Proposal for a COUNCIL REGULATION (EEC, EURATOM) concerning the provision of technical assistance to economic reform and recovery in the independent States of the former Union of Soviet Socialist Republics and Mongolia
Date: 1992-11-25
Institutions: European Commission
Subjects: EU aid, Mongolia, USSR, economic reconstruction, republic, technical cooperation

COMMISSION  OF  THE  EUROPEAN  CCMVIUNITIES 

C0M(92) 475 final 

Brussels, 25 November  1992 

A  >,'VF%Vff 

ig&s^ETMwna/à 

Proposal  for a 

COUNCIL REGULATION  (EEC. EURATOM) 

concerning  the provision of  technical  assistance  to economic 

reform  and  recovery  in the  independent  States of  the former 

Union of Soviet  Socialist  Republics and Mongolia 

(presented  by  the  Commission) 

- 2 -

EXPLANATORY  MEMORANDUM 

The granting of aid under  Regulation  (EEC. EURATOM) No 2157/91 of 
15 July 1991, concerning  the provision of  technical  assistance to 
economic reform and  recovery  in the Union of Soviet  Socialist 
Republics will  come to an end on 31 December  1992. Accordingly, and 
bearing  In mind  subsequent  changes  In the situation of  the former 
Soviet  Union and of certain neighbouring  states, as well  as the 
Community's experience  In providing  technical  assistance under  this 
regulation»  It  Is necessary  to propose a new regulation. This will 
provide  the  legal basis for the provision of  technical  assistance in 
the years to come. The Community's experience with  technical 
assistance  in 1991 and  1992 will be the subject of  a  forthcoming 
report  to the Parliament. Council  and Economic and Social  Committee. 

The proposed  regulation  is modelled closely on  its predecessor, 
mutatis  mutandis.  In order  to ensure the necessary continuity, changes 
have been kept  to a minimum. However, certain necessary modifications 
have been  introduced, the most significant  of which  are as follows: 

1. The title and annex  listing the beneficiaries are modified  to 
reflect  the  inclusion of the twelve  independent states of the 
former Soviet  Union  and Mongolia. 

2. Mongolia  is added to the  list of beneficiaries as  its situation and 
needs for assistance  are comparable  to those of  a number of  the 
independent  states. This country was formerly  dependent, 
politically and economically, upon the Soviet  Union although not 
formally part of  It. Mongolia has now established a democratic 
political  system,  hetd free and fair elections and begun the 
transition  to a market  economy.  It has signed a trade and 
cooperation agreement  with the Community,  Including a commitment  to 
protect  human rights.  It has requested  support  for post-communist 
economic reconstruction, which goes beyond  the scope of  cooperation 
assistance presently  available. The Commission  considers it 
appropriate to respond positively  to this request within the 
framework  of the present  regulation. 

3. The priority sectors for  technical  assistance  have been maintained, 
to provide  the necessary continuity and  to avoid a dispersion of 
effort. The description of  these sectors  is adapted  slightly  to 
correspond more exactly with needs. 

4. Multiannual  indicative programming  is provided  for as the  Community 
will  be offering sustained  support  to programmes  and projects which 
span several  years. Within this multiannual  approach, the principle 
of  annuality  in budget  allocations  is respected. This  implies the 
need  for action programmes specifying the main projects on a yearly 
basis. 

The  indicative programmes  and the action programmes  will  be adopted 
through  the management  committee  procedure. 

-  3 -

5. The regulation makes provision  for assistance to be offered, under 
the Community's tendering procedures, by entities either  in the 
Community,  the beneficiary  countries, the Phare recipient states or 
adjacent Mediterranean  states. The  inclusion of this "triangular1" 
element  Is designed  to encourage  the provision, of assistance by 
countries with specific relevant expertise, based on experience in 
transition  to a market  economy or on close  links with the 
beneficiaries. 

6. The regulation provides  for assistance  to be reviewed  if the 

political  situation  in a beneficiary  state  impedes the effective 
implementation of  the programme* This provision  is based on  recent 
experience and provides a necessary  element of flexibility  In 
difficult circumstances. 

7.  in order  to prevent unforeseen  circumstances  from hampering  the 
process of recovery  in the beneficiary states, the proposed 
regulation provides that up to ten per cent of the total annual 
allocation should be available when necessary  for responding  to 
humanitarian needs» as with PHARE. 

8. The proposed  regulation provides for  the preparation of an annual 

progress  report. 

In addition to these modifications, the Commission  would draw 
attention to the  Importance  of  retaining the provision of the previous 
regulation  for the award by  restricted  Invitation to tender and by 
private treaty  for operations up to ECU 300,000. Any heavier  procedure 
would  introduce excessive  delays and  Impede the delivery of 
assistance. 

Tne Commission would also draw attention  to the  importance of  the 
provision, retained  from  the previous regulation, which calls for  the 
effective co-ordination, by  the Commission,  together with the Member 
States, of the technical  assistance efforts by the Community  and 
Member  States on-the basis of  information provided by the Member 
States. 

On  this basis, the Commission  would  invite the Council  to adopt  the 
attached proposal. 

- 4 -

Proposal  for a 

concerning the provision of technical assistance to economic  reform and recovery 
in the independent  States of the former union of Soviet  Socialist  Republics 

and Mongolia 

THE COUNCIL OF THE EUROPEAN COMMUNITIES, 

Having regard to the Treaty establishing the European Economic Community, and in 

particular Article 235 thereof, 

Having regard to the Treaty establishing the European Atomic Energy Community, and 

in particular Article 203 thereof. 

Having regard to the proposal of the Commission, 

Having regard to the opinion of the European Parliament, 

Whereas  pursuant 

to 

t he  European  Council  meetings 

in  D u b l in  and  in  Rome  the 

European  Community 

i n t r o d u c ed  a  t e c h n i c al  a s s i s t a n ce  programme 

in  favour  of 

the  economic  reform  and  recovery 

in  the  former  Union  of  Soviet  S o c i a l i st  R e p u b l i c s; 

Whereas  Council  R e g u l a t i on  (EEC,  EURATOM)  No  2157/91  of  15  J u ly  1991  concerning 

the  p r o v i s i on  of 

t e c h n i c al  assistance  to  economic  reform  and  recovery 

in 

the 

Union  of  Soviet  S o c i a l i st  Republics 

lays  down  t he  c o n d i t i o ns 

f or 

the  p r o v i s i o ns 

1 

of 

t h is 

t e c h n i c al  a s s i s t a n ce  and  foresaw  such  o p e r a t i on  under  t he  1991  and  1992 

budgetary  p e r i o d s;  whereas  since  the  s a id  reform  and  recovery 

in  the  former  Union 

of  Soviet  S o c i a l i st  Republics 

is  s t i ll  underway, 

it 

is  necessary  to  c o n t i n ue 

t h is 

e f f o r t; 

Whereas  it is necessary  to take express account  of the consequences of the 

dissolution of.the Union of the Soviet  Socialist  Republics, of  which Armenia, 

Azerbaijan, Belarus, Georgia, Kazakhstan, Kirghizstan, Moldavia, the Russian 

Federation, Tadjikistan, Turkmenistan, Ukraine and Uzbekistan, hereinafter  called 

"the independent  States" were part; 

Whereas  in view of Mongolia's  close traditional  links with the former  Union of 

Soviet  Socialist  Republics  and  of  the  fact  that  it  is  in  the 

process  of  transition  to  a  market  economy  and  hence  has 

10J  No L 201, 24.7.1991, p. 2. 

-  5 

-

need  of  technical assistance with economic reconstruction, comparable with the needs 
of the independent states, it is appropriate to extend the technical assistance to the state 
of Mongolia; 

Whereas the priority sectors for  technical assistance cover the fields of  human 
resources development; support for enterprises, including financial services; food 
production, distribution and marketing; transport and energy ; 

Whereas to ensure that unforeseen circumstances do not unduly hamper the process of 
recovery in the independent States and Mongolia, it is necessary to permit a certain 
amount of the financial allocation to be used for humanitarian aid; 

Whereas the requirements of economic reform and restructuring now in progress, and 
the effective management of this programme require a multi-annual approach; 

Whereas assistance for economic reform and recovery may require specific types of 
expertise particularly available in the PHARE  beneficiary countries and in certain 
other states; 

Whereas the continued provision of technical assistance will contribute to the 
attainment of the Community's objectives, and the Treaties have not provided, for the 
adoption of this Regulation, powers other than those of Article 235 of the EEC Treaty 
and Article 203 of the EAEC Treaty, 

HAS ADOPTED THIS REGULATION: 

Article 1 

A programme to assist economic reform and recovery in the States listed in the Annex 
(hereinafter called the "beneficiary States")  shall be implemented by the Community 
as from 1 January 1993 in accordance with the criteria laid down in this Regulation. 
Assistance shall be concentrated on sectors and, where appropriate, on selected 
geographical areas where it can play a central role and  serve  as  an  example  in 
support of the reform process. 

The assistance will be reviewed if the political situation in a beneficiary State impedes 
the effective implementation of the programme. 

-  6  -

Article 2 

The budget authority shall determine the appropriations available for each financial 
year, taking into account the principles of sound financial management referred to in 
Article 2 of the Financial Regulation applicable to the  general  budget of the European 
Communities and with due regard for the financial perspectives. 

Article 3 

1. 

The programme referred to in Article 1  shall take the form of technical 
assistance for the economic reform under way in the beneficiary States. It shall 
also cover reasonable costs of supplies required in support of the 
implementation of the technical assistance . 

The cost of the projects in local currency shall be covered by the Community 
only to the extent strictly necessary. 

The assistance shall also cover costs related to the preparation, implementation, 
monitoring and evaluation of the execution of these operations. 

Technical assistance shall give priority to the fields of  human resources 
development; support for enterprises, including financial  services; food 
production, distribution and marketing; energy and transport. 

Operations to be financed under this Regulation shall be selected taking account, 
inter alia, of the recipients' preferences and on the basis of an assessment of 
their effectiveness in achieving the objectives aimed at by the Community 
assistance. 

Technical cooperation shall be implemented  on a decentralized basis. The final 
recipients of Community assistance shall be closely involved in the evaluation 
and execution of the projects. 

At the request of a beneficiary state humanitarian aid and technical assistance 
for its implementation maybe provided. In the first instance  such  aid  shal I  not 
exceed  10% of the annual financial allocation to be made available under this 

2. 

3. 

4. 

5. 

6. 

-  7  -

Regulation. Amendment to either the objectives of  such  aid  or  to  the  percentage 
mentioned above may be made in accordance with the procedure provided for 
in Article 7 (2) and (3). 

1. 

2. 

1. 

2. 

1. 

2. 

Article 4 

Community assistance shall take the form of grants which shall be released in 
tranches as projects materialise. 

Financing decisions and any contracts resulting therefrom shall expressly 
provide, inter alia, for supervision by the Commission and the Court of 
Auditors to be carried out on the spot, if necessary. 

Article 5 

Indicative programmes covering a three-year period shall be established for 
each of the beneficiary States in accordance with the procedure provided for in 
Article 7 (2) and (3). They shall define the principal objectives and orientations 
of Community assistance in the priority areas referred to in Article 3. They 
shall be adopted every three years and may be amended in accordance with the 
same procedure during the period of their application. 

Action programmes based on these indicative programmes shall be adopted in 
accordance with the procedure provided for in Article 7 (2) and (3). These 
action programmes shall include a list of the main projects to be financed 
within the priority areas  referred  to  in  Article  3. 

Article 6 

The Commission shall implement operations in accordance with the action 
programmes referred to in Article 5(2). 

Supply contracts shall be awarded by means of open invitations to tender except 
in the cases provided for in Article 116 of the Financial Regulation applicable 
to the general budget of the European Communities. 

Service contracts shall, as a general rule, be awarded by restricted invitations to 
tender and by private treaty for operations up to ECU 300 000. 

-  8  -

Participation in invitations to tender and contracts shall be open on equal terms 
to all natural and legal persons in the Member States and in the benef i c i a ry 
S t a t e s. 

Participation by  natural and legal persons from the countries benefiting from 

PHARE  as  w e ll  as  from  adjacent  Mediterranean  c o u n t r i es  may  be 

a u t h o r i s ed  by  the  Commission  on  a  case-by-case  b a s is 

if 

the  programmes 

or  p r o j e c ts  concerned  r e q u i re  s p e c i f ic 

forms  of  a s s i s t a n ce  p a r t i c u l a r ly 

a v a i l a b le 

in  economies 

in  t r a n s i t i on  or 

in  c o u n t r i es  w i th 

t r a d i t i o n al 

economic  or  g e o g r q p h i c al 

l i n k s. 

Taxes, duties, charges and the purchase of immovable property shall not be 
funded by the Community. 

In the case of co-financing,the participation of third countries in invitations to 
tender and contracts may be authorised by the Commission, but on a case-by-
case basis. 

Article 7 

The Commission shall be assisted by a committee composed of the 
representatives of the Member States and chaired by the representative of the 
Commission, to be known as the "Management Committee for Assistance to the 
independent States  and Mongolia". 

The representative of the Commission shall submit to the Committee a draft of 
the measures to be taken. The Committee shall deliver its opinion on the draft 
within a time limit which the chairman may lay down according to the urgency 
of the matter.  The opinion shall be delivered by the majority laid down in 
Article 148 (2) of the EEC Treaty in the case of decisions which the Council is 
required to adopt on a proposal from the Commission. The votes of the 
representatives of the Member States within the Committee shall be weighted in 
the manner set out in that Article. The chairman shall not vote. 

3. 

4. 

1. 

2. 

3. 

The Commission shall adopt measures, which shall apply  immediately. 
However, if these measures are not in accordance with the opinion of the 

-  9  -

Committee, they shall be communicated by the Commission to the Council 
forthwith. In that event, the Commission shall defer application of the measures 
which  it  has  decided  f or  a  p e r i od  of  s ix  weeks. 

The Council, acting by a qualified majority, may take a different  decision 
within the period laid down in the first subparagraph. 

4. 

The Committee may examine any other question relating to the implementation 
of this Regulation which may be put to it by its Chairman, possibly at the 
request of the representative of a Member State and, in particular, any question 
relating to general implementation, the administration of the programme co-
financing and the  coordination referred to in Article 8. 

5. 

The Commission shall inform the Committee at regular intervals concerning the 
implementation of the technical assistance programme. 

Article 8 

The Commission shall, together with the Member States, ensure the effective  co 
ordination of the technical assistance efforts undertaken in the beneficiary states by 
the Community and individual Member States on the basis of the information 
supplied by the Member States. 

In addition  coordination and  cooperation  with the International Financial 
Institutions shall be stimulated. 

Article 9 

At the end of each financial year the Commission shall draw up a progress report on 
the implementation of the technical assistance programme.  This report shall be 
addressed to the European Parliament, the Council and the Economic and Social 
Committee. 

Article 10 

This Regulation  shall enter  into force on the third day following  that of 

its publication  in the Official  Journal  of the European  Communities. 

-  10  -

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

Done at Brussels, 

For the Council 
The  President 

-  11  -

ANNEX 

BENEFICIARY STATES 

Armenia 

Azerbaijan 

Belarus 

Georgia 

Kazakhstan 

Kirghizstan 

Moldavia 

Russian Federation 

Tadjikistan 

Turkmenistan 

Ukraine 

Uzbekistan 

Mongolia 

-  12 -

FINANCIAL  STATEMENT 

SECTION  1: FINANCIAL  IMPLICATIONS 

1. Title of operation 

Technical cooperation with the independent  states of the former Soviet 
Union and Mongolia 

2. Budget heading involved 

B7-620 

Technical cooperation with the independent  states of the 
former Soviet Union. 
Mongolia's  inclusion  in the list of recipient countries will 
require the title of the budget heading to be changed. 

3. Legal basis 

Council Regulation  (EEC) No 2157/91 of  15 July  1993, which only covers 
1991 and 1992. 

The attached proposal for a Regulation  (from  1993). 

4. Description of operation 

4.1  Specific objectives of operation 

To assist the reform process, in particular by financing or helping 
to finance technical assistance operations  aimed at supporting the 
transition towards a market economy, mainly  in the field of human 
resources, business  support  including  financial services, 
production, distribution and marketing of food products, energy and 
transport. 

4.2  Duration 

Unlimited 

4.3  Target population 

The population of the former Soviet Union and Mongolia. 

5. Classification of expenditure or revenue 

Non-compulsory 

Differentiated 

6. Type of expenditure or revenue 

100% subsidy 

7. Financial impact 

7.1  Method of calculating total cost of operation  (commitment 

appropriations) 

1992 
1993 

Budget  ECU 445 million 
ECU 520 million 
PDB 

- 13 -

7.2  Breakdown of operation. 

Ten per cent could be used as part of humanitarian  aid operations at 
the request of the recipient countries. 

8. What anti-fraud measures are planned in the proposal for the operation? 

Anti-fraud measures are carried out by the delegation  staff, who check 
that the proper procedures are followed and work well at each stage of 
the development of the projects, and that the projects are carried out. 
Inspection and audit missions are also planned  for the various countries. 
A management  information  system has been set up to monitor: 

the technical execution of the programmes; 
contracting procedures, and 
expenditure. 

9. Elements of cost-effectiveness  analysis 

9.1. Objectives 

The aim of the technical assistance programme  for the former Soviet 
Union and Mongolia is: 
(a) to secure their transition to a market  economy; 
(b) to modernize their economies. 

It is not possible at this time to determine how long the  programme 
will run given the scale of the problems confronting the countries 
concerned. 

9.2. Grounds for the operation 

The operation  is part of the implementation  of decisions taken by the 
European Council in Rome in December  1990. 

The community  aid is intended, by transferring  skills and knowledge, to 
achieve a multiplier effect  in the five sectors concerned, helping to 
create the  conditions  for internally-generated  economic development in 
the Soviet Union and Mongolia and an attractive environment  for foreign 
investors. 

The community•s contribution will be mainly to provide consultants  (both 
individual experts and consultancies) and training programmes. 

9.3. Monitoring and evaluation of the operation 

Performance  indicators 

The success of the technical assistance operations will be measured by 
the ability of the former Soviet States to take over from European 
experts on programmes  run with Community  assistance. Every effort will be 
made to ensure that European experts are progressively  replaced by local 
staff in the relevant sectors. 

The European experts will be recruited under service contracts  containing 
detailed terms of reference, specifying the objectives to be met and the 
time limit for the work, so as to permit their programme  to be evaluated 
afterwards. 

-  14 -

Details of evaluation 

Commission  staff will draft regular reports on the progress of the 
operations, the problems encountered  and how they are to be tackled. 

The experts responsible  for the projects will also draft regular reports 
on the execution of their duties. 

The commission will regularly  inform the Member states on the progress of 
the programme via a Management Committee  for Assistance to the 
Independent States and Mongolia. 

-  15  -

ISSN 0254-1475 

COM(92) 475  final 

DOCUMENTS 

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Catalogue number : CB-CO-92-586-EN-C 

ISBN 92-77-50853-1 

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