament, [2]

[2] OJ C

Whereas:

(1) The Community provides assistance for Albania, Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and the former Yugoslav Republic of Macedonia.

(2) Most of this assistance is currently provided under Council Regulation (EC) No 1628/96 of 25 July 1996 relating to aid for Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and the former Yugoslav Republic of Macedonia [3] (Obnova), as last amended by Regulation (EC) No 2454/1999, [4] and under Council Regulation (EEC) No 3906/89 of 18 December 1989 on economic aid to certain countries of Central and Eastern Europe [5] (Phare), as last amended by Regulation (EC) No 1266/1999. [6] This means that the assistance is subject to different sets of procedures, which encumbers management. In the interests of efficiency it is therefore desirable to establish a single legal framework for this assistance. It is therefore appropriate to repeal Regulation (EC) No 1628/96 and to amend Regulation (EEC) No 3906/89. However, in order to ensure the continuity of the activities of the European Agency for Reconstruction, the provisions of Regulation (EC) No 1628/96 which concern the establishment of the Agency should be incorporated in another Regulation which should enter into force on the date of that repeal.

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

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

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

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

(3) The European Council which met in Lisbon on 23 and 24 March 2000 confirmed that its overall objective remained the fullest possible integration of the countries of the region into the political and economic mainstream of Europe and that the Stabilisation and Association Process was the centrepiece of its policy in the Balkans.

(4) The existing financial assistance should be expanded and redirected to adjust it to the European Union's political objectives for the region and, particularly, to ensure that it contributes to the Stabilisation and Association Process.

(5) Assistance will therefore be focussed mainly on building up an institutional, legislative, economic and social framework directed at the values and models subscribed to by the European Union.

(6) A precondition of receiving assistance is that the recipients respect democratic principles, human and minority rights and other fundamental freedoms.

(7) The regional dimension of such assistance must be given special attention, with a view to stepping up regional cooperation and supporting the European Union's role within the Stability Pact.

(8) In view of the political situation in some areas and the nature of the various entities that have responsibility for implementing assistance there, it is desirable to provide that the assistance can be supplied in some cases directly to recipients other than the State.

(9) To make the assistance more effective and ensure it is properly implemented, the Commission should adopt general guidelines in accordance with the management procedure laid down in this Regulation.

(10) To promote cooperation within the region, provision should be made for all the candidate countries and the countries covered by the TACIS and MEDA programmes to participate in the tendering procedures and contracts.

(11) Provision should be made for checks and for the protection of the Community's financial interests inter alia by enabling the Commission, the Court of Auditors and OLAF to exercise their respective powers pursuant to Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities' financial interests against fraud and other irregularities [7] and Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities' financial interests. [8]

[7] OJ L 292, 15.11.1996, p. 2.

[8] OJ L 312, 23.12.1995, p. 1.

(12) The assistance will be governed by annual and multiannual programming, which will be put to the management committee set up by this Regulation for an opinion. This will situate the assistance within a medium-term outlook, and will make it possible to ensure that Community assistance complements and remains consistent with that of the Member States.

(13) The measures necessary for the implementation of this Regulation are management measures within the meaning of Article 2 of Council Decision No 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission, [9] and should be adopted in accordance with the management procedure provided for in Article 4 of that Decision.

[9] OJ L 184, 17.7.1999, p. 23.

(14) In the case of Kosovo, provision should be made for the Commission to be able to adopt programmes for reconstruction in Kosovo put to it by the European Agency for Reconstruction. In other cases, programmes should be adopted using the management procedure.

(15) In the light of the scope of this Regulation, consequent changes will need to be made to Council Regulation (EEC) No 3906/89 of 18 December 1989 on economic aid to certain countries of Central and Eastern Europe (Phare), as last amended by Regulation (EC) No 1266/1999, to Council Decision 97/256/EC [10] of 14 April 1997 granting a Community guarantee to the European Investment Bank against losses under loans for projects outside the Community (Central and Eastern Europe countries, Mediterranean countries, Latin American and Asian countries, South Africa, the Former Yugoslav Republic of Macedonia and Bosnia and Herzegovina), as last amended by Decision 98/729/EC, [11] and to Council Regulation (EEC) No 1360/90 [12] of 7 May 1990 establishing a European Training Foundation, as last amended by Regulation (EC) No 1572/98. [13]

[10] OJ L 102, 19.4.1997.

[11] OJ L 346, 22.12.1998.

[12] OJ L 131, 23.5.1990.

[13] OJ L 206, 23.7.1998.

(16) The operations covered by this Regulation are part of the Community's Western Balkans policy and are needed to implement one of the Community's objectives. The Treaty does not provide, for the adoption of this Regulation, powers other than those under Article 308,

HAS ADOPTED THIS REGULATION:

Article 1

1. The Community shall provide financial assistance, hereinafter referred to as "Community assistance", to Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia.

2. The following shall be directly eligible for Community assistance: the State, federal, regional and local bodies, public and semi-public bodies, organisations providing support to businesses, cooperatives, mutual societies, associations, foundations and non-governmental organisations.

3. Authorities established by the international community to act as the civil administration in some areas, such as the High Representative in Bosnia and the United Nations Interim Administration Mission in Kosovo, shall be duly consulted on implementation of the Community assistance in their areas. Any programmes or projects they implement shall be eligible for Community assistance under this Regulation, except in the case of those entities' running costs. Where appropriate, such costs may draw on a grant provided under Council Regulation (EC) 1080/2000 [14] of 22 May 2000 on support for the United Nations Interim Mission in Kosovo (UNMIK) and the Office of the High Representative in Bosnia and Herzegovina (OHR).

[14] OJ L 22, 24.5.2000.

Article 2

1. The main purpose of the Community assistance is to support participation by the recipient countries in the Stabilisation and Association Process.

2. The Community assistance is for, inter alia:

(a) reconstruction, the return of refugees and stabilisation of the region;

(b) the creation of an institutional and legislative framework to underpin democracy, the rule of law and human and minority rights;

(c) sustainable economic and social development and market-economy orientated economic reform;

(d) the development of closer relations among recipient countries, between them and the European Union, and between them and countries which are candidates for accession to the European Union;

(e) fostering regional, trans-national, cross-border and inter-regional cooperation among the recipient countries and between them and the European Union, and between the recipient countries and other countries of the region.

3. The Community assistance shall be implemented by financing investment and institution-building programmes in accordance with the programming principles set out in the general guidelines adopted in accordance with the procedure referred to in Article 10(2).

Article 3

1. Save in exceptional, duly justified cases, assistance shall be provided as part of national and multi-beneficiary programmes drawn up on the basis of indicative multiannual programmes and annual action programmes adopted in accordance with the procedure referred to in Article 10(2).

2. Multiannual indicative programmes shall lay down the main objectives and broad guidelines for Community assistance; they shall include indicative financial estimates. Before adopting indicative programmes for the countries in question, the Commission shall examine with the Committee referred to in Article 10 the strategy framework (country strategy paper) on which programming is to be based.

3. Annual action programmes shall be based on the indicative programmes and shall set out, for a given operational year, the aims being pursued, the fields of action and the budget provided for.

Article 4

1. By way of derogation from Article 3, where assistance for Kosovo is implemented by the European Agency for Reconstruction, that assistance shall be provided under the annual programme for reconstruction.

2. The Governing Board of the European Agency for Reconstruction shall examine the strategy framework (restricted to assistance only) presented by the Commission, on which the annual programme for reconstruction is to be based.

3. The Director of the Agency shall submit the draft annual programme for reconstruction to the Commission, in accordance with Article 4(10)(b) of the Regulation [on the Agency].

The Commission may adopt the programme as submitted by the Agency. In other cases, the programme shall be adopted in accordance with the procedure laid down in Article 10(2).

The procedure laid down in Article 10(2) shall also be used to adopt programmes of assistance for Kosovo which are not due to be implemented by the Agency and which do not therefore figure in the annual programme for reconstruction.

Article 5

1. Respect for the principles of democracy and the rule of law and for human and minority rights and fundamental freedoms is an essential element for the application of this Regulation and a precondition of eligibility for Community assistance. If these principles are not respected, the Council, acting by qualified majority on a proposal from the Commission, may take appropriate measures.

2. Community assistance shall also be subject to the conditions defined by the Council in its conclusions of 29 April 1997, [15] in particular as regards the recipients' undertaking to carry out democratic, economic and institutional reforms.

[15] Bulletin 4-1997, point 2.2.1.

Article 6

1. Community assistance shall be in the form of grants.

2. Community financing may be used to cover expenditure on preparing, implementing, monitoring, checking and evaluating projects and programmes, and on information.

3. Community financing may be used for cofinancing. Cofinancing of investment projects financed by loans from the European Investment Bank or other international financial institutions may take the form of interest rate subsidies.

4. In the event of the occurrence or threat of a serious political and economic crisis in one of the recipient countries and/or entities, the Community may provide exceptional budget assistance targeted on clearly identified items of expenditure. The Commission shall decide on such assistance, using the procedure laid down in Article 10(2).

Such assistance shall not take the place of macro-economic assistance (macro-financial and exceptional financial assistance), which shall be provided, where applicable, on the basis of specific instruments.

5. Community financing may not be used for paying taxes, duties or charges or for acquiring immovable property.

Article 7

1. The Commission shall implement the Community assistance in accordance with the Financial Regulation applicable to the general budget of the European Communities.

2. Participation in invitations to tender and contracts shall be open on equal terms to all natural and legal persons from Member States, States which are recipients under this Regulation, candidate countries and countries which are recipients under the TACIS and MEDA programmes.

3. In the case of cofinancing, the Commission may authorise participation in invitations to tender and contracts by nationals of other countries on a case-by-case basis.

Article 8

1. Financing decisions and any agreements or contracts resulting therefrom shall expressly provide for monitoring and financial control by the Commission and audits by the Cour of Auditors, if necessary on the spot.

2. In addition, the Commission may carry out on-the-spot checks and inspections in accordance with Regulation (Euratom, EC) No 2185/96. Measures taken by the Commission in accordance with the procedures referred to in Article 10(2) shall provide for adequate protection of the financial interests of the Community as required by Regulation (EC, Euratom) No 2988/95.

Article 9

Decisions amending decisions taken in accordance with the procedure referred to in Article 10(2) shall be adopted by the Commission without consulting the Committee where they do not comprise substantial changes to the nature of the original programmes and operations and, as regards the financial element, where they do not exceed 20% of the total amount allocated for the programme or operation in question. The Committee shall be notified of all revised decisions.

Article 10

1. The Commission shall be assisted by a management committee composed of the representatives of the Member States and chaired by the representative of the Commission.

2. Where reference is made to this paragraph, the management procedure laid down in Article 4 of Decision 1999/468/EC shall apply, in compliance with Article 7(3) thereof.

3. The period provided for in Article 4(3) of Decision 1999/468/EC shall be one month.

4. The Committee may examine any other question concerning the implementation of this Regulation which is submitted to it by the Chairman, whether or not at the request of the representative of a Member State, and in particular any question relating to the programming or general implementation of measures or to co-financing.

Article 11

1. In the interests of making the assistance cohesive and more efficient and complementary, the Member States and the Commission shall exchange any relevant information on the operations they intend to implement.

2. Every year the Commission shall submit a progress report to the European Parliament and the Council on implementation of the Community assistance.

Article 12

Regulation (EC) No 1628/96 is repealed.

Article 13

In the Annex to Regulation (EC) No 3906/89, the names "Bosnia and Herzegovina", "Albania", "Croatia", "former Yugoslav Republic of Macedonia" and "Yugoslavia" are deleted.

Article 14

The second subparagraph of Article 1a(5) of Council Decision 97/256/EC is replaced by the following:

"Financial decisions relating to this Decision shall be adopted in accordance with the procedures laid down in Regulation [CARDS]."

Article 15

The first subparagraph of Article 1 of Council Regulation (EEC) No 1360/90 is replaced by the following:

"This Regulation hereby establishes the European Training Foundation, hereinafter referred to as the "Foundation", whose objective shall be to contribute to the development of the vocational training systems of:

- the countries of Central and Eastern Europe designated as eligible for economic aid by the Council in Regulation (EEC) No 3906/89 or in any subsequent relevant legal act,

- the New Independent States of the former Soviet Union and Mongolia which are the beneficiaries of the programme to assist economic reform and recovery pursuant to Regulation (Euratom, EC) No 1279/96 or any subsequent relevant legal act,

- the Mediterranean non-member countries and territories which are the beneficiaries of the financial and technical measures to accompany the reform of their economic and social structures pursuant to Regulation (EC) No 1488/96 or any subsequent relevant legal act and

- the countries which are beneficiaries under Regulation [CARDS] or any subsequent relevant legal act.

Those countries shall be hereinafter referred to as the "eligible countries"."

Article 16

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

It shall apply until 31 December 2006.

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

Done at Brussels,

For the Council

The President