Proposal for a COUNCIL REGULATION (EC) ON REHABILITATION AND RECONSTRUCTION OPERATIONS IN DEVELOPING COUNTRIES
Date: 1995-06-26
Institutions: European Commission
Subjects: EU aid, aid system, cooperation policy, developing countries, development aid, economic development

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels, 26.06.1995 
COM(95) 291 final 

95/0165  (SYN) 

Proposal  for a 

COUNCIL REGULATION (EC) 

ON REHABILITATION AND RECONSTRUCTION 

OPERATIONS  IN DEVELOPING COUNTRIES 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

Owing  to  the  proliferation  of  wars,  civil  unrest  and  natural  disasters  affecting  large 
numbers  of  developing  countries,  economic  reconstruction  and  social  rehabilitation  has 
become a major  component  of development  cooperation. 

In countries emerging from  a crisis situation, rehabilitation  should gradually replace relief 
as the  focus  for  aid,  paving  the way  for  a return  to  long-term  development  cooperation. 
The  aim  is  to  relaunch  economic  activity,  consolidate  social  and  political  stability  and 
rebuild  the institutional  capacity  required  for  the  transition. 

In May  1993 the Commission presented  a Communication along these lines to Parliament 
and the Council, which led to a Parliament resolution  on rehabilitation  aid (16 November 
1993)  and  Council  conclusions  on  aid  to  rehabilitation  in  the  developing  countries  (2 
December  1993). 

In line with those conclusions, the budget heading created in  1994 and allocated ECU  44.8 
million for that year enabled the Community to support major economic reconstruction and 
social  and institutional  rehabilitation  projects  in the developing countries,  complementing 
the other resources available for  development cooperation and improving the coherence of 
the  various  instruments  deployed  by the  Community.  In  the  Asian,  Latin  American  and 
Mediterranean  developing  countries,  9 projects  were  financed  for  a total  of  ECU  27.02 
million,  and  a further  34  projects  were  funded  in  the  ACP  countries  for  a total  of  ECU 
17.6 million. 

With the creation  of this budget heading the Community  now has access to the full  range 
of  instruments  it  needs  to  respond  to  the  varied  needs  of  the  people  of  the  increasing 
number  of  countries  that  are either  in  crisis  or just  emerging  from  crisis  situations,  thus 
providing ongoing assistance from  the emergency  aid phase right through to development 
cooperation. 

To emphasize the need for  continuity,  no duration  is specified  in this proposal. 

PROPOSAL FOR A COUNCIL  REGULATION  (EC) No... 

ON REHABILITATION AND RECONSTRUCTION  OPERATIONS  m 
DEVELOPING  COUNTRIES 

THE CGUNCH. OF THE EUBOI'EAN UNION, 

Having regard to aie Treaty establishing the European Community, and in particular Article 
130w 

Having regard  to the proposal from the  Commission, 

In  cooperation with the European  Parliament,1 

Whereas  the  Commission,  in  its  communication  of  12 May  1993  to  the  Council  and 
Parliament  on  a  special  rehabilitation  support  programme  in  developing  countries,2 
highlighted the specific nature and scale of the rehabilitation and reconstruction  aid needed 
by developing  countries that have suffered  serious destraction through war,  civil  disorder 
or natural  disaster; 

Whereas  the  Council's  conclusions  of  2 December  1993  on  rehabilitation  aid  define  the 
principal  objectives,  conditions  and criteria for  such aid and emphasize the need  for  close 
coordination  between  the  Commission  and  the  Member  States  when  planning  and 
implementing  it;3 

Whereas tibe European Parliament, in its resohmon of  16 November  1993,4 emphasized the 
scale of the developing countries' need for rehabilitation aid and proposed the establishment 
of a specific financial framework  for  that purpose  in the Community  budget; 

Whereas the budgetary  authority included  in the  1994 budget a new item B7-5076 for  the 
financing  of  rehabilitation  and reconstruction  operations  in developing  countries; 

Whereas procedures  should be established  for  the  administration  of  such  operations, 

Opinion  delivered  on 

...  (OJ  No  ...,  ...)  and  Decision  of  ...  (OJ  No  ...,  of ...). 

COM(93)204,  12.5.1993. 

Council  10641/93,  2.12.1993. 

PE  A3-0329/93,  Doc.  176.642,  16.11.1993. 

HAS ADOPTED  THIS  REGULATION: 

Article 1 

The Community  shall carry out rehabilitation and reconstruction operations in  developing 
countries  or regions which have suffered  serious damage through war, civil  disorder and 
destabilization.  Operations  of  limited  duration  shall  be  designed  to  help  re-establish  a 
working  economy  and the  institutional  capacities  needed  to  restore  social  and  political 
stability  to  the  countries  concerned  and  meet  the  needs  of  the  people  affected.  The 
operations must progressively take over from humanitarian action and pave the way for the 
resumption of long-term  development aid. 

Article 2 

The priorities for operations under this Regulation shall be: the relaunch of production, the 
physical  and operational  rehabilitation of basic infrastructure,  social reintegration and the 
restoration of the institutional  capacities needed  in the rehabilitation period,  especially  at 
local  level. 

Article 3 

The  agents  of  cooperation  eligible  for  financial  support  under  this  Regulation  include 
national,  regional  and local  government  departments  and agencies,  local  authorities and 
other local  bodies, international  organizations and non-governmental  organizations. 

Article 4 

1.  The  instruments  to  be  employed  in  the  course  of  the  operations  referred  to  in 
Article  1  include  studies,  technical  assistance,  training  or  other  services,  supplies  and 
works, along with audits and evaluation and monitoring missions 

2.  Community financing may cover both investment, with the exception of the purchase 
of buildings,  and operating costs in local  or foreign  currency, depending  on the needs of 
the operation. 

3.  A systematic effort  shall be made to get the agents or partners ultimately  benefiting 
from the  operation  (countries,  local  communities,  firms  etc.) to contribute,  in particular 
financially,  according to their means and the nature of the operation concerned. 

4.  Opportunities  shall  be  sought  for  cofinancing,  especially  with  Member  States. 
Necessary measures will  be taken to emphasise the Community  character of aid provided 
under this Regulation. 

In order to reinforce  coherence  and complementarity  between the actions  financed 
5. 
by the Community and those financed by the Member States, with the aim of guaranteeing 
optimal  efficiency  of the totality  of these actions, the Commission will take all necessary 
coordination measures, notably : 

a) 

b) 

the establishment of a system for the systematic exchange of information on actions 
financed  or  for  which  financing  is  foreseen  by  the  Community  and  the  Member 
States; 

on the spot coordination of these actions by means of regular meetings and exchange 
of  information  between the representatives  of the Commission  and Member  States 
in die beneficiary  country or countries concerned. 

Financial  support under this Regulation shall be in the form of grants. 

Article 5 

Article 6 

1.  The Commission  shall  appraise,  decide and administer  operations covered  by this 
Regulation according to the budgetary and other procedures in force, and in particular those 
laid  down in the Financial  Regulation  applicable  to the general  budget  of  the European 
Communities. 

2.  Decisions relating to  grants of more than ECU 2 million  for  individual  operations 
financed  under this Regulation  or any change resulting in an increase of more than 20% 
in the sum initially approved for such an operation shall be taken under the procedure laid 
down in Article 7. 

3.  All financing  agreements or contracts concluded under this Regulation shall provide 
for the Commission and the Court of Auditors to conduct on-the-spot checks according to 
the  usual  procedures  laid  down  by  the  Commission  under  the  rules  in  force,  and  in 
particular  those  of  the  Financial  Regulation  applicable  to  the  general  budget  of  the 
European Communities. 

4.  Where operations are the subject of financing agreements between the Community 
and the recipient country,  such agreements shall stipulate that the payment of taxes, duties 
or any other charges is not to be covered  by the Community. 

Participation  in  invitations  to  tender  and  the  award  of  contracts  shall  be  open  on 
5. 
equal terms to natural and legal persons of the Member States and of the recipient country. 
It may be extended to other developing countries and, in exceptional cases which are  fully 
justified,  to third  countries. 

6. 
Supplies  shall  originate  in  the  Member  States,  the  recipient  country  or  other 
developing  countries.  In  exceptional  cases,  where  circumstances  warrant,  supplies  may 
originate  elsewhere. 

Article 7 

1. 
The  Commission  shall  be  assisted  by  an  advisory  committee  made  up  of 
representatives from the Member States and chaired by a representative of the Commission, 
depending  on the beneficiary  country  or region  concerned,  as  follows: 

a) 

b) 

c) 

for  the  ACP  countries,  the  EDF  Committee  set  up  by  Article  21  of  Internal 
Agreement 91/401/EEC on the financing and administration of Community aid under 
the fourth  Lomé Convention,  adopted  on  16 July  1990 by the representatives of the 
Member  States meeting in the Council; 

for the Mediterranean countries, the MED Committee set up by Article  6 of Council 
Regulation  (EEC) No  1762/92 of 29 June  1992; 

for  the Asian  and Latin American  countries, the ALA Committee  set up by  Article 
15 of  Council  Regulation  (EEC) No 443/92  of 25 February  1992. 

2. 
The Commission representative shall submit to the committee a draft  of the measures 
to  be  taken.  The  committee  shall  deliver  its  opinion  on  the  draft,  voting  if  necessary, 
within  a period  that  the  chairman  may  specify  according to the urgency  of the  matter  at 
hand. 

The opinion shall be entered in the minutes; each Member State shall be entitled to ask that 
its  position  be  recorded  in  the  minutes.  The  Commission  shall  take  full  account  of  the 
committee's  opinion.  It  shall  notify  the  committee  of  the  manner  in which  it  has  taken 
account  of that  opinion. 

Article 8 

An  exchange  of views will  take place,  once a year,  on the basis of  a presentation  by  the 
Commission's  representative  of the general  guidelines for the operations to be  carried  out 
in the year  ahead, in the framework  of a joint meeting of the three committees  mentioned 
in Article  7, paragraph  1. 

After  each  budget  year,  the  Commission  shaft  report  to  Parliament  and  te  Council, 
summarizing  te  operations  fiwmrtri  m  te  course  of  that  year  and  evaluating 
implementation of thés Régulât*» at that period 

The «unary  shall in parbcoUr contain infbnnation abcet  tese  with whom contracts have 
been 

Hie  report  tel  a te  set  out  te  conclusions of  any  independent evahistioiis of  specific 
operations. 

This Regoiatio& shafl enter into force on the third day following  tel  of its publication in 
the Officiai Jammed of Ike European Communities. 

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

Done at Brassds, 

For the Council 

FINANCIAL  STATEMENT 

1.  TITLE OF  OPERATION 

Rehabilitation  and reconstruction  measures for  developing  countries. 

2.  BUDGET HEADING INVOLVED  :  B7-5076. 

3.  LEGAL BASIS  :  See Volume 4. 

4.  DESCRIPTION  OF  OPERATION 

4.1  Specific  objective 

The  ECHO  (European  Community  Humanitarian  Office),  set  up  in  1992,  gave  the 
Community the means of responding more effectively,  visibly and rapidly to the needs 
of victims of natural disasters or exceptional  circumstances.  In the Lomé Convention, 
the Regulation governing  aid to developing  countries in Latin America and Asia, the 
budget  heading  on  aid  towards  self-sufficiency  for  refugees,  displaced  persons  and 
repatriates from  and in developing countries in Latin America and Asia (B7-302), the 
Financial Protocols for Mediterranean countries, the Food Aid system and the heading 
on decentralized cooperation (Item  B7-5077) the Community has at its disposal a body 
of instruments  with which  to make  a coordinated  medium  or long-term  contribution 
to the efforts  of the developing countries themselves.  Nevertheless, there was a piece 
missing  in  this  jigsaw  -  the  one  needed  for  action  at  the  intermediate  stage 
immediately  after  the  emergency  and  before  medium-term  development  cooperation 
can  get going  again.  It is  at this  critical  stage that the basis for  development  has to 
be re-established.  This is when emergency aid teams are gradually leaving the country 
to  make  way  for  experts  who  will  evaluate  needs  and  prepare  for  a  return  to 
conventional  forms  of  aid in the form  of projects  and programmes. 

During this transitional phase priority  should go to economic reconstruction and social 
rehabilitation  measures  with  the  aim  of  facilitating  a  return  to  production,  of 
re-establishing  the infrastructure  (roads, water,  electricity),  resettling  people  affected 
by the disruption and re-establishing those institutions that are indispensable to society. 

The  number  of  countries  in  this  situation  -  Somalia,  Eritrea,  Mozambique,  Haiti, 
Rwanda,  Cambodia,  Afghanistan  and  Lebanon  - is continually  growing.  None is in 
a region where the Community can provide reconstruction aid through its conventional 
instruments  alone. 

The Commission therefore proposes that the appropriations intended for rehabilitation 
and reconstruction measures for developing countries (ECU 65 million) be re-entered 
in the budget  for  next year. 

4.2  Period  covered  :  Not fixed. 

4.3  Intended  beneficiaries  : 

Those  in  developing  countries  at  an  intermediate  phase  of  reconstruction  and 
rehabilitation  in the aftermath  of a war,  a critical  conflict  or a natural  disaster. 

5.  CLASSIFICATION  OF EXPENDITURE  OR REVENUE 

5.1  NCE:  NCE 

5.2  DA:  DA 

6. TYPE OF EXPENDITURE OR REVENUE 

6.1  100% subsidy,  and/or 

6.2  subsidy  for joint financing with  other sources in the public and/or private  sector 

both  applicable. 

6.3  Will  the proposed  operation cause any  change in the level  of revenue?  No. 

7.  FINANCIAL  IMPACT 

7.1  Method  of  calculating total  cost of  operation 

The  object  is  to  add  to  the  range  of  existing  instruments  and  launch  ad hoc 
action,  the  cost  of  which  will  depend  on  the  local  situation.  Given  the 
Community's total level of commitments in respect of rehabilitation in developing 
countries (ECU  300 million a year from  1992 to  1994), and the foreseeable  level 
of  additional  needs  in  new  countries  (Burundi,  Haiti,  Rwanda,  Zaire,  Peru, 
Madagascar,  Sri Lanka,  etc.), it is proposed  that the Community  should  allocate 
ECU  65 million.  Experience gained under similar circumstances  suggests a rate 
of  expenditure  of  50%  in  the  first  year,  40%  in  the  second  and  the  remaining 
10% in the third. 

8. FRAUD PREVENTION MEASURES INCLUDED IN THE PROPOSAL FOR 

THE MEASURE 

Auditing  by the Commission's  departments  and the Court of Auditors. 

9.  ELEMENTS  OF COST-EFFECTIVENESS  ANALYSIS 

9.1  Objectives 

To provide people in developing countries with immediate help that will put them in 
a  position  to help themselves,  will  restore hope and,  as far  as possible,  will  prevent 
further  destabilization,  i.e.  to  allow  life  to  return  to  normal  until  such  time  as 
conventional  forms  of  cooperation  and  development  can take over. 

This  specific  objective  is one of the general  objectives for  specific  development aid. 

9.2  Grounds for  the  operation 

Each  individual  measure will  undergo  a cost-effectiveness  analysis  to  determine  the 
extent  to  which  the  truly  essential  needs  were  met  before  medium-term  aid  was 
organized. 

The  main  purpose  of  the  operation  is  to  finance  the  purchase  of  equipment  and 
supplies  to meet  basic  needs  and  permit  the provision  of  technical  assistance  in  the 
short term. 

Spin-off 

production  will  start  up  again,  incomes  will  grow  and  the  population's  driving 
forces  will  come into play; 

expenditure  on humanitarian  aid will  gradually  decrease; 

the political  situation will  be stabilized  and the peace process  consolidated. 

Multiplier  effects 

The  Community's  example may  attract  other donors. 

9.3  Monitoring  and  evaluation  of the  operation 

9.3.1 

Performance  indicators  selected 

The indicators will be determined individually  for each project and will take into 
account  the  number  of  people  affected,  to  what  extent  public  services  are 
functioning,  any  migration  by  the  groups  concerned  and  any  other  indicators 
appropriate  to the particular  situation. 

9.3.2 

Details and frequency  of planned  evaluations 

Ex-post evaluation of each action based on the pre-established indicators included 
in the operating  contract. 

9.3.3 

Assessment of the results  obtained 

The assessment will be made at the end of the rehabilitation phase when medium 
and  long-term  aid is being  mobilized. 

ISSN 0254-1475 

COM(95) 291 final 

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11 

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ISBN 92-77-91002-X 

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