Proposal for a Council Decision concerning the Community position within the Association Council on the participation of Hungary in the financial instrument of the Community for the environment (LIFE)
Date: 2000-09-06
Institutions: European Commission
Subjects: Association Council (EU), EU financial instrument, Hungary, environmental policy, financing of the EU budget

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 06.09.2000
COM(2000) 510 final

2000/0228 (ACC)

Proposal for a

COUNCIL DECISION

concerning the Community position within the Association Council on the participation
of Hungary in the financial instrument of the Community for the environment (LIFE)

(presented by the Commission)

EXPLANATORY MEMORANDUM

The Helsinki European Council of December 1999 confirmed the enlargement process
launched at its meeting of December 1997 in Luxembourg. The enhanced Pre-Accession
Strategy defined in 1997 has been reiterated, which includes the participation of the
13 candidate States in Community programmes as an important part of this strategy.

With regard to the ten candidate countries of Central and Eastern Europe (CEECs),
participation in Community programmes is provided in their respective Europe Agreements.
Pursuant
the conditions and modalities of these countries’
participation are defined by the respective Association Councils.

to the Europe Agreements,

The third phase of Life will shortly replace the second phase. The Regulation establishing the
LIFE third phase provide that LIFE should be open to the participation of the CEECs (art 6)
from 2000, but because of the delay incurred in adoption by the Parliament and the Council,
such participation will only be feasible from 2001.

Hungary has already confirmed its willingness to participate in the new programmes as from
2001, and to pay its financial contribution partly from its national budget, and partly from its
annual Phare allocation.

The main issues addressed in the proposed Decision of the Association Council are the
following:

• projects and actions submitted by participants from Hungary shall be subject to the same
conditions, rules and procedures pertaining to LIFE as are applied to Member States,
the
regarding in particular the submission, assessment, and selection of applications,
responsibilities of the national authorities in the implementation, and the activities related
to the monitoring of their participation in the programmes;

• Hungary will pay each year a contribution, as established in the Association Council
decisions. This contribution will not be reimbursed to Hungary if, at the end of the year, the
results fall short of the contribution paid;

• as provided in the conclusions of the meeting of the European Council in Luxembourg,
Hungarian experts will be invited to attend the LIFE Committees as observers, for the
points which concern them;

• the decision will apply for the duration of the programmes, starting from 1 January 2000,

and will enter into force the day of its adoption.

The early adoption of Association Council decisions would allow Hungary to continue being
actively involved in this internal Community instrument without any interruption, as part of
reinforced pre-accession strategy. It is, therefore, of considerable political importance.

Accordingly, the Council is invited to adopt the annexed proposal for Decision concerning the
Community position within the respective Association Council.

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2000/0228 (ACC)

Proposal for a

COUNCIL DECISION

concerning the Community position within the Association Council on the participation
of Hungary in the financial instrument of the Community for the environment (LIFE)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular
Articles 175(1), in conjunction with Article 300(2) thereof,

Having regard to the proposal from the Commission,

Whereas:

(1)

(2)

(3)

The Additional Protocol to the Europe Agreement establishing an association between
the European Communities and their Member States, of the one part, and the Republic
of Hungary, of the other part, has been concluded by decision of the Council and the
Commission of 4 December 1995;

According to Article 1 of the said additional Protocol, Hungary may participate in
Community framework programmes, specific programmes, projects or other actions
notably in the field of environment and according to Article 2 the terms and conditions
for the participation of Hungary in these activities shall be decided by the Association
Council;

Regulation (EC n°…/2000) of … 2000 of the European Parliament and the Council
concerning the financial instrument for the environment (LIFE)1 and, in particular,
Article 6 thereof, provide that LIFE shall be open to the participation of the accession
candidate Central and Eastern European countries in accordance with the conditions
set out in the Association Agreements, and on the basis of the provisions set up in the
decisions of the respective Association Councils,

HAS DECIDED AS FOLLOWS:

1

OJ L , , p.

3

The position to be taken by the Community within the Association Council established by the
Europe Agreement between the European Communities and their Member States, of the one
part, and the Republic of Hungary, of the other part, concerning the participation of Hungary
in the financial instrument for the environment (LIFE), is the attached draft decision of the
Association Council.

Done at Brussels,

For the Council
The President

4

Draft

DECISION N° …/ 2000 OF THE ASSOCIATION COUNCIL

between the European Communities and their Member States, of the one part, and the
Republic of Hungary, of the other part

adopting the terms and conditions for the participation of the Republic of Hungary in
the financial instrument for the environment (LIFE)

THE ASSOCIATION COUNCIL

Having regard to the Europe Agreement between the European Communities and their
Member States, of the one part, and the Republic of Hungary, of the other part2

to the Europe Agreements establishing an
Having regard to the Additional Protocol
association between the European Communities and their Member States, of the one part, and
Hungary, of the other part, concerning Hungary's participation in Community programmes,
and, in particular, Articles 1 and 2 thereof 3;

Whereas:

(1)

(2)

According to Article 1 of the said Additional Protocol , Hungary may participate in
Community framework programmes, specific programmes, projects or other actions
notably in the field of environment;

According to Article 2 the terms and conditions for the participation of Hungary in
these activities shall be decided by the Association Council;

HAS DECIDED AS FOLLOWS:

Article 1

instrument for the
Hungary shall, as from 1 January 2001, participate in the financial
environment (hereinafter called LIFE) according to the terms and conditions set out in
Annexes I and II which shall form an integral part of this Decision.

This Decision shall apply for
1 January 2001.

the duration of

the LIFE third phase, starting from

Article 2

2

3

OJ L 357, 31.12.1994, p. 2
OJ L 317, 30.12.1995, p. 40

5

Article 3

Proposals submitted to the Commission by Hungary before the 31 October 2000 for Life
Nature and before the 30 November 2000 for Life Environment will be eligible for
evaluation.

Article 4

This Decision shall enter into force the day of its adoption by the Association Council.

Done at Brussels,

For the Association Council
The President

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1.

2.

3.

4.

5.

6.

7.

ANNEX I

Terms and conditions for the participation of the Republic of Hungary
in the financial instrument for the environment (LIFE).

Hungary will participate in all actions of LIFE in accordance with the objectives,
criteria, procedures and deadlines laid down in Regulation (EC n°…/2000) of
… 2000 of the European Parliament and of the Council concerning this financial
instrument;

To participate in the programme, Hungary will pay each year a contribution to the
general budget of the European Union according to the modalities described in
Annex II.

If necessary in order to take into account LIFE developments, or the evolution of
Hungary’s absorption capacity, the Association Committee is entitled to adapt this
contribution, so as to avoid budgetary imbalance in the implementation of LIFE.

the submission, assessment and selection of
The terms and conditions for
applications related to eligible institutions, organisations and individuals of Hungary
will be the same as those applicable to eligible institutions, organisations and
individuals of the Community.

The Commission may take Hungarian experts into consideration when appointing
independent experts according to the relevant provisions of the decision establishing
the programme to assist it in the project evaluation.

To reflect the Community dimension of LIFE, transnational projects and activities
proposed by Hungary should, whenever relevant, include at least a partner from one
of the Member States of the Community.

The Member States of the Community and Hungary will make every effort, within
the framework of existing provisions, to facilitate the free movement and residence
of experts and other eligible persons moving between Hungary and the Member
States of the Community for the purpose of participating in activities covered by this
Decision.

Activities covered by this Decision shall be exempt from imposition by Hungary of
indirect taxes, customs duties, prohibitions and restrictions on imports and exports in
respect of goods and services intended for use under such activities.

Without prejudice to the responsibilities of the Commission of the European
Communities and the Court of Auditors of the European Communities in relation to
the monitoring and evaluation of the programme pursuant to Article 9 of the Reg.
the participation of Hungary in the programme will be
EEC ….2000 (LIFE),
continuously monitored on a partnership basis involving the Commission of the
European Communities and Hungary. Hungary will take part in any other specific
activities set out by the Community in that context.

7

8.

9.

10.

11.

conformity with

the Community’s Financial Regulations,

contractual
In
arrangements concluded with entities of Hungary shall provide for controls and
audits to be carried out by, or under the authority of, the Commission and the Court
of Auditors. As far as financial audits are concerned, they may be carried out with
the purpose of controlling such entities’ income and expenditure, related to the
contractual obligations towards the Community. In a spirit of co-operation and
mutual interest, the relevant authorities of Hungary shall provide any reasonable and
feasible assistance as may be necessary or helpful under the circumstances to
perform such controls and audits.

Without prejudice to the procedures referred to in Article 3, paragraph 7, and in
Article 11 of the Regulation EC n°…/2000, representatives of Hungary will, for the
points which concern them, participate as observers in the relevant committees. The
committees shall meet without the presence of representatives of Hungary at the time
of voting.

The language to be used in all contacts with the Commission, as regards the
application process, contracts, reports to be submitted and other administrative
arrangements for the programmes, will be one of the official languages of the
Community.

The Community and Hungary may terminate activities under this Decision at any
time upon twelve months’ notice in writing. Projects and activities in progress at the
time of termination shall continue until their completion under the conditions laid
down in the appropriate agreements.

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ANNEX II

Financial contribution of the Republic of Hungary to LIFE

1.

2.

The financial contribution to be paid by Hungary to the budget of the European
2.280.000 for each of the first two budgetary
Union to participate in LIFE will be
years. Supplementary costs of
included in the
are
above-mentioned amount.

administrative nature

€

The contribution to be paid by Hungary for the following period will be decided by
the Association Council in the course of the year 2002.

Hungary will pay the contribution mentioned above, partly from the Hungarian
national budget and partly from Hungary’s PHARE National Programme. Subject to
a separate PHARE programming procedure, the requested PHARE funds will be
transferred to Hungary by means of a separate Financing Memorandum. Together
with the part coming from Hungary’s State budget, these funds will constitute
Hungary’s national contribution, out of which it will make payments in response to
annual calls for funds from the Commission.

3.

PHARE funds will be requested according to the following schedule:

€

€

–

–

1.045.000 for the contribution to LIFE for the first year 2001;

1.045.000 for the second year.

The remaining part of the contribution of Hungary will be covered from the
Hungarian State budget.

4.

The financial regulation applicable to the general budget of the European Union will
apply, notably to the management of the contribution of Hungary.

Travel costs and subsistence costs incurred by representatives and experts of
Hungary for the purposes of taking part as observers in the work of the committee
referred to in Annex I, point 9, or other meetings related to the implementation of
LIFE shall be reimbursed by the Commission on the same basis as, and in
accordance with, the procedures currently in force for non-governmental experts of
the Member States of the European Union.

5.

After the entry into force of this Decision and at the beginning of each following
year, the Commission will send to Hungary a call for funds corresponding to its
contribution to LIFE under this Decision.

This contribution shall be expressed in Euro and paid into an Euro bank account of
the Commission.

Hungary will pay its contribution according to the call for funds:

9

–

–

by 1 April for the part financed from its national budget, provided that the call
for funds is sent by the Commission before 1 March, or at the latest one month
after the call for funds is sent if later;

by 1 April for the part financed from PHARE, provided that the corresponding
amounts have been sent to Hungary by this time, or at the latest in a period of
30 days after these funds have been sent to Hungary.

Any delay in the payment of the contribution shall give rise to the payment of
interest by Hungary on the outstanding amount from the due date. The interest rate
corresponds to the rate applied by the European Central Bank, on the due date, for its
operations in Euro, increased by 1.5 percentage points.

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FINANCIAL STATEMENT

1.

TITLE OF OPERATION

Participation of Hungary in the financial instrument for the environment (LIFE).

2.

BUDGET HEADINGS INVOLVED

B 4-3200A, B 4-3201A and B7-030 (Economic aid to the associated countries of
Central and Eastern Europe) and 6091 (Revenue accruing from the participation of
the candidate countries in Community programmes)

3.

LEGAL BASIS

Treaty establishing the European Community, and, in particular, Articles 175(1), in
conjunction with Article 300(2) thereof;

The Additional Protocol to the Europe Agreement with Hungary, providing for the
participation in Community programmes;

Regulation of the European Parliament and of the Council (EC n°..…/2000) of
the… 2000 concerning the financial instrument for the environment (LIFE) and, in
particular, Article 6 thereof.

4.

4.1

DESCRIPTION OF OPERATION

General objective

The additional protocols to the Europe Agreement with Hungary provide for
Hungary’s participation in Community programmes in a wide range of areas,
amongst which is the environment.

In line with the Commission communication “Agenda 2000” of 16 July 1997 and of
the conclusions of the European Council in Luxembourg, Hungary’s participation in
LIFE has been part of the reinforced preaccession strategy which assists this country
in its preparation for future accession to the Union.

Its participation in LIFE will not only contribute to preparing it for its future
accession to the Union and towards the implementation of the provisions relating to
economic and environmental co-operation in the Europe Agreement, but will also
enable Hungary to familiarise itself with the procedures and methods used in
Community programmes.

This new draft Association Council Decision aims at allowing the Hungarian
participation to be carried on and to ensure the best efficiency of the new third phase
of LIFE. This decision lays down conditions, notably as concerns Hungary’s
financial contribution and practical arrangements for participation in LIFE.

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4.2

Period covered and arrangements for renewal

Until the end of the Community programme concerned, i.e. 31 December 2004.

5.

5.1

5.2

5.3

CLASSIFICATION OF EXPENDITURE OR REVENUE

Non-compulsory expenditure

Differentiated appropriations

Type of revenue involved

Since Article 3 of the Additional Protocol to the Europe Agreement stipulates that
Hungary itself will meet the costs resulting from its participation, it will be invited to
pay a contribution for participating in the programme. As the same article states that
the Community may supplement Hungary’s contribution, Hungary will contribute
only part from its national budget. The remaining part of its contribution will be
taken from its PHARE National Programme. The required PHARE funds will be
charged to heading B7-030 and transferred to Hungary by means of a separate
Financing Memorandum. Together with the part coming from Hungary’s state
budget, these funds will constitute Hungary’s national contribution, out of which it
will make payments in response to annual calls for funds from the Commission. The
total contribution, once paid by Hungary, will be transferred to item 6091 of the
EU’s budget receipts.

6.

TYPE OF EXPENDITURE OR REVENUE

– 100% subsidy;

– Subsidy for joint financing with other sources in the public and/or private sector;

– No provision for all or part of the Community contribution to be reimbursed;

– As far as revenue is concerned, provision for Hungary’s contribution to cover the
cost of its participation is made under item 6091. The revenue will be allocated to
the items for expenditure on the programme in question and, where appropriate, to
the relevant items of operating expenditure. The total revenue expected is given
under item 7.4.

7.

7.1

FINANCIAL IMPACT

Method of calculating total cost of operation (link between individual and total
costs)

Based on the Additional Protocol to the Europe Agreement with Hungary,
the
financial and budgetary arrangements for the programme concerned are as follows:
Hungary’s contribution takes into account two elements:

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–

–

the foreseeable operational costs, which have been estimated on the basis of the
GDP per capita weighted with purchasing power parity in relation to the LIFE
budget (the draft preliminary budget for LIFE 2000), the country’s estimated
take-up capacity and previous experience of its participation in LIFE;

the foreseeable administrative costs, corresponding to the meetings and
missions. These estimated administrative costs amount yearly to
12.000 for
missions and participation in meetings (chapter A) and
68.000 for project
monitoring
(chapter B).

€

€

Hungary will use part of its national PHARE annual programme as a complement to
its state budget to finance its contribution to the operational costs.

7.2

Itemised breakdown of cost

€

)

2001 (

€

)

2002 (

Origin: national budget

1 125 000

1 125 000

Of which administrative costs part A
(see point 10)

Of which administrative costs part B
(see point 7.3)

Origin: PHARE

Total contribution

12 000

68 000

1 045 000

2 170 000

12 000

68 000

1 045 000

2 170 000

7.3

Operational expenditure for studies, experts etc. included in Part B of the
budget

Up to a maximum in proportion to the appropriations of that kind in the EUR 15
allocation for the programme (5% max), but within the limits allowed by the part of
the contribution which came from the country's national budget.

7.4

Schedule of commitment and payment appropriations

Amounts to be charged to item B7-030:
€

1.125.000 in 2001 and the same amount for 2002, in commitment appropriations

and in payment appropriations.

The foreseeable annual receipts for 2001 and 2002 are as follows:
€

€

2.170.000, of which

2.090.000 for the operational costs, and

€

80.000 for the

administrative costs.

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8.

FRAUD PREVENTION MEASURES

All the Commission’s contracts, agreements and other legal commitments provide
for on-the-spot checks by the Commission and Court of Auditors. Amongst others,
the beneficiaries of the operations are obliged to file reports and financial statements.
These are analysed from the point of view of their content and the eligibility of the
expenditure in line with the objective of Community financing.

The anti-fraud provisions of the basic budget headings apply to this heading too
when adapted to the case of the countries of Central Europe.

9.

9.1

ELEMENTS OF COST-EFFECTIVENESS ANALYSIS

Specific and quantified objectives; target population

The aim of opening up the financial instrument LIFE to Hungary is to bring about
similar benefits as for Member States of the Community.

Where LIFE Nature is concerned, the specific objective is to promote, as a matter of
priority, the measures needed for the identification, maintenance or re-establishment
of natural habitats and for the conservation of wild fauna and flora of Community
and/or European importance.

Where measures other than those relating to nature protection are concerned, the
objectives are in particular:

• Help define the most appropriate infrastructure investments needed to implement
Community environmental legislation and undertake demonstration actions to
increase the efficiency of community aid for the environment;

• Contribute

to

the

sustainable

development

in

industry by

promoting

demonstration projects using innovative clean techniques and methods;

• Promote better land use by integrating environmental consideration on the
environment and on sustainable development in order to achieve cleaner socio-
economic activities, in particular in urban areas.

Lastly, where the accompanying measures are concerned, the aim is to ensure a
better cost-benefit ratio for assistance from the instrument and to prevent any fraud.

As illustrated by the past experience of LIFE, target beneficiaries are the following:

• Private sector (SMEs, business partnerships) such as new technologies, and waste

recycling;

• Public sector (local and central authorities);

• Partnership between private and public sector;

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• Non-governmental organisations and associations, particularly at regional/local

level;

• Universities (mainly for nature conservation).

9.2

Grounds for the operation

–

Need for Community financial aid

In view of the high cost of participation in the programme and Hungary’s
precarious budgetary situation, assistance from PHARE is essential.

–

Choice of ways and means

With a contribution from the national budget, supplemented by one from
PHARE, Hungary’s participation in LIFE will allow the Hungarian
stakeholders to co-operate with the aim of
familiarising with the EU
environmental "acquis". Consequently LIFE will serve the dual purpose of
providing Hungary with an adequate preparatory grounding in this field and of
integrating Hungarian bodies in Community networks in order to make a
definite contribution to Hungary 's future membership

–

Main factors of uncertainty which could affect the specific results of the
operation

Since projects will be selected according to qualitative criteria, it will only be
possible to measure the real impact on the basis of Hungarian firms, bodies and
non governmental organisations’ capacity to respond to the calls for proposals
launched by the Commission under LIFE.

9.3

Monitoring and evaluation of the operation

The control and monitoring procedures for LIFE (as provided for in the LIFE
regulation) will also apply to Hungarian beneficiaries.

10.

ADMINISTRATIVE EXPENDITURE (SECTION III, PART A OF THE BUDGET)

The actual mobilisation of the necessary administrative resources will depend on the
Commission’s annual decision on the allocation of resources, taking into account the
number of staff and additional amounts authorised by the budgetary authority.

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10.1

Effect on the number of posts

Type of post

Staff to be assigned to managing
the operation

Source

Duration

Additional
resources

2000-2004

Permanent
posts

Temporary
posts

0.3

0.2

0.5

Existing
resources in
the DG or
department
concerned

0.3

0.2

0.5

Officials or
temporary staff

A
B
C

Total

10.2

Overall financial impact of the human resources
€

Amounts

Method of calculation (total cost for the period 2001-2004)

€

Officials (*)

216.000

0.5 man x 4 years x 108.000

Total

216.000

(*) By using existing resources required to manage the operation (Calculation based on titles
A1, A2, A4, A5 and A6).

10.3

Increase in other administrative expenditure as a result of the operation

Budget heading

€

Amounts

Method of calculation (yearly cost of the action)

€

A 7010 -missions

4.400

1.100 EURO x 4 yearly missions

A 7031 -committees

4.400

Travel allowance and subsistence allowance for 1 participant in
4 two-day meetings (2 LIFE nature - 2 LIFE environment)

A 7030 - other meetings

3.200

Travel allowance and subsistence allowance for 1 participant in
3 one-day meetings

Total

12.000

The above expenditure will be met from the receipts (article 4, paragraph 2, third indent of the
financial regulation) received from Hungary (see points 5.3 and 7.4 of the financial
statement).

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