Proposal for a COUNCIL REGULATION amending Council Regulation (EC) No 1080/2000 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)

(presented by the Commission)

EXPLANATORY MEMORANDUM

The European Union plays a leading role in the Stability Pact for South-Eastern Europe (SP), which is a regional policy framework established by the international community in Cologne on 10 June 1999 in an attempt to support the countries in that region in their efforts to foster peace, democracy, respect for human rights and economic prosperity, and to achieve stability in the region as a whole. The Special Coordinator of the SP is appointed by the EU after consultation with the OSCE Chairman in Office and other participants, and endorsement by the OSCE Chairman in Office. Timely installation and regular operation of the SP may be important factors in achieving the goals of the European Union in the region, in particular in achieving stabilisation in the region. Until now, the Council has appointed an EU Special Representative (EUSR) to act as Special Coordinator of the SP and provided him with the necessary means to fulfil his mandate by adopting renewed Joint actions [1] under the CFSP.

[1] 99/523/CFSP OJ L 201 (29.07.1999); 99/822/CFSP OJ L 337 (09.12.1999); 00/793/PESC OJ L 318 (14.12.2000); 01/915/CFSP OJ L 337 (19.12.2001); 02/964/CFSP OJ L 334 (10.12.2002).

In the context of the review by the Council and the Commission of CFSP instruments and in view of the fact that they will be streamlined by May 2003, it has been agreed to move EU financial support for the SP from CFSP to the first pillar and to remove the Special Coordinator of the SP from the list of EUSRs. This will reflect the fact that, since the mandate of the SP was confirmed with a medium-term objective, it appears inappropriate that the SP should continue to be subject to the rules applied to EUSRs, in particular the six-monthly mandate renewal rule. The current financial proposal, is to a large extent a budget-neutral operation for Heading IV "External Action". The Commission is proposing a transfer of the financing of the operation from CFSP line 19 03 03 (former B8-012) "Conflict resolution, verification, support for the peace process and stabilisation" to line 19 07 04 (former B7-547) "Interim Civilian Administration". Yet line 19 07 04 will also have to cover those expenditures financed in 2003 by Council Administrative Budget line 1113 "Special advisers".

Since the proposal to amend the Regulation was adopted by the Commission after the 2004 Preliminary Draft Budget, the accompanying EUR 2 million increase in the specific line 19 07 04 (B7-547) for Interim Civilian Administrations will have to be secured in the 2004 budgetary procedure by means of an amendment by the budgetary authority.

It is therefore necessary to provide a legal framework under the first pillar so as to cover, as from 1.1.2004, the Community's financial assistance to the SP. This objective is best achieved by amending Council Regulation (EC) No 1080/2000 of 22 May 2000 [2] on support for the United Nations Interim Mission in Kosovo (UNMIK) and the Office of the High Representative in Bosnia and Herzegovina (OHR), to extend its scope to include the SP.

[2] OJ L 122, 24.5.2000, p. 27

This legal framework will ensure the transparency of Community financing of the SP, which will take the form of a grant, subject to the yearly conclusion of a financing agreement, based on a detailed budget submitted by the SP. The financing agreement will be concluded by the Commission, acting on behalf of the Community, with the SP. It will determine the amount of the grant, the eligible expenditure, the period covered, the implementing procedures and the procedures for verifying the management and ultimate destination of the Community grant. With regard to Article 2 of the Regulation No 1080/2000 on the equitable division of costs with other members of the international community, co-financing in kind will be explicitly allowed. In addition, this legal framework will provide a procedure for appointing the Special Coordinator of the SP, in accordance with the Cologne document, which established the Stability Pact on 10 June 1999.

This financial assistance by the Community will allow the Special Co-ordinator of the SP to continue to fulfil its mandate and, in particular: to promote achievement of the Pact's objectives within, and between, the individual countries, where the Pact proves to have added value; to chair the South-Eastern Europe Regional Table; to maintain close contact with all participants and facilitating States, organisations and institutions of the Pact, as well as pertinent regional initiatives and organisations, with a view to fostering regional cooperation and enhancing regional ownership; to cooperate closely with all institutions of the European Union and its Member States in order to promote the role of the European Union in the Pact and to ensure complementarity between the work of the Pact and the Stabilisation and Association Process; to meet periodically and collectively with the Chairs of the Working Tables to ensure strategic overall coordination and provide the secretariat of the Regional Table and its instruments; and to work on the basis of a list, agreed in advance on a yearly basis and in consultation with the participants of the Pact, of priority actions for the Pact to implement, while keeping the working methods and structures of the Pact under review and ensuring consistency and efficient use of resources.

2003/0143 (CNS)

Proposal for a COUNCIL REGULATION amending Council Regulation (EC) No 1080/2000 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)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 181a (2) 1st sentence thereof,

Having regard to the proposal from the Commission, [3]

[3] OJ C [...], [...], p.[...]

Having regard to the opinion of the European Parliament, [4]

[4] OJ C [...], [...], p.[...]

Whereas:

(1) The European Union plays a leading role in the Stability Pact for South-Eastern Europe (SP), which is a transitional regional policy framework that was established by the international community in Cologne on 10 June 1999 in an attempt to support the countries in that region in their efforts to foster peace, democracy, respect for human rights and economic prosperity, and to achieve stability in the region as a whole.

(2) Paragraph 13 of the document approved in Cologne stipulates that the Stability Pact will have a Special Coordinator appointed by the European Union, after consultation with the OSCE Chairman in Office and other participants, and endorsed by the OSCE Chairman in Office. The Special Coordinator chairs the Regional Table for South-Eastern Europe and is assisted by three working tables. The Special Coordinator promotes achievement of the Pact's objectives where the Pact proves to have added value, with a view to fostering regional cooperation and enhancing regional ownership, and ensuring complementarity between the work of the Pact and the Stabilisation and Association Process of the European Union.

(3) Timely installation and regular operation of the Stability Pact are important factors in achieving the goals of the European Union in the region, in particular in achieving stabilisation in the region and optimising the effectiveness of Community aid under this policy.

(4) A legal framework, comparable to that established by Council Regulation (EC) No 1080/2000 on support for the United Nations Interim Mission in Kosovo (UNMIK) and the Office of the High Representative in Bosnia and Herzegovina (OHR), should accordingly be provided to cover the Community's financial assistance to the Stability Pact.

(5) This objective is best achieved by amending Council Regulation No (EC) 1080/2000 to extend its scope to include the Stability Pact,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 1080/2000 is hereby amended as follows :

(1) The Title is replaced by the following

"Council Regulation (EC) No 1080/2000 of 22 May 2000 on support for the United Nations Interim Mission in Kosovo (UNMIK), the Office of the High Representative in Bosnia and Herzegovina (OHR) and the Stability Pact for South-Eastern Europe (SP)".

(2) Article 1 is replaced by the following :

"Article 1

1. Within the context of its policy of reconstruction, aid to assist the return of refugees and displaced persons and economic and regional cooperation with Kosovo and Bosnia and Herzegovina, as well as its policy towards the region as a whole, the Community shall contribute financially to the establishment and operation of the UNMIK (fourth pillar), the OHR and the SP.

2. This financing shall be in the form of a grant to the budgets of the UNMIK, the OHR and the SP."

(3) The following Article 1a is inserted:

"Article 1a

The Commission shall appoint the Special Coordinator of the Stability Pact, after consultation with the OSCE Chairman in Office and other participants, and endorsement by the OSCE Chairman in Office".

(4) In Article 2(2)(2), the following sentence is added:

"Co-financing in kind shall be possible."

Article 2

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

It shall apply as from 1 January 2004.

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

Done at Brussels,

For the Council

The President

LEGISLATIVE FINANCIAL STATEMENT

Policy area(s): External relations

Activit(y/ies): Relations with the Western Balkans

Title of action: Proposal for a Council Regulation amending Council Regulation (EC) No 1080/2000 in order to provide a legal basis for Community financial support for the Stability Pact for South-Eastern Europe

1. BUDGET LINE(S) + HEADING(S)

Chapter :19 07 "Cooperation with the countries of the Western Balkans"(Former Chapter B7-5 4, )

Article : 19 07 04 "Interim civilian administrations" (former Article B7-547)

Chapter CFSP 19 03 "Common Foreign and Security Policy" (Former B8-01)

Article : 19 03 03 "Conflict resolution, verification, support for the peace process and stabilisation" (Former B8-012)

Council Administrative Budget item 1113 "Special advisers"

2. OVERALL FIGURES

2.1. Total allocation for action (Part B): EUR6 million for commitment

2.2. Period of application

As from 1.1.2004 and for an undetermined duration. Subject to an annual review of the mandate of the Stability Pact, reflected in an annual financing agreement to be concluded between the Commission and the Stability Pact.

2.3. Overall multiannual estimate of expenditure

(a) Schedule of commitment appropriations/payment appropriations (financial intervention) (see point 6.1.1)

EUR million (to three decimal places)

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(b) Technical and administrative assistance and support expenditure (see point 6.1.2)

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(c) Overall financial impact of human resources and other administrative expenditure (see points 7.2 and 7.3)

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2.4. Compatibility with financial programming and financial perspective

|X| Proposal is compatible with existing financial programming.

2.5. Financial impact on revenue

|X| Proposal has no financial implications (involves technical aspects regarding implementation of a measure)

3. BUDGET CHARACTERISTICS

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4. LEGAL BASIS

Proposal for a Council Regulation amending Council Regulation (EC) No 1080/2000 in order to provide a legal basis for Community financial support for the Stability Pact for South-Eastern Europe

5. DESCRIPTION AND GROUNDS

5.1. Need for Community intervention

5.1.1. Objectives pursued

Timely installation and regular operation of the SP may be important factors in achieving the goals of the European Union in the region, in particular in achieving stabilisation in the region. The European Union plays a leading role in the Stability Pact for South-Eastern Europe (SP), which is a regional policy framework established by the international community in Cologne on 10 June 1999 in an attempt to support the countries in that region in their efforts to foster peace, democracy, respect for human rights and economic prosperity, and to achieve stability in the region as a whole.

The Special Coordinator of the SP, who is appointed by the EU, will carry out the tasks set by the Stability Pact for South-Eastern Europe, these being:

(a) to promote achievement of the Pact's objectives within, and between, the individual countries in SEE, where the Pact proves to have added value;

(b) to chair the South-Eastern Europe Regional Table;

(c) to maintain close contact with all participants and facilitating States, organisations and institutions of the Pact, as well as relevant regional initiatives and organisations, with a view to fostering regional cooperation and enhancing regional ownership;

(d) to cooperate closely with all institutions of the European Union and its Member States in order to promote the role of the European Union in the Pact in accordance with paragraphs 18, 19 and 20 of the Stability Pact document and to ensure complementarity between the work of the Pact and the Stabilisation and Association Process;

(e) to meet periodically and collectively as appropriate with the Chairs of the Working Tables to ensure strategic overall coordination and provide the secretariat of the South-Eastern Europe Regional Table and its instruments;

(f) to work on the basis of a list, agreed in advance and in consultation with the participants of the Pact, of priority actions for the Stability Pact to implement during the course of 2003, while keeping the working methods and structures of the Pact under review and ensuring coherence and efficient use of resources.

5.1.2. Measures taken in connection with ex ante/ex-post evaluation

In its Common Position of 17 May 1999, the Council of the European Union outlined the reasons and procedures for the establishment of a Stability Pact for South-Eastern Europe:

- a political solution to the Kosovo crisis must be embedded in a determined effort geared towards stabilising the region as a whole;

- a Stability Pact for South-Eastern Europe should be prepared, founded on the UN Charter, the principles and commitments of the OSCE, and the relevant treaties and conventions of the Council of Europe, in particular the European Convention on Human Rights;

- the EU should play the leading role in the Stability Pact, the OSCE has a key role to play in fostering security and stability, and the Stability Pact should be developed and implemented in close association with the OSCE;

- the aim of this Stability Pact is to help ensure cooperation among the countries in the region towards comprehensive measures for the long-term stabilisation, security, democratisation, and economic reconstruction and development of the region, and for the establishment of lasting good-neighbourly relations among and between them, and with the international community.

The Stability Pact for South-Eastern Europe (SP) was established by the international community at the Cologne Summit on 10 June 1999.

The EU renewed its financial support for the Stability Pact, by adopting four joint actions, in December 1999, December 2000, December 2001 and December 2002, respectively.

The member states and the Commission established a document entitled "EU Priorities within the Stability Pact", which was adopted by the General Affairs Council on 11 June 2001. The General Affairs Council of 19 November 2001 adopted conclusions on the future direction of the Stability Pact, including (1) concentration and refocusing of activities on priority areas, (2) emphasis on regional cooperation and (3) complementarity with the Stabilisation and Association Process of the EU. These objectives were followed up in the GAC of 11 March 2002 and priorities were set under the stewardship of the new Special Coordinator.

The SCSP has conducted an internal review and has presented its core objectives and achievables for 2003 in order to further focus its activities and follow up on the results from 2002.

Therefore, the future financing of the Stability Pact can be committed, based on a regular and extensive examination in the past of its mandate.

5.2. Action envisaged and budget intervention arrangements

The main beneficiaries are the countries and people of South-Eastern Europe. The working tables of the Stability Pact coordinate the objectives and action undertaken by its participants and promote regional cooperation in the fields of democracy and human rights, economic development and reconstruction, security and justice and home affairs. The Stability Pact will provide an effective addition to the Stabilisation and Association Processes and move steadily toward a leadership role for South-Eastern Europe, by promoting regional ownership of the activities within the Stability Pact.

Community financing will be in the form of a grant to the budget of the SP.

Equitable division of costs is also envisaged with other members of the international community (see section 6.2 below). In 2002, the EU contribution was estimated at 40% of the SP budget, EU member states contribution at 21% and non-EU states at 39%. With regard to EU member states and non-EU members of the Stability Pact, provision is made for co-financing in kind, in accordance with existing arrangements.

5.3. Methods of implementation

The operation will be managed centrally and directly by the Commission using regular staff.

6. FINANCIAL IMPACT

6.1. Total financial impact on Part B - (over the entire programming period)

(The method of calculating the total amounts set out in the table below is explained by the breakdown in Table 6.2. )

Project funded by EC grant contribution and contributions in kind by Stability Pact member states. In 2000 the contribution of the EU amounted to EUR 2 485 000 that was integrally financed from the CSFP budget line B8-012. In subsequent years, the contribution has been financed both from the CSFP budget line B8-012 and from Council administrative budget line 1113. It totaled EUR2 610 824 in 2001 (of which CFSP : EUR1 862 824; Council : EUR748 000) and EUR2 142 290 in 2002 (of which CFSP : EUR1 420 290; Council : EUR722 000).

For 2003, the estimates are EUR1 903 631 (of which CFSP: EUR1 583 631; Council : EUR320 000).

The current financial proposal, is to a large extent a budget-neutral operation for Heading IV "External Action". The Commission is proposing a transfer of the financing of the operation from CFSP line 19 03 03 (former B8-012) "Conflict resolution, verification, support for the peace process and stabilisation" to line 19 07 04 (former B7-547) "Interim Civilian Administration". Yet line 19 07 04 will also have to cover those expenditures financed in 2003 by Council Administrative Budget line 1113 "Special advisers".

Since the proposal to amend the Regulation was adopted by the Commission after the 2004 Preliminary Draft Budget, the accompanying EUR 2 million increase in the specific line 19 07 04 (B7-547) for Interim Civilian Administrations will have to be secured in the 2004 budgetary procedure by means of an amendment by the budgetary authority.

Commitments in EUR million

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6.2. Calculation of costs and division of costs

The amount of the grant, the eligible expenditure, the period covered, the implementing procedures and the procedures for verifying the management and ultimate destination of the Community grant will be covered by a financing agreement between the Commission, acting on behalf of the Community, and the recipient bodies.

The understanding is to maintain the current structure of EU support and the current division of costs with the other members of the international community. As an illustration, the respective figures for the 2003 EU contribution and the list of recorded contributions in kind from other members of the international community in the year 2002 are listed below:

- Existing EU Financial contribution (Estimates for 2003)

1. EU CFSP Budget line (B8-012)

- Salaries of 4 secretaries, 2 experts, 1 financial official; 1 finance officer and 1 bookkeeper: EUR589 174

- Mission expenditure related to the EU staff of the Stability Pact secretariat (hotel, travel, subsistence): EUR191 488

- Equipment, communications, services and other supplies: EUR 247 500

- Insurance: EUR4000 - Office rent: EUR429 010

- Contingencies: EUR122 459

TOTAL (1st half of 2003) CSFP budget for operational expenditures: EUR1 583 631

2. Council Administrative Budget line 1113

Administrative expenditure, including secondment of the EUSR acting as Special Coordinator (salaries, mission expenses, insurance): EUR320 000

TOTAL (1st half of 2003) Council Secretariat administrative budget: EUR320 000

TOTAL EU CONTRIBUTION (Estimates for 2003): EUR1 903 631

CO-FiNANCING in KIND (2002)

1. EU Member States

- 10 A grade staff members of SCSP: 4 Cabinet members (Head of Cabinet, Deputy Head of Cabinet, 2 Cabinet Members), 2 Heads of Unit and 4 experts. In 2002, these secondments were made by A [2], S, D, NL, B, IRL, I [2]

- 1 personal assistant to the EUSR, seconded by A

- 3 secretaries, seconded by A

- Mission costs of the Cabinet members are borne by the seconding member states.

- 1 meeting of Regional table in Thessaloniki hosted by EL

- 2 Table Chairs (EL, I) and 1 Sub-Table Chair (S)

- Office in Thessaloniki (EL)

- Regional Return Initiative (RRI) and Migration and Asylum Initiative (MAI) Steering Committee Chairman and Assistant (DK)

2. Non-EU Participants

- 9 A grade staff members of SCSP: 1 Deputy SC with logistical back-up, 1 Cabinet member, 1 Spokesperson, 1 Head of Unit and 5 experts - all with associated mission costs. In 2002, the USA provided the Deputy Special Coordinator at ambassadorial level, logistical back-up and missions and 1 Cabinet Member. Switzerland provided 1 Spokesperson, and Canada provided 1 Head of Unit. In 2002, contributors of experts from South-Eastern Europe were: Croatia, FYROM, Hungary, Turkey and Czech Republic.

- 3 Table co-chairs (principally missions). Rotating at yearly intervals between SEE states.

- 1 Table chair + assistant (principally missions) (Croatia).

- 1 meeting of the Regional table in Bucharest hosted by Romania.

- 12 related Stability Pact meetings (working tables, task forces, etc.) in various SEE countries.

7. IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE

7.1 Impact on human resources: none

7.2 Overall financial impact of human resources: none

7.3 Other administrative expenditure deriving from the action: none

8. FOLLOW-UP AND EVALUATION

8.1. Follow-up arrangements

The Commission is responsible for implementation of the operations covered by this Regulation.

The amount of the grant, the eligible expenditure, the period covered, the implementing procedures and the procedures for verifying the management and ultimate destination of the Community grant will be covered by a financing agreement between the Commission, acting on behalf of the Community, and the recipient bodies.

The terms of that financing agreement will ensure an equitable division of the cost between the European Union and the other members of the international community. The Commission will verify implementation of this Regulation and regularly report back to the European Parliament and the Council.

The Stability Pact will be accountable to the Commission for expenditure incurred in respect of its activities. The Special Representative will present a comprehensive written annual report to the Commission on the implementation of the mandate

To ensure the coherence of EU external action, the activities of the SP will be coordinated with those of the HR, the Presidency and the Commission. Close liaison will be maintained in the field with the Presidency, the Commission and the Heads of Mission as well as with other international stakeholders.

8.2. Arrangements and schedule for the planned evaluation

The Commission may conduct an evaluation of this action within the framework of its budgetary powers.

9. ANTI-FRAUD MEASURES

The financing agreements and any contract or implementing instruments resulting therefrom will expressly provide for the Commission or bodies authorised by the Commission, the Court of Auditors and the European Anti-Fraud Office (OLAF) to carry out inspections on the spot, if necessary.

An external audit was organised by the Commission in 2001. It covered the SP accounts for 1999 and 2000, with satisfactory results.