Report on the International Fund for Ireland pursuant to Article 5 of Council Regulation (EC) No. 214/2000 - [SEC(2001)1579]
Date: 2001-10-01
Institutions: European Commission
Subjects: EU financing, European Commission, Northern Ireland, activity report, cross-border cooperation, international aid

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels,01.10.2001
COM(2001) 548 final

REPORT

on the International Fund for Ireland pursuant to Article 5 of Council Regulation (EC)
No. 214/2000

[SEC(2001)1579]

(presented by the Commission)

TABLE OF CONTENT

1.

2.

Introduction.................................................................................................................. 3

Survey of the IFI's Activities ....................................................................................... 4

2.1

Overall Description of the IFI...................................................................................... 4

2.1.1

Objectives and Priorities .............................................................................................. 4

2.1.2

Organisation and functioning....................................................................................... 4

2.1.3

Activities ...................................................................................................................... 5

2.1.4

Budget ......................................................................................................................... 8

2.2

3.

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

4.

4.1

EU Involvement in the IFI ........................................................................................... 9

Past Assessments of the IFI activities ........................................................................ 10

KPMG impact assessments commissioned by the IFI ............................................... 10

The 1999 Commission report to the EC Budget Authority........................................ 11

The 2000 USAID Audit ............................................................................................. 11

The European Court of Auditors Special Report No 7/2000 ..................................... 11

Audits by the European Commission services........................................................... 12

The 2001 NISRA impact Study in Northern Ireland ................................................. 13

The PriceWaterhouse Coopers draft audit report....................................................... 14

Conclusion ................................................................................................................. 14

IFI activities and the new round of Structural Funds................................................. 14

IFI and EU Programmes : Complementarity of Objectives ....................................... 15

4.1.1

Synergies of Priorities ................................................................................................ 15

4.1.2

Targeting of resources and selection criteria ............................................................. 17

4.1.3

Conclusion ................................................................................................................. 19

4.2

Organising Co-ordination .......................................................................................... 19

4.2.1

Current Co-ordination arrangements ......................................................................... 20

4.2.2

Improving co-ordination ............................................................................................ 21

4.2.3

Conclusion ................................................................................................................. 22

5.

6.

Publicity and information........................................................................................... 22

Conclusion and Proposals .......................................................................................... 23

2

REPORT ON THE
INTERNATIONAL FUND FOR IRELAND
Pursuant to Article 5 of
Council Regulation (EC) N° 214/2000

_________

1.

INTRODUCTION

Since  the  1960's,  the  regional  political  context  of  Northern  Ireland  has  been
dominated by inter-community strife  and violence. In 1985, almost 13  years before
the Belfast/Good Friday Agreement was signed (April 1998), the Anglo-Irish Treaty
was agreed which provided for the two Governments to "co-operate to promote the
economic and social development of those areas of both parts of Ireland which have
suffered most severely from the consequences of the instability of recent years" and
"to consider the possibility of securing international support for this work".

This  gave  birth  to  the  International  Fund  for  Ireland  (IFI)  which  was  set  up  the
following year (1986) as an independent international organisation, in the form of a
Trust or Foundation, with its own governing body.

The  European  Community  has  been  contributing  to  the  IFI  since  1989.  European
Union  support  represents  34 %  of  annual  contributions  to  the  Fund  and  38 %  of
cumulative contributions to date.

Council  Regulation  (EC)  No.  214/2000  provides  the  current  legal  basis  for  the
Community contributions in respect of the  years 2000, 2001 and 2002. Article 5 of
that Regulation provides for an assessment to be made of the need for further support
beyond  2002  and  to  be  submitted  to  the  EC  Budgetary  Authority  (European
Parliament and Council of the European Union). This assessment should cover inter
alia the following matters:

(cid:1)  a survey of the IFI's activities ;

(cid:1)  a list of projects which have received aid ;

(cid:1)  an  assessment  of  the  nature  and  impact  of  the  intervention,  in  respect,  in
particular, of  the objectives of the  IFI  and  the  criteria  laid  down  in  the  first  and
second  paragraph  of  Article  2  ("priority  given  to  projects  of  a  cross-border  or
cross-community  nature,  in  particular  those  with  the  objectives  of  the  PEACE
programme  and  other  operations  supported  by  the  Structural  Funds" ;  "genuine
additional  impact  on  the  areas  concerned  (…)  not  therefore  [ to ]  be  used  as  a
substitute  for  other  public  or  private  expenditure") and  in  Article  3  ("the
Commission  shall  ensure  co-ordination  between  the  Fund's  activities  and  those
financed  by  Community  structural  policies"  ;  "the  Commission  shall  keep  the
relevant monitoring committees informed of the activities of the Fund")

(cid:1)  an annex containing the results of the verifications and controls carried out by the
Commission representative or its agents, particular as regards the modalities of the
co-ordination  of  the  IFI's  activities  with  those  carried  out  under  the  Community
structural policies.

3

This report and its annexes provide that assessment. It goes further by presenting past
assessments of the IFI carried out by other sources, and by addressing the question of
publicity and information (Article 4).

2.

2.1

SURVEY OF THE IFI'S ACTIVITIES

Overall Description of the IFI

2.1.1

Objectives and Priorities

The  IFI  was  established  by  an  agreement  made  between  the  British  and  Irish
Governments in 1986 (ANNEX I). The IFI came into existence in December of that
year.

The agreement sets out the IFI’s principal objectives as being

(cid:1)  to promote economic and social advance, and

(cid:1)  to  encourage  contact,  dialogue  and  reconciliation  between  nationalists  and

unionists throughout Ireland.

The  IFI  is  required  to  maximise  the  economic  and  social  benefits  arising  from  the
expenditure  of  the  funds  available  to  it,  subject  to  a  requirement  that  its
disbursements are consistent with the relevant policies of both Governments.

The agreement sets out the following priorities for the IFI

(cid:1)  stimulation of private sector investment, in particular by means of venture capital

initiatives,

(cid:1)  projects of benefit to people in both parts of Ireland,

(cid:1)  projects  to  improve  the  quality  and  conditions  of  life  for  people  in  areas  facing

serious economic and/or social problems, and

(cid:1)  projects  to  provide  wider  horizons  for  people  from  both  traditions  in  Ireland

through industrial training and work experience overseas.

The agreement also provided that approximately 75% of the IFI’s resources shall be
distributed in Northern Ireland.

2.1.2

Organisation and functioning

The  UK  and  Irish  governments  jointly  appoint  a  Chairman  and  a  Board  of  six
members, which oversee the direction, and operation of the IFI (see ANNEX II). The
Board  are  appointed  for  a  three-year  term  after  which  they  are  eligible  for
re-appointment; the present Board will be eligible for re-appointment on 31 January
2003.  The  Board  is  representative  of  the  communities  in  both  the  North  and  the
South of Ireland and meets on average five times annually. Board meetings are held
alternately in North and South Ireland.

4

The  IFI  was  initially  empowered  in  1987  with  financial  contributions  from  the
Governments  of  the  United  States,  Canada  and  New  Zealand.  EU  contributions
commenced  in  1989  and  Australia  started  its  financial  commitment  in  1995.
Representatives of the EU and of the donor countries participate in Board meetings
as Observers.

A  Secretariat,  led  by  two  Joint  Directors-General,  provides  co-ordination  and
administration of the work of the IFI. It is made up of civil servants seconded from
both the Irish and UK administrations and it is based in Belfast and Dublin.

The Board is also assisted by an Advisory Committee of officials appointed by and
representative  of  the  UK  and  Irish  governments.  The  Advisory  Committee  meets
prior to Board meetings to prepare advice for the  Board on projects that have been
put forward for decision and other issues. The two Joint  Chairmen of the Advisory
Committee or their deputies attend Board meetings.

Each of the IFI's main programmes (see following section) is administered on a day
to day basis by a joint Programme Team, which brings together relevant expertise
from  Government  Departments  and  specialist  agencies,  North  and  South  (see
ANNEX III).  These  teams  act  as  administering  agents  for  the  IFI,  within  written
guidelines  and  criteria,  and  under  the  direction  of  Designated  Board  Members
(DBMs) (see ANNEX II).

In  addition,  the  IFI  has  put  in  place  a  team  of  10  locally  based  Development
Consultants  to  provide  a  local  interface,  particularly  in  liasing  with  local
communities, assist in identifying suitable projects, and where necessary, to provide
assistance  to  the  promoters  of  projects  in  the  formulation  of  proposals  (see
ANNEX IV).

the  Board's  approval  of 

The  Board  of  the  IFI  is  the  final  decision-taker  on  all  matters,  including  project
individual  projects,  direct
applications.  Following 
responsibility for their processing is divided between the Secretariat, consultants and
government  departments  acting  as  IFI  agents.  The  Secretariat  handles  the  smallest
number of programmes and usually those which contain a small amount of projects.
In  Ireland,  the  majority  of  programmes  are  implemented  by  consultants,  semi-
government  and  national  agents  whereas  in  Northern  Ireland,  the  IFI  mainly  uses
agents.

2.1.3

Activities

A list of projects which have received aid is presented in ANNEX V.

Initially, projects were financed by the IFI under six programmes. The Board of the
IFI regularly reviews its priorities and programmes and introduces new initiatives to
meet identified needs as appropriate. For example during 2001 a major new initiative
to target community development at a number of recognised flash point areas within
the  most  deprived  areas  was  approved  by  the  Board.  Today’s  IFI  activities  are
carried out through various programmes and schemes which can be clustered under
three headings:

5

1.

Regeneration of Deprived Areas

This is a series of community-led and economically driven programmes that operate
exclusively in the most disadvantaged areas.

(cid:1)  Community Regeneration Improvement Special Programme (CRISP): CRISP
seeks to empower local communities on a cross-community basis to encourage the
economic  and  physical  regeneration  of  the  most  disadvantaged  small  towns  and
villages in Northern Ireland.

(cid:1)  Community  Economic  Regeneration  Scheme  (CERS):  CERS  targets  the
deprived  urban  areas  in  Northern  Ireland  offering  support  to  community-led
projects  for  the  economic  regeneration  of  areas  where  the  private  sector  market
has failed.

(cid:1)  Border Towns and Villages (BTV): BTV works in the Southern border counties
around the development of core economic projects for towns or villages, with the
aim of helping the regeneration of areas that have suffered from the instability of
recent years.

(cid:1)  Rural Development Programme (RDP): RDP supports community-led projects
which foster the economic and social regeneration of the deprived rural areas

(cid:1)  Special  Projects:  individual  projects  of  particular  merit  which  meet  the  IFI's

objectives but for which there is no specific programme of support.

2.

Community Capacity Building

This  series  of  programmes  seeks  to  build  capacity  within  the  wider  community,
particularly in the most disadvantaged areas.

(cid:1)  Community  Leadership  Programme:  this  programme  is  designed  to  lay  the
foundations  for  the  regeneration  of  the  most  disadvantaged  and  underdeveloped
areas. It provides training and support to groups and individuals who feel that they
have  something  to  offer  their  local  communities,  yet  require  some  assistance  to
start the process of community development.

(cid:1)  Communities  in  Action  Programme:  this  pilot  programme  funded  30  projects
over a four year period which ended in 2000 and which impacted on the lives of
people, particularly women and children, living in disadvantaged areas.

(cid:1)  New  Community  Initiative:  approved  by  the  Board  in  June  2001,  this
programme will be in continuation of the "Communities in Action" programme. It
will  support the creation and development  of community  infrastructure  and  help
alleviate the tensions that exist in these areas by targeting community leaders and
potential leaders.

(cid:1)  Community Bridges Programme: this programme aims to support organisations
which  promote  greater  dialogue  and  understanding  and  tackle  issues  of  division
between people from different cultural and religious traditions within Ireland.

6

(cid:1)  Wider  Horizons  Programme:  this  Programme  offers  disadvantaged  young
people, aged 16-28, from the two traditions in Northern Ireland and the South the
opportunity  to  improve  their  employment  prospects  through  the  provision  of
training  and  work  experience  at  home  and  abroad,  while  promoting  mutual
understanding and reconciliation between participants.

(cid:1)  Interact  Programme:  this  provides  an  opportunity  for  young  people  in  the
16-17 age  group  to  improve  their  employability  by  providing  enhanced  pre-
vocational  opportunities with a major focus in  the  development of  generic  skills
and  personal  competencies 
in  an  environment  which  promotes  mutual
understanding and reconciliation

(cid:1)  Knowledge  through  Enterprise  for  Youth  (KEY)  Programme:  this  involves
the  development  of  an  enterprise  skills  programme  over  a  three  year  period  for
900 young people in the 14-16 age group from schools in disadvantaged areas in
Northern Ireland and the Southern border counties from all traditions and entering
in cross-community contacts.

3.

Economic Development

This  series  of  programmes  is  designed  to  encourage  the  development  of  the  local
economic  base  through  community  or  private  led  initiatives  providing  economic
opportunities and job creation in several key areas.

(cid:1)  Business  Enterprise  and  Technology  Programme:  the  principal  aim  of  the
Business  Enterprise  Programme  is  the  creation  of  conditions  within  which
enterprise  and  business  opportunities  can  flourish.  A  major  element  of  the
Programme  has  been  the  Fund's  continued  contribution  towards  local  economic
development. Components of this programme are :

– 

– 

– 

RADIANE  (Research  and  Development  between  Ireland  and  North
America  or  Europe):  RADIANE  seeks  to  stimulate,  promote  and
provide  financial  support  for  product  and  process  development  joint
ventures  which  are:  mutually  profitable,  innovative,  technology  based
and  market  led  between  Manufacturing  or  Internationally  Tradeable
Services  companies  located  in  Northern  Ireland  or  the  six  southern
border counties and partner companies in the United States of America,
Canada or the European Union.

Ron  Brown  Programme:  hosted  in  Babson  College,  Boston  this
programme  provides  12  places  a  year  for  young  business  men  and
women to receive intensive management training and experience within a
US company.

AMBIT  (American  Business  Internship)  Programme:  provides
business internships in the US for companies from Northern Ireland and
the  Border  Region.  The  Programme  was  expanded  in  1999  to  offer
placements for community leaders.

7

(cid:1)  Tourism  Programme:  The  Tourism  Programme's  overall  aim  is  to  encourage
economic  regeneration  by  stimulating  private  sector  investment  in  the  provision
and  upgrading  of  tourist  amenities  and  through  supporting  tourism  marketing
initiatives and staff development.

(cid:1)  Urban  Development  Programme:  This  Programme  aims  to  generate  economic
activity  in  the  commercial  centres  of  towns  and  villages  by  encouraging  the
owners of vacant and derelict properties particularly in the disadvantaged areas to
bring these back into economic use.

In addition, the IFI introduced a Flagships Programme to support a small number of
major  projects  of  symbolic  importance  for  the  island  as  a  whole,  which  have
potential to make a significant contribution to social and economic regeneration.

It  also  helps  Irish  and  Northern  Ireland  companies  establish  links  with  North
America,  Australia  and  New  Zealand 
links
partnerships programmes.

through  various 

international 

Two investment companies were set up in 1987 which are based respectively in the
North  and  South  of  Ireland:  Enterprise  Equity  based  in  Belfast  (Northern  Ireland),
and Enterprise Equity based in Dundalk (Ireland). These companies provide venture
capital to new and expanding businesses in Northern Ireland and the Border Region
of Ireland.

2.1.4

Budget

The IFI’s legal status can be assimilated to that of a trust or a foundation.

Since its inception, the IFI has received approximately € 625 million (current prices).
The United States has been and remains its largest contributor (64 %), while the EU
contribution  is  approaching  2/5  of  the  total  committed  resources.  The  combined
contributions  of  the  United  States  and  the  EU  constitute  99 %  of  total  resources
committed  to  the  IFI,  the  remainder  coming  from  Canada,  Australia  and  New
Zealand (see ANNEX VI).

At the end of 2000, the IFI budget available for allocation in 2001 was estimated at
£ 32.66  million  (€ 51.64  million,  current  prices),  compared  with  the  budget  figures
for  2000  and  1999  at  £ 29.35  million  (€ 46.41  million)  and  £ 29.7  million
(€ 46.96 million) respectively.

For  the  year  2001  alone,  the  United  States  contribution  amounts  to  64 %
(US $ 25 million),  the  EU  contribution  36 %  (€ 15 million),  and  the  Canadian
contribution 1 % (Can $ 0.333 million). There is no certainty of annual contributions
from New Zealand and Australia for 2001.

The expense of general administration, organisational costs and the provision of the
Secretariat is met by the UK and Irish Governments.

8

2.2

EU Involvement in the IFI

The IFI being an independent international organisation, like a Trust or Foundation,
with  its  own  governing  body,  one  should  bear  in  mind  that  it  is  different  in  nature
from EU Structural Funds' forms of assistance. The status of the EU within the IFI is
therefore similar to that of the other donor countries.

Since  the  European  Community  first  contributed  financially  to  the  IFI  (1989),  the
European Commission has been involved in its Board meetings with observer status.
Until  May  2000,  the  Commission  was  represented  by  its  Secretary-General  or  his
representative. Since May 2000, the Commission's Directorate-General for Regional
Policy  has  been  directly  responsible  for  the  IFI  within  the  Commission  and  its
Director General or his representative have attended all Board meetings.

In  Berlin,  March  1999,  the  European  Council  recognised  the  particular  situation  in
Northern Ireland and the Border Counties as justification of exceptional support, and

–  continued the PEACE Programme for a further 5 years, from 2000 to 2004, with a
financial  allocation  of  € 500  million  (of  which  € 100  million  was  allocated  to
Ireland), and

–  renewed the EU contribution to the IFI for a further 3 years, from 2000 to 2002, at

the level of € 15 million per year.

Through  annual  commitment  and  payments,  the  EU  financial  contributions  to  IFI
have been as follows :

(cid:1)  1989-1994 :

(cid:1)  1995-1997 :

(cid:1)  1998-1999 :

(cid:1)  2000-2002 :

€ 15 million annually

€ 20 million annually1

€ 17 million annually2

€ 15 million annually3

Over  recent  years,  various  high  level  EU  representatives  have  also  visited  or
launched  IFI  projects,  including  the  former  President  of  the  European  Parliament,
José  María  Gil-Robles,  European  Commissioners  Flynn  and  Kinnock,  and  a
delegation  of  Members  of  the  European  Parliament  led  by  Antoni  Gutiérrez  Díaz,
former Vice-President of the European Parliament. Most recently, during his visit to
Northern Ireland (March 2001) Michel Barnier, European Commissioner responsible
for the IFI, visited a cross-community project funded by the IFI and PEACE I in an
interface area between Protestant and Catholic communities in West Belfast. Similar
visits  and  inauguration  of  IFI-funded  projects  have  been  made  by  the  Director
General  for  Regional  Policy  or  his  representatives  on  the  occasion  of  their
participation to Board meetings. In addition, the Commission’s Offices in Belfast and

1

2

3

Council Regulation (EC) No 2687/1994.
Council Regulation (EC) N° 2614/1997.
Council Regulation (EC) N° 214/2000.

9

                                                
Dublin maintain regular contacts with the IFI and its operations ; they also participate
in launches of IFI-funded projects.

3.

PAST ASSESSMENTS OF THE IFI ACTIVITIES

The IFI is regularly audited by its own accountants (PriceWaterhouse Coopers) and
the  results  are  presented  in  the  annual  report,  which  is  approved  by  the  Board.
However, it is also audited by public audit bodies of the UK and Irish governments
and  is  subject  to  audits  by  the  European  Commission  services4  and  the  European
Court  of  Auditors,  and  other  auditors  acting  on  behalf  of  the  Governments  of  the
other donors.

3.1

KPMG impact assessments commissioned by the IFI

At regular intervals, the IFI commissions evaluation studies of its impacts, conducted
by  external  consultants:  KPMG  completed  a  study  in  1995  which  was  followed  in
1998  by  a  similar  evaluation  carried  out  by  a  consortium  of  consultants5  led  by
KPMG.  A  further  study  has  been  assigned  to  the  same  consortium  in  2001  whose
preliminary findings will be presented to the Board in September 2001.

The  1998  KPMG  Study  concluded  that  almost  90 %  of  IFI  commitments  had
benefited  the  IFI's  Designated  Disadvantages  Areas.  Cumulatively,  up  to  end
September 1997,  8,274 persons had been  estimated  to  be  engaged  in  IFI  supported
cross-community or cross-border projects, while 1,494 companies had participated in
cross-border business development programmes.

The  IFI’s  impact  on  employment  was  estimated  at  a  total  of  31,629  full  time
equivalent  jobs  inclusive  of  direct,  indirect  and  temporary  jobs.  The  study  further
estimated that participants involved in cross-community  groups totalled over 7,600,
whereas participants in cross-border structures totalled over 4,700.

The overall conclusion of the study was that the IFI’s impact had been substantial; its
impact  had  been  assisted  by  the  integration  of  its  economic  and  reconciliation
objectives  and  the  businesses-orientated  and  flexible  approach  of  its  Board.  The
clustering  of  Programmes  under  3  headings  was  a  decision  of  the  Board,  taken  in
1999 on consideration of the findings of the 1998 KPMG Report.

Preliminary results from the 2001 KPMG Report show similar performance in the
three  years  following 
the  previous  study:  between  September  1997  and
September 2000, over 782 new projects have been approved by the Board and new
commitment  have  amounted  to  £80  million.  89 %  have  been  committed  to  the  IFI
designated "Disadvantaged Areas". Additional jobs created by IFI co-funded projects
are  estimated  540. 
in
cross-community groups have increased by 3,530in the same period.

further  estimated 

that  participants 

involved 

is 

It 

4

5

Previously the responsibility of the Directorate-General for Financial Control ; after decentralisation of
the  ex-post  audits  functions,  responsibility  of  the  audit  services  of  Directorate-General  for  Regional
Policy.
KPMG, Colin Stutt Consulting, NIERC.

10

                                                
3.2

The 1999 Commission report to the EC Budget Authority

Pursuant  to  Council  Regulation  (EC)  N° 2614/1997,  the  Commission  submitted  to
the EC Budgetary Authority a report assessing the need for further EC contribution6.
The conclusions of this report may be summarised as follows:

(cid:1)  The  IFI  has  progressively  increased  priority  and  emphasis  on  Disadvantaged

Areas.

(cid:1)  Constant  effort  is  made  to  ensure  complementarity  between  IFI  funding  and

Community support.

(cid:1)  The  IFI’s  principle  objectives  were  stated  alongside  three  areas  of  priority:
creating  economic  opportunities;  addressing  disadvantage  and  deprivation;  and
promoting  contact  dialogue  and  reconciliation.  The  Report  states  that  individual
projects under any of these priorities are designed to have a positive impact on all
the priorities and that in this regard, the IFI tends to give value for money.

(cid:1)  The Report found a ‘close correspondence in objectives and aims between the IFI
and  PEACE’  and  that  the  two  initiatives  have  ‘defined  ways  to  ensure  that  they
complement each other’. Moreover, it reported close co-operation with the other
Structural Fund Programmes.

(cid:1)  Overall,  the  Report  conveys  the  message  that  the  Commission  and  the  IFI  were
aware  of  the  need  to  ensure  complementarity  and  that  in  practical  terms,  efforts
were  being  made  to  preclude  problems  relating  to  double  funding,  additional
impact and complementarity.

3.3

The 2000 USAID Audit

As  part  of  the  audit  requirements  set  out  in  the  USAID  Grant  Letter  of  Credit  of
1997, the IFI commissioned PriceWaterhouse Coopers an audit for  the period  from
1st October  1996  to  30  September  2000.  The  audit  covered  projects  with  an  IFI
contribution  of  £ 375,000  or  above.  The  report  presented  to  the  Board  in
February 2001 concluded that there were no control weaknesses or non-compliance
exceptions.

3.4

The European Court of Auditors Special Report No 7/2000

In 1997, the European Court of Auditors (ECA) carried out an audit of both the IFI
and  the  PEACE  I  Community  Initiative  programme 7.  Its  report  acknowledged  the
fact  that  the  IFI  had  pioneered  the  joint  management  and  delivery  of  programmes
between  Ireland  and  Northern  Ireland  and  was  innovative  in  giving  priority  to
disadvantaged areas for funding. The ECA also praised the IFI’s role as "first funder"
of projects, which enables grant recipients to gain access to other sources of funding.

6

7

from 

the  Secretary  General  of 

Letter 
DG(99)D/210849 (English version).
European Court of Auditors : Special Report No 7/2000, OJ. C146/1, 25.05.2000.

the  European  Commission,  20  September  1999,

11

                                                
The ECA advised that the IFI should consider setting out staffing arrangements and
delegations of power in writing, which was done in December 2000. Moreover, the
Court  deemed  that  the  evaluation  of  project  applications  and  the  post-grant
monitoring  of  IFI-funded  projects  should  be  improved  to  ensure  sound  financial
management  in  all  cases.  Similar  weaknesses  in  monitoring  and  evaluation  were
described in the Commission 1998 Audit report. In response, in September 2000, the
IFI Board decided to commission a study by its auditors (PriceWaterhouse Coopers)
to review its systems and procedures, starting with the functioning of its secretariat's
offices,  whose  results  were  presented  in  draft  form  at  the  June  2001  Board
meeting (see below).

The ECA also criticised the Commission’s system of advance payment of  grant aid
(in application  of the  governing Council Regulation), due to the  fact that it did not
ensure "the most efficient use of EU funding" and allowed the IFI to carry over very
large  cash  balances  every  year.  In  response,  the  IFI  asserted  that  the  Court  of
Auditors had "failed to recognise that the EU support is not going to a private body
for a specific project nor a Government Department or Agency in a Structural Fund
context".  The  Commission  confirmed  that  the  IFI  needs  to  be  sure  of  donor
contributions  well  in  advance  of  final  disbursement  to  projects  therefore  bank
balances  held  by  the  IFI  do  not  represent  ‘unused  monies’.  However,  in  order  to
address  the  ECA  observations,  the  European  Commission  and  the  IFI  agreed  in
November  2000  that  EC  advance  payments  would  be  issued  in  two  instalments  of
40 %  each  rather  than  one  advance  payment.  Since  2000,  the  annual  financial
statement agreed by  the  IFI  allows  the  Commission  to  reclaim  any  unused  funding
after 12 months. Further changes - such as the establishment of a budget for payment
-  would  require  a  modification  of  the  IFI  internal  accounting  system  and  of  the
Council Regulation (See audit mission report and reply by the IFI in ANNEXES VII
and VIII).

The ECA also pointed out that in the case of multifunded actions (funded by both IFI
and the Structural Funds) the Commission services should regularly assess proposed
activities in order to ensure synergy and to avoid overspending and bureaucracy.

Finally,  the  ECA  noted  that  the  absence  of  Commission  audits  and  on-the-spot
checks  needed  to  be  addressed  urgently.  This  aspect  is  addressed  in  the  following
section.

3.5

Audits by the European Commission services

The European Commission services have carried out various audits and on-the-spot
checks of the IFI since the time the ECA investigations took place (1997).

One  audit  was  carried  out  by  the  Commission  services  (Directorate-General  for
Financial Control) in October 1998. The results of this audit and on-the-spot checks
were reported in the previous report to the Budget Authority (see section 3.2).

Another  audit  was  carried  out  in  December  2000  by  the  Commission  services
(Directorate-General 
findings,  conclusions  and
recommendations resulting from this audit are presented in ANNEX VII.

for  Regional  Policy).  The 

12

The objectives of this audit was to review IFI expenditure in the annual accounts for
1999 and 2000, to evaluate IFI management and control procedures, and to evaluate
co-ordination of funding between IFI and the Structural Funds. The audit resulted in
the  following  main  recommendations  each  relating  to  one  of  the  objectives  of  the
audit:

– 

The  Commission  is  concerned  about  the  large  cash  balances  held  by  the  IFI.
The  IFI  budget  is  solely  based  on  a  commitment  budget.  Due  to  the  lack  of
monitoring,  failure  to  apply  fixed  eligibility  periods,  and  lack  of  up-dated
information  about  the  situation  for  individual  projects  from  implementing
agents the IFI is currently not in a position to forecast actual payment needs in
a  given  year.  Sound  financial  management  requires  accurate  information  on
cash  needs  for  an  aid  granting  body.  In  addition  to  the  current  commitment
budget, it is therefore recommended that the IFI draws up an annual budget for
payments. It could then be considered to pay EC contributions on the basis of
the cash needs without this leading to any reduction in the overall contribution
made (see points 1.3, 1.4 and 4.1 of the attached report).

–  Management  and  control  procedures  of  the  IFI  should  be  improved,  in
particular  to  ensure  proper  monitoring  of  the  implementing  agents  and  to
extend  the  current  inadequate  database  (see  points  2  and  4.2  of  the  attached
report).

– 

As  regards  co-ordination  between  IFI  and  the  Structural  Funds,  it  should  be
considered to codify the established practice of a 75 % ceiling for EC funding
to any given project in a future Regulation on Community contributions to the
IFI.  The  IFI  should  also  draw  up  guidelines  as  to  the  application  of  this  rule
(see points 3.3, 3.4 and 4.3 of the attached report).

The  IFI  reply  to  the  findings,  conclusions  and  recommendations  are  presented  in
ANNEX VIII.

3.6

The 2001 NISRA impact Study in Northern Ireland

In 1996 and 2001, the Northern Ireland Statistics and Research Agency (NISRA) was
commissioned to carry out a detailed analysis of the IFI geographical distribution of
commitments  in  Northern  Ireland  in  terms  of  economic  and  social  deprivation  and
community background.

The 2001 figures show that the IFI continues to target the most disadvantaged areas
(70 %  of  its  commitments);  the  correlation  between  the  IFI's  commitments  and
deprivation at District Council level remains high; and the commitments between the
Protestant and Catholic communities overall is well balanced in the designated areas,
although a significant imbalance remains within the non-deprived areas.

The  IFI  decided  that  it  will  shortly  review  its  list  of  designated  deprived  areas  to
make  it  match  with  the  most  up-to-date  index  of  deprivation  in  Northern  Ireland
published in July 2001 ("Noble index").

13

3.7

The PriceWaterhouse Coopers draft audit report

Commissioned by the IFI Board in September 2000 in response to the ECA report, a
draft audit mission report by PriceWaterhouse Coopers (PWC) has been presented to
the Board in June 2001.

The  PWC  draft  findings/recommendations  conclude  that  processes  of  controls  and
procedures  in  place  at  the  IFI  are  broadly  adequate  to  ensure  completeness  and
accuracy  of  disbursement  of  grant  funding  and  that  no  fundamental  weaknesses  in
controls over the grants' cycles were identified. Improvements could nevertheless be
made to avoid variations in procedures established by the IFI agencies and deficiency
of  documentation  held  on  some  project  files  with  regard  to  appraisal  process  and
project  monitoring.  The  absence  of  consistent  post  project  evaluation  and  formal
closure procedures was also stressed.

The IFI intends to use this report to develop an instructions manual with the aim of
standardising procedures across all the IFI's operations. This will also address some
of the points raised by the recent Commission audit (see ANNEX VII), particularly
those  referring  to  the  IFI  monitoring  and  control  procedures  and  the  setting  of
eligibility periods and improved accounting procedures (see ANNEX VIII).

3.8

Conclusion

The  European  Court  of  Auditors  report  and  other  recent  audit  reports  and  impact
studies  have  unanimously  recognised  the  very  positive  contribution  of  the  IFI's
activities  and  its  innovative  approach  in  fulfilling  its  objectives,  i.e.  to  promote
economic and social advance, and to encourage contact, dialogue and reconciliation
between nationalists and unionists throughout Ireland.

Critical  observations  - such  as  aspects  of  technical  management  and  control
procedures - are currently being  improved, but some remain  yet  to be implemented
within the operations of the IFI. Among the issues raised by the latest Commission
audit, the question of the establishment of an IFI payment budget and the modalities
for  codifying  the  existing  practice  of  limiting  all  EU  contribution  to  75 % of  a  co-
funded project will need to be addressed.

Above all, the new round of Structural Funds (2000-2006) set a new background for
the  IFI.  It  is  therefore  essential  to  assess  issues  such  as  complementarity  with  EU
Structural operations and co-ordination with their bodies in this light.

4.

IFI ACTIVITIES AND THE NEW ROUND OF STRUCTURAL FUNDS

The  Council  Regulation  governing  the  EU  contribution  to  the  IFI  states  that  "it  is
vital to ensure proper co-ordination between the Fund's activities and those financed
under Community structural policies". An assessment of the nature and impact of the
IFI  intervention  should  therefore  ensure  that  funding  provided  by  the  IFI
complements the Community Support Frameworks for Northern  Ireland and Ireland
(2000 – 2006),  in  particular  the  EU  Programme  for  Peace  and  Reconciliation  in
Northern  Ireland and  the Border  Region of  Ireland  (“PEACE II  Programme”),  and
other  Structural  Funds’  Operational  Programmes  or  Community  Initiatives  in  the
region  (e.g.  INTERREG III-A).  This  should  further  take  into  account  that  the  EU

14

Programmes  have  indeed  developed  a  more  focused  targeting  and  extensive
monitoring frameworks.

Complementarity between the IFI and EU Programmes, can be sought on two levels:

(cid:1)  on the level of specific objectives and synergy of priorities;

(cid:1)  through close cooperation and coordination between the IFI and EU Programmes’

procedures and structures.

4.1

IFI and EU Programmes : Complementarity of Objectives 

In  accordance  with  Article  2  of  Council  Regulation  N° 214/2000,  the  EC
contribution to the IFI should be used:

– 

– 

“in accordance with the Agreement under which the IFI was established8,

in  priority  for  projects  of  a  cross-border  or  cross-community  nature,  in
particular  those  consistent  with  the  objectives  of  the  PEACE  programme  and
other operations supported by the Structural funds”.

Past assessments of the IFI (see previous section) have shown that it has performed
well  in  fulfilling  the  objectives  and  priorities  drawn  by  the  Agreement  on  which  it
was  established.  This  section  analyses  how  the  IFI  contributes  to  projects  that
complement  the  objectives  and  priorities  of  Structural  Funds  interventions  in
Northern Ireland and Ireland.

4.1.1

Synergies of Priorities

There is a clear similarity between the objectives of the IFI and those of the PEACE
Programme 9.  The  strategic  aim  of  PEACE  is  ‘to  reinforce  progress  towards  a
peaceful  and  stable  society  and  to  promote  reconciliation’.  In  this  new  round  of
Structural  Funds,  the  PEACE  II  specific  objectives  are to  address  the  legacy  of  30
years of conflict in the region and to take the opportunities arising from the return of
peace.  Furthermore,  it  aims  at  paving  the  way  to  reconciliation,  by  encouraging
appropriate levels of cross-community contacts and participation.

8

9

See ANNEX I.
The PEACE II Programme is classified as an objective 1 Operational Programme in the period between
2000 and 2004, for a total amount of € 531 million (80 % : Northern Ireland; 20 % : Border Region of
Ireland).

15

                                                
In practical terms, both initiatives have defined a limited number of priority areas on
which to focus their assistance, with various levels of assistance:

PEACE II 10

IFI 11

1. Economic Renewal 
(32.1 %)

1. Economic Development
(41.5 %)

2. Social Integration, Inclusion and
Reconciliation (24.8 %)

2. Community Capacity Building
(20.5 %)

3. Locally-based Regeneration and
Development Strategies (19.4 %) 

3. Regeneration of Deprived
Areas
(35.2 %)

4. Outward and Forward Looking
Region (5.2 %)

5. Cross-border Co-operation
(15.0 %)

Broad similarities to PEACE  II priorities may be identified  in all  areas  of the  IFI’s
three  groups  of  programmes.  For  example,  under 
the  heading  “Economic
Development”,  the  IFI  contributes  to  the  strengthening  of  private  investor
confidence, technology support and tourism, very much like the PEACE Programme
does  in  its  “Economic  Renewal”  Priority.  Under  “Community  Capacity  Building”,
the IFI promotes training and supports groups and individuals, with a key emphasis
on  young  people  and  women,  in  the  same  way  that  the  PEACE  Programme  does
under its priority 2.

Similar conclusions may be found in comparing other Structural Funds Programmes
in  the  region,  albeit  the  latter  do  not  have  as  an  explicit  goal  the  enhancement  of
peace  and  reconciliation.  For  instance,  the  “Building  Sustainable  Prosperity”
Programme12 also displays a similar set of priorities, namely “economic growth and
competitiveness”,  “employment”,  “urban  and  social  revitalisation”,  “agriculture,
rural development, forestry and fisheries”, and “the environment”. Once adopted, the
INTERREG III-A, URBAN II and LEADER + Community Initiative Programmes
will also display common features with IFI activities in the fields of cross-border co-
operation, urban development and rural development respectively.

10

11

12

Financial tables approved for 2000-2004 in the Commission decision C(2001)638 of 22 March 2001.
IFI Indicative Budget allocation for 2001, December 2000.
Transitional objective 1 Operational Programme for Northern Ireland (2000-2006), for a total amount of
€ 890.5 million.

16

                                                
Under  such  conditions,  it  is  therefore  frequent  that  the  same  projects  are  being
funded under both IFI and EU programmes (ANNEX V). In such cases, although the
IFI often offers a smaller financial contribution than the EU Programmes’ share13 it
also  processes  applications  quickly  and  through  streamlined  selection  procedures.
This explains the reputation of the  IFI  to be considered “first money on the  table”.
This pump-priming role is therefore very useful for projects’ sponsors who then seek
complementary  funding  from  EU  Programmes  and  could  be  further  developed  by
formal co-ordination mechanisms.

The  IFI  and  the  EU  Programmes  differ  most  in  terms  of  methods  for  allocating
financial  amounts  to  their  respective  priorities.  Indeed,  EU  Programmes  plan  their
spending over the entire programming period (2000-2004 for PEACE, 2000-2006 for
all other Programmes) while incorporating the flexibility necessary for the Managing
Authorities  and  their  Monitoring  Committees  to  make  changes  at  any  time  during
this  period.  Conversely,  the  IFI  Board  decides,  once  a  year,  the  following  year’s
budget (adjustments are also made at mid-year) which is based on the known donors’
contributions (mainly US and EU) on the one hand, and on project bids broken down
by  programme  and  by  scheme  on  the  other  hand.  This  sets  a  largely  “demand
sensitive” and short-term approach to funding which makes the IFI more flexible to
respond to emerging needs and opportunities, while EU Programmes develop a more
forward-planning approach. Open and thorough debates at Board meetings and at EU
Programmes’  Monitoring  Committees  –  particularly  the  PEACE  Programme’s  -  on
reprioritisation of their respective activities in the light of evolving needs would be
mutually beneficial.

4.1.2

Targeting of resources and selection criteria

At the operational level, comparisons on targeting resources and the selection criteria
are an essential element in assessing the complementary actions of IFI and other EU
Programmes.  This  is  particularly  important  in  relation  with  PEACE,  as  this
Programme has developed a very innovative methodology.

The most obvious level for targeting is the overall geographical focus : both IFI and
PEACE  operate  mainly  in  Northern  Ireland  and  in  the  Border  Region  of  Ireland.
While this area is the only eligible one for PEACE (as well as for INTERREG III-A),
the  IFI  may fund projects in  any  part  of  the  Irish  territory,  but  it  has  progressively
concentrated  its  action  so  much  so  that  67  %  IFI  funded  projects  are  currently  in
Northern  Ireland  and  33 %  in  the  Border  Region  (between  01.06.1999  and
30.06.2001).

In accordance with the aim of the Agreement establishing the IFI “to [fund] projects
to  improve  the  quality  and  conditions  of  life  for  people  in  areas  facing  serious
economic and/or social problems”, the IFI also developed since its inception a policy
consisting  of  targeting  disadvantaged  areas.  In  1988,  the  Board  formally  adopted  a
list  of  “Designated  Disadvantaged  Areas”  which  was  revised  in  1995.  The  six
border  Counties  of  Ireland  were  confirmed  as  priority  area  under  this  initiative.  In
Northern  Ireland,  the  definition  of  what  constitutes  such  an  area  been  based  on

13

See ANNEX IX on maximum rates of intervention.

17

                                                
indicators of economic and social deprivation (partial use of the “Robson Index”) in
local  government  wards  across  Northern  Ireland  on  the  basis  of  the  1991  Census
data. However, the IFI has widened the definition of disadvantaged areas to include
several pockets of significant disadvantage in local government wards which would
not be classified as disadvantaged on an overall basis. It now covers some 222 wards,
representing  37  %  of  Northern  Ireland  wards  and  36 %  of  its  population.  In  the
South, the Border Region is classified as disadvantaged as  a whole – reflecting the
fact that that region is the most disadvantaged in the Republic and it is also classified
as an Objective 1 region for this round.

The IFI has thus progressively increased the emphasis which it gives to Designated
Disadvantaged  Areas,  not  only  under  the  programmes  of  the  “Regeneration  of
deprived  areas”  theme,  but  also  through  projects  financed  within  its  other
programmes.  It  is  now  estimated  that  90.5  %  IFI  funding  goes  to  Designated
Disadvantage Areas.

This  approach  to  targeting  has  proved  useful  but,  as  the  negotiations  on  the  new
PEACE Programme have shown, it now faces two challenges :

– 

– 

adapting  this index  to economic and social  evolution  in  Northern  Ireland  and
the Border Region in recent years ;

complementing  this  approach  with  criteria  which  are  more  directly  linked  to
the  source  of  the  conflict  in  Northern  Ireland  (which  are  not  economic  and
social in nature);

The  first  challenge  is  being  addressed  both  by  the  IFI  and  EU  Programmes.  The
Board decided in June 2001 to commission a review of its designated disadvantaged
areas to take account of the new index of economic and social deprivation (“Noble
index”) in Northern Ireland which is part of the UK Government’s “New Targeting
Social Needs” policy and will be complemented by the results of the 2001 census as
they become available. In the Border region, the “Combating Poverty” index will be
used in the PEACE Programme. It is likely that the IFI will continue to designate the
entire Border region as “disadvantaged”.

The  second  challenge  had  been  addressed  by  the  new  PEACE  Programme  which
explicitly targets potential beneficiaries as those belonging to  areas, sectors,  groups
or  communities  that  have  been  ‘most  affected  by  the  conflict’  and  which  do  not
necessarily  correspond  to  those  areas,  groups  or  sectors  which  have  been  most
deprived  in  economic  and  social  terms.  Among  others,  PEACE  II  will  therefore
target  areas  that  are  interfaces  between  Protestant  and  Catholic  communities  or
which have been affected by high levels of violence, or affected by border  closures
or  high  levels  of  displaced  persons  ;  groups  such  as  victims  of  violence  and  their
relatives or ex-prisoners ; sectors such as tourism, security, arts or sports. Through its
programmes  and  schemes,  the  IFI  often  funds  projects  which  benefit  the  same
categories of people (with the exception of arts and sports, as the Board has taken the
decision not to support these sectors). However, it does not consider these categories
as overall selection criteria,  nor  does it  monitor  the impact  of  its  activities  on  such
groups.

18

Finally, the Council Regulation insists that the EC contribution to the IFI should be
used “in priority for projects of a cross-border or cross-community dimension”. The
IFI  has  funded  384  cross-community  projects  and/or  176  cross-border  projects,
representing  an  average  of  63 %  and  29 %  of  IFI  funded  projects  between
01.06.1999 and 30.06.2001, respectively.

Gathering this type of information from the IFI requires ad hoc compilation of data
since  it  is  not  available  online  from  a  central  database.  In  the  new  PEACE
Programme,  the  cross-border  dimension  is  addressed  by  a  specific  priority
representing 15 % of the overall Programme financial allocation. It is expected that,
overall,  all  projects  with  a  North-South  dimension  will  represent  € 100  and
€ 400 million  respectively  in  the  Northern  Ireland  and  the  Ireland  CSFs.  This  data
will be collected in a central database as projects are being approved for funding.

The cross-community dimension is addressed in PEACE II as an instrument to help
“pave the way to reconciliation”. All projects seeking assistance from PEACE II will
thus  need to  demonstrate  how  effectively  they  intend  to  develop  reconciliation  and
mutual understanding and respect between and within communities and traditions, in
Northern  Ireland  and  between  North  and  South.  This  new  focus  on  a  cross-
community dimension at an appropriate level (which does not exclude, under certain
conditions,  so-called  “single  identity  projects”)  has  therefore  been  defined  as  a
horizontal requirement applicable to all PEACE priorities. By comparison, the cross-
community dimension is only explicitly required for some IFI programmes (such as
the  “community  Bridges”,  the  Wider  horizon,  the  KEY,  the  “Interact”  and  the
“CRISP”  programmes),  while  it  is  not  a  selection  criterion  for  some  of  the  most
substantial IFI programmes, e.g. all “Economic development” programmes and most
“Regeneration of deprived areas” programmes.

4.1.3

Conclusion

In  conclusion,  although  the  methods  and  financial  scale  with  which  they  are
implemented  remain  distinct,  the  priorities  set  by  both  IFI  and  EU  Programmes
activities complement each other and show high potential for synergies.

In  terms  of  targeting,  the  IFI  emphasis  remains  on  economically  Disadvantaged
Areas,  while  the  PEACE  II  Programme  has  evolved  considerably  by  addressing
explicitly issues such as areas, groups and sectors “most affected by the conflict” and
the  cross-community  and/or  cross-border  dimension(s)  in  making  them  selection
criteria for all projects seeking funding.

Enhancing  complementarity  between  IFI  and  EU  activities  will  not  only  involve
harnessing the synergies between objectives, priorities, and targeting methods, but it
will also depend on establishing operational means. The following section therefore
addresses the issue of co-ordination between IFI and EU Programmes structures and
bodies on the level of management and procedures.

4.2

Organising Co-ordination

The governing Council Regulation (EC)  n° 214/2000  states  in  its  Article  3  that  the
Commission  ‘shall  ensure  co-ordination  between  the  Fund’s  activities  and  those
financed by Community structural policies. The Commission shall keep the relevant
monitoring committees informed of the activities of the Fund”.

19

Article  2  of  the  same  Regulation  states  that  the  EC  contribution  should  be  used  in
such  a  way  that  there  is  a  “genuine  additional  impact  on  the  areas  concerned  and
should  not  therefore  be  used  as  a  substitute  for  other  public  and  private
expenditure”

4.2.1

Current Co-ordination arrangements

Representatives  of  the  European  Commission  attend  all  IFI  Board  meetings.  The
IFI  and  the  Commission  agreed  in  1994  that  in  addition  to  receiving  the  relevant
papers  for  the  Board  meeting,  the  Commission  also  receives  the  papers  of  the  IFI
Advisory  Committee meetings14  (although  presently  the  Commission  does  not
receive all papers, but only those on projects for decision).

Concerning  the  information  on  the  EU  Programmes  Monitoring  Committees,  a
simple solution has been agreed, in the course of the discussions on the new round of
Structural Funds (based on a practice established for INTERREG in the last round of
Structural  Funds),  by  which  representatives  of  the  IFI  secretariats  attend,  in  an
observer  capacity,  the  Monitoring  Committees  most  relevant  to  its  activities,
namely :

(cid:1)  Community Support Framework for Northern Ireland ;

(cid:1)  PEACE II Operational Programme ;

(cid:1)  Building Sustainable Development Operational Programme ;

(cid:1)  INTERREG III-A for Northern Ireland and Ireland Community Initiative ;

Representation  of  the  IFI’s  Secretariat  at  key  Monitoring  Committees  provides  a
useful level of knowledge sharing, as does the participation of representatives from
the  European  Commission  Directorate-General  for  Regional  Policy  in  IFI  Board
meetings.

At an operational level, co-ordination is also established to address the issue of  the
additional  impact  of  IFI  intervention :  this  is  naturally  the  case  when  the  same
Government  Department  acts  as  Agent  under  the  IFI,  and  simultaneously,  for
instance, as Implementing Body under the PEACE Programme.

When  a  given  project  is  funded  both  by  the  IFI  and  an  EU  Programme,  there  is
indeed a potential risk of reaching the maximum ceiling of 75 % of the total eligible
cost  allowed  for  Structural  Funds  intervention15.  Although  the  IFI  is  not  per  se
subject  to  Structural  Funds  regulations,  there  are  arguments  for  more  consistent
management  of  co-funding  by  some  IFI  programmes  (see  rates  of  intervention
ANNEX IX)  with  EU  programmes  within  a  given  project,  in  order  to  avoid
exceeding the 75% ceiling.

14

15

Exchange of letters IFI/Commission : Letter to C. Trojan, 28 June 1994.
Article 29 of Regulation (EC) 1260/1999.

20

                                                
This  problem  has  long  been  recognised;  as  early  as  1994,  the  IFI  and  the
Commission agreed that “the IFI’s Joint Directors-Generals [would] be invited (…)
at  least  once  a  year  to  exchange  views  and  discuss  programmes  and  levels  of
assistance. Such regular review [would] help prevent duplication and ensure that the
level  and  mix  of  grant  assistance  in  co-financing  arrangements  [is]  prudent  and
appropriate.”16

The  attached  Audit  Report  acknowledges  that,  for  the  audited  Government
Departments  acting  as  agents  for  the  IFI  that  were  audited  in  Northern  Ireland,  ‘it
appears  that  [ they ]  do  take  account  of  all  funding  sources  and  that  there  was  a
system  established  for  co-ordination  of  payment  requests’  (see  point  3.1  in  the
ANNEX VII).  However,  there  is  no  clear  internal  procedure  within  the  IFI  for
systematic exchanges of information with other Programmes bodies to guarantee that
this  ceiling  is  not  reached.  Furthermore,  as  regards  Ireland  the  audit  report
established  that  it  was  ‘not  clear  how  different  funding  sources  are  taken  into
account’.

4.2.2

Improving co-ordination :

Within the provisions of the Belfast / Good Friday Agreement which set up the peace
process in Northern Ireland, a North/South Special EU Programme Body (SEUPB)
has  been  established.  The  SEUPB  is  now  the  Managing  Authority  for  the  PEACE
and  INTERREG  Programme.  Regular  contacts  and  working  relations  between  the
SEUPB  and  the  IFI  Secretariats  would  undoubtedly  benefit  both  organisations.
Contact  with  the  ad  hoc  co-ordination  group  set  up  under  the  NI  CSF  would
certainly  go  in  the  same  direction.  One  point  worth  exploring  would  indeed  be  to
identify all co-ordination points at all levels which may  readily be  used to  enhance
their co-ordination.

Another point for improvement is on database exchanges. The attached audit report
(see ANNEX VII) stressed the need for more wide-reaching input of data into the IFI
database  to  include  sources  of  funding  other  than  those  of  the  IFI  (in  particular  by
identifying  Structural  Funds  programmes  as  separate  sources  of  funding),  which
would  allow  for  greater  visibility  and  co-ordination.  EU  Programmes  databases
would in turn need to be adapted in a similar way for their mutual interests.

For  instance,  as  underlined  in  the  audit  report,  the  IFI’s  project  selection
procedures appear extensive, thorough and satisfactory. For example, applicants are
required  to  provide  business  plans  or  equivalent  and  procedures  involve  both  an
evaluation  of  the viability  of the project and of  the  necessity  for  the  IFI  to  fund  it.
This  type  of  information  would  certainly  be  very  valuable  –  whether  the  project  is
eventually  approved  for  funding  or  not  –  if  the  same  project  sponsor  decides  to
subsequently apply to an EU Programme. This transmission of data would accelerate
the selection procedure for the benefit of all.

16

Exchange of letters IFI/Commission, Letter to C. Trojan, 28 June 1994.

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Conversely,  the  audit  report  identifies  some  systematic  weaknesses  in  respect  of
management and control procedures related to the monitoring of projects once they
have  been  approved  by  the  Board  for  funding.  This  aspect  is  particularly  well
developed in the current round of Structural Funds, where extensive sets of physical
and financial monitoring indicators are being set up for all interventions. In the case
of  projects  funded  both  by  the  IFI  and  an  EU  Programme,  the  IFI  would  therefore
certainly benefit from a regular access to these monitoring data.

Finally, a further argument for integrating the monitoring systems of the IFI and the
main  EU  Programmes  in  the  region  is  the  risk  of  double  counting  their  impact,
which would undermine any attempt to carry out thorough evaluation studies.

4.2.3

Conclusion

In  view  of  the  preceding  observations,  the  co-ordination  mechanisms  so  far
established  need  more  synchronised  procedural  approaches  between  IFI  and  EU
Programmes  structures  (particularly  PEACE),  e.g.  by  making  full  use  of  available
communication and database technology.

This will enhance the additional impact of the IFI, in a more visible, organised and
controlled way, and will definitely prevent the risks related to multi-funding.

5.

PUBLICITY AND INFORMATION

Article 4 of Council Regulation (EC) 214/2000 states that ‘The Commission shall, in
co-operation  with  the  board  of  the  Fund,  determine  appropriate  publicity  and
information  procedures  in  order  to  publicise  the  Community’s  participation  in  the
projects  financed  by  the  Fund’.  One  objective  of  these  publicity  and  information
procedures  may  be  found  in  recital  (17)  of  the  same  Regulation,  which  states  that
“this support will contribute to reinforcing the solidarity between the Member States
and between their peoples”.

The  IFI  acknowledges  support  of  all  its  donors  (regardless  of  their  level  of
contribution or the regularity of their payments) by means of standard references in
press  releases,  published  literature  (Annual  Report,  information  brochures,  and
published reports) and on its website. Reference to donors is also made in speeches
made  by  the  Chairman  or  Board  members  and  in  briefings  given  to  visitors  to  IFI
projects.  Finally,  the  Commission  representation  offices  in  Belfast  and  Dublin  are
invited to all IFI project launches.

Nevertheless, the IFI image as perceived by the general public is predominantly that
of a US supported organisation, despite the fact that the EU contribution amounts to
38 % of all contributions.

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Solutions to improve publicity given to Community participation in projects financed
by the IFI will therefore have to be found. A first step was taken by Commissioner
Barnier who undertook to systematically include visits of  IFI-funded projects when
travelling  to  the  island  of  Ireland.  He  also  wrote  to  Mrs  Fontaine,  President  of  the
European Parliament, inviting Members of Parliament to do the same17.

The Commission will therefore, in the near future, submit further proposals destined
to better  profile  EU presence in the  IFI's  activities  (e.g.  organising  media  coverage
and information of beneficiaries), particularly in cases where co-financing by the EU
and IFI occurs.

6.

CONCLUSION AND PROPOSALS

The European Union’s long standing support to a peace process in Northern Ireland
has been best exemplified by its commitment to the IFI since 1989 and the PEACE
Programme since 1995. The Berlin European Council in March 1999 confirmed the
necessity for continuing special support beyond 2000. In doing so, it recognised the
long-term  nature  of  the  peace  process’s  objectives,  which  have  been  widely
supported  over  the  years  by  the  European  Parliament,  the  Council  and  the
Commission.

Today's  threats  to  the  future  of  Northern  Ireland's  institutions  and  political
settlements, and the continuing levels of violence and division in the region, suggest
that efforts need to be sustained. As reinforcing the solidarity between the Member
States and between their peoples is a core objective of the EU, this is an opportunity
for  the  EU  to  act.  Moreover,  the  IFI  is  supported  by  the  international  community
who, by doing so, demonstrates its involvement in the peace process in the area. It is
therefore  important  for  the  EU  to  be  seen  as  being  equally  committed  to  these
objectives.

In this context, this report, like others before, acknowledges that the IFI makes a very
valuable  and  positive  contribution  to  peace  and  reconciliation  in  Northern  Ireland
and  the  Border  Region  of  Ireland  and  thereby  fulfils  its  objectives,  namely  to
promote  economic  and  social  advance,  and  to  encourage  contact,  dialogue  and
reconciliation between nationalists and unionists throughout Ireland. Some aspects of
technical  management  and  control  procedures are  currently  being  improved,  but
some remain yet to be implemented within the operations of the IFI or discussed with
the Commission (establishment of a payment budget, clear rules on the application of
the 75 % ceiling of EU support to projects, etc.).

The new round of EU Structural Funds Programmes (in particular the new PEACE II
Programme),  which  are  the  major  instruments  to  promote  economic  and  social
progress in the region, also present new challenges for the IFI.

17

Letter from Michel Barnier to Nicole Fontaine, 27.07.2000, n°7271.

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First, the priorities set by both IFI and EU Programmes complement each other and
this  high  potential  for  synergies  needs  to  be  harnessed.  In  particular,  while  the  IFI
targets  mainly  economically  disadvantaged  areas,  the  PEACE  II  Programme  has
evolved considerably by also targeting a list of areas, groups and sectors identified as
“most affected by the conflict”; similarly, the  cross-community and/or  cross-border
dimension(s) could become explicit selection criteria for all IFI programmes, as they
now are for all PEACE priorities.

Second,  in  terms  of  operational  means,  the  co-ordination  mechanisms  so  far
established  need  more  synchronised  procedural  approaches  between  IFI  and  EU
Programmes  structures  (particularly  PEACE),  e.g.  by  making  full  use  of  available
communication and database technology. This will enhance the additional impact of
the IFI, in a more visible, organised and controlled way, and will definitely prevent
the risks related to multi-funding.

Finally, as concerns the publicity  given to the  IFI’s activities, the Commission will
submit  practical  proposals  destined  to  give  greater  visibility  to  EU  presence  in  the
region, particularly in cases where co-financing by the EU and IFI occurs.

***

The  possible  continuation  of  the  annual  EC  contribution  to  the  IFI  after  2002  should  be
appraised  on  the  basis  of  the  observations  made  in  this  report  and  in  particular,  of  the
synergy  and  complementarities  of  the  IFI  with  the  PEACE  II  Programme  which  will  be
ending at the end of 2004.

A Commission proposal for a Council Regulation on the  EC contribution to  the  IFI  or  the
definition of other appropriate means for cooperation between the Commission and the IFI
should take into account the observations made in this report.

ANNEX : SEC(2001)1579

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