Proposal for a COUNCIL REGULATION (EURATOM, EC) concerning the provision of assistance to economic reform and recovery in the New Independent States and Mongolia
Date: 1995-04-12
Institutions: European Commission
Subjects: Commonwealth of Independent States, EU aid, EU programme, Mongolia, development aid, financial regulation

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  12.04.1995 
COM(95)  12 final 

95/0056 (CNS) 

Proposal for a 

COUNCIL REGULATION  (EURATOM, EC) 

concerning the provision  of assistance to economic reform and recovery in the New 
Independent States  and  Mongolia 

(presented by the Commission) 

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Explanatory  Memorandum 

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The granting  of aid under Regulation (EURATOM,  EEC) N°  2053/93  of  19 July  1993, 
concerning the provision of technical assistance to economic reform and recovery in the 
independent States of the former Soviet Union and Mongolia, will come to an end on 31 
December  1995. Although the transition process is now well underway in the N.I.S., th© 
latter still need foreign assistance.  In view of its commitment to build close political and 
economic  links with these  countries,  the European Union is to  play a major role  in the 
effort of the international community to support the reform process in the N.I.S..  Bearing 
in mind  subsequent  changes  in the  situation  of the new  independent  States  (N.I.S.)  and 
Mongolia, as well as the Union's experience in providing assistance under this Regulation 
and the requests emanating from the N.I.S.,  it is necessary to propose a new Regulation, 
which will provide the legal basis for the provision of assistance in the years to come. 

The  TACIS  programme will  continue to  concentrate  on  a limited  number  of  sectors  to 
maximize  impact  of  lasting  consequence,  pursuing  where  possible  an  integrated  and 
demand-driven approach with regard to programme preparation.  This will enable TACIS 
to  cover,  as  in the  past,  important  activities  of  horizontal  nature  such  as  environment, 
human  health  and  consumer  protection,  and  inter-regional  cooperation.  Industrial 
cooperation will continue to receive highest priority. 

The proposed Regulation is modelled  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. 

i)  the  experience  gained by the  Commission  in the field of  Technical 
In view  of: 
Assistance;  ii) the fact that Tacis activities are funded through grants, and not loans; 
and iii) the deep involvement of other major donors (World Bank, EBRD, bilateral 
assistance)  in  equipment  and  infrastructure  funding;  Technical  Assistance  should 
remain the core component of the Union's co-operation with the N.I.S.,  and in line 
with the relevant provisions of the P.C.A.S. 

However, with a view to meeting the accute financing needs of small and medium-
sized  enterprises, the proposed Regulation  shall also provide  equity capital to  new 
joint-ventures (mechanism inspired by the JOPP scheme).  In appropriate cases, co-
financing  could be  sought with other major donors.  In certain cases it should also 
be  possible  to finance small  infrastructure  projects,  in the  context  of cross-border 
operations. 

The title is modified to reflect the inclusion of these types of assistance ("technical" 
has been deleted). 

2. 

The assistance provided by the Union to the new independent  States and Mongolia 
is intended to facilitate political reform and economic liberalisation.  It is, therefore, 
necessary to require firm commitments to: i) transition towards political democracy; 
and ii) structural reforms in the economic sectors covered by the assistance. 

The present proposal emphasizes that assistance will be fully effective in the context 
of  progress  towards free and open democratic  systems  that  respect  human  rights. 
These  latter  aspects  have  been  reinforced  in  the  present  proposal.  This  issue  of 
political conditionality must be seen in relation to the Partnership and Co-operation 
Agreements.  These  contain  a  general  political  conditionality:  "respect  for 
democratic principles and human rights" as defined in the C.S.C.E. Final Act and the 
Paris Charter.  This is an essential  element of the Agreement.  Grave violation can 
lead to its suspension, without notice in cases of special urgency. 

In  addition,  there  is  a  strong  case  for  introducing  an element  of  conditionality  at 
sectoral  level,  so  that Union  assistance  is  focused  on  sectors  where  the  recipient 
Governments  have  already  taken  concrete  measures  to  promote  reform  and  can 
present a time-schedule for further changes. 

Although the current Regulation allows for the drawing-up  of three-year indicative 
programmes, country action programmes and projects still have to be prepared and 
approved every  single year.  Without  assurance  of continuous  availability  of  funds 
over  several budget years, it is difficult  for Union assistance to  operate  effectively. 
Assurance  of  continuity  of  budget  funds  would  allow  more  flexibility  in  the 
allocation  of  these  funds  among  individual  countries  and  years.  To  that  end,  a 
political commitment from the budgetary authority for an overall multi-year  financial 
framework  will  be  sought,  in  order  to:  i)  make  the  multi-annual  programming 
approach  worthwhile  for  the  partner  countries;  and  ii)  to  improve  Tacis'  overall 
efficiency. 

The priority  sectors for  assistance  have been maintained,  to  provide  the  necessary 
continuity  and  to  maintain  concentrated  efforts  in  a  limited  number  of  areas. 
Increased  attention  will,  at  the  relevant  stages  during  the  implementation  of  the 
programme,  be  paid  to  nuclear  safety,  environment  and  the  promotion  of  the 
participation of women in the social and economic life. 

The  proposed  Regulation  strengthens  the  regional  concentration  of  Tacis 
programmes.  This approach reflects  positive  experience  in that respect.  This will 
permit the Union's presence to be more visible,  selecting regions where it can help 
to support reform-minded administrations directly, and foster local synergies. 

The  political  break-up  of  the  Soviet  Union  in  1991  disrupted  existing  trade  and 
payment arrangements and fragmented the formerly integrated infrastructure.  Most 
N.I.S.  realise  that  this  development  was  a  major  cause  for  the  fall  in  industrial 
output which they faced in 1992 and 1993, and are now demonstrating a willingness 
to  resume  some kind of economic  links.  The Commission considers it appropriate 
to  support  the  promotion  of  inter  N.I.S.  economic  co-operation  within  the 
framework  of the proposed Regulation. 

3. 

4. 

5. 

6. 

7. 

The  Commission  considers  appropriate  that  in  the  implementation  of  the  Tacis 
programmes  it  is  assisted  by  a  Management  Committee.  This  Committee  is 
composed  of  the  representatives  of  the  Member  States  and  chaired  by  the 
representative of the Commission. 

i 

The Commission  made a similar proposal in  1992 which later became the  current 
Regulation 2053/93.  At  that time,  however,  the  Council  did not  agrée with this 
proposal and decided on the introduction of a Regulatory Committee (type III A). 
This decision led to  a case before  the Court  of Justice,  initiated  by the European 
Parliament,  which  proposed  the  introduction  of  a  Consultative  Committee.  At 
present, this case is stiU pending before the Court.  It is difficult to wait for the  final 
outcome of the case given the need for continuity of the Tacis programmes beyond 
1995.  However,  the  Commission  will  put  forward  to  the  other  Institutions  an 
amended proposal soon after and in accordance with the final ruling of the Court on 
the matter. 

8. 

The proposed Regulation provides for the preparation of an annual progress report 
to be submitted to the Tacis Committee and to the European Parliament, as well as 
for the provision of other relevant information, including statistical. 

9. 

The proposed Regulation shall be open-ended. 

Retaining  the  necessary flexibility for  smooth  implementation  of  Tacis  programmes  Is 
essential.  In  that  context  existing  procedures  have  become  consolidated  and  the 
Commission and partner countries have learned to make them as operational as possible. 

The Commission would also draw attention to  the importance of the provision, retained 
from  the  previous  Regulation,  which  calls  for  the  effective  co-ordination,  jby  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. 

Council Regulation (EURATOM, EC) No 

of.. 

concerning  the provision  of assistance to economic reform and recovery in the  New 
Independent States and  Mongolia 

s 

THE COUNCIL OF THE EUROPEAN UNION 

Having  regard  to  the  Treaty  establishing  the  European  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 from the Commission, 

Having regard to the opinion of the European Parliament, 

Whereas pursuant to the European Council in Dublin and in Rome in  1990 the European 
Community  introduced  a  technical  assistance  programme  in favour  of  economic  reform 
and recovery in the former Union of Soviet Socialist Republics; 

Whereas  Council  Regulation 
(EURATOM,  EEC)  No  2053/93  of  19  July  1993 
concerning  the provision  of  technical  assistance  to  economic  reform  and  recovery  in 
the  New  Independent  States  of  the former  Soviet  Union  and  Mongolia  laid  down  the 
conditions for  the provision  of  this  technical  assistance  and foresaw  such  an  operation 
from  1 January  1993 to 31 December  1995; 

Whereas such assistance will be fully effective  only in the context of progress towards  free 
and  open  democratic  systems  that  respect  human  rights,  and  towards  market-oriented 
economic systems; 

Whereas  such  assistance  has  already  generated  significant  impact  on  reform  in  the 
New  Independent  States  and  Mongolia,  and  further  assistance  is  still  required  to 
ensure  that  this reform  becomes  sustainable,  it is necessary to continue  this  effort 

Whereas  the  implementation  of  such  assistance  should  enable  conditions  favourable  to 
private investment to be established; 

Whereas it is appropriate to establish priorities for this assistance; 

Whereas  Community  assistance  will  be  all  the  more  effective  where  it  can  h 
implemented  on a decentralised  basis within  each partner  country; 

Whereas  the  development  of inter-State  economic  links  and  trade flows  conducive  to 
economic reform and restructuring should be encouraged; 

Whereas in order to properly  meet the most acute needs of the New Independent  States 
and Mongolia  at the present  stage of their economic  transformation,  it is necessary  to 
permit  a  limited  amount  of  the  financial  allocation  to  be  used  for  small  scale 
infrastructure projects  in the context of border-crossing facilities; 

Whereas the  development  of  small  and  medium-sized  entreprises  is  a priority  in  all 
New  Independent  States  and  Mongolia,  and  it  is  therefore  appropriate  to  provide 
equity funding for  such companies; 

Whereas  the  integration  of  the  environment  aspects  into  the  programme  would 
guarantee  the long term sustainabiUty of the economic  reforms; 

Whereas  the European Council  at its  meeting  in Rome  also  stressed  the  importance  of 
effective  co-ordination  by  the  Commission  of  the  efforts  made  in the former  Union  of 
Soviet Socialist Republics by the Community and its Member States acting individually; 

Whereas  it  is  appropriate  that  the  Commission  be  assisted  in  the  implementation  of 
Community aid by a committee made up of Member States' representatives; 

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

Whereas  assistance  for  economic  reform  and  recovery  may  require  specific  types  of 
expertise particularly available in the Phare partner countries and in certain other States; 

Whereas  the  continued  provision  of  assistance  will  contribute  to  the  attainment  of the 
Community's objectives, notably in the Partnership  and Co-operation Agreements; 

Whereas 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 

1. 
A  programme  to  assist  economic  reform  and  recovery  in  the  partner  States 
listed in Annex  I  (hereinafter  called  *thepartner States9) shall  be implemented  by  the 
Community from  1  January  1996  in  accordance  with  the  criteria  laid  down  in  this 
Regulation. 

Assistance  shall  be  concentrated  on  sectors  and,  where  appropriate,  on 
2. 
geographic  areas in which  the partner  States have already taken  concrete measures  to 
promote  reform and/or for  which they can present  a time-schedule.  The modalities  of 
assistance  shall  be  decided  upon  in  accordance  with  the procedure  provided  for  in 
Article  6 (2) and (3). 

Article 2 

j-

1. 
The programme referred  to  in Article  1 shall  mainly  take  the  form  of  technical 
assistance  in  support  of  the  economic  reform  in  progress  in  the  partner  States  for 
measures  aimed  at  bringing  about  the  transition  to  a  market  economy  and  reinforcing 
democracy,  inter  alia  through  the  encouragement  of  the  dialogue  between  the  social 
partners. 
It  shall  also,  case  by  case  and  in  accordance  with  the  procedure  set  out  in 
Article  6  (2)  and  (3),  cover  reasonable  costs  of  supplies  required  in  support  of  the 
implementation  of  the  technical  assistance.  In  particular  cases,  such  as  nuclear  safety 
programmes, a significant supply element may be included. 

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

2. 
On a case by case basis and subject to the procedure  referred to in Article  6 (2), 
assistance  may  cover  costs related  to small-scale  infrastructure projects  in the  context 
of border-crossing facilities  referred to in Article  2 (9). 

The  programme  shall  promote 

the 
3. 
establishment  of joint  ventures through the funding  of equity investment  in small  and 
medium-sized  companies. 

industrial  co-operation  and  support 

The assistance  shall  also  cover  costs  related  to  the preparation,  implementation, 
4. 
monitoring,  audit  and  evaluation  of  the  execution  of  these  operations,  as  well  as  costs 
concerning information. 

5. 
The assistance shall be concentrated in particular in the indicative areas referred to 
in  Annex  II  taking  into  account  the  evolving  needs  of  the  beneficiaries.  In  addition, 
environmental  aspects shall  be integrated  into  the preparation  and  implementation  of 
the programme.  This shall further  be done, inter alia, by assisting partner  countries  to 
strengthen  environmental  institutions,  legislation  and  training.  Particular  emphasis 
shall be laid on nuclear safety issues. 

Due  regard  shall  be  taken  of  the promotion  of  the participation  of  women  in 

6. 
social and economic  life, when designing and implementing  programmes. 

Operations  to  be financed pursuant  to  this  Regulation  shall  be  selected  taking 
7. 
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. 

8. 
The assistance shall be implemented  on a decentralised  basis as far  as possible. 
To this  end,  the  final  recipients  of  Community  assistance  shall  be  closely  involved  in 
the preparation  and execution of the projects,  and once the National Authorities  of the 
partner  States  have  agreed  on  sectoral  policies  and  strategies,  as  well  as  the 
geographical  concentration  areas,  the  identification  and preparation  of  the  measures 
to be supported shall be carried out directly at regional level, wherever  possible. 

Regular  co-ordination  shall  be  established  between  the  Commission  and  the  Member 
States, including on-the-spot co-ordination in their contacts with the partner States, both 
in the programme-definition and in the programme-implementation stage. 

* 

Assistance  may be provided  to support measures aimed at promoting 

interstate, 
9. 
inter-regional  and  cross-border  co-operation.  Particular  attention  will  be  paid  to 
border-crossing facilities  on borders between the N.I.S  and  the  Union, and  the  N.I.& 
and  Central Europe,  to  the  co-operation  on  the  level  of  large  geographic  regions  as 
well as to measures  complementary  to those undertaken  in this field within  the  Union 
and the Phare  countries. 

10.  When an essential element for the continuation of co-operation through assistance 
is missing, in particular in cases of violation of democratic principles and human rights, the 
Council may,  on a proposal from the Commission,  acting by a qualified  majority,  decide 
upon appropriate measures concerning the assistance to a partner State. 

Article 3 

Community  assistance  shall  take  the  form  of  grants  which  shall  be  released  in 

1. 
tranches as projects materialise. 

Financing decisions  and any contracts resulting therefrom  shall expressly  provide 
2. 
for  supervision by the  Commission  and the  Court  of  Auditors to  be  carried  out  on the 
spot, if necessary. 

Article 4 

1. 
Indicative  programmes  covering  three-year  periods  shall  be  established  for 
each of  the partner  States  in accordance with  the procedure provided for  in Article  6. 
These  programmes  shall  define  the  principal  objectives  of  and  guidelines  for 
Community  assistance  in  the  indicative  areas  referred  to  in  Article  2,  and  could 
include financial  estimates.  They  may  be  amended  in  accordance  with  the  same 
procedure  during  the  period  of  their  application.  Before  the  establishment  of 
indicative  programmes,  the  Commission  shall  inform  the  Committee  referred  to  in 
Article  6, on the priorities  identified with the partner  States. 

2. 
Action programmes based on these indicative programmes shall be adopted on an 
annual basis in accordance with the procedure provided for in Article 6 (2) and (3).  These 
action  programmes  shall  include  a  list  of  the  main  projects  to  be financed within  the 
indicative  areas  referred  to  in  Article  2.  The  content  of  the  programmes  shall  be 
determined in detail so as to provide the Member States with the relevant information to 
enable the Committee referred to in Article 6 to deliver its opinion. 

Article 5 

The  Commission  shall  implement  operations  in  accordance  with  the  action 

1. 
programmes referred to in Article 4 (2). 

Supply  and  works  contracts  shall  be  awarded  by  means  of  open  invitations  to 
2. 
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. 

ê  3 

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 partner States. 

Participation by natural and legal persons from the countries benefiting from Phare as well 
as  in  specific  cases  from  Mediterranean  countries  with  traditional  economic,  trade  or 
geographical  links may be  authorised  by the  Commission  on  a  case-by-case  basis  if the 
programmes  or  projects  concerned  require  specific  forms  of  assistance  specifically 
available in such countries. 

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

3. 
Community. 

4. 
In  the  case  of  co-financing,  the  participation  of  third  countries  concerned  in 
invitations to tender and contracts may be authorised by the Commission, but on a case-
by-case basis.  In these cases participation of undertakings from third countries shall only 
be acceptable if reciprocity is granted. 

Article 6 

1. 
The Commission shall be assisted by a committee composed of the representatives 
of the Member  States  and chaired by the  representative  of the  Commission  (hereinafter 
referred  to  as  the  'Committee')  to  be  known  as  the  "Management  Committee  for  the 
assistance to the independent States and Mongolia". 

The representative of the Commission shall submit to the Committee a draft of the 
2. 
measures to be taken.  The Committee shall deliver its opinion on the draft within a time 
limit  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 weighed in the manner set out in that Article.  The chairman shall not 
vote. 

The  Commission  shall  adopt  measures,  which  shall  apply 

3. 
immediately. 
However,  if these measures  are not in accordance  with  the  opinion  of the  Committee, 
In  that 
they  shall  be  communicated  by  the  Commission  to  the  Council forthwith. 
event, the Commission shall defer application of the measures which  it has decided  for 
a period  of six weeks. 

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

The Committee may examine any other question relating to the implementation of 
4. 
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  co-ordination 
referred to in Article 7. 

5. 

6. 

The Committee shall adopt its rules of procedure by qualified majority. 

The Commission shall keep the Committee regularly informed,  supplying 

specific,  detailed  information  on  the  contracts  awarded  for  the  implementation  of  the 
projects and programmes.  Moreover,  for projects expected  to  be  put  out  for  restricted 
invitations  to  tender  in  accordance  with  Article  5  (2),  the  Commission  shall,  before 
drawing  up  short-lists,  provide  in  good  time  advance  information  which  shall  include 
selection and evaluation criteria so as to facilitate participation by economic operators. 

•/o 

The  European  Parliament  shall  also  be  kept  regularly  informed  of  the 

7. 
implementation  of the Tacis programmes. 

Article 7 

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

In addition co-ordination and co-operation with the international financial institutions and 
other donors shall be encouraged. 

In  the  framework  of  the  assistance  provided  pursuant 
the 
Commission  shall promote  co-financing with public  or private  bodies  in  the  Member 
States. 

to  this  Regulation, 

Article  8 

Each year the  Commission  shall present  a progress report  on the implementation  of the 
assistance programme.  This report shall also include, to the extent feasible,  an evaluation 
of the assistance already provided.  This report shall be addressed to the Member States, 
the European Parliament, the Council and the Economic and Social Committee. 

Article  9 

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

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

ANNEXI 

Partner States referred to in Article 1: 

.  „ 
^1 

Armenia 
Azerbaijan 
Belarus 
Georgia 
Kazakhstan 
Kyrgyzstan 
Moldova 
Russian Federation 
Tajikistan 
Turkmenistan 
Ukraine 
Uzbekistan 
Mongolia 

ANNEXII 

Indicative areas referred to in Article 2 (5) 

Assistance shall give priority to the following areas: 

1. 

Human Resources Development: 

education, training including manpower training, 
restructuring of public administration, 
employment services and social security advice, 
strengthening of the civic society, 
policy and macro-economic advice, 
legal assistance including approximation of legislation; 

2. 

Enterprise restructuring and development: 

support for the development of small and medium-sized enterprises, 
conversion of defence related industries, 
privatisation and restructuring 
financial  services; 

3. 

Infrastructure: 

transport 
telecommunication; 
Energy, including nuclear safety: 
Food production, processing and distribution. 

4. 
5. 

FINANCIAL  STATEMENT 

1 TITLE OF  OPERATION 

Community assistance for reform  in the independent states of the former  Soviet 
Union and in Mongolia (Tacis programme). 

2 BUDGET HEADING INVOLVED 

B7-620: Technical cooperation with the Independent States of the former  Soviet 
Union 

3 LEGAL BASIS 

Article 235 of the Treaty of Rome 
Article 203 of the Euratom Treaty 
Council Regulation  (Euratom,  EEC)  No 2053/93  of  19/7/93  (OJ N°  L 
187/1 of  29/7/93)  on  the provision  of  technical  assistance  to  economic 
reform  and  recovery  in  the  independent  states  of  the  former  Soviet 
Union  and  Mongolia  (replaces  Council Regulation  (Euratom,  EEC)  No 
2157/91 of 15/7/91); 
Partnership  and  Cooperation  Agreements  signed  with Russia  (26/6/94), 
Ukraine  (16/6/94),  Moldova  (28/11/94)  and  Kazakhstan  (23/1/95); 
others due to sign in 1995: Kyrgyzstan and Belarus. 

4DESCRIPTION OF OPERATION 

4.1 

General objective 

Backing  for  the  process  of  reform,  notably  by  financing  or  part-
financing  of assistance to achieve the transition to a market economy and 
to bolster the democratic process. The focus will be on human resources 
(training, job-finding  and social security, civil society, etc.),  developing 
and  restructuring  companies  (SME,  conversion,  restructuring,  etc.), 
energy and nuclear safety,  infrastructure  and production and distribution 
of  food. 

4.2 

Period covered and arrangements for renewal 

13 
in 
Council  Regulation  (EURATOM,  EEC)  N°  2053/93  expires 
December  1995.  Its  replacement,  which  is  to  be  valid  indefinitely, 
should enter into force in January 1996. 

5 CLASSIFICATION OF EXPENDITURE 

5.1 

Non-compulsory expenditure 

5.2 

Differentiated  appropriations 

6 TYPE OF EXPENDITURE 

The  Tacis  financing  will  usually  be  a  100%  subsidy,  but  in  some  cases  co-
financing  may  be  arranged  with  partners  such  as  the  EBRD  or  the  Member 
States.  Other  co-financing  is  provided  for  small  projects  in  infrastructure 
and in capital investment in Joint Ventures. 

The  programmes  for  financing  will  be  selected  from  among  the  recipient 
countries' proposals. 

The programmes drawn  up by  the  Commission  departments  will be  forwarded 
to the Tacis committee (which consists of representatives of the Member States) 
for its opinion. 

7FINANCXAL IMPACT 

7.1  Method of calculating total cost of operation 

In  accordance  with  the three-year  indicative programmes  referred  to  in 
Article 4, the Commission will establish multi-annual indicative financial 
programming.  The  budget  authority  will  determine  the  appropriations 
available for each financial  year. 

The attached multiannual indicative programme for financing reflects the 
options adopted at the Edinburg Council and is in conformity  with the 
Copenhague Council declaration. Indeed, the Community shall continue 
to grant an important part of its funds to external actions, namely 
towards the newly independent states through the Tacis programme. 

Even though, given the needs of the newly independent states, the 
financial  aid which can be provided by the Tacis programme until the 
end of the Financial Perspectives of the Budget seems limited, the Union 
plans to grant, under the provision of the yearly budget procedure,  for 
the period  1995-1999 2,734 MECU to implement chapter B7-62 "Co 
operation with the newly independent States from  the former Soviet 

Union". This represents an average nominal growth per year of about 
3.5% for the same period of time. 

•JLf 

7.2 

Itemised breakdown of  cost 

A rough breakdown by programme group is as follows: 

National programmes 
Regional  (inter-state) programmes 
Other (multidisciplinary,  EBRD cooperation,  etc.) 

% 

60 
30 
10 

The programmes aim namely at the following  sectors: human resources, 
enterprise development,  transport and telecommunications,  nuclear 
safety and environment,  energy,  food production and distribution and 
government institutions.  The effective  sharing within the frame of the 
programmes takes account of the priorities of each partner country. 

8  FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN 

The administrative  side  of  contract  and  financial  affairs  is  still  concentrated  in 
the hands of  the Commission.  Progressively  more decentralized  management  is 
a  possibility  but  depends  on  the  circumstances  and  abilities  of  the  recipient 
countries.  A  monitoring  system  with  a  centre  in  Moscow  and  sector-based 
monitoring teams are in place and are responsible  for making a detailed  follow-
up  of  the  implementation  of  projects  and  activities.  The  Commission 
delegations,  especially  in  Moscow  and  Kiev,  also  fulfil  such  functions.  These 
checks  are  backed  up  by  audit  teams  sent  by  the  Commission  departments  to 
examine work done under contract. 

9 

ELEMENTS OF COST-EFFECTIVENESS  ANALYSIS 

9.1  Specific  and quantified  objectives; target  population 

The aim of  the programme  of  assistance  for  the countries  of  the  former 
Soviet Union and for Mongolia is: 

to achieve  the transition  to a market economy  in  the countries in 
question; 
to modernize the countries' economies; 
to back the process of democratization. 

Within the frame of the main objective (purpose) under point 4.1 above, 
the actions undertaken aim at a part or full financing of projects in the 
field of: 

^S 

- human resources training 
- restructuring of the public administration 
- employment and social security  services 
- backing and reinforcment of civil company 
- assistance to macro-economic policy 
- legal assistance, namely the unification of legislative  systems 
-  support to the development of SMEs 
- military industry conversion 
-  support to enterprises privatisation and restructuring 
- financing system modernization 
- reforms linked with the rehabilitation and modernization of basic 
infrastructures,  namely within the transport and telecommunications 
sector 
- modernization of energy-producing  companies,  including  improvement 
of nuclear safety 
- food manufacturing,  transformation,  distribution and safety. 

The fields mentioned hereabove shall also deals with the problems of 
environment protection and the promotion of women's equality.  These 
points shall be included in the programmes improvement and 
implementation. 

The final recipient of the Tacis projects will be the population of the 
beneficary  countries. However,  the programme is implemented by 
intermediaries: political and economical institutions and organisations 
which direct the aid. 

9.2  Grounds for the  operation 

The  operation  is  in  line  with  the  decisions  of  the  European  Council 
(December  1990) of Rome. 

As the economic  situation of the beneficiary  countries does not allow 
them to direct themselves towards a pluralist democracy and a market 
economy independent from any external assistance,  and as it is in the 
interest of the EU to complete the above-mentioned objectives as soon as 
possible,  the Community is dedicated to these actions  , including from a 
financial  point of view. 

The aim of  Community assistance is to use knowledge  and know-how  to 
produce  a  multiplier  effect  in  the  sectors  involved  and  establish  the 
framework  and  institutions  for  a  market  economy  operating  in  a 
democratic society. 

The  programme  offers  the  advantage  of  genuinely  European  sourcing, 
with a very wide choice of  systems and economic partners. 

% 
The  Community  element  is  designed  to  back  up  the  Member  States' 
programmes of bilateral assistance. 

Spin-oft  effects 

By  concentrating  on  key  areas  of  economic  infrastructure  (energy, 
transport  and-finance),  the  programme  is  seeking  to  create  a  suitable 
climate  for  internal  economic  activity  and  investment  from  public  and 
private sources. 

Multiplier  effects 

Community financing for  a project  often  draws in financing from other 
sources,  either because co-financing  from  the Community  is a condition 
for  the  involvement  of  other  institutions  or  because  funds  from  the 
Commission  create  the  climate  needed  for  other  privately  or  publicly 
financed  projects to succeed. 

Factors  of uncertainty 

The  main uncertainty  which  could  influence  the results  of  the  operation 
is the speed of reform in the partner countries. 

9.3  Monitoring  and evaluation of the  operation 

Performance  indicators 

The  success  of  the  operations  will  be  measurable  by  the  ability  of  the 
recipient  countries  to  take  over  rapidly  from  European  experts  in 
projects  started  with  Community  backing.  Everything  will  be  done  to 
achieve  a  gradual  replacement  of  those  experts  with  experts  from  the 
countries themselves in the sectors involved. 

The  "demand-driven"  nature  of  the  operations  and  the  recipients' 
undertakings  that  they  will  accept  the  assistance  provided  will  ensure 
that they have an impact. 

European  experts  will  be  recruited  under  service  contracts  containing 
detailed  terms  of  reference  setting  out  the  goals  and  duration  of  the 
functions in question, in order to allow subsequent evaluation. 

Procedure for evaluation and assessment  of results 

The  Commission  departments  will  draw  up  annual  reports  on  the 
progress  of  the  operations,  difficulties  encountered  and  proposed 
solutions.  These  will  be  put  to  the  Member  States,  the  Council  of  the 
European Union,  the European Parliament and the Economic  and  Social 
Committee. 

^ 
The projects  will be run and evaluated  regularly  in  accordance  with  the 
Logical  Framework.  The  experts  in  charge  of  the  projects  will 
themselves produce half-yearly reports on their work. 

The  Commission  will  give  the  Member  States  (as  represented  on  the 
Tacis  Committee)  and  the  European  Parliament  regular  updates  on  the 
programme's progress. 

Community assistance for reform in the Newly Independent States of the former Soviet Union and in Mongolia 

(Tacis) 

Indicative multiannual programming of  commitment appropriations 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

total 95 to 
99 

4.120 

4.311 

4.895 

5.264 

5.743 

6.345 

7.064 

29.311 

(million ECU, current prices) 

Ceiling on heading 4 of 
the Financial 
Perspectives (EUR 15) 

Indicative programming 
for Chapter B7.62  (1) 

510 

460 

510 

528 

546 

565 

585 

2.734 

t 

(1) 

For 1995 =  470 (Budget)  +  40 MECU (APBRS N°  1/95 - enlargement) subject to the approval of the budgetary authority 
For 1996-1999, following a growth of approximately 3.5% a year. 

-^ 

4? 

ISSN 0254-1475 

COM(95) 12 final 

DOCUMENTS 

EN 

11 

Catalogue number  : CB-CÛ-95-062-EN-C 

ISBN 92-77-86086-3 

Ofllcc fur Official Publications of the European Communities 

L-2985 Luxembourg