PROPOSAL FOR A COUNCIL REGULATION (EC) ON DECENTRALIZED COOPERATION
Date: 1995-07-10
Institutions: European Commission
Subjects: cooperation policy, decentralisation, developing countries, development aid

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

Brussels,  10.07.1995 
COM(95)  290  final 

95/0159  (SYN) 

PROPOSAL FOR 

A  COUNCIL REGULATION  (EC) 

ON DECENTRALIZED COOPERATION 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

Decentralized cooperation is one of the innovations of the Community's cooperation policy 
that was first introduced  in  1989 in the Lomé Convention,  and subsequently  as from  1992 
in  the  legislation  governing  cooperation  with  the  Latin  American  and  Asian  developing 
countries. 

Decentralized cooperation reflects the Community's commitment to involving a broad range 
of local,  non-governmental  bodies  in  its  programmes  both  in  Europe  and the  developing 
countries;  such  bodies  generate  imaginative  development  initiatives  that  complement 
projects  launched  at government  level. 

This is part of the Community's general cooperation strategy to support socially  sustainable 
development  and  to  consolidate  democracy  and human rights. 

The bodies concerned, which include grassroots associations, local authorities, cooperatives 
and  trade  unions,  together  constitute  a  mine  of  potential  for  development  work  quite 
distinct  from  the  established,  mainly  European  NGOs  that  have  hitherto  been  the  only 
group  to  receive  special  attention  from  the  Community,  with  their  own  special  financial 
instruments  (e.g.  budget  heading B7-5010). 

In  Europe  this  sector  embraces  a  wide  variety  of  movements  and  civilian  organizations 
working  on projects  such  as town  twinning,  migration  flows  and  social  issues,  of  whose 
activities the  Community  has thus far  taken  little notice. 

In  the  developing  countries  we  are  witnessing  the  rapid  emergence  of a  new  breed  of 
organizations, popular movements and decentralized local authorities which often  owe little 
to the European NGO  tradition,  and which  are  clamouring  for  a greater  role in  preparing 
and  implementing  national  cooperation  policies. 

In  response  to  the  emergence  of  the  grassroots  as  a  major  player  in  the  Community 
cooperation  of  the  future,  in  1992  the  budgetary  authority  decided  to  create  a  special 
budget  heading  to promote  this approach  in  all  the  developing  countries  and to  create an 
environment  in  which  decentralized  cooperation  could  be  better  integrated  into  official 
(EDF  and  ALA)  programmes;  this  would  include  the  development  of  new  types  of 
partnership between the grassroots, local institutions and the State to further  the social  and 
economic  development  objectives  of the  South. 

Community  action in this area is all the more justified  in that it builds genuine, coordinated 
partnerships between European and developing-country organizations, and provides a useful 
frame  of  reference  for  many  Member  States  that  as  yet  lack  a  special  policy  on 
decentralized  cooperation. 

The  draft  Regulation  allows  for  an  exchange  of  views  between  representatives  of  the 
Commission and the Member States, once a year, on the general guidelines for the actions 
to be  carried  out in the  coming  year.  The relatively  small  scale  of  operations  does not 
warrant the organisation  of consultation of the member States on a case by case basis. 

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

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

ON DECENTRALIZED  COOPERATION 

THE  COUNCIL  OF  THE EUROPEAN  UNION, 

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

Having  regard  to the proposal  from  the  Commission, 

In  cooperation  with  the European  Parliament,1 

Whereas the importance of the decentralized approach to development cooperation has been 
emphasized  in  the  fourth  Lomé  Convention,  Council  Regulation  (EEC)  No  443/92  of 
25 February  1992 on financial  and technical assistance to, and economic cooperation with, 
the  developing  countries  of  Asia  and  Latin  America,  and  the  Council  resolution  of 
27 May  1991; 

Whereas  the  budgetary  authority  decided  to  include  in  the  1992  budget  an  item  for  the 
promotion  of this approach to cooperation  in all  developing  countries; 

Whereas decentralized cooperation makes an important contribution to the objectives of the 
EU set out  in  Article  130 U of the Treaty  of  Maastricht; 

Whereas administrative  procedures  should  be  established, 

Opinion  delivered  on 

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

HAS ADOPTED  THIS  REGULATION: 

Article 1 

The  Community  shall  support  development  operations  and  initiatives  by  decentralized 
agents  of the  European  Union  and  the developing  countries,  in particular  those  designed 
to promote: 

a  more  participatory  approach  to  development,  responsive  to  grassroots  needs  and 
initiatives  in the developing  countries; 
a contribution to the diversification  and reinforcement  of civil  society and grassroots 
democracy  in the countries concerned; 
the  mobilization  of  decentralized  agents in the developing  countries  and the  Union 
in pursuit  of these  objectives. 

All  developing  countries  shall  be  eligible  for  operations  to  promote  decentralized 
cooperation. 

The priority  fields  for  operations under this Regulation  shall be: 

Article 2 

- 

the  development  of human  and  technical  resources  and  local  rural  or urban  social  and 
economic  development; 
information  and  the mobilization  of decentralized  agents; 

- 
-  support  for  strengthening  the  institutional  capacities  of  such  agents  and  their  capacity 

for  action. 

Article  3 

The  agents  of  cooperation  eligible  for  financial  support  under  this  Regulation  are 
decentralized  bodies in the  developing  countries or the Union,  namely:  local  authorities, 
NGOs, local traders' associations and citizens' groups, cooperatives, trade unions, women's 
and  youth  organizations,  teaching  and  research  institutions,  churches  and  any  non 
governmental  associations  likely  to  contribute to  development. 

Article 4 

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

Community financing may cover both investment, with the exception of the purchase 
2. 
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  developing-country  agents  ultimately 
benefiting  from  the operation, as well as any Union partners they may have, to contribute, 
whether  financially  or  in  kind,  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. 

5. 
In  order  to  reinforce  coherence  and  complementarity  between  the  actions financed 
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  the 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.  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. 

Participation  in  invitations  to  tender  and  the  award  of  contracts  shall  be  open  on 
3. 
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. 

4.  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 

The  representatives  of  the  Commission  and the Member  States will have  an  exchange  of 
views,  once a year,  on the basis of a presentation by the representative of the Commission 
of the general  guidelines  for  operations to be  carried  out in the year  ahead. 

This  exchange  of  views  will  be  organized  in  the  framework  of  a joint  meeting  of  the 
following  committees: 

a) 

b) 

c) 

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; 

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

the  ALA  Committee  set up by  Article  15 of Council  Regulation  (EEC)  No 443/92 
of 25 February  1992. 

Article  8 

After  each  budget  year,  the  Commission  shall  report  to  Parliament  and  the  Council, 
summarizing  the  operations  financed  in  the  course  of  that  year  and  evaluating  the 
implementation  of this Regulation  in that  period. 

The summary shall in particular contain information  about those with whom contracts have 
been  concluded. 

The  report  shall  also  set  out  the  conclusions  of  any  independent  evaluations  of  specific 
operations. 

Article 9 

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

Done at Brussels,  .. 

For the Council 
The President 

FINANCIAL  STATEMENT 

1. 

ITEM  B7-5077 

2.  TITLE OF OPERATION:  Decentralized  cooperation  in the developing  countries 

million  ECU 

Appropriations authorized for 
1995 

Appropriations requested for 1996 

Percentage change % 

Commitments 

Payments 

Commitments 

Payments 

Commitments 

Payments 

5.0 

3.5 

5.0 

3.0 

-

+43.0 

3.  LEGAL BASIS: The proposal  formulating  the legal basis  is due for  presentation  to 

the Council  shortly. 

4.  DESCRIPTION  OF  OPERATION 

4.1  General  objective 

In encouraging grassroots cooperation the aim is to mobilize local people and  groups 
in the developing  countries and  the EU,  and  their  resources,  in order to: 

encourage greater participation in the development process, thereby ensuring that 
development  and  the  methods  used  are  more  closely  related  to  what  those 
concerned perceive as their needs; 

help  create  and  consolidate  a  democratic  grassroots  structure  and  promote  the 
diversification  of  civil  society  in developing  countries. 

The purpose of this heading is therefore  to act as an incentive that can stand alone or 
be  used  in  tandem  with  decentralized  cooperation  measures  carried  out  within  the 
major  official  frameworks  (EDF,  aid  for  developing  countries  in  Asia  and  Latin 
America,  aid  for  Mediterranean  countries).  Hie  measures  involve  promoting 
grassroots cooperation  in order  to benefit  all developing  countries. 

4.2  Period covered 

As the legal basis  has not yet been approved  by the Council,  this  measure has  to be 
renewed  annually. 

4.3  Beneficiaries 

The  beneficiaries  of  this  new  form  of  cooperation  will  be  those  sections  of  the 
the  poorest,  who are  represented  by  local  authorities  or 
population,  particularly 
various forms of association. 

5.  CLASSIFICATION OF EXPENDITURE OR REVENUE 

5.1  NCE 

5.2  DE 

6.  TYPE OF EXPENDITURE OR REVENUE 

100% subsidy:  exceptionally,  depending on the measure. 

Subsidy  for  joint  financing  from  Community  and  other  sources  in  the public 
and/or private sector. 

Most measures will be financed jointly, any additional finance being provided by 
private sources (NGOs, associations) or public sources (mainly local authorities 
but also states) in cash and/or kind. 

Should the operation prove an economic success, is there provision for all or part 
of the Community contribution to be reimbursed? 

No.  The primary aim of all the measures is social and institutional development. 
Where the aim is to promote economic activity, any sums that might be repaid 
will be ploughed back to benefit  the target population. 

Re-use:  Any revenue will be re-used  in accordance with  the requirements of 
Article 27 of  the Financial  Regulation  of 21 December  1977 applicable  to the 
general  budget  of 
(OJ L 356/77  of 
31 December  1977, p.  1),  as  last  amended  by  Regulation  (Euratom,  ECSC, 
EEC) No 610/90 (OJ L 70/90 of  16 March  1990, p.l). 

the  European  Communities 

7.  FINANCIAL CONSEQUENCES 

7.1  Method of calculating total cost of operation 

The amount has been calculated on the basis of past experience and the results 
of a number of earlier successful projects, it being borne in mind that we are not 
allowed to request the additional appropriations really needed. 

Most  of  the projects  are small-scale  (on average  ECU 212 000  in  1994),  the 
maximum disbursed on a single project  so far being ECU 630 000. 

7.2  Itemized breakdown of costs 

Bearing in mind the specific objectives set out in point 9.1 below, the breakdown 
of costs of  1994 was as follows: 

- measures to promote the activities concerned (objective (a)):  10% 
- institutional backup for local agents in developing countries (objective b):  31 % 
- programmes and pilot projects (objectives  (c) and (d)):  59% 

As concerns  the type of  local  agent, just  under  half  the operational  measures 
mainly involved local authorities.  In the rest the beneficiaries  were associations 
of various kinds (NGOs and other groupings or - in line with a major  strand of 
Commission policy - local authorities and associations had a part to play. 

8.  FRAUD PREVENTION MEASURES 

Various checks are applied: 

progress reports have to be submitted and approved before the next instalment 
of Community finance is released; 

final reports have to be submitted on all measures  financed; 

the Commission's financial control departments and the Court of Auditors carry 
out audits at NGO offices  or on site; 

the lead department for this budget heading and the respective Delegations carry 
out inspections on site; 

where  it  transpires  that  Community  funds  have  been  badly  managed,  the 
Commission may ask for total or partial reimbursement of the sum in question. 

9.  ELEMENTS OF COST-EFFECTIVENESS  ANALYSIS 

9.1  Specific and quantified  objectives;  target population 

Specific  objectives 

(a)  to  disseminate  information  and  promote  local  cooperation -  by  means of 
targeted action such as seminars, meetings and workshops and by providing 
documentation - in order to get grassroots agents in developing countries and 
the  EU  interested  in  the  prospect  of  this  kind  of  cooperation  within  the 
framework  of  EU cooperation policy; 

(b)  to  provide  persons  and  bodies  at  grassroots  level  with  institutional  and 
technical  backup; 
to  provide  support,  education  and  training  aimed  at 
ensuring  that local  agents  in developing  countries  gain the  competent and 
credibility  needed by the EU's cooperation partners; 

(c)  to provide  the  support  the  local  partners  need  to carry out project  studies 

and prepare grassroots programmes; 

(d)  to  mount  pilot  local  development  programmes  to  demonstrate  that  the 

beneficiaries  have the capacity to be grassroots partners; 

(e)  to  carry  out  the  inspections  and  evaluations  that  are  a  necessary  part  of 

implementing decentralized cooperation. 

Target population 

Objective  (a) 

i.e.  NGOs,  professional  associations, 

All  agents, 
local 
authorities,  trade  unions  and  the  national  and  international 
organizations  for  all  these  groups  (intermediaries:  the same 
or specialist bodies); 

Objective  (b) 

All  agents  but  more particularly  networks  of  associations  or 
NGO forums and local authorities  in developing countries; 

Objective  (c) 

All grassroots agents; 

Objective  (d) 

The ultimate beneficiaries of the development process, i.e. the 
rural and urban poor,  women and local economic circles; 

Objective  (e) 

Intermediaries,  i.e.  specialist bodies. 

9.2  Grounds for the operation 

The requirement for the Community to contribute from  its budget under: 

*  Articles 20 to 22 of Lomé IV and the provisions of the Council  Regulation 
of  2 February  1992 on cooperation with developing  countries  in Asia and 
Latin America, both of which provide for,  or encourage,  the promotion of 
decentralized cooperation; 

*  Article 5  of  the  Council  resolution  of  27  May  1991  emphasizing  the 
importance  of  decentralized  cooperation  under  the  Lomé  Convention,  the 
new  Mediterranean  policy  and  the  guidelines  for  developing  countries  in 
Asia and Latin America; 

*  Article  130 U of the Maastricht Treaty concerning sustainable economic and 
social  development  and emphasizing  the  importance  of  respect  for human 
rights and democracy. 

This necessarily  means opening a heading specifically  for this policy. 

11 

Choice of ways and means 

This  is  dictated  by  the  need  to  create  conditions  that  will  help  mobilize 
people and groups within civil society and prepare them for participating in 
the  achievement  of  the  objectives  of  decentralized  cooperation.  At 
Community  level  there  is  no  other  course  of  finance  that  would  make  is 
possible  to  mobilize,  prepare  and  train  these  agents.  Some  forms  of 
decentralized  cooperation  exist  in some  Member  States.  No  two  are the 
same  and  none  is  as  wide  in  its  scope  as  the  European  Union's.  The 
Member  States  want  their  approach  to  be  coordinated  with  the 
Commission's. 

The main areas of uncertainty are the fact that decentralized cooperation is 
a  new  approach,  the lack  of  experience  of  the potential  partners  with this 
form of cooperation and the attitude of the public authorities  in developing 
countries to civil  society being  involved  in aid programmes. 

Close  consultation  with  the  Commission  departments  responsible  for  the 
respective  geographical  areas  (DGs VIII  and  I)  and with  the  Delegations 
concerned  will  ensure  consistency  between  measures  supported  from  this 
budget  heading  and  other  development  programmes  financed  by  the 
Community. 

9.3  Monitoring  and evaluation of  the operation 

*  Output indicators:  the number of requests for financing under this heading, 
the  number  of  partners  mobilized,  the  sustainability  and  viability  of  the 
measures  financed. 

Impact  indicators:  the  level  of  mobilization  in  the  various  countries 
(developing and European), the number of national platforms and grassroots 
bodies  established  and  the  number  of  grassroots  cooperation  programmes 
launched within the framework  of the EU's official  cooperation funds. 

Evaluation 

Provision  has  been  made  for  some  of  the  more  important  programmes 
financed  under this heading to be evaluated by external specialists. 

The  Delegations  and  the  departments  responsible  for  the  respective 
geographical  areas will  monitor and evaluate the rest. 

An overall  evaluation of  this recent heading and pilot  programme  will  not 
be justified  until the new projects to mobilize agents (following  completion 
of  a  current  study)  and  their  effect  on  the  incorporation  of  decentralized 
cooperation in the official  cooperation structures (EDF, developing countries 
in Asia and Latin America)  have reached a more advanced  stage. 

9.4  Consistency  with financial  programming 

Is  the  operation  incorporated  in  the  DG's  financial  forecasts  for  the  relevant 
year? 

Yes. 

To  which  broader  objective  defined  in  the  DG's  financial  forecasts  does  the 
objective of  the proposed operation correspond? 

The general objective for this heading (see point 4.1 above) is in line with those 
of  the EU's development policy as a whole. 

In particular,  as indicated  in point 4.1,  it is  in line  with the specific  objectives 
set out in Lomé IV and the Council Regulation on aid to developing countries in 
Asia and Latin America,  hence the care taken to ensure that measures  financed 
under this heading are consistent with the EDF and Mediterranean programmes 
and the programme for developing countries  in Asia and Latin America. 

BSN 0254-1475 

C0M(95) 290  final 

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Catalogue number  :  CB-CO-95-326-EN-C 

ISBN 92-77-91046-1 

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