Communication from the Commission to the Council and the European Parliament on Community assistance for the stabilisation and association process for certain countries of South-East Europe: CARA programme (Community Association and Reconstruction Assistance) Guidelines and detailed arrangements for assistance to Albania, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia under the future CARA programme (2000-2006)
Date: 1999-12-08
Institutions: European Commission
Subjects: Central and Eastern Europe, EU programme, European integration, financial aid, technical cooperation

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 8.12.1999
COM(1999) 661 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE
EUROPEAN PARLIAMENT

ON COMMUNITY ASSISTANCE FOR THE STABILISATION AND ASSOCIATION
PROCESS FOR CERTAIN COUNTRIES OF SOUTH-EAST EUROPE
CARA PROGRAMME
COMMUNITY ASSOCIATION AND RECONSTRUCTION ASSISTANCE

Guidelines and detailed arrangements for assistance to Albania, Bosnia and Herzegovina,
Croatia, the Former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia
under the future CARA programme.

2000 - 2006

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE
EUROPEAN PARLIAMENT

ON COMMUNITY ASSISTANCE FOR THE STABILISATION AND ASSOCIATION
PROCESS FOR CERTAIN COUNTRIES OF SOUTH-EAST EUROPE
CARA PROGRAMME
COMMUNITY ASSOCIATION AND RECONSTRUCTION ASSISTANCE

Guidelines and detailed arrangements for assistance to Albania, Bosnia and Herzegovina,
Croatia, the Former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia
under the future CARA programme.

2000 - 2006

1. INTRODUCTION.

The purpose of this Memorandum is to set out guidelines and detailed arrangements for
implementing the Community’s future assistance to the countries of the region: Albania,
Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia and the
Federal Republic of Yugoslavia. These guidelines aim to adapt assistance to the objectives of
the
the European Union’s strategy for the region. On the basis of these guidelines,
Commission will present a draft regulation on implementing the assistance in the first quarter
of 2000. This will reflect the Commission’s own experience and comments from the Court of
Auditors and Parliament. This will provide a single legal basis and a single set of procedures
for assistance to the region.

2. ASSISTANCE OBJECTIVES

The European Union is providing significant
technical and financial assistance to the
countries of the Western Balkans: almost EUR 4.5 billion, including humanitarian aid and
macro-financial aid, since 1991. From 1996 onwards, with the exception of humanitarian aid,
it has been implemented in line with the objectives set out in that year’s regional approach
and the political and economic conditions laid down by the Council (general affairs) on
29 April 1997.

To contribute to the objectives of the Stabilisation and Association Process, future
assistance needs to be seen in the context of the eventual integration of the countries of
the region into EU structures. This will come about gradually as they come closer to the
EU and develop stronger links with each other.

Bringing the countries of the region closer to the EU

The prospect offered to these countries of integration into EU structures is a historic turning-
point in their relations with the Community. The conclusion of stabilisation and association

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agreements is essential to future integration. The agreements represent both the cornerstone of
the process and a key step to its completion.

These countries will have to gear their political, economic and institutional development to
the values and models underpinning the European Union: democracy, respect for human
rights, the rule of law and a market economy. The EU is ready to support and assist them in
introducing the reforms necessary to progress in these areas.

Reforms to back up these forms of development and the assistance to support them should
now be framed in a partnership designed to involve and associate these countries more
closely in a process of their own in which they must shoulder responsibility and show real
political determination.

This partnership will require open and constructive dialogue with the countries to determine
jointly what political and economic reforms are required to take this process forward and
make integration a reality.

the necessary political, economic and institutional

Initially,
reforms and Community
assistance in support of them will be targeted on making the countries concerned eligible to
enter into the agreements. Assistance will therefore be shaped by an analysis of the situation
of each country in relation to the reforms needed.

Subsequently, countries that have concluded Stabilisation and Association Agreements will
be given assistance in meeting the obligations they have entered into in the Agreements so
that they move towards integration at a rate agreed with the EU.

Strengthening links between countries in the region

Strengthening links between countries is fundamental to stability in the region. The priorities
for assistance will be to bring them together via regional initiatives with shared projects,
structures and objectives. Priority will also be given to promoting bilateral and multilateral
agreements.

As the Commission Communication on the Stabilisation and Association Process states, “the
EU is itself a model for overcoming conflict and promoting reconciliation through close
cooperation to achieve common goals ...”.

By the same token, there is a need for stronger regional cooperation aimed at creating ties
of solidarity among the countries that are beneficiaries of this programme, and between them
and other countries in the region that are beneficiaries of other Community programmes. This
will
take the form of multi-beneficiary programmes and cross-border cooperation
programmes and will involve national and local administrations and other institutions in the
fields of culture, education, vocational training, local government and justice.

A strong link will be made between bilateral assistance and regional cooperation. Bilateral
cooperation will be placed as far as possible in the context of stronger regional cooperation
and initiatives will be promoted to contribute to the stability and economic development of
the region as a whole. This applies particularly to the fields of energy, environment,
infrastructure, transport and statistics.

Regional programmes will be implemented to promote investment, the development of small
and medium-sized enterprises and business integration. These will need to be geared to the
gradual development of an area of free trade and economic cooperation. To enable the private

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sector to play its role as the main generator of economic growth in the region,
programmes should include measures to improve the investment climate.

the

A particular importance will be attached toregional cooperation in the field of justice and
home affairs, particularly in areas linked to transnational crime (drugs, money laundering,
trafficking in firearms, etc.), the prevention of illegal activity (e.g. illegal immigration) and
civil security and protection.

3. A NEW REGULATORY FRAMEWORK

The new guidelines for assistance and the objectives that it must fulfil involve a new approach
requiring new mechanisms and procedures.

In the coming months the Commission intends to propose that the Council adopt a new legal
basis for assistance to the Western Balkans.

The new Regulation will also present an opportunity to address certain problems that have
hampered assistance to the region, such as slow implementation and cumbersome procedures
that have been a factor in causing delays. These have tarnished the EU’s image in the region
its contribution merits.
and compromised the diplomatic influence that
Appropriate mechanisms must be set up which allow accountable management that can be
monitored and implementation that
the
Community’s image be restored and that we secure a reputation for implementing assistance
effectively.

is both rapid and flexible. It is imperative that

the scale of

through the future Regulation,

It will also be possible,
to consolidate the regulatory
framework for assistance to the region. The coexistence of two legal bases, Phare and
Obnova, each with its own administrative and management procedures, has been a source of
many operational problems, which have quite rightly been highlighted by the European
Parliament and the Court of Auditors. Also, new guidelines have been developed to adapt the
Phare programme to the new demands of enlargement and it is no longer a suitable instrument
for assistance to the Western Balkans. The Phare programme, therefore, will no longer
include implementation of assistance to the countries covered by this memorandum.

In future, assistance will be focused on three priority areas:

–

–

–

developing public institutions and administrations in order to strengthen democracy
and the rule of law;

reconstruction, development and economic reform;

regional cooperation.

4. ELIGIBILITY AND CONDITIONALITY

4.1. Eligibility to participate in the future assistance programme

A partnership can be established and a country may be eligible to benefit from the new
programme of Community assistance only if it respects the basic principles of democracy, the
rule of law and human rights.

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4.2. Conditionality

Assistance to the countries in the region must be seen in the context of their eventual
integration into EU structures. This can happen only if there is progress in the institutional
and economic fields: such progress is a condition for integration. The conditions for
assistance and for integration are closely linked therefore.

If conditionality is to encourage reform, it needs to be defined in a spirit of partnership,
through dialogue with the countries concerned and on the basis of an analysis of their
situation.

The nature and scale of the assistance will depend on the level of commitment to reform by
the authorities concerned. By this we mean commitment in all areas. Conditionality will also
apply to priority reforms in certain sectors, be they political, economic or institutional - it will
not be possible for these to be excluded from the authorities’ commitment to reform.

The level of assistance should reflect progress actually made. On trade, for example, greater
access to the Community market could be offered, but subject to the efforts of the countries
concerned to promote trade within the region..

Assistance will need to be part of a reform programme with precise short and medium-term
sectoral objectives. It will contribute to achieving these objectives and will be shaped by
them.

A gradual, progressive approach based on the respective stages and timetables of reform and
assistance will mean, in the context of partnership and dialogue, that reform can progress at a
pace best suited to the situation of the country. This will make it possible to proceed faster in
some sectors without excluding others.

Specific conditions might be adopted for projects to ensure that beneficiary countries
participate actively and constructively in carrying them out.

Failure to comply with the conditions will incur a range of penalties ranging from total or
partial suspension of the assistance programme to deferment of certain projects to future
budget years.

5. IMPLEMENTING ARRANGEMENTS

5.1. Programming

As a rule, assistance will be implemented under national and regional programmes.

5.1.1. National programmes

National programmes will remain the main vehicle for Community assistance.

Under the partnership, an analysis of the situation of each country will be discussed with the
national authorities in order to evaluate the reforms and action necessary in the short and
medium term to further stabilisation and association and to draw up on this basis the annual
assistance programmes.

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The annual assistance programmes will be contingent on a commitment by the authorities to
a programme of reform and action.

Long-term action is required of the beneficiary countries if they are to achieve the objectives
of the reform programmes. This is why the annual assistance programmes must be drawn up
under multiannual indicative programming fixing amounts and priorities for assistance
over a 4-year period. Programming will be adjusted each year according to the progress
made on reforms and the assistance implemented.

Assistance will focus on a small number of sectors or large-scale projects, according to
agreed priorities and other donors’ contributions, in order to achieve maximum impact and
make it easier to manage.

The national annual programmes may include projects and initiatives for local bodies or
independent organisations, particularly as regards industrial development and cooperation
between local and EU businesses. Where they are ineligible or agreement has not been
reached with the authorities on a national programme, specific assistance programmes may be
drawn up with local authorities. The programmes for Bosnia and Herzegovina and Kosovo
will take account of the respective responsibilities of the UN High Representative and the
Representative of the UN Secretary General.

5.1.2. Regional programmes

institutional and economic
Assistance for administrative modernisation, for legislative,
reforms and infrastructure development, etc. will have to take account of the regional
dimension and provide the basis for initiatives in the field of regional cooperation. The
national assistance programmes will
include arrangements for participation in regional
programmes.

The regional programmes will cover “horizontal” cooperation designed to involve all the
countries in the region (multi-beneficiary programmes) and cooperation aimed at forming
links between neighbouring countries (cross-border programmes).

5.2. Complementarity with other Community assistance instruments

The assistance given by the Community in other fields and under other regulations will
complement and must dovetail with the assistance provided through the partnership under this
new regulation. This applies in particular to the following types of aid, which will not be
covered by the new regulation:

–

–

Humanitarian assistance is not subject to the eligibility criteria or conditions set out
in these guidelines and is not dependent on other types of assistance. Nevertheless,
Commission staff in Brussels and on the ground do liaise to avoid duplication
between the two types of assistance and to ensure a smooth transition from
humanitarian aid to reconstruction and development assistance. This coordination
will be intensified.

Assistance in favour of democracy (on the basis of Council Regulation
(EC) No 976/99 of 29 April) is compatible with and complements assistance under
this new regulation, which will focus on the institutional and legislative aspects of
reforms to strengthen democracy, the rule of law and the protection of human and
minority rights. With regard to the press and the media, the new Regulation will
provide for technical and financial assistance in support of the independent media.

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Assistance under Council Regulation (EC) No 976/99 will pursue its objectives by
supporting projects in favour of civil society and cooperation with NGOs.

–

The purpose of exceptional macroeconomic assistance (budgetary aid and
balance-of-payments loans) is to support stabilisation and reform programmes run by
the beneficiary countries under the auspices of the International Monetary Fund and
the World Bank. The conditions and arrangements linked with its implementation
will back up the reform and assistance programmes established under
the
partnership.

5.3. Coordination

Programming will take account of the assistance given by other donors, especially the IFIs’
sectoral or macroeconomic guidelines and assistance programmes.

5.4. Cooperation with the International Financial Institutions (IFIs)

Community action could also take the form of cofinancing for projects or programmes
implemented by the IFIs.

To ensure transparency in the way financial cooperation with the IFIs is organised, the
Commission will propose to them a framework agreement similar to that for the candidate
countries.

5.5. Management models

The Commission’s objective is initially to devolve and in time to decentralise the
management of assistance in order to involve and associate the beneficiary countries more
closely. This objective will be pursued gradually, according to their administrations’ ability to
develop the resources and skills they need to take over the management of the programmes.

The European Agency for Reconstruction should in future extend the scope of its activities,
either (in the context of devolving management) by taking on the responsibility for
implementing assistance, or (with decentralisation) by helping national administrations. It will
also be able to ensure the implementation of regional cooperation. In any event, it will need to
ensure rigorous programme management in line with Community procedures.

6. FINANCING

Given the current state of the five countries’ institutions, economies and infrastructures, the
EC needs to approve financing commensurate with the objectives being pursued.

The exact amount will have to be calculated on the basis of several factors.

While the level of financing must reflect the significance of the political signal being given to
these countries, we must not forget that we are not yet absolutely clear on their real needs. A
lot of work still needs to done here and the countries’ absorption capacity must also be taken
into account.

Nor is it certain that all the countries will be able, by 2000, to fulfil the conditions for taking
part in this programme.

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In the light of the above, an estimated sum of EUR 5 500 million in the form of grants is
conceivable for this period (2000-2006). It will go to finance assistance to the region under
the new regulation and, where appropriate, macrofinancial assistance. When the proposal for
the new regulation is presented at the beginning of 2000, the regions' requirements will be
programmed on the basis of an estimate of requirements and in the form of a financial
statement. The sum of EUR 5 500 million serves as a “political” financial reference point, it
being understood that the political instability in the region does not make it possible at this
stage to draw up a duly substantiated financial statement.

This sum represents a considerable increase compared with the resources earmarked for
assistance to the region in the preceding period. The sum is such that a proposal should be
made for revising the perspective on the basis of the new programming of the whole of
heading 4 which is to take place in February 2000.

A programme of this kind makes it necessary to lay on the human resources needed for the
implementation of a programme on this scale. A lack of human resources could cause a
recurrence of the difficulties encountered in the past which led to delays in implementation.

A substantial portion of this amount will be earmarked for the reconstruction of Bosnia and
Herzegovina, Kosovo, Serbia and Croatia. In the case of Serbia, assistance for reconstruction
will depend on the political conditions. Another large portion will go towards regional
cooperation.

7. CONCLUSIONS

The Commission is requested to adopt
Parliament for information.

this document and send it

to the Council and

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