EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 21.4.2009 
SEC(2009) 531 
  
COMMISSION STAFF WORKING PAPER 
accompanying the 
proposal for a  
COUNCIL REGULATION 
 
amending Regulation (EC) No 1934/2006 of 21 December 2006 establishing a financing 
instrument for cooperation with industria lised and other high-i ncome countries and 
territories  
 
EXECUTIVE SUMMARY OF THE  
 
IMPACT ASSESSMENT 
{COM(2009)197 final} 
{SEC(2009)532} 
{SEC(2009)533} 
 
EN 2   EN INTRODUCTION  
A mid-term review (MTR) was provided for in e ach of the seven new external action financial 
instruments for 2007-2013: DCI, ENPI, IPA, IfS, EIDHR, INSC and ICI1. The Commission 
must submit a report evaluating their impl ementation accompanied, if appropriate, by 
legislative amendments. Although the Regulati ons set a deadline of 31 December 2010, the 
Commission agreed — at the EP’s  request — to present the re view before the 2009 elections, 
i.e. to the same legislature which co-decided the instruments. The review was conducted by 
Commission staff reporting to the inter-services Group on the MTR of the financial instruments. The Commission also agreed that  before adopting the MT R it would take into 
account the views that Parliament had expressed in the process of demo cratic scrutiny of DCI 
programming. The main issue relates to the fina ncing of activities which might not qualify as 
official development assistance (ODA) in countries covered by the DCI Regulation, No 
1905/2006 (Latin America, Asia, Central Asia, pl us Iraq, Iran, Yemen,  and South Africa). 
This issue relates only to count ries covered by the DCI, as ot her instruments do not stipulate 
that activities must qualify as ODA. Beside s this proposal, the MTR of the financial 
instruments will also produce amendments to th e IfS (adjusting its scope as regards small 
arms and light weapons, on par ticipation and rules of origi n, and on the breakdown of the 
financial allocations) and an amendment to the DCI and EIDHR regulations to align the wording on taxes, duties, and charges with the other instruments.  
P
ROBLEM DEFINITION  
The limited scope of the DCI Regulation 
The DCI Regulation excludes measures whic h do not meet the Official Development 
Assistance (ODA) criteria set by the Developm ent Assistance Committee of the Organisation 
for Economic Cooperation and Development (OEC D/DAC). This limitation is enshrined in 
Article 2(4) of the DCI Regulation, which stat es that measures for geographic programmes 
must be designed to meet the criteria for ODA eligibility. Parliament identified a number of 
problematic cases during the de mocratic scrutiny and commitology “droit de regard” process. 
As a result it passed a series of resolutions  condemning the Commission for exceeding its 
powers in adopting such projects under the DCI Regulation and calling for their withdrawal. 
This legal restriction has gi ven rise to three problems: 
(1) there are no legal provisions allowing m easures ineligible as ODA to be financed; 
(2) the Commission and Parliament hold diverg ing views on the eligibility of certain 
programmed actions; 
(3) there is a risk of having to discontinue financing for activities carried out under the 
Preparatory Actions and for the ‘EU mobility’ component of the Erasmus Mundus External 
Window Cooperation (EMEWC). 
The need to fill the legislative gap 
                                                 
1 The Development Cooperation Instrument (DCI), the European Neighbourhood and Partnership 
Instrument (ENPI), the Instrument  for Pre-accession Assistance (IPA), the Instrument for Stability (IfS), 
the European Instrument for Democracy and Human Rights (EIDHR), the Instrument for Nuclear Safety Cooperation (INSC), and the Instrument for Cooperation with Industrialised Countries (ICI). 
 
EN 3   EN The Budget Authority voted to include a series of Preparatory Actions in the budget to finance 
these ‘non-ODA activities’ for the regions and countries concerned by this problem (i.e. 
business and scientific excha nges with India and China, c ooperation with middle-income-
group countries in Asia and in Latin Ameri ca). Further to the implementation of the 
Preparatory Actions, which started in 2007 a nd 2008, in the MTR a clear need emerged to 
follow up and to build on these Preparatory Actions  in order to offer scope to fund measures 
going beyond ODA in these countries, particular ly in emerging countries. It should also 
ensure that some energy projects and public diplomacy activities th at will not be ODA-
eligible (e.g. in Central Asia a nd in Iraq/Iran) can be financed. 
OBJECTIVES  
The general policy objective should be similar to  the those set out in the ICI Regulation (No 
1934/2006) for the DCI countries, that is ‘to provide a specific response to the need to 
strengthen links and to engage furt her with them on a bilateral, regional or multilateral basis 
in order to create a more favourable environm ent for the development of the relations of the 
Community with these countri es and territories and to promote dialogue while fostering 
Community's interests.’ 
The proposed regulation will finance projec ts which meet the following main operational 
objectives:  
• promotion of economic partnershi p and business in EU interests 
• people to people links/education cooperation 
• public diplomacy and outreach 
• dialogue 
• cooperation projects which do not meet the ODA criteria. 
It is proposed to cover the DC I countries only. The IPA and EN PI regulations are not limited 
in the same way, and ACP count ries are covered unde r the EDF. The overa ll allocation is 
expected to be €176 million over the 2010-2013 pe riod. Funding should come from Heading 4 
and comply with the Financial Framework for 2007-2013. Although the Preparatory Actions 
were funded from the margin of Heading 4 for 2007-2009, some redeployment from the cooperation programmes will be necessary to fund the inte nded activities adequately. 
The current initiative aims to fill a legislat ive gap within the current legal and budgetary 
constraints 2007-2013. The present initiative has therefore a limited scope in terms of its 
policy content, budgetary implications and ti me frame. It does not prejudge any future 
proposal on external cooperati on financial instruments under th e next financial framework.  
P
OLICY OPTIONS AND ASSESSMENT  
Spending programmes require a basic act. The fo llowing four options fo r tackling the problem 
have been considered: 
1. No EU action: cooperation with the count ries concerned remain s strictly in the 
framework of the DCI regulation. 
2. Amend DCI Regulation: add an additional strand to the regulation to finance 
‘non-ODA activities’ with a ring-fenced amount.  
 
EN 4   EN 3. Amend ICI Regulation: extend the geogra phical scope of the regulation to DCI 
countries with a ring-fenced amount. 
4. Table a new instrument.  
The different options have been analyzed on  the criteria of coherence, efficiency and 
effectiveness. Option 1 is not considered a va lid option in view of the need to fill the 
legislative gap. Option 2 would be  the most coherent, but it is  not recommended as it would 
bring different objectives under the same re gulation: eradicating poverty and fostering 
Community interests. Option 3 is considered the most appropriate and effective legislative option in view of the major simplification of th e financial instruments (r eplacing more than 30 
different legal instruments). The ICI also covers non-ODA purposes, an d its provisions and 
legal base (Article 181a of the Treaty) are suited to covering the intended activities.  
C
ONCLUSION  
Taking into account established objectives and areas of coope ration, the third option is 
preferred, ‘Amending the ICI regulation’. It is therefore recommended that the ICI’s 
geographical scope be extended to the DCI count ries and that the legislative amendment be 
put forward in the framework of the mid-term  review of the financial instruments.