TABLE OF CONTENT

PART I: FINANCIAL ASSISTANCE TO ICELAND, THE WESTERN BALKANS AND TURKEY 6

1........... ALBANIA.. 6

1.1........ Summary. 6

1.2........ Strategic planning and programming. 6

1.2.1..... Multi-annual Indicative Planning Document 6

1.2.2..... Programming. 8

1.3........ Implementation of assistance. 13

1.3.1..... IPA.. 13

1.3.2..... CARDS. 18

2........... BOSNIA AND HERZEGOVINA.. 22

2.1........ Summary. 22

2.2........ Strategic planning and programming. 22

2.2.1..... Multi-annual Indicative Programming Document 22

2.2.2..... Programming exercise. 24

2.3........ Implementation of assistance. 28

2.3.1..... IPA.. 28

2.3.2..... CARDS. 35

3........... CROATIA.. 37

3.1........ Summary. 37

3.2........ Strategic planning and programming. 38

3.2.1..... Multi-annual Indicative Planning Document 38

3.2.2..... Programming exercise. 39

3.3........ Implementation of assistance. 42

3.3.1..... IPA.. 42

3.3.2..... CARDS and PHARE. 55

4........... THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA.. 60

4.1........ Summary. 60

4.2........ Strategic planning and programming. 60

4.2.1..... Multi-annual Indicative Planning Document 60

4.2.2..... Programming exercise. 62

4.2.3..... Component II 65

4.3........ Implementation of assistance. 66

4.3.1..... IPA.. 66

4.3.2..... CARDS. 76

5........... ICELAND.. 78

5.1........ Summary. 78

5.2........ Strategic planning and programming. 78

5.2.1..... Multi-annual Indicative Planning Document 78

5.2.2..... Programming exercise. 79

5.3........ Implementation of assistance. 79

5.3.1..... IPA.. 79

6........... KOSOVO.. 82

6.1........ Summary. 82

6.2........ Strategic planning and programming. 82

6.2.1..... Multi-annual Indicative Planning Document 82

6.2.2..... Programming exercise. 83

6.3........ Implementation of assistance. 86

6.3.1..... IPA.. 86

6.3.2..... CARDS. 92

7........... MONTENEGRO.. 94

7.1........ Summary. 94

7.2........ Strategic planning and programming. 94

7.2.1..... Multi-annual Indicative Planning Document 94

7.2.2..... Programming exercise. 96

7.3........ Implementation of assistance. 101

7.3.1..... IPA.. 101

7.3.2..... CARDS. 106

8........... SERBIA.. 108

8.1........ Summary. 108

8.2........ Strategic planning and programming. 108

8.2.1..... Multi-annual Indicative Planning Document 108

8.2.2..... Programming exercise. 109

8.3........ Implementation of assistance. 112

8.3.1..... IPA.. 112

8.3.2..... CARDS. 119

9........... TURKEY.. 122

9.1........ Summary. 122

9.2........ Strategic planning and programming. 122

9.2.1..... Multi-annual Indicative Planning Document 122

9.2.2..... Programming exercise. 125

9.3........ Implementation of assistance. 131

9.3.1..... IPA.. 131

9.3.2..... Turkish Pre-Accession Instrument (TPA) 141

10......... MULTI-BENEFICIARY.. 146

10.1...... Summary. 146

10.2...... Strategic planning and programming. 146

10.2.1... Multi-annual Indicative Planning Document 146

10.2.2... Programming exercise. 148

10.3...... Implementation of assistance. 150

10.3.1... IPA.. 150

10.3.2... CARDS (and PHARE for HR) or TPA.. 154

PART II: FINANCIAL ASSISTANCE TO FORMER CANDIDATE COUNTRIES. 157

1........... Summary. 157

2........... Implementation of PHARE and Transition Facility assistance in 2010. 157

2.1........ Taking stock of pre-accession and post-accession assistance. 157

2.2........ Implementation of PHARE and the Transition Facility. 161

PART III - FINANCIAL DATA.. 165

1........... 2010 allocations by beneficiary and by component (in million EUR) 165

2........... Breakdown of IPA commitments in 2010 in million EUR.. 165

2.1........ Component I – Transition Assistance and Institution Building Programmes. 165

2.2........ Component II – Cross Border Cooperation Programmes. 166

2.3........ Component III – Regional Development Programmes. 167

2.4........ Component IV – Human Resources Development Programmes. 167

2.5........ Component V – Rural Development Programmes. 167

3........... Global overview of IPA 2007-2010 amounts committed, contracted and paid as at 31 December 2010 per beneficiary, in million EUR.. 168

4........... PHARE, CARDS, Turkey Pre-Accession and Transition Facility - Financial data at 31st December 2010 169

4.1........ PHARE, Turkey Pre-Accession and Transition Facility funds implementation by country at the end of 2010 169

4.2........ CARDS funds implementation by country at the end of 2010. 170

PART I: FINANCIAL ASSISTANCE TO ICELAND, THE WESTERN BALKANS AND TURKEY

1. ALBANIA 1.1. Summary

EU financial assistance to Albania has played an important role during 2010 to further support the country on its way towards European integration. Ongoing CARDS and IPA projects in the areas of justice and home affairs, public administration reform and fight against corruption have been further advanced and have shown concrete results. Furthermore, there has been progress in infrastructure projects in the water and transport sectors. There have also been many technical assistance projects ongoing in different line Ministries or state institutions, and the support to the Ministry of European Integration has had a positive horizontal impact on programming of EU financial assistance. Compared to the previous year, further improvements in the programming exercise have been encountered as the Ministry was in a better position to play its coordination role. This has to be seen in the context of a more streamlined approach with the relevant line Ministries as the previously installed Senior Programming Officers became more and more operational.

The amount contracted during the reporting period under the IPA programmes 2007, 2008 and 2009 is EUR 92.31 million, exceeding the new commitments (nearly EUR 87 million) under the 2010 IPA Programmes. This continued a positive trend which began in 2009. With a view to the preparation for the decentralised management of IPA funds further progress has been made with the help of an IPA 2007 technical assistance. Under IPA Component I, key structures have now been established and relevant staff hired and trained. Work has also started on IPA Components II-V.

2010 also saw the preparation of the MIPD 2011-2013, which follows a sectoral approach. The beneficiary, Member States and other donors have been actively involved and welcomed the identified choice of sectors. Overall, there has been good progress in the programming of EU funds, while there are still remaining challenges concerning the implementation and sustainability of projects, also after they have finished.

1.2. Strategic planning and programming 1.2.1. Multi-annual Indicative Planning Document

The following priorities for IPA support have been identified in the Multi-Annual Indicative Planning Document (MIPD) 2011-2013 in close cooperation with the beneficiary, Member States and other donors:

· Strengthen rule of law, ensuring the independence, efficiency and accountability of judicial institutions and enhance the fight against organised crime.

· Support the public administration reform, with a view to enhancing professionalism and de-politicisation of public administration and to strengthening a transparent, merit-based approach to appointments and promotions and strengthen the fight against corruption at all levels.

· Reinforce the protection of human rights, notably for women, children and Roma, and to effectively implement anti-discrimination policies.

· To support acquis related issues, in particular, administrative capacity, adoption and enforcement of legislation and related investments in the transport sector, social sector, as well as in the environment, climate change and agriculture sectors.

To achieve the priorities selected for support in the programming period 2011-2013, in 2010 the Commission identified primarily the following sectors: i) Justice and Home Affairs, ii) Public Administration Reform, iii) Transport, iv) Environment and Climate Change, v) Social Development, vi) Agriculture and Rural Development.

To increase the impact of IPA assistance, to give greater focus to achievable results and to strengthen ownership by the beneficiary countries, the Commission has decided to concentrate its efforts on targeted sectors. A sector approach should facilitate cooperation and coordination among donors and beneficiaries. To date, the number of fully-fledged sector programmes developed by Albania is limited. Overall ownership on the side of the government to move towards a more sector approach is improving, in particular with a view to coordination and monitoring mechanisms at the central level. At the same time, there are obvious differences between sectors and linked line Ministries, e.g. there has been no sector strategy adopted in the justice sector. On the other hand, the agriculture and rural development sector has been identified with the beneficiary, Member States and the Commission as one where a possible sector-wide or programme-based approach could be tested. The sector comprises the main features for such an approach, namely the existence of a sector strategy, an action plan, multi-annual budgeting, donor coordination and a relatively strong capacity (including the political will) of the main beneficiary Ministry.

The chosen sectors are in line with the Enlargement Strategy published in November 2010 and are designed to help the EU to attain its own objectives that include dealing with the economic crisis and governance, restoring growth for jobs through the Europe 2020 reform agenda and making the EU a safer place. The strategic priorities of four of the above mentioned sectors have been identified in close cooperation with the various Commission services responsible for the different IPA components. This is a good basis for the implementation of the IPA programmes during the coming years as well as the strategic definition of a future accession instrument.

Overall, the three-year planning period of the MIPD limits achieving the identified objectives according to the many needs in the different sectors. A longer period would probably make it more feasible to achieve the intended results and sector objectives, as many of them have to be seen in a medium to long-term perspective. This is particularly true as regards reforms in the rule of law as well as public administration sectors.

In May and June 2010, the EU Delegation undertook a review and consultation process in certain sectors in order to assess the existence as well as the quality of various strategies and action plans/budget plans. On the basis of this assessment and the needs and priorities in EU and Albanian Government strategy papers a first draft text for the MIPD 2011-2013 was prepared. During a consultation mission in July, the first MIPD draft document, which has been shared beforehand, was discussed with the beneficiary, Member States and other donors. This first round of consultations confirmed the suggested choice of sectors, on which the European Commission will focus over the next three years. In particular, the sectors regarding the political criteria were seen as very relevant. Further refinements of the draft have been made, and subsequently, the draft MIPD was consulted with Member States in Tirana, with IFIs, bilateral and international organisations and the Beneficiary at the beginning of December 2010. The outcome of these consultations led to further adjustments of the MIPD, notably in emphasizing that a programme-based approach is also encouraged in other sectors under the leadership of other donors, which could eventually be supported by the EU. Furthermore, the division of tasks has been updated and clarified. Finally, it was suggested to bring the indicators more in line with the indicators of the NSDI, which are currently being revised.

The findings from an IPA mid-term evaluation, conducted during 2010, partly confirmed this and also showed that some of the prerequisites for a sector-based approach exist in Albania. However, at present the administrative capacity to adopt a sector-based approach is relatively low. Therefore, with sufficiently well-targeted assistance and continued effort to complete ongoing reforms (functional strategies and monitoring system) the Albanian administration has the potential to develop these necessary capacities in the immediate to short-term. The evaluation also assessed different sectors and stated that the sector of agriculture/rural development is one of the most advanced. Furthermore, it stated that synergy between donor assistance, national strategy and IPA programming is important if a sector-wide approach is to be applied in future programming. The evaluation concluded that programming takes adequate and relevant account of the beneficiary's policies, strategies and reform process.

These findings have been taken into account in drafting the MIPD 2011-2013 as the document was fully based on the national strategic framework and put future IPA intervention into perspective with ongoing donor involvement.

Table 1: MIFF[1] allocations per component, in million EUR

Component || 2010 || 2011 || 2012 || 2010-2012

I – Transition Assistance and Institution Building || 82.71 || 84.30 || 85.99 || 253.00

II – Cross-border cooperation || 9.97 || 10.13 || 10.28 || 30.38

TOTAL || 92.68 || 94.43 || 96.27 || 283.38

1.2.2. Programming 1.2.2.1. Component I

The IPA 2010 national programme was adopted on 8 December 2010. It focused on the objectives identified in the Multi-Annual Planning Document (MIPD) 2009-2011. The 10 projects of the programme were grouped under 3 strategic priority axes, addressing key issues such as police training and rule of law enforcement, in particular as regards support to the penitentiary infrastructure and improvement of training capacities of the Police Education Centre as well as the modernisation of the prosecution system. At the same time, the national programme was also designed to continue supporting the capacity-building efforts of Albania's administration, in particular the Ministry of European Integration, the Ministry of Labour and the Ministry of the Environment. Furthermore, support was planned to be given to the Albanian Parliament and to important acquis-related issues such as food safety. Two large infrastructure projects were included, one in the environment sector (water supply and sewerage) and one in the transport sector (local roads). It has been agreed with the Albanian Government that the local road project and parts of the water project shall be implemented in cooperation with international financial institutions (IFIs). This has to be seen also in the context of the Commission's continuous efforts to help Albania soften the effects of the financial crisis.

The rural road project was included as part of a continuous effort in the frame of a World Bank-coordinated and beneficiary-led multi-donor programme, to which the European Commission has already allocated funds under IPA 2008 and 2009. The water project is an example of continuous EU support over the last years, which has not only an environmental aspect, but which improves also the socio-economic development of the coastal areas with view to tourism development. Finally, the food safety project has been designed to follow-up on an IPA 2009 project.

Overall, donor coordination in Albania has improved during 2010. The Department of Strategy and Donor Coordination (DSDC) created in 2005 under the Deputy Prime Minister's Office in the Council of Ministers of the Albanian Government is responsible for national, sectoral and cross-cutting development strategy coordination as well as for donor coordination. The donors are organised via a Donor Technical Secretariat, including representatives of the European Commission, World Bank, Organisation for Security and Cooperation in Europe (OSCE), UNDP as well as other bilateral donors.

Furthermore, the Fast Track Initiative of Division of Labour in line with the Paris Declaration and the Accra Agenda for Action became more and more developed. In Albania, this is led by the Government, through the DSDC. Fast Track Initiative arrangements are open to any European donor willing to join and other development and integration partners that could contribute to the coordination process in the context of division of labour and complementarity. The Fast Track Initiative of Division of Labour should be seen as added value to the existing coordination mechanisms established by the Government; as such it is embedded in the national Harmonisation Action Plan. The allocation of Lead Donors to specific sectors has been agreed based on expressions of interest from donors and as a result of sectoral analysis of donor commitments by DSDC. The Fast Track Initiative is intended to support Albania in the process of implementing in-country division of labour. The final goal is to achieve better development results through more effective aid and to increase the coherence of EU assistance, and ensure less overlap, less transaction cost, etc. European donors participate in the Fast Track Initiative on a voluntary basis. A Memorandum of Understanding has been signed so far between the Albanian Government and some European donors (European Commission, Italy, Austria, Switzerland and Sweden) on 31 May 2010. As regards donor presence, it should be noted that some bilateral donors have announced a reduction of their foreseen resources and presence.

Coordination meetings with international financial institutions as well as with EU and non–EU donors have been organised on a regular basis. They focus primarily on strategic orientations and the regional dimension of IPA planning and programming. Additionally, coordination between the Commission and EU Member States took place on a regular basis in the context of the IPA Committee. Meetings with the Embassies of EU Member States and the local branches of international financial institutions on MIPD or national programme preparations were organised regularly during programming missions.

As mentioned above, the rural roads project is the best example of a donor and beneficiary coordinated programme, where the EU was able in cooperation with the EIB and EBRD to trigger a substantive amount of funds due to grants/loan blending with the IPA 2010 project. The same was also true for the water project, where through indirect centralised management in cooperation with Germany (KfW) and Austria (ADA) significant funds have been allocated. Finally, it was decided that a project on human resource development is best implemented in joint management with the International Labour Organisation due to its experience on the ground. This can be seen as a continuation of using different management modes for an efficient and effective programme implementation as done during previous IPA programmes.

Overall, the IPA 2010 programme has been developed in close cooperation and consultation with national authorities. The exercise has shown, compared to previous years, improvement with a view to ownership by the beneficiary. The Member States, other donors as well as civil society have been associated in the process as much as possible.

Significant efforts have been undertaken to involve Albania's institutions in the planning and programming process for EU assistance. The Ministry for European Integration benefited from substantial institution and capacity-building support of the last years. The increased involvement of the Senior Programme Officers (SPO) within the European Integration units in line ministries and the leading role of the Ministry for European Integration in the programming process improved overall the identification and programming of financial assistance. Lessons learned, in particular regarding the maturity, timely planning, better links between EU assistance and sectoral strategies as well as sustainability have been taken into account during the programming of IPA 2010.

Under the current institutional and legal circumstances, the different methods of delivering EU financial assistance were adequate. An intelligent mix out of centralised, indirect centralised and joint management, as in recent years, is currently the best way to deliver IPA funds for Albania. There is for the foreseeable future no possibility to use other aid delivery modes, such as budget support, because the overall conditions, as laid down in the IPA Regulation, are not yet in place in Albania.

The programming exercise for IPA 2011 started already early during the reporting year and took the six sectors of the foreseen MIPD 2011-2013 fully into account. A first programming mission took place in May 2010 and a final one in October, after which the beneficiary started to draft the project fiches for the programme for an overall amount of EUR 82 million. In the pilot sector "agriculture and rural development", a project of EUR 10 million is foreseen to start investment in farms through rural development component (IPARD)-like measures and to further develop the national payment and management system in preparation for IPA Component V.

Table 2: Indicative financial allocations for the year 2010 per component, in million EUR

ALBANIA || 2010

I. Transition Assistance and Institution Building || 84.20[2]

Of which: ||

National Programme || 83.20

Tempus Programme* || 1.00

II. Cross-Border Cooperation || 10.48[3]

Of which: ||

CBC Montenegro-Albania || 0.85

CBC the former Yugoslav republic of Macedonia-Albania || 0.85

CBC Kosovo-Albania || 0.60

CBC Greece-Albania || 1.66

CBC IPA Adriatic** || 6.01

Albania's participation in ERDF transnational programmes "South East Europe" and "Mediterranean"** || 0.51

TOTAL || 94.68

* The Tempus Programme is coordinated and implemented under the relevant IPA Multi-beneficiary programme

**Management of the allocations for these programmes was cross-delegated to the DG Regional Policy (REGIO)

Table 3: Indicative financial allocations for the year 2010 under the National Programme, per priority axis and per project, in million EUR

Priority Axis/Projects || Budget

Political Criteria || 26.20

|| Support to the Penitentiary Infrastructure and the Police Education Centre || 18.20

|| Modernisation of the Albanian Justice system || 3.00

|| Support to the EU integration process || 2.00

|| Strengthening the Assembly of Albania || 1.50

|| Project Preparation Facility || 1.50

Economic Criteria || 23.00

|| Improvement of rural roads in Albania || 20.00

|| Human Resources Development || 3.00

Ability to assume the obligations of membership || 34.00

|| Improvement of Drinking Water Supply and Sewerage Systems || 26.00

|| Support to the Food Safety Infrastructure || 4.00

|| Capacity strengthening of the Ministry of Environment || 4.00

TOTAL || 83.20

1.2.2.2. Components II

During 2010, the cross-border programmes between the former Yugoslav Republic of Macedonia and Albania and between Albania and Montenegro were both revised by the national authorities for the period 2007-2011. The revision added mainly the 2010 and 2011 yearly financial allocations for each partner countries and clerical changes following the entry into force of the Lisbon Treaty, but did not touch the substance of the programme.

The revised cross-border cooperation programme between the former Yugoslav Republic of Macedonia and Albania 2007-2011 and the multi-annual Financing Proposal for the years 2010 and 2011 were adopted by the Commission in October 2010. The overall objective of the programme is to promote sustainable development in the cross-border area.

The revised cross-border cooperation programme between Albania and Montenegro 2007-2011 and the multi-annual Financing Proposal for the years 2010 and 2011 were adopted by the Commission in July 2010. The overall objective of the programme is promotion of regional cohesion and competitiveness though an approach integrating economic, environmental and social development.

Following the October 2009 Commission Communication on Kosovo, which recommended "progressively activate the IPA cross border cooperation component (component II) for Kosovo"[4], the first Albania-Kosovo cross-border cooperation programme 2010-2013 was jointly developed by the Albanian and Kosovan authorities. The programme and the multi-annual Financing Proposal for the years 2010 and 2011 were adopted by the Commission in December 2010. The overall objective of the programme is to promote sustainable economic, social, cultural and environmental development in the border area.

The cross-border programme between Greece and Albania 2007-2011 was revised in order to include the 2010 and 2011 ERDF and IPA financial allocations. The programme builds on the 2000-2006 INTERREG programme between the two countries. The multi-annual Financing Proposal for the years 2010 and 2011 (IPA funds part) was adopted by the Commission in December 2010. The overall objective of the programme is to increase living standards by promoting sustainable local development in the border area.

Since 2007, Albania is taking part in the IPA Adriatic cross-border cooperation programme together with Italy, Slovenia, Greece, Croatia, Bosnia and Herzegovina, Montenegro and, in phasing-out, Serbia. This programme is a continuation of the 2004-2006 Italy-Adriatic INTERREG and Italy-Albania Neighbourhood programmes. The global objective of the programme is to strengthen sustainable development of the Adriatic region.

Albania is also participating in the ERDF transnational programme "South-East Europe" (SEE) since 2007 and "Mediterranean" (MED) since 2009 under the European Territorial Co-operation objective of the Structural Funds 2007-2013. 2010 IPA funds were integrated in the SEE and MED programmes. They are managed by the Commission's Directorate-General for Regional Policy, which is now entirely in charge of the programming and implementation of both ERDF and IPA funds within these programmes. The programme supports Albania’s participation in joint transnational co-operation activities with partners from EU Member States and familiarises the country with territorial co-operation programmes under EU Structural Funds.

1.2.2.3. Components III, IV and V

With a view to preparing for decentralised management of IPA funds, a joint mission was organised by the Commission's Directorate Generals for Enlargement, Regional Policy, Employment and Social Affairs, and Agriculture and Rural Development, in January 2010. The aim of this mission was to launch the programming exercise for Components III, IV and V with the Albanian authorities. In spring 2010, the Albanian authorities started drafting their Strategic Coherence Framework for IPA Component III and IV areas, i.e. regional development, competitiveness and transport, as well as education, employment and social inclusion. Their first draft was submitted for comments to the Commission in autumn 2010, initiating a dialogue on the document. The first draft Operational Programme for IPA Component IV was submitted to the European Commission in autumn 2010 and the drafting process of the Operational programme for Component III started. With regards to IPA Component V programming, there was a dialogue between the Commission services and the relevant Albanian authorities on the draft agricultural and rural development programme.

Establishment of the Albanian financial management and control structures for Component III and IV, based on Component I structures, began. In May 2010, DG Enlargement audited the basic structures, while in November DG Agriculture and Rural Development audited the IPA Component V structures including the Paying and Managing Agency. Both concluded that while progress had been achieved, the Albanian authorities are still far from being able to apply for Conferral of Management for IPA funds under Components III, IV and V. Notably, the implementation of an accounting system by the Albanian authorities is still needed, as well as the completion of the Audit Authority structure. For Component V, the establishment of a rural cadastre and farm register is a crucial and challenging element for defining the scope of future rural beneficiaries.

While the aim is for these programmes to be ready for implementation when Albania becomes a candidate country, they do not however have a clear timeframe and remain flexible documents to be adjusted according to the progress of Albania on its European integration agenda.

1.3. Implementation of assistance 1.3.1. IPA 1.3.1.1. Success stories

Support for civil service reform (IPA 2008, EUR 1 million)

This project - supporting civil service reform aiming at strengthening the public sector governance by reinforcing the management capacity of the Department of Public Administration - produced an important result during 2010. Thanks to the project, an Order on "Measures for improving the management of the civil servants in the line ministries and Council of Ministers apparatus" was issued by the Albanian Prime Minister in October 2010. This act set the basis for clear rules and limitations with regards to temporary contracts, restructuring procedures and job descriptions, as well as specific requirements for working positions. Overall, the project also supported the modernisation of the legal framework for the Albanian civil service. New laws were drafted regarding the status of civil servants, general administrative procedures and the organisation and functioning of the State public administration. A more effective and efficient public administration is the basis for progress in all areas of society and the socio-economic development of Albania.

Preparation for EU decentralised implementation system of IPA funds (IPA 2007, EUR 1.13 million)

The project helped the Albanian authorities to progress towards preparation for the decentralised management of IPA funds for Component I. It supported the establishment of proper operating structures and of a management control system with strong involvement and leadership by the Albanian authorities, notably the Ministry of Finance. Based on the results, the Albanian authorities now intend to apply for conferral of management for IPA Component I. In addition, as the main structures for IPA components II, III and IV are similar to Component I structures, the success of this IPA 2007 project laid the foundation for setting up the structures for components II, III and IV programmed under an IPA 2009 national programme. Overall, progress in the preparation for decentralised management process adds also to the improvement in the country's public financial management system in general, which is the basis for the transparent, efficient and legal spending of public funds.

Support for police reform (IPA 2007, EUR 5.5 million)

Finally, the project "Support to the Police Reform - PAMECA III" has proven extremely valuable in improving the functioning of the Albanian State Police, in particular regarding its structures fighting organised crime and terrorism, the functioning of the Police Academy, the functioning of IT systems, the implementation of the Integrated Border Management Strategy and the Community Policing model. The project was also instrumental in identifying ways forward. It encourages continued progress within the Albanian State Police with regard to the respect of human rights, notably as regards the treatment of detainees. It has been a successful method to use a pool of police experts from different Member States, who addressed, with their different backgrounds and specific experience, the complex needs of the Albanian police system.

1.3.1.2. Overview of IPA implementation in 2010

2010 has been the best year to date regarding IPA implementation, as regards commitments and disbursements. A total amount of EUR 92.34 million was contracted: a considerable increase compared with the contracting performance of EUR 65.25 million in 2009. The disbursement of EUR 56.38 million also exceeded the performance in 2009 when EUR 53.54 million were paid.

Component I: Transition Assistance and Institution Building

Table 4: Status of implementation of IPA financial assistance (Component I) as at 31st December 2010 (in million EUR) per annual programme

|| Committed || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 49.27 || 28.86 || 58.58% || 12.35 || 25.07%

IPA 2008[5] || 64.04 || 40.01 || 66.79% || 22.62 || 35.32%

IPA 2009 || 69.86 || 33.34 || 47.72% || 17.10 || 24.48%

IPA 2010 || 83.20 || 0.00 || 0.00% || 0.00 || 0.00%

TOTAL || 266.37 || 104.97 || 39.41% || 52.07 || 19.55%

Table 5: Distribution of total committed funds (2007-2010 allocations) by priority axes

Priority Axes || % of 2007-2010 allocations

Political criteria || 31.61%

(of which civil society) || 0.57%

Economic criteria || 21.72%

Ability to assume membership obligations || 45.41%

Support programmes || 1.25%

TOTAL || 100%

TAIEX, Twinning, SIGMA and EU Programmes

Altogether, 55 TAIEX events assisted Albania's administration in 2010. There were several positive outcomes, where Albanian institutions addressed problems in regard to legislation approximation, regulating internal inspection procedures, implementation of legislation and strengthening of administrative capacities. The focus of these events was on several areas of the acquis, such as environment, fishery, agriculture and food, consumer protection, transport, and competition. They contributed to the preparation of legislation in line with EU standards as well as overall improved the administrative capacity of different line Ministries.

Three Twinning projects were launched during 2010, funded by IPA 2009, in the sector of justice and home affairs. The projects dealt with penitentiary reform, witness protection as well as anti-Money Laundering and Financial Crime Investigations. The participating Member States were the United Kingdom, a consortium between Hungary and Lithuania and another consortium between Spain and Bulgaria. The total budget allocated for these Twinning projects is EUR 3.14 million.

SIGMA activities in 2010 have revolved around the following topics: public service and administrative framework with a focus on the Law on administrative procedures and civil service reform, public expenditure management and assistance to develop the public procurement system. The input of SIGMA for the preparation of the Commission Opinion in November 2010 was very useful.

In 2010, Albania participated in the following EU programmes: 7th Research Framework Programme, Competition and Innovation Framework Programme (CIP) and Europe for Citizens. Furthermore, exploratory contacts were held with a view to participation in the “Culture” Programme.

Component II: Cross-border Cooperation

Implementation of the 2007–2009 Cross-border Cooperation Programmes with Albanian participation continued in 2010.

For the programme Albania-Montenegro, 6 cross-borders projects were contracted and began at the end of 2010, from the first call for proposals of 2007 IPA funds. Two projects were selected for each measure of the programme: economic development; environmental protection and social cohesion. The second call for proposal including joint 2008 and 2009 IPA funds for this programme was launched and closed during 2010 and at the end of 2010 the proposals were to be evaluated by a set-up Joint Steering Committee with Albanian and Montenegrin nationals. During the second semester 2010, the Shkodra-based Joint Technical Secretariat of the programme established in 2008 experienced staffing and building issues due to internal Albanian financial reasons. During the December 2010 IPA Monitoring meeting, the Commission raised the matter since EU technical assistance funds had been paid under this programme for those purposes, and asked the Albanian authorities to solve the internal financial issue as soon as possible and respect their commitment by ensuring an operational Joint Technical Secretariat.

For the programme Albania-the former Yugoslav Republic of Macedonia, 17 cross-border projects were selected by the Joint steering Committee composed of Albanian and Macedonian nationals during the autumn 2010, from the first call for proposals on IPA 2007 funds. The second call for proposals encompassing the remaining 2007 and 2008 funds was launched and closed during the first semester 2010 and the evaluation was pending at the end of 2010. In 2010, the El-Basan/Albania antenna of the programme established in 2008 experienced staffing and buildings issues due to internal Albanian financial reasons. Since EU technical assistance funds had been paid under this programme for those purposes, the Commission strongly encouraged the Albanian authorities to solve the internal financial issue as soon as possible and respect their commitment by ensuring an operational antenna.

For the programme Albania-Greece, one single joint call for proposals encompassing ERDF and IPA 2007, 2008 and 2009 funds was prepared during 2010 and launched in November. The call for expressions of interest for the recruitment process of the 6 members of the Thessaloniki based Joint-Technical Secretariat started in November 2010, to be composed of both Albanian and Greek nationals.

As regards Albanian participation in the ERDF South East Europe Transnational Programme, calls were opened for project proposals in the four following areas: facilitation of innovation and entrepreneurship, protection and improvement of the environment, improvement of the accessibility.

CBC Programmes can make a valuable contribution to reconciliation and good neighbourly relations, and the beneficiaries have shown high expectations with regards to the results of the programmes of this component, also in light of the fact that CBC's 'learning-by-doing' approach will significantly contribute to local capacity-building. These expectations were reflected in the large number of applications received under these calls for proposals, despite the almost symbolic amount of available funds.

Tables 6: Status of implementation of IPA financial assistance (Component II) as at 31st December 2010 (in million EUR) per annual programme[6]

|| Committed || Paid || % Paid

IPA 2007-2010 || 35.57 || 1.82 || 5.12%

Out of which, the breakdown for the intra-Western Balkans CBC Programmes and the ERDF Transnational Programmes (South-East Europe and Mediterranean) is[7]:

|| Committed || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 3.52 || 1.33 || 37.78% || 1.80 || 51.14%

IPA 2008 || 3.19 || 0.02 || 0.63% || 0.02 || 0.63%

IPA 2009 || 3.93 || 0.00 || 0% || 0.00 || 0%

IPA 2010 || 4.47 || 0.00 || 0% || 0.00 || 0%

TOTAL || 15.11 || 1.35 || 8.93% || 1.82 || 12.05%

Table 7: Distribution of total committed funds (2007-2010 allocations) by priority axes

Priority Axes || % of 2007-2010 allocations

CBC with Member States || 41.01%

CBC within Western Balkans || 51.71%

Participation to ERDF Transnational Programmes || 7.28%

TOTAL || 100%

1.3.1.3. Implementation Modalities and Structures

As a potential candidate country, Albania receives pre-accession financial assistance from the Instrument for Pre-Accession Assistance (IPA) under its first two components, currently managed by the EU Delegation in Tirana (EUD).

The introduction of a decentralized implementation system for management of IPA funds remains an important objective for Albania. A decentralised management process will enable Albania to take responsibility for, and hence increased ownership over, the implementation of IPA components and the future management of EU Structural and Cohesion Funds. Albania has taken a number of steps towards achieving decentralised management accreditation and continued working towards this objective during 2010. While progress was solid on IPA components I and V during the year 2010, the process is at an early stage for IPA components II, III, IV.

On Component I (Transition assistance and Institution Building), Albania followed and revised its Roadmap for decentralized management. It set-up the main structure in 2009 (stage 0), finalised its gap assessment report (stage 1) in May 2010, started the gap plugging phase (stage 2) in August 2010 and started undertaking the compliance assessment (stage 3).

On Component II (Cross Border Cooperation), the process of decentralised management started in January 2010 and was at stage 1 (gap assessment) at year end.

On Components III and IV (Regional development and human resources development), Albania started to prepare necessary decentralised management structures, strategic coherence framework and operational programmes since January 2010. The Strategic Coordinator is the Deputy Minister of European Integration, while the Operating Structure for Component III is the Ministry of Transport, Public Works and Telecommunications, and for Component IV, it is the Ministry of Labour, Social Affairs and Equal Opportunities. The key challenges for these components are the strengthening of the structure and the coordination mechanism as well as the drafting of the Strategic Coherence Framework and the Operational Programmes for components III and IV.

On Component V (Rural development), Albania is trying to use already existing structures in order to set up the Managing Agency and the Paying Agency for the Instrument for Pre-Accession Assistance for Rural Development. A first draft programme for the rural development component was prepared by the Albanian during 2010 on the basis of sectoral analyses of priority sectors in agriculture, aiming at identifying the current situation in the milk and dairy products sector, the meat sectors, the fruit and vegetables sector.

1.3.1.4. Monitoring

IPA projects are amongst others monitored by a formalized Result Oriented Monitoring (ROM) mechanism, outsourced to a specialized company. For 2010, the EU Delegation adopted a monitoring plan and regularly updated it with the ROM team. In 2010, 32 projects were monitored in this way.

In addition to ROM, regular internal monitoring was conducted by the EU Delegation during 2010. Regular meetings with project teams and beneficiaries were organised throughout the year. The EU Delegation in Tirana carried out 114 site visits on 42 IPA and CARDS projects representing an amount of EUR 95.3 million.

Finally, the annual joint IPA monitoring meeting undertaken by the European Commission with the Albanian authorities took place in December 2010.

1.3.2. CARDS 1.3.2.1. Sectors with positive results/ Success stories

Modernisation of the civil registry and address systems (CARDS 2004, EUR 2.5 million)

This project supported the strengthening of good governance and good public services, as well as the protection of fundamental rights in Albania. A functioning address system brings important benefits to inhabitants and local governments alike for quality and efficiency of health, tax, social security, education, postal, court services, as well as emergency response.

The Albanian authorities were assisted in the establishment of the national register for civil status and the national register of addresses. The national register for civil status data is used for the production of biometric identity documents as well as for the compilation of voters' lists. The national register of addresses aims at being uploaded with almost 260 digital maps and enables providing about 3.8 million registered citizens with an official address. Also with the support of the project, street names were chosen and plates installed in all streets of the city of Saranda, in the south of Albania, benefiting both local residents and tourists. Furthermore, a data protection law has been drafted with the help of the project and approved. The project also supported the establishment of the Data Protection Commission.

Strengthening public internal financial control system (CARDS 2005, EUR 1 million)

This project to strengthen the control of Albanian public internal finances lasted two years and ended in July 2010. The project provided assistance for the further development of the public internal financial control system in Albania, in order to bring it in line with EU standards and best practices. This project focused notably on strengthening the administrative capacity for financial management control and internal audit.

The twinning partnership was established between the Albanian Ministry of Finance, the National Audit Office of the United Kingdom and the Polish Ministry of Finance, with the support of the Bulgarian Ministry of Finance. The twinning team assisted central harmonisation units within the Ministry of Finance of Albania to develop new a financial management control law, instructions related to the new law and an internal audit law, in accordance with the international standards for internal control and internal audit. In addition, two manuals on financial management control and internal audit were developed, as well as a number of trainings events that were organised for the high-level managers, the financial managers and internal auditors of the public sector.

The newly developed manual on financial management control was approved by the Albanian Minister of Finance in July 2010, while the law on inspection was adopted by parliament in July 2010 and the law on internal audit in September 2010.

These significant developments will help the Albanian Government to manage the national State Budget in a more transparent way. They will also serve as a basis for the future management of EU funds when the conferral of management of IPA funds is granted to Albania.

"EURALIUS II" (CARDS 2006, EUR 4.5 million)

Support for the judicial system continued despite a national strategy not being ready in 2010. Through the EURALIUS II project, support was provided to the Ministry of Justice, institutions of the judiciary, penitentiary institutions and to the general prosecutor Office. The assistance focused on the improvement of law drafting and legal approximation skills and methods (development of a law drafting manual on best practices and assessment of approximation of laws in the sector), on the introduction of a new enforcement of rulings system, on justice organisation and reform (new judicial power law, territorial reorganisation of the courts, establishment of a new evaluation system for judges), inter-institutional dialogue, improvement of the management capacities of the judicial and penitentiary budget administration and planning, more efficient and transparent court administration and case management systems, improvement of legislation in civil matters (civil code and civil procedure code review) and criminal justice (new "anti-mafia law", new law on mediation, new judicial police law, new law on international legal mutual assistance, new probation law), and support to immovable property rights matters. Overall, the result has been an improvement in the quality of fundamental pieces of draft legislation such as administrative procedures and judicial review. Finally, the project helped to some extent to increase the professionalism or, as well as accountability within, the judiciary in Albania.

1.3.2.2. Lessons learned

In 2010 four ex-post evaluations of CARDS projects were carried out:

- Assistance to the Justice System of Albania: EURALIUS II (CARDS 2006) - rated satisfactory;

- Assistance to the Ministry of Public Works, Transport and Telecommunications in the field of Transport (CARDS 2004) - rated moderately satisfactory;

- Accreditation, Standards and Certification (CARDS 2006) - rated moderately unsatisfactory;

- Assistance to the Ministry of Environment and Institutions involved in Environmental Monitoring aimed at Strengthening of the Environmental Monitoring System in Albania (CARDS 2006) - rated moderately unsatisfactory.

This exercise concluded that EU funds have significantly contributed to specific sector objectives in Albania, in particular with regard to the reform of the judiciary system and transport sector. Results in the ‘environment’ and ‘internal market’ sectors are less satisfactory, for an array of reasons. Assistance has been less successful in terms of helping Albania meet obligations deriving from the Stabilisation and Association Agreement, as projects are often not really implemented from an EU accession perspective. Common constraints to full project success were limited ownership and commitment from the beneficiary Albanian authorities, persistence of inadequate institutional structures, programme management constraints in the EU Delegation (due to limited human resources available for project monitoring) and a management style that focuses more on outputs than on process management. On the basis of this evaluation, the Commission is insisting on a closer involvement of the Albanian administration in the programming, planning, implementation as well as post-completion phase.

1.3.2.3. Management performance

Table 8: Status of financial assistance as at the end of December 2010 (in million EUR) – CARDS programmes[8]

|| Allocated || Contracted || % Contracted || Paid || % Paid

CARDS 2001 || 33.50 || 32.68 || 97.55% || 31.69 || 94.60%

CARDS 2002 || 42.90 || 41.39 || 96.48% || 40.90 || 95.34%

CARDS 2003 || 38.50 || 37.83 || 98.26% || 37.40 || 97.14%

CARDS 2004 || 62.00 || 56.47 || 91.08% || 52.19 || 84.18%

CARDS 2005 || 40.20 || 37.98 || 94.48% || 32.21 || 80.12%

CARDS 2006 || 42.50 || 40.73 || 95.84% || 27.25 || 64.12%

Total || 259.60 || 247.08 || 95.18% || 221.65 || 85.38%

During the reporting period, the Delegation did not undertake any contracting activity under the above-mentioned Annual Programmes, as the contracting periods set forth therein had already expired (the last one in August 2009 for the CARDS 2006 Annual Programme). However, in addition to regular disbursement activities, the Delegation closed a significant number of projects implementing the above-mentioned Annual Programmes. Overall, 80 such projects were closed during 2010.

1.3.2.4. Institution Building highlights

CARDS 2006 - Implementation of the National Plan for Approximation of Environmental Legislation (INPAEL)

The main objective of the project is the transposition and implementation of the priority legislation as foreseen in the Stabilisation and Association Agreement (SAA), the National Plan for the Implementation of the SAA and the National Environmental Strategy. The main beneficiary is the Ministry of Environment. The approximation of EU legislation on the environment in Albania is advancing well, with broad public consultation done for each new piece of legislation and horizontal line ministries consultation.

Important results from this project included the cost estimation of the future implementation of EU Directives in environmental sector, both in terms of investments and administrative costs, the Strategy and Action Plan in the waste sector, the Pilot Water Basin Management Plan in Mati River District, a National Compliance Plan for the Urban Waste Water Treatment Directive, Monitoring Plan for the Gerdec area (affected by explosion of ammunition deposit in 2008), as well as public awareness campaigns on environmental protection regarding air, water and waste.

At the end of its implementation, together with past pre-accession assistance (Environment Legislation Project in Albania project under CARDS 2004), the most visible impact is that a large share of EU legislation in the environment sector was approved by the Albanian Council of Ministers and sent to parliament. This brings Albania closer to a proper acquis transposition in that particular field.

Overall, the improvement of the environmental situation in the Western Balkan, and in particular in Albania, has an added value also for EU citizens, as possible environmental disasters with implications on neighbouring EU countries will be better contained and the risk minimized.

1.3.2.5. Joint Monitoring

The 2010 joint monitoring meeting undertaken by the European Commission with the Albanian authorities in December reviewed the implementation of the currently ongoing CARDS and IPA projects. Many shortcomings in the implementation of projects were raised, in particular retaining trained staff and providing maintenance as well as budgeting plans for finished infrastructure projects in order to ensure a stronger impact and sustainability. The outcome of the meeting was a list of agreed action points, where the beneficiary committed itself to address the identified problems.

2. BOSNIA AND HERZEGOVINA 2.1. Summary

EU financial assistance to Bosnia and Herzegovina has played an important role during 2010 to further support the country on its way towards European integration. Whereas the implementation of CARDS was almost completed, IPA continued to offer support for Bosnia and Herzegovina to comply with the requirements of the EU accession process and to fulfil its obligations under the Stabilisation and Association Agreement and the Interim Agreement. The priorities of the assistance in 2010 were support for the public administration reform, the strengthening of the rule of law, including the fight against corruption and organised crime, and support for Bosnia and Herzegovina to overcome the consequences of the financial and economic crisis. Compared to the previous year, further improvements in the programming exercise occurred as the Directorate for European Integration and the Ministry of Finance organised sector support workshops in 2010, to which the European Commission, other donors and the International Financial Institutions contributed to identify IPA priorities for the years 2011 – 2013. This was an important step to improve Bosnian ownership in the IPA programming process.

The amount contracted during the reporting period under the IPA 2007 - 2009 programmes was EUR 70.91 million, an increase of 100 % compared to the preceding period and a continuation of the positive trend which began in 2009. With a view to the preparation for the decentralised management of IPA funds, some progress has been made by the nomination of the Competent Accrediting Officer (CAO), the National Authorising Officer (NAO), and the National IPA Coordinator (NIPAC). However, State and entity representatives could not agree on the structures to be built to support the decentralised implementation of EU assistance, further blocking progress towards decentralisation.

The year 2010 has also seen the preparation of the MIPD 2011 – 2013, which follows a sectoral approach. The beneficiary, Member States and other donors have been actively involved and welcomed the identified sectors.

2.2. Strategic planning and programming 2.2.1. Multi-annual Indicative Programming Document

The strategic priorities identified in the 2011-2013 Multi-annual Indicative Programming Document (MIPD) are strengthening the rule of law, improving the capacity and efficiency of the public administration, and supporting social and economic development.

To achieve the strategic priorities, in 2010 the Commission identified the following sectors of intervention and specific objectives:

- Justice and Home Affairs, with the objectives of supporting the justice sector reform and to intensify the fight against corruption and organised crime.

- Public Administration Reform, with the objective of setting up a professional civil service, improving the functioning of the institutions at all levels and adopting the legal framework for public financial management, compliant with EU standards.

- Private sector, and Transport and Environment sectors, with the objectives of developing the SME sector and supporting investments in transport and environment infrastructure.

- Social Development, with the objective of alleviating unemployment and reforming the education system.

The priorities and objectives have been selected because of their remarkable significance for the country's progress in the pre-accession process. Overcoming the economic crisis, social inclusion and strengthening the rule of law and public administration reform were identified as key challenges in the Enlargement Strategy 2010–2011. The 2010 Progress Report concluded that Bosnia and Herzegovina has to step-up its efforts in the areas of justice and public administration reform and that despite a moderate economic recovery, unemployment remains high and fiscal adjustment measures, as well as economic reforms, have to be pursued with determination to enable the country to recover. In the long-term, these measures will allow the country to cope with the competitive pressure and market forces of the EU.

The Commission decided to concentrate its efforts on a limited number of sectors to increase the impact of IPA assistance and to give greater focus to achievable results. A sector approach will facilitate cooperation among donors and beneficiaries, will eliminate duplication of efforts and will lead to greater efficiency and effectiveness. Following the philosophy of the sector support approach, the priorities identified above support Bosnia and Herzegovina's own reform strategies, in particular the Country Development Strategy, the Justice Sector Reform Strategy, the Public Administration Reform Strategy and the Social Inclusion Strategy.

The Europe 2020 agenda offers enlargement countries an important inspiration for reform. IPA supports Bosnia and Herzegovina in following the priorities of the 2020 agenda, particularly by supporting the environmental protection, the promotion of social inclusion and the fight against poverty.

The Commission, the Bosnia and Herzegovina Directorate for European Integration and the Ministry of Finance and Treasury held a series of consultation workshops in June 2010 to facilitate the identification of relevant sectors and to assess how to best move towards a sector approach in the different areas concerned. Representatives from line ministries, other relevant institutions, selected donors and civil society organisations were invited to participate. Workshops were held in the areas of social inclusion, small and medium-sized enterprises, education and employment, civil society, judiciary, law enforcement, public administration reform, environment, transport and energy. The aim of the workshops was to identify strategic objectives, expected results, benchmarks and indicators for financial assistance in the period 2011-2013. The workshops helped to identify areas where the support provided by IPA or other donors can be better aligned with the existing strategies so as to gradually move towards a sector approach. This new approach considerably strengthened Bosnia and Herzegovina's ownership in the programming process.

The relevance of the consultation process and donor coordination was confirmed by the conclusion of the Mid-term Meta Evaluation of IPA Assistance. The evaluation, which took place in 2010, recommended that MIPDs should concentrate on fewer specific priorities in line with the beneficiaries' strategic reform framework.

Table 1: MIFF[9] allocations per component, in million EUR

Component || 2010 || 2011 || 2012 || 2010-2012

I – Transition Assistance and Institution Building || 100.69 || 102.68 || 104.67 || 308.04

II – Cross-border cooperation || 4.70 || 4.75 || 4.80 || 14.24

TOTAL || 105.39 || 107.43 || 109.47 || 322.28

2.2.2. Programming exercise 2.2.2.1. Component I

The IPA 2010 national programme has been prepared during the reporting year and was adopted on 28 July 2010. It focused on the objectives identified in the MIPD 2009 – 2011.

The 14 projects of the programmes were grouped under 3 strategic priority axes with a focus on supporting the justice sector reform. Strengthening the rule of law was an EU enlargement strategy priority, in particular to support the fight against organised crime and corruption. The projects on "support to the area of law enforcement", (EUR 8.0 million), "implementation of the anti-corruption strategy and action plan" (EUR 2.0 million), "construction of a high security state prison, phase II", (EUR 5.15 million), and strengthening the judiciary", (EUR 4.0 million) continued activities in previous IPA programmes and will be followed-up by further assistance to the justice sector in the years 2011 and the following ones. The expected results of the projects were improved cooperation and coordination of key institutions in the security sector, reduction of organised crime, improved capacities of the State Investigation and Protection Agency, police restructuring and better cooperation between police and the judiciary, improved border management, the improvement and implementation of the anticorruption strategy, improved capacity building for judicial reform, and the building of the high-security state prison.

The reform of the justice sector is a key component of the EU integration process of Bosnia and Herzegovina. The Commission mandated a team of Member State judicial experts to identify priority areas for future EU support. A fact-finding mission was conducted in May 2010. The objectives of the team were to identify and analyse specific areas in the justice sector where the lack of progress is particularly relevant to the European integration process and that could therefore be considered for future IPA support. The findings and recommendations of the fact finding mission served as a basis for the sectoral strategy planning for the time frame 2011 to 2013.

Further assistance was directed at developing and implementing a sustainable strategy for integrated social protection and the inclusion of children and families, to preserve Bosnia and Herzegovina's cultural heritage, to support the Public Administration Reform Strategy through the development of coordination and policy making capacities, and to provide support on public financial management and the improvement of information systems in public institutions.

As Bosnia and Herzegovina was severely hit by the global economic crisis, the EU continued to provide support for infrastructure investments through the 2010 national programme. The EU cooperated with the World Bank on the rehabilitation and transport and navigation development of the Sava River to link national with regional core transport networks. It also supported the rehabilitation and construction of water, waste water and solid waste infrastructure together with the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the Kreditanstalt für Wiederaufbau (KfW). Grants to the international financial institutions (IFIs) and the KfW leveraged significant loans for major infrastructure investments and helped Bosnia and Herzegovina to conclude those loan agreements.

The infrastructure projects in this programme were selected because they were well-advanced in the preparatory phase, but their timely implementation would have been unlikely without EU support. They were a continuation of infrastructure support in 2009. Support for transport and environment infrastructure will be continued in future IPA national programmes. Support for infrastructure created a number of catalytic effects, such as providing employment and income for citizens, protecting public health, fostering industrial and agricultural production, trade, and improving environmental conditions. Support for infrastructure was in line with the EU 2020 Agenda, in particular where it promotes sustainable development and social inclusion, and supported the European Neighbourhood Transport Action Plan.

In the area of European standards, the programme supported the customs sector through the Indirect Taxation Authority. It also prepared rural development structures through piloting IPA rural development type measures to support the preparation of farmers towards the implementation of a rural development policy in a way which is compatible with the main principles of the EU rural development policy. Further assistance was provided to the regional animal vaccination programme.

Donor coordination was ensured throughout the entire project management cycle from project design to implementation. As the main donor, the EU, in cooperation with DFID, was involved in setting up an Aid Coordination Committee together with the Ministry of Finance, the Directorate for European Integration and the Directorate for Economic Planning.

Regular coordination meetings on programming and assistance implementation were held with EU Member States. The Commission also participated in and provided regular updates on the IPA programming process to a Donor Coordination Forum which comprised the European Union Delegation, the EBRD, the International Monetary Fund (IMF), United Nations Development Programme (UNDP/United Nations Resident Coordinator (UNRC), the KfW, the World Bank and key bilateral donors.

Improved donor co-ordination resulted in the division of labour in certain areas, in particular in infrastructure investments, where member states or other donors are carrying out projects which would otherwise not have been considered for financing.

The Commission used different management approaches to implement assistance under the IPA 2010 programme to ensure adjusted, efficient and effective programme implementation. The predominant part of the assistance, which was devoted to infrastructure projects, was implemented by joint and indirect central management, while other assistance was implemented as twinning with European member states or technical assistance.

A lesson confirmed (this is not a new lesson, in BiH or elsewhere) from the implementation of assistance in Bosnia and Herzegovina was that lack of ownership and political commitment is detrimental to the success of the assistance. In particular, despite the efforts of EU assistance to support key reforms, progress has been rather limited in terms of state building, governance and rule of law implementation, as well as in the approximation to European Standards. The complex constitutional set-up, insufficient political support and an overall weak administrative capacity have not been conducive to reform implementation. The workshops mentioned in section 2.1 aimed to include final beneficiaries as early as possible in the programming and project identification process to encourage ownership and commitment. This approach has been confirmed by the recommendation of the Interim/Strategic Evaluation of IPA Pre-accession Assistance to Bosnia and Herzegovina in the year 2010, which recommended the securing of an adequate time frame for consultation and sufficient participation of all relevant stakeholders.

In addition, the programme aimed at promoting ownership by ensuring that projects were in line with Bosnia and Herzegovina's own reform strategies and development plans, especially the public administration reform and the judicial reform strategies.

The programming exercise for IPA 2011 started officially in November 2010 with a kick-off meeting in Sarajevo where the beneficiaries were asked to propose their priorities for the timeframe 2011 – 2013 and to propose projects based on these priorities for the IPA 2011.

Table 2: Indicative financial allocations for the year 2010 per component, in million EUR

BOSNIA AND HERZEGOVINA || 2010

I. Transition Assistance and Institution Building || 100.69

Of which: ||

National Programme || 98.29

Tempus Programme* || 2.40

II. Cross-Border Cooperation || 4.70

Of which: ||

CBC Bosnia and Herzegovina – Croatia || 1.00

CBC Bosnia and Herzegovina - Montenegro || 0.50

CBC Bosnia and Herzegovina - Serbia || 0.70

CBC IPA Adriatic || 2.50

TOTAL || 105.39

* The Tempus Programme is coordinated and implemented in the Multi-beneficiary IPA 2010

Table 3: Indicative financial allocations for the year 2010 under the National Programme, per priority axis and per project, in million EUR

Priority Axis/Projects || Budget

Political Criteria || 31.90

|| Enhancing the Social Protection and Inclusion System for vulnerable groups – Phase III || 1.40

|| Construction of a High Security State Prison in Bosnia and Herzegovina - Phase II || 5.15

|| Strengthening the Judiciary || 4.00

|| Support to the Area of Law Enforcement || 8.00

|| Implementation of the Anti-Corruption Strategy and Action Plan || 2.00

|| Preservation of Bosnia and Herzegovina’s Cultural Heritage – Phase II || 5.00

|| Coordination of policy making capacities and public financial management || 3.00

|| Information Systems in Public Institutions || 1.35

|| Support to the Forensic Science Department of the International Commission on Missing Persons || 2.00

Economic Criteria || 51.60

|| Rehabilitation and Development of Transport and Navigation on the Sava River Waterway || 5.60

|| Rehabilitation and construction of water, waste water and solid waste infrastructure || 40.00

|| Rehabilitation and construction of water and waste water infrastructure || 6.00

Ability to assume the obligations of membership || 8.31

|| Pilot support to IPA Rural Development measures || 3.00

|| Improvement of animal health control through the vaccination against rabies || 3.06

|| Strengthening the customs sector within the Indirect Taxation Authority || 2.25

Supporting programmes || 6.48

|| Participation of Bosnia and Herzegovina in Community Programmes || 1.50

|| Project Preparation Facility || 4.98

TOTAL || 98.29

2.2.2.2. Component II

The overall objective of the cross-border cooperation (CBC) programmes is to promote cooperation between people, communities and institutions, aiming at sustainable development and stability and prosperity of bordering areas. The CBC programmes should have catalytic effects as they should build the capacities of local stakeholders, municipal, regional institutions and civil society, continuously strengthening their ability to participate in cross-border initiatives.

The revised cross-border cooperation programmes between Croatia and Bosnia and Herzegovina 2007-2011, between Bosnia and Herzegovina and Montenegro 2007-2011, and the multi-annual Financing Proposals for the years 2010 and 2011 for these programmes were adopted by the Commission in August 2010. The revised cross-border cooperation programme between Serbia and Bosnia and Herzegovina 2007-2011 and the multi-annual Financing Proposal for the years 2010 and 2011 were adopted by the Commission in October 2010. The revisions mainly added the 2010 and 2011 yearly financial allocations for both countries and minor adjustments revising outdated references, but did not affect the substance of the programme.

Since 2007, Bosnia and Herzegovina is taking part in the IPA Adriatic cross-border cooperation programme together with Italy, Slovenia, Greece, Albania, Croatia, and Montenegro and, in phasing-out, Serbia. The global objective of the programme is to strengthen the sustainable development of the Adriatic region.

Bosnia and Herzegovina is also participating in the ERDF transnational programme "South-East Europe" (SEE) and "Mediterranean" (MED) under the European Territorial Co-operation objective of the Structural Funds 2007-2013. 2010 IPA funds were integrated in the SEE and MED programmes. They are managed by the Commission's Directorate-General for Regional Policies, which is now entirely in charge of the programming and implementation of both ERDF and IPA funds within these programmes. The programme supports Bosnia and Herzegovina’s participation in joint transnational co-operation activities with partners from EU Member States and familiarises the country with territorial co-operation programmes under EU Structural Funds.

2.3. Implementation of assistance 2.3.1. IPA 2.3.1.1. Success stories

Reinforcement of Local Democracy Project, IPA 2007, direct grant to UNDP (EUR 1.5 million)

The Reinforcement of Local Democracy Project worked with 14 local governments focusing on strengthening relations between local governance and the civil society sector, raising awareness on the significance of the institutionalisation of these relations and the transparent disbursement of funds.

There are 142 municipalities in Bosnia and Herzegovina, disbursing millions of euro per year to civil society organisations (CSO), most of them in a non-transparent manner. The main objective of this project was therefore two-fold: firstly, to introduce transparent mechanisms for disbursement of municipal funds, and secondly, to improve the communication and partnership between CSOs and municipalities. For many municipalities, the project represented a first opportunity to learn how to work with CSOs in a transparent corruption-free environment, thus helping them to learn how to spend their financial resources effectively, efficiently, and by applying good financial management. The EU will continue with a second phase of this project in an effort to establish this culture in a critical amount of municipalities across BiH which would in turn put pressure on the rest to act in a similarly transparent manner.

The objectives to introduce transparent mechanisms for disbursement of municipal funds to CSOs projects, to improve communication and partnership among CSOs and to strengthen local grassroots organisations were met.

Monitoring mechanisms were developed and monitoring teams were established in 14 partner municipalities. These activities improved trust, transparency and mutual understanding between the civil society and local governance. In total, 67 sub-projects were implemented with a focus on poverty reduction, social inclusion, gender equality, human rights, environment, and improving the situation of minorities and vulnerable groups.

A project of this nature needs to be implemented by the EU to send a clear message to local governments and civil society in Bosnia and Herzegovina that transparency is a value embedded in the European culture.

Technical Assistance for the Central Bank of Bosnia and Herzegovina, IPA 2008, direct agreement with the European Central Bank (ECB), EUR 1.0 million.

The overall objective of this project was to assist the Central Bank of Bosnia and Herzegovina (CBBH) to continue working towards compliance with the EU central banking standards and rules to be ready to join the European System of Central Banks (ESCB) when Bosnia and Herzegovina joins the European Union.

The success of this project is highlighted by the proactive ownership of the beneficiary institution, whose staff has been capable of adopting more advanced project implementing methodologies, such as tailor-made transfer of know-how through well-planned study missions, expert visits or preparation of very particular training documents, manuals, guidelines, bridging models, etc.

This project needed to be implemented by the EU (and not any other donor) as it concerned partnership with relevant EU institutions such as the European Central Bank and National Banks from the Euro area.

The project yielded important deliverables in the fields of portfolio and interest rates statistics, including proposal for adequate IT communication solutions, which enabled the CBBH to improve its preparation of statistical data and information to decision makers, and to provide recommendations and economic analysis on policy and fiscal stability.

Efficient Prison Management, IPA 2007, Contribution Agreement with Council of Europe (CoE)- known as the 'joint programme', EUR 600,000.

As a transition country with 15 prisons or detention centres spread throughout the country, Bosnia and Herzegovina faces various policy, institutional and operational challenges in meeting European standards in this area. The joint programme therefore was designed to address some of those issues, and by doing so not only improved aspects of the day-to-day operations of the prisons and the treatment of inmates, but also supported the responsible Ministries of Justice and related ministries such as health, in revising parts of their policy and legal framework.

More specifically the objective of the joint programme was to address six key areas: amending the strategic framework in the use of alternative sanctions and independent inspections, enhancing staff knowledge of European human rights, improving the treatment of vulnerable groups, amending the legal framework on mental health and proposing improvements to the prison databases.

With a strong track record in prison reform, the CoE was selected as the EU's implementing partner. As a member state of the CoE, Bosnia is already obliged to adhere to European standards in this field, particularly the European Convention of Human Rights, and European Convention for the Prevention of Torture. However, as a potential candidate country to the EU, whose requirements under Chapter 23 of the accession negotiations include the same conventions, the EU added value was clear and founded on clear legal requirements for accession when compared to an EU Member State financing the same support. Equally, in the framework of EU requirements for justice, freedom and security, the EU has a clear framework for this area.

The joint programme adopted an innovative and inclusive methodology in implementing the assistance; namely to establish working groups comprising officials from the Bosnian authorities for the 6 areas mentioned above. It also included 'cascade' trainings whereby a group of 12 Bosnian prison related officials were initially trained as trainers on relevant topics and thereafter provided the trainings to their compatriots. Such approaches were highly appreciated by all the beneficiaries who mentioned throughout project implementation that they considered the approach not only relevant to the reality in Bosnia and Herzegovina in terms of substance, but also sustainable in terms of impact. The calibre of expertise was highly valued by all stakeholders.

In the course of the activities, over 420 prison related staff were trained, legal frameworks were amended and adopted, and collaboration between the prison related staff including ministry officials were reinforced, an important benefit in an administratively and politically fragmented set up as that of BiH.

The CoE considered the project to be such a positive example of CoE/EU impact that they undertook an evaluation of the joint programme. The possibility of future benefits of the CoE and EU working together in areas of mutual interest should not be underestimated.

2.3.1.2. Overview of IPA implementation in 2010

Component I: Transition Assistance and Institution Building

The figures in table 5 below confirm that after the slow start of IPA 2007 the implementation of IPA gained momentum and contracting and payment rates improved considerably in 2010. At the end of the year, EUR 142.88 were contracted, an increase of more than 100 % in comparison to the year 2009, when EUR 70.91 million were contracted. Also the disbursement of EUR 83.31 million at the end of the year 2010 triplicated the 2009 figures, when EUR 25.16 million was were disbursed.

Table 4: Status of implementation of IPA financial assistance (Component I) as of 31st December 2010 (in million EUR) per annual programme[10]

|| Committed || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 49.74 || 48.15 || 96.80% || 28.74 || 57.78%

IPA 2008 || 66.75 || 36.22 || 54.26% || 15.94 || 23.88%

IPA 2009 || 80.50 || 41.58 || 51.65% || 22.01 || 27.34%

IPA 2010 || 98.29 || 0 || 0% || 0 || 0%

TOTAL || 295.95 || 125.95 || 42.65% || 66.69 || 22.59%

Table 5: Distribution of total committed funds (2007-2010 allocations) by priority axes

Priority Axes || % of 2007-2010 allocations

Political criteria || 29%

(of which civil society) || (4%)

Economic criteria || 42%

Ability to assume membership obligations || 25%

Support programmes || 4%

TOTAL || 100%

SIGMA activities were implemented in the frame of 6 active project definition sheets (PDS). Most of the work was done in the area of public procurement, with comments on a draft law on public procurement and a peer review that started at the end of 2010. A workshop was done jointly with a technical assistance project in the area of Public Internal Financial Control (PIFC). Advisory assistance to the decentralisation of assistance (DIS) on the set up of the Audit Authority was suspended, together with other assistance to DIS due to the lack of progress in nominations and a legal basis for DIS.

One continued activity was the support to the Public Administration Reform (PAR) and especially further work on the Blueprint of the Centres of Government. Another activity was in the area of administrative decision-making, procedures and disputes but without follow up on the side of authorities. SIGMA assistance has in general been timely, professional and efficient.

Twinning: 5 twinning projects were launched and a further 5 were under implementation. No twinning light projects were implemented in Bosnia and Herzegovina. The general problem with twinning projects was the exceptionally long procedure for work-plan preparation and contract signature that created uncertainty on both Member State and beneficiary sides and postponed the European Commission's contracting targets and led to the ineligibility of many costs for the beneficiary participants. With budget constraints on the side of the beneficiary country and the non-adoption of the state budget, the beneficiaries were unable to take part in some of the twinning activities which reduced the impact of twinning projects in BiH.

The TAIEX instrument was largely used by institutions from State and entities (e.g. study tour, expert mission to beneficiary country, participation in regional workshops, organisation of a single-country seminars, etc). TAIEX assistance predominantly was requested and provided for the areas of justice and home affairs and internal market. Out of 119 applications, 91 were approved and realised in 2010.

In addition to classical TAIEX assistance, it’s the non-governmental sector (civil society organisations) in particular benefited from the European Union's People-to-People Programme (P2P), in the form of study tours to Brussels, to learn about EU policies, legislation, and programmes. 22 P2P study tours were organised in 2010.

154 TAIEX and P2P events involving Bosnia and Herzegovina were organised in 2010, out of which 79 were single country events and 75 were multi-country events.

EU Programmes

In 2010 Bosnia and Herzegovina participated in the Seventh Framework Programme for Research and Technological Development (FP7). The costs for the entry ticket were EUR 1.5 million, of which 85% were co-financed by IPA. The Ministry of Civil Affairs, in cooperation with a network of National Contact Points (NCP), which are based at Universities throughout Bosnia and Herzegovina, organised a series of workshops and training session for applicants to increase the rate of participation in the programme as well as to improve their capacities in submitting good quality project proposals. Bosnia and Herzegovina had 25 approved projects with a total amount of EUR 2 million. BiH research institutions also participated in 16 European Cooperation in Science and Technology (COSTS) actions and 2 EUREKA projects.

During 2010 BiH negotiated the Memorandum of Understanding (MoU) for entering into the Culture Programme. The MoU was signed in November 2010, enabling it to take part in the programme as of January 2011.

In the second half of 2010, Bosnia and Herzegovina initiated a series of consultations with the different European Commission services on the participation in the Entrepreneurship and Innovation programme (EIP), the, Media programme, and the programme Europe for Citizens.

Component II: Cross-border Cooperation (CBC)

The contracting peak for the 2007 and 2008 bilateral CBC programmes was reached towards the end of 2010, when the evaluations of the received proposals were completed. The first call for proposal for bilateral programmes demonstrated that that the interest for participation in the programme exceeded by far the available resources. As an example, the Commission received more than 100 applications for participation in the CBC Croatia – Bosnia and Herzegovina programme, requesting more than Euro 25 million. Finally, thirteen projects worth EUR 1.6 million were accepted.

Tables 6: Status of implementation of IPA financial assistance (Component II) as at 31st December 2010 (in million EUR) per annual programme[11]

|| Committed || Paid || % Paid

IPA 2007-2010 || 18.82 || 1.59 || 8.45%

Out of which, the breakdown for the intra-Western Balkans CBC Programmes and the ERDF Transnational Programmes (South-East Europe and Mediterranean) is:

|| Committed || Contracted || % Contracted || Paid || % Paid

IPA 2007 || 2.65 || 1.74 || 65.66% || 1.19 || 47%

IPA 2008 || 2.71 || 0.65 || 23.99% || 0.40 || 14%

IPA 2009 || 2.76 || 0.00 || 0% || 0.00 || 0%

IPA 2010 || 2.20 || 0.00 || 0% || 0.00 || 0%

TOTAL || 10.32 || 2.39 || 23.16% || 1.59 || 15.41%

Table 7: Distribution of total committed funds (2007-2010 allocations) by priority axes

Priority Axes || % of 2007-2010 allocations

CBC with Member States || 44%

CBC within Western Balkans || 45%

Participation to ERDF Transnational Programmes || 11%

TOTAL || 100%

2.3.1.3. Implementation Modalities and Structures

Implementation of Component I and II programmes: As in the previous reporting year, also in 2010 the majority of projects under IPA 2007, 2008 and 2009 Components I and II were implemented on a centralised (devolved) basis by the EU Delegation to Bosnia and Herzegovina, in accordance with Article 53(a) of the Financial Regulation (FR) and the corresponding provisions of the Implementing Rules (IR). Exceptions are the infrastructure support projects in the 2009 and 2010 IPA programmes, which were implemented by joint management with the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the World Bank (WB) in accordance with FR Article 53(d) and corresponding IR provisions, and by indirect centralised management through a delegation agreement with the Kreditanstalt für Wiederaufbau (KfW), in accordance with FR Article 54(2)(c) and corresponding IR provisions.

Multi-Beneficiary programmes: As was the case in the previous reporting year, Bosnia and Herzegovina's participation in horizontal nuclear safety and education (Tempus) programmes was funded by allocations under Component I of IPA, but was implemented on a centralised basis by the European Commission in Brussels in the framework of the Multi-Beneficiary Programme.

Preparation for decentralised management of IPA: In April 2010, the Council of Ministers of Bosnia and Herzegovina adopted decisions to nominate the Competent Accrediting Officer (CAO), the National Authorising Officer (NAO), and the National IPA Coordinator (NIPAC). The CFCU (Central Finance and Contracts Unit) and National Fund (NF) are established within the Ministry of Finance and Treasury and are functional although not fully staffed at the end of 2010. However, State and entity representatives could not agree on the structures to be built to support the decentralised implementation of EU assistance, further blocking progress towards decentralisation.

2.3.1.4. Monitoring

During 2010, regular project monitoring was undertaken by EU Delegation programme managers on all ongoing contracts through participation in project Steering Committees, in specific project activities and visibility events (conferences, seminars, training sessions, open days) and by field visits, including verification of progress of construction works and delivery of supplies. The general picture of implementation coming from the monitoring activities was rather good; programme managers were in general able to see if the projects are on the track and slightly steer them if needed. Visibility events in general received good media coverage.

71 Result-oriented Monitoring (ROM) missions were undertaken for 63 projects with a total value of approximately EUR 78 million. This was an increase of more than 100 % compared to the previous year, both in value and in number of monitoring missions. The average score of the projects performance was 2.17 on the scale from 1 - very good to 4 - serious deficiencies. Except for individual projects related to social protection, regional development, support to rural development and support to the Ministries of Justice, for which corrective measures were taken, most of the projects received scores ranging from 1 to 3. In general, the problematic issues included mainly impact prospects, potential sustainability, and effectiveness to date. Relevance and quality of design as well efficiency of implementation to date were in general better scored. For each project, key recommendations were proposed separately for the contractor and for the EU Delegation in order to move forward. The implementation of these recommendations generally proved to be successful and the projects were able to get back on track.

The projects "Bosnian Kingdom Trial", "VRBAS, Joint tourism development of the Vrbas valley" "Building in the Capacity for Exports and Promote Export Base in BiH", "Mine Clearance and Technical Assistance", and "Reinforcement of Local Democracy I" as well as "Support to the Registry for Section I for War Crime and Section II for Organised Crime" were considered as success stories.

The findings of ROM reports in 2010 indicated that the best performance of projects was demonstrated in relation to relevance /project design quality and impact as well as sustainability prospects.

In terms of involvement of the beneficiary institutions in the monitoring activity, their representatives participated in project Steering Committees and the above mentioned specific project activities and visibility events as it was the practice in past years. The step forward was undertaken in summer 2010, when the Monitoring and Evaluation (M&E) unit was established within the EU assistance coordination sector of the Directorate for European Integration (DEI). Capacity building to the staff of the M&E Unit was s provided by the Commission.

2.3.2. CARDS 2.3.2.1. Sectors with positive results/ Success stories

As the implementation of CARDS programme was very successful in Bosnia and Herzegovina and done within a relevant timeline, it is almost completed and therefore no noteworthy activities took place in 2010. All the relevant CARDS success stories as well as lessons learned were therefore reported in previous Reports. All evaluations were also done in the previous period.

2.3.2.2. Management performance

With regards to the closure of CARDS contracts, 111 contracts were closed in 2010 compared to 97 closed CARDS contracts in 2009.

In 2010, 17 recovery orders were issued in a total value of EUR 525,716 of which EUR 478,031 was recovered by the end of the year. This is an increase compared with 2009. Sound financial management and the effectiveness and efficiency of the activities were ensured inter alia through the recovery orders. The most common reasons for the recovery orders were ineligible expenses (identified either by the EU Delegation or by external auditors in their expenditure verification report), unspent advance payments, and recovery of interest.

Table 8: Status of financial assistance at the end of December 2010 (in million EUR) – CARDS annual programmes[12]

|| Allocated || Contracted || % Contracted || Paid || % Paid

CARDS 2001 || 105.23 || 98.12 || 93.24% || 98.12 || 93.24%

CARDS 2002 || 60.50 || 56.53 || 93.44% || 56.53 || 93.44%

CARDS 2003 || 50.60 || 46.09 || 91.09% || 46.07 || 91.05%

CARDS 2004 || 62.10 || 60.15 || 96.86% || 59.96 || 96.55%

CARDS 2005 || 44.00 || 42.79 || 97.25% || 41.95 || 95.34%

CARDS 2006 || 43.80 || 42.30 || 96.58% || 40.72 || 92.97%

Total || 366.23 || 345.98 || 94.47% || 343.35 || 93.75%

2.3.2.3. Institution Building highlights

CARDS 2006 "Capacity building and Institutional Strengthening of Science and Research in BiH" (Service Contract EUR 477,900)

The project was completed successfully. It supported the re-establishment of a vibrant national research, technological development and innovation system, and further integration of Bosnia and Herzegovina into the European Research Area. It also contributed to the development and strengthening of the national contact point network for FP7 and provided support for the Ministry of Civil Affairs in promoting activities in the science and research sector. The project received great support from the Federation of Bosnia and Herzegovina Ministry of Education and Science and the Republika Srpska Ministry of Science and Technology.

3. CROATIA 3.1. Summary

In 2010 the European Union continued providing IPA support for the accession process of Croatia. Croatia made good progress in using IPA funds towards completing the preparations for accession to the EU and assuming the responsibilities of full membership.

The implementation of IPA, as in the previous reporting period, took place under the provisions for decentralised management, through which the management of programs is undertaken by the relevant Croatian authorities, subject to the ex ante controls by the European Commission. Furthermore, progress was made by Croatia towards meeting the conditions for the waiver of ex ante controls.

Programming and implementation of IPA was differentiated into five components that focused on particular strategic priorities, as defined in the Multi-annual Indicative Programming Document (MIPD) for Croatia.

IPA Component I, Transition Assistance and Institution Building (TAIB), focused on the remaining assistance needs of Croatia relevant for assuming membership obligations. The TAIB National Programme provided support in particular for efforts to reform the judicial system, as well as improve Croatia's capacity of assuming its obligations under the EU acquis. Component II, Cross-Border Cooperation (CBC), continued promoting the development of good neighbourly relations between Croatia and the EU Member States, as well as the other Western Balkan countries. Components III, IV and V served the dual role of, on one hand improving the regional competitiveness and development of Croatia, and on the other hand, preparing the national authorities for the implementation of structural and cohesion funds available after the date of accession.

As regards the performance during the reporting period, Component I was characterised by a relatively stable performance in 2010, with 13 twinning and 8 twinning light projects under implementation in this period, as well as considerable support provided to Croatia under the TAIEX and SIGMA programs. TAIB 2007 National Programme reached its contracting deadline, achieving a contracting rate of 92.22%, but the 2008 National Programme faced delays in contracting. This lead to a situation where Croatia will have to implement various programmes under this component simultaneously.

Component IV, Human Resources Development, showed good performance, with tenders launched covering 87% of the 2007-2009 allocation and contracts signed representing 70% of the same allocation. The programmes under Components II, III and V showed a slower pace of activity compared with Component I and IV. This was due to a number of factors such as the addition of new bodies to the implementation system in the case of the Cross-Border Co-operation Component, the underlying complexity of big infrastructure contracts in the case of Component III, or due to delays in the conferral of management for Component V, Rural Development. Nevertheless, addressing these delays in the implementation process led to important lessons for improving the structures managing pre-accession assistance and preparing for managing EU Structural and Cohesion funds.

3.2. Strategic planning and programming 3.2.1. Multi-annual Indicative Planning Document

The purpose of the MIPD, prepared during 2010, is to set out the EU's priorities for assistance to Croatia for the programming period 2011-2013. Croatia will receive an indicative allocation of EUR 479 million, according to the Multi-annual Indicative Financial Framework (MIFF) for IPA for the years 2011-2013. The "Enlargement Strategy and Main Challenges 2010—2011" and the 2010 Progress Report[13], identifies Croatia's needs to consolidate reforms in the field of judiciary and fundamental rights and to make further efforts to finalise and implement the legal framework for public administration reform. Further, Croatia needs to sustain efforts to fully establish the administrative structures required for the management and control of EU funds.

In order to achieve these priorities, the Commission decided to focus assistance on the following 7 sectors, as detailed in the MIPD:

- Justice and home affairs and fundamental rights,

- Public administration reform,

- Environment and climate change,

- Transport,

- Private sector development,

- Social development,

- Agriculture / rural development.

Croatia has shown a high degree of ownership during discussions on the draft MIPD and raised a number of questions related to the presentation of assistance per "sectors" (rather than, as in the past, by IPA Components) and its suitability for Croatia. The Commission explained, as agreed in the wider context of the IPA donor coordination conferences, the need to enhance the strategic links between membership preparations, the Annual Enlargement Strategy and the Progress Report with financial assistance. Evaluations made by external parties, such as the Court of Auditors and the European Parliament, on the effectiveness of financial assistance in Croatia have been carefully taken into consideration.

Table 1: MIFF[14] allocations per component, in million EUR

Component || 2010 || 2011 || 2012 || 2010-2012

I – Transition Assistance and Institution Building || 39.48 || 39.96 || 40.87 || 120.31

II – Cross-border cooperation || 15.60 || 15.87 || 16.14 || 47.61

III – Regional Development || 56.80 || 58.20 || 59.35 || 174.35

IV – Human Resources Development || 15.70 || 16.00 || 16.04 || 47.74

V – Rural Development || 26.00 || 26.50 || 27.27 || 79.77

TOTAL || 153.58 || 156.53 || 159.67 || 469.78

3.2.2. Programming exercise

Table 2: Indicative financial allocations for the year 2010 per component, in million EUR

CROATIA || 2010

I. Transition Assistance and Institution Building || 39.48

Of which: ||

National Programme || 38.62

Nuclear Safety Programme* || 0.86

II. Cross-Border Cooperation || 15.60

Of which: ||

CBC Croatia– Bosnia and Herzegovina || 1.00

CBC Croatia - Montenegro || 0.40

CBC Croatia - Serbia || 0.80

CBC Croatia – Slovenia || 3.27

CBC Croatia – Hungary || 2.67

CBC IPA Adriatic || 7.46

III. Regional Development || 56.80

Of which: ||

Transport || 21.30

Environment || 21.30

Regional Competitiveness || 14.20

IV. Human Resources Development || 15.70

V. Rural Development || 26.00

TOTAL || 153.58

*The Nuclear Safety Programme is coordinated and implemented under the relevant Multi-beneficiary IPA 2010 programme.

3.2.2.1. Component I: Transition Assistance and Institution Building

The IPA 2010 Component I programme for Croatia was adopted by the Commission on 7 December 2010, on the basis of project proposals made by the National IPA Coordinator (NIPAC) in Croatia and subsequent discussions with the Commission.

Given the advanced state of membership preparations, the IPA Component I programme for Croatia focused on the remaining assistance needs relevant for assuming membership obligations. The 13 projects of the IPA 2010 programme were grouped under the four strategic priority axes defined in the Multi-annual Indicative Planni