Opinion of the Economic and Social Committee on the "Financial assistance for Pre-accession — Phare, ISPA and Sapard"
Date: 2002-09-19
Institutions: European Economic and Social Committee
Subjects: EU financial instrument, accession to the European Union, management, pre-accession aid

14.3.2003

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Official Journal of the European Union

C 61/93

Opinion of the Economic and Social Committee on the ‘Financial assistance for Pre-accession —
Phare, ISPA and Sapard’

(2003/C 61/17)

On 17 January 2002 the Economic and Social Committee, acting under Rule 23(3) of its Rules of
Procedure, decided to draw up an opinion on the ‘Financial assistance for Pre-accession — Phare, ISPA
and Sapard’.

The Section for External Relations, which was responsible for preparing the Committee’s work on this
subject, adopted its opinion on 5 September 2002. The rapporteur was Mr Kenneth Walker.

At its 393rd Plenary Session (meeting of 19 September 2002) the Economic and Social Committee
adopted the following opinion by 23 votes to 1 with 2 abstentions.

1.

Introduction

1.3.
Under ISPA (Instrument for Structural Policies for pre-
Accession), which came into force on 1 January 2000, the EU
provides assistance to the CEECs for:

1.1.
As part of its pre-accession strategy, the EU makes
financial assistance available in various forms to the applicant
countries. The ten Central and Eastern European countries
(CEECs) receive direct financial assistance from the Phare, ISPA
and Sapard instruments; in addition, they participate in co-
financing with the European Investment Bank (EIB) and
international financial institutions. The remaining applicant
countries, Cyprus, Malta and Turkey, do not benefit from
Phare,
ISPA or Sapard but are eligible for EIB facilities,
including the EUR 6,42 billion EIB facility for Mediterranean
the MEDA programme. The applicant
countries under
countries also gain useful experience by being allowed to
participate in EU programmes (such as Erasmus, Socrates and
Leonardo), agencies and committees.

1.2.
The Phare programme has operated since 1989,
delivering assistance to the CEECs, and is focused on institution
building — the strengthening of candidate countries’ capacities
to put the acquis communautaire into effect. Through this
programme, the EU makes experts available for short-term
advice and through twinning — longer-term secondments of
officials from Member State ministries, regional bodies, public
agencies and professional organisations. It also provides for
investment to help the candidate countries to implement the
acquis. Other allocations for economic and social cohesion
assist in developing the mechanisms and institutions that each
country will need as it joins the EU, particularly to implement
EU regional funding. In 1999, the Phare programme was re-
orientated in the context of the imminent introduction of ISPA
and Sapard, in order to avoid overlapping and to ensure the
greatest possible coordination between the three instruments.
Phare has also made assistance available to some nations in
Eastern Europe which are not applicant countries. The annual
amount
2001 was
EUR 1 620 million (EUR 1 590 million at 1999 prices).

disbursement

available

for

in

— environmental measures

to enable these candidate

countries to meet the requirements of the acquis;

— transport infrastructure measures to promote sustainable
mobility and, in particular, projects of common interest
based on the criteria in the Council Decision No 1692/
96/EC establishing the Trans-European Networks (TENs).

The latter includes the inter-connection and inter-operability
of national networks as well as with the TENs. Each of the
eligible candidate countries has prepared national strategies
for transport and the environment for EU funding under ISPA.
The EU allocates EUR 1 080 million per annum (at 1999
prices) to infrastructure assistance under this programme.

to financial rules reflecting in part

1.4.
The Sapard (Special Accession Programme for Agri-
culture and Rural Development) programme was introduced
by Council Regulation (EC) No 1268/1999 and came into
effect on 1 January 2000; to promote agricultural and rural
development in the beneficiary countries. Aid granted under
this programme has to be in the form of a financial contri-
bution, subject
those
established for the financing of the Common Agricultural
Policy (CAP) as well as those relating to structural instruments.
The programme allocates EUR 540 million per annum (at
1999 prices) to the CEECs, co-financing projects selected by
the candidate countries themselves on the basis of rural
development plans approved by the EU. The fully-decentralised
implementation structure for each country includes a Sapard
Agency, responsible for management and payments, accredited
and approved by the European Commission.

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legal

The financial assistance under all three instruments is
1.5.
given in the general
framework of the Association
Agreements with the beneficiary countries and taking into
account the contents of the relevant Accession Partnerships.
For Phare and ISPA, the Commission exercises systematic ex-
ante controls; i.e. decisions concerning procurement and the
award of contracts are taken by the Contracting Authority and
referred for prior approval to the Commission Delegation.
Sapard operates under an ex-post control system in which the
Sapard Agency takes these decisions without prior reference
to the Commission Delegation.

1.6.

The aim of pre-accession funding is twofold:

— to provide financial assistance in meeting EU standards

and complying with the acquis communautaire;

— to provide learning experience and prepare countries for
the EU Structural and

effective future utilisation of
Cohesion Funds.

The three pre-accession instruments are precursors to
1.7.
the Community funding which will be available to the
candidate countries after accession; they necessitate capacity
building in relevant institutions and new organisational and
administrative structures. Phare is a precursor to the Structural
Funds, ISPA to the Cohesion Fund and Sapard to the agricul-
tural funds (1). Phare is the sole instrument to provide support
for institution building.

1.8.
The three instruments are controlled by three different
Directorates-General of the Commission. Phare is administered
by DG Enlargement, ISPA by DG Regional Policy and Sapard
by DG Agriculture. The three instruments also have different
rules. The process for ISPA is quite different from Phare, while
Sapard is very different from Phare and ISPA (1).

1.9.
The EU also promotes large-scale infrastructure pro-
jects through co-financing arrangements with the EIB and with
international financial institutions with which the European
Commission has signed a coordination memorandum.

1.10.
In addition to its pre-accession assistance, the EU
will also make available compensatory post-accession budget
payments to new Member States in the period 2004-2006 in
order to prevent them from becoming net contributors to the
EU budget. Despite the low levels of GDP in the accession
countries compared to the EU average, there is a danger that,
without these payments, some countries could contribute

( 1) Proceedings of a seminar held in September 1999 at the EU
Information Centre in Budapest. Presentation given by Mr Alain
Bothorel, Head of Phare Unit, Budapest Delegation.

more to the EU budget than they receive in aid because they
will be required to make contributions to the EU budget from
the date of accession but the lack of absorption capacity in their
administrative structure and the reduced levels of payments
proposed under the CAP will curtail the amount of financial
assistance actually received.

1.11.
The proven ability to handle the pre-accession funds
and, by implication, the much larger Structural and Cohesion
Fund assistance which will follow accession, is likely to be a
criterion for the final closure of Chapter 28. Both the European
Parliament and the Council have indicated that this should be
seen as a key indicator of a country’s readiness for accession.

1.12.
In the preparation of this opinion, the Committee has
visited four of the candidate countries (Bulgaria, Estonia,
Poland and Slovakia) and conducted hearings there with
representatives of the social partners and a wide range of civil
society organisations.
In addition, members of the study
group held talks with some of the European Commission’s
delegations in the candidate countries. A questionnaire was
sent to civil society representatives in those candidate countries
with which the EESC has a Joint Consultative Committee.
Input has also been received from Commission documents,
from officials of the Directorates General involved and from
civil society organisations at the European level.

2. The operation of the pre-accession instruments

2.1.

Phare

2.1.1.
Phare is an enormous and extremely complex pro-
gramme, which represents a huge challenge both for the
European Commission and for each of
the beneficiary
countries. In its early stages, it concentrated on the public
finance sector, agriculture, the environment and privatisation.
Support for regional development was also a priority, comp-
lemented by cross-border cooperation programmes. SMEs
were another area of particular concern. Support measures
mainly took the form of technical assistance, with limited
investment support (1).

2.1.2.
In this phase it was mainly demand-driven. The
governments of candidate countries proposed projects to
the European Commission. As long as they met the Phare
objectives, they could be in any field or sector, for varying
amounts and for whatever purpose. This resulted in a large
number of small projects, which were complicated and time-
consuming to manage.

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2.1.3.
In 1997, when the other two pre-accession instru-
ments were being planned, the Phare programme was re-
focused to form part of a comprehensive pre-accession
strategy. The Commission prepared an opinion on each of the
applicant countries, indicating areas where action was needed
before accession could take place. These opinions became the
basis of the respective Accession Partnerships. Phare support
was now geared to the accession priorities listed in the relevant
Accession Partnership. It thus became accession-driven.

In this form, Phare provides two types of support,
2.1.4.
institution building and investment support. The former
accounts for 30 % of the total funding and is divided between
twinning and technical assistance. Twinning involves the
secondment of a Member State civil servant to a counterpart
organisation in a partner country on a long-term basis (more
than one year).
It may be complemented by specialised
technical assistance and equipment-investment support; the
latter focuses on the equipment necessary to support insti-
tution-building projects. There are no minimum levels for
institution-building projects but the average value is about
EUR 1 million. Investment support projects, which account
for the bulk of the remaining 70 % of the funds, are focused
primarily on rehabilitating/modernising infrastructures and
have a minimum project value of EUR 2 million.

2.1.5.
The refocusing of the programme took virtually two
years to complete, a fact that has been the subject of some
criticism by both the European Court of Auditors (1) and
representatives of the beneficiary countries. In the process, it
imposed a heavy additional workload on their national
administrations and the European Commission’s delegations
alike (1). It also initiated a process of progressive decentralis-
ation that is still on-going. Under the old rules, all contracts
exceeding EUR 500 000 had to be sent to Phare headquarters
in Brussels for authorisation; under the new rules, heads of
delegations can endorse projects up to a value of EUR
5 million.

2.1.6.
Approximately 78 % of Phare funding is allocated to
national programmes, which are agreed bilaterally with each
candidate country. The remainder goes to multi-country,
horizontal and cross-border cooperation (CBC)
initiatives.
Following its re-orientation in 1998, Phare no longer makes
new commitments to environmental projects, which have
devolved upon ISPA, or agricultural projects, which have been
subsumed into Sapard.

Phare has been criticised by the Court of Auditors (2)
2.1.7.
for the limited impact of the programme, due in large part to
inadequate harmonisation with Interreg. It was also claimed
that an effective management-information system was lacking
and that the Commission had failed to demonstrate that the
twinning process offered value for money (1). This led to a
review of the process.

2.1.8.
At the end of 1998, Phare had delivered some EUR
5,8 billion of aid against a total commitment of nearly EUR
9 billion of funds. On average, some 95 % of the sums
committed are eventually delivered. Some 500 twinning
projects are currently in place.

2.2.

ISPA

2.2.1.
The management of the programming phase and
implementation of ISPA is the responsibility of DG Regional
Policy;
the European Commission’s delegations play an
important role during implementation. Like the other pre-
accession instruments, ISPA targets accession and must con-
form to the priorities of the relevant Accession Partnership.
The fund is reserved for transport and environmental projects
in equal proportions.

2.2.2.
The beneficiary countries are required to produce
national strategies for both the transport and environmental
aspects. ISPA projects must have co-financing and Community
support is limited to 75 % of the national contribution (or
85 % in exceptional cases); they are also required to be
leveraged to the greatest possible extent. ISPA requires a
financing memorandum for each project rather than a finan-
cing memorandum covering an entire programme (as is the
case under Phare).

Transport projects must constitute either an exten-
2.2.3.
sion of a TINA (Transport Infrastructure Needs Assessment)
network, one of the priority corridors which the Commission
is recommending or an access route to such a network. Before
a project can be selected by the Commission, a cost-benefit
analysis and an environmental-impact assessment must be
carried out. It must further be financially sustainable, particu-
larly in terms of the ability to ensure continued maintenance
provision, and fit in with the relevant national strategy. In the
case of ISPA environmental projects, priority is given to those
that will benefit the greatest number of people; hence, urban
projects tend to predominate. The minimum size of an
investment is EUR 5 million but a number of smaller projects
can be grouped to achieve the qualifying limit (3).

Like Phare,

2.2.4.
ISPA is based on an ex-ante control
system. The Commission can waive the requirement for ex-
ante controls but would only do so within the parameters of
the Extended De-centralised Implementation System (EDIS) as
outlined in Article 12 of the Coordination Regulations.

( 1) Court of Auditors 1999 sector letter on Phare.
( 2) Special Report on Phare Cross Border Cooperation (CBC) 1994-

1998.

(3) European Commission: Enlargement Directorate General, Februa-
ry 2002 ‘The enlargement process and the three pre-accession
instruments; Phare, ISPA and Sapard’Proceedings of the conference
organised by DG Enlargement and the Permanent Representations
of Sweden and Austria to the European Union on 5 March 2000.

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2.2.5.
Implementation of ISPA is quite low. Against more
than EUR 1 billion per annum allocated in the years 2000-
2002, nothing was spent in 2000 and only EUR 200 million
in 2001. The figures for 2002 are not yet available but are
likely to be higher than for 2001.

2.3.4.
To the end of 2001, some EUR 30 million of aid has
been delivered against the total of more than EUR 1,5 billion
allocated for the years 2000-2002, although the programme
did not get under way until May 2001 with the first conferral-
of-management Decision. Two thirds of the total Community
contribution is allocated to Poland and Romania.

2.3.

Sapard

3. Developments in the pre-accession instruments

Sapard functions along the lines of the European
2.3.1.
Agriculture Guidance and Guarantee Fund (EAGGF),
the
agricultural subsidy system for the Member States (1), and
requires a paying agency to be set up in the candidate country,
which, on accession, could be responsible for the Community’s
agricultural funds. To date, such agencies have been established
in all but one of the eligible countries. The Commission
approves a programme for each candidate country based on a
plan drawn up by the national authorities. Due to the system
of fully decentralised management, it is not involved in project
selection or management and comes on the scene on an ex-
post basis during a clearance of accounts exercise (as for
the EAGGF), in order to ensure that implementation is in
accordance with the Sapard rules. The rules require co-
financing, with the EU paying up to 75 %, and exceptionally
100 %, of the total eligible public expenditure.

2.3.2.
The programme supports, in particular, farming and
rural development projects, regional tourism projects and
food-industry projects. The beneficiaries tend to be private
sector operators (often SMEs) but public beneficiaries are also
involved, particularly with infrastructure. Calls for proposals
are made by the Sapard Agency in the beneficiary country,
which conducts the selection process and manages the criteria
set in line with the overall Sapard rules.

2.3.3. Whereas ISPA support is at the government level and
goes to ministries, Sapard funding tends to go to numerous
other beneficiaries, such as individual farmers, many of whom
cannot speak any Community language, and municipalities.
Because of the large number of individual cases, and in order
to contribute as much as possible to the capacity-building
objective, a decentralised system was justified from the start.
Beneficiary countries are required to set up an administrative
system to exert effective controls. Strict audits are conducted
and, unlike the situation in Phare, the Commission can demand
reimbursement if the project is not implemented properly; it
can also decide that the amounts concerned can be offset
against payments due under any Community instrument.

The Commission has identified (2) five key actions to

3.1.
improve the operation of the pre-accession instruments:

— Programming and administrative capacities in the CEECs
need to be strengthened through institution building and
associated investment, as well as pilot-testing approaches
for Objective 1 actions.

— National Development Plans (NDP) need to be strength-

ened.

— An appropriate mix of national and regional schemes will

be chosen by the candidate country.

— The use of the programmatic approach will be expanded
and the management of such measures tightened-up.

— As for economic and social cohesion, programming for
CBC will follow the NDP and will move towards Interreg.

3.2.
As part of the continuing process of extended decentra-
lisation, all Phare funds will be channelled through one
single body, the National Fund, in the CEECs. The National
Authorising Officer will bear full responsibility and liability
towards the Commission for the use of the funds.

The new implementation mechanisms reflect

3.3.
the
experience from the implementation of the Phare programme
over the years and, in particular, the lesson that it is necessary
to ensure that a limited number of ‘centres of excellence’ be
responsible for handling the funds (2). This is an essential
precondition for the full transfer of responsibility for tendering
and contracting from the Commission to the candidate
country.

3.4.
Instead of stand-alone projects, Phare is now moving
towards a more programmatic approach. This should lead to
a further alignment of the Phare CBC programmes with the
Structural Funds’ version of these programmes (Interreg).

( 1) European Commission: Enlargement Directorate General, Februa-
ry 2002 ‘The enlargement process and the three pre-accession
instruments; Phare, ISPA and Sapard’Proceedings of the conference
organised by DG Enlargement and the Permanent Representations
of Sweden and Austria to the European Union on 5 March 2000.

(2) Phare Annual Report 2000.

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3.5.
Adoption by the Phare programme of the Interreg III
guidelines has provided additional guidance for preparing and
submitting joint PhareCBC/Interreg programming documents
for EU/CEEC border regions, covering the 2002-2006 period.

mandatory requirement for public consultation. The Czech
Republic is the only candidate country that consistently
conducts a Sustainable Environmental Assessment (SEA) for
prepared strategies and plans.

An appropriation has been made in the PhareCBC
3.6.
budget line for Small Project Funds (SPF). These are now in
place on all borders (1).

There has been a significant increase in the activities
3.7.
of the TAIEX (Technical Assistance Information Exchange)
office (1).

3.8.
A need was identified for a new medium-term instru-
ment to fill the gap between the long-term twinning process
and the short-term TAIEX assistance. This has been termed
‘twinning light’ and was introduced in 2001; it should provide
increased flexibility for these measures (1).

3.9.
A SME finance facility has been introduced into
the Phare programme to encourage financial institutions to
expand, and maintain in the long term, their financing of SME
operations (1).

4. Perspectives on progress to date and the current

situation

4.1.

EU Perspectives

4.1.1.
The Commission accepts that the amount of aid
delivered, compared to the sums allocated under each of the
three instruments, is disappointing but lays the blame for this
squarely on the governments of the beneficiary countries.
‘The instruments used in the Phare programme risk being
undermined by systematic failings
in national adminis-
trations.’ (2) The Commission takes the view that nothing can
be paid out until a country has demonstrated that it is capable
of managing the funds. The Commission is engaged in building
this capacity, mainly through the Phare programme, but
progress has been slow in some countries. The Commission is
constrained in what it can do by the requirements of the
financial regulations.

4.1.2.
The Commission considers that a coherent long-
term view should guide policy. As a prerequisite for obtaining
pre-accession funding, candidate countries must prepare
national plans and strategies for sectoral development. The
guidelines for the pre-accession funds do not provide a

4.1.3.
It is not only a question of ensuring that the partner
countries have instituted adequate control systems. It is also
essential that they should develop satisfactory mechanisms for
it is necessary to build up a
delivering the projects. Thus,
bureaucratic infrastructure which will be able to manage the
implementation process, liase with EU officials and exercise a
coordinating function within the country concerned. The
creation of this infrastructure is required for inter-facing with
the pre-accession funding process but is also a prerequisite for
attracting inward investment.

4.1.4.
Criticism has been levelled at the fact that the three
instruments all have different rules. The Commission contends
that this is inevitable because the various instruments have
different target beneficiaries. In addition, one of their functions
is to prepare candidate countries for participation in the
Structural and Cohesion Funds, which also have different rules.

4.1.5.
Small, localised projects may appear to have a more
direct and immediate impact on regional living standards but
larger projects, and particularly those with a cross-border
infrastructure dimension, have a greater macro-economic
impact and are more likely to improve the quality of life for
everyone in the long run.

4.1.6.
National Development Plans are often prepared in a
rush, with inadequate consultation between the responsible
ministries and other government departments and even less
consultation with the representatives of civil society (3). The
applicant countries are being asked to adjust to current models
in all aspects of EU policy, even if their planned date of
accession is still somewhat distant and where the existing
policy is presently under review. The result, in many cases, is
an exercise limited to outdated policies and methods of
operation. The shortcomings and mistakes of EU policies are
being replicated in the candidate countries. It is unsatisfactory
for both the EU and the accession countries if all the past
mistakes in the current Member States are repeated by future
Member States, who thus become locked in to unsustainable
positions. According to Friends of the Earth, this is particularly

( 1) Phare Annual Report 2000.
( 2) Phare 2000 Review COM(2000) 3103/2, 27 October 2000.

(3) Friends of the Earth Europe/CEE Bankwatch: Billions for Sustaina-
bility? Second briefing on the EU pre-accession funds and their
environmental and social implications.

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true in relation to the CAP, which has not
fulfilled the
conditions for sustainable development; therefore, Sapard is
in the applicant
not promoting sustainable development
countries (1).

4.1.7.

The key problem areas are:

— the undeveloped nature of the business environment;

— the lack of administrative capacity;

— the weakness of the judiciary;

— the lack of neutrality and accountability in the civil

service.

4.1.8.
The following is a synopsis of the views expressed by
representatives of the European Commission delegations in
the various countries visited during the discussions held with
them.

4.1.8.1.
Projects have often fallen through due to weakness
of the national administrative structure. This is sometimes the
result of the project being too ambitious for the current state
of the national administration. The right types of projects are
not being formulated and this is creating a log-jam of funds. It
is frequently difficult to set up monitoring bodies of sufficient
is
quality. Corruption is also an issue;
exacerbated by lack of efficiency in the judiciary.

in many cases,

it

In many national government ministries,

4.1.8.2.
the
necessary institutional standards and administrative capacity
are not yet in place. The ministries need fewer, but more
motivated and better paid, staff. There is a lack of implementing
agencies at regional level, primarily because of weaknesses in
the regional administrations.

4.1.8.3.
In most candidate countries, there is a weakness in
the social dialogue and, frequently, an imbalance between the
two sides of the social partnership.

4.2.

Perspectives of the governments in the beneficiary countries

4.2.1. Most government agencies feel that substantial pro-
gress has been made with the development of the administrat-
ive infrastructure, that there is now a full capability to plan,
present and implement projects and that there is capacity to
absorb a very high proportion of the allocated funds.

4.2.2.1.
Views on the success or otherwise of the twinning
programme vary considerably from country to country. In
general, the introduction of the ‘twinning-light’ programme
has been well received. It is seen as being more flexible,
cheaper, quicker and easier to implement than the conven-
tional twinning programme.

There is a need for greater motivation of the target
4.2.3.
beneficiaries, particularly in relation to Sapard,
in order to
encourage them to bring forward more projects. This could be
improved by enhanced publicity; EU assistance in this direction
would be useful. There is also a need to improve the capacity
of the private sector.

4.2.4.
Government officials consider that, in general, NGOs
and other civil society organisations are well represented in
the process and carry equal weight with government officials.

4.2.5.
The requirement under Phare and ISPA that tendering
companies should have at least two years’ experience in the
relevant sector militates against the participation of national
companies unless they form consortia with multi-national
organisations.

4.2.6.
It sometimes appears that the EU applies pressure to
appoint certain firms of consultants in order to obtain project
approval. This is particularly the case under ISPA.

4.2.7.
The insistence on the initiation, implementation and
completion of a Phare project within a three-year timescale
(the N+3 rule) is overly restrictive and should be relaxed.

4.2.8.
programme should be strengthened.

The social and cohesion elements of the Phare

4.2.9.
There is a tendency for the EU to be late in fulfilling
its responsibilities but to hold national government officials
strictly to the deadlines. There is often a lack of communication
between EU officials and the government ministries.

4.2.2.
There is a tendency for government departments
which are not involved in the process to exhibit indifference
or even hostility towards it.

4.2.10.
Phare is administered by DG Enlargement but other
line DGs are often involved. It appears that there is frequently
a lack of coordination and cooperation between them.

( 1) Friends of the Earth Europe/CEE Bankwatch: Sustainable Theory
— Unsustainable Practice? Third briefing on the EU pre-accession
funds and their environmental and social implications.

It frequently appears that there is a lack of com-
4.2.11.
munication between the Commission in Brussels and the
Commission delegations in the candidate countries.

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4.3.

Perspectives of civil society representatives in the beneficiary
countries

4.3.1.
Respondents said that major problems are encoun-
tered when preparing proposals for pre-accession funding. The
links with the consulting agencies are weakest in those remote
regions that are most in need of assistance. Too often, attention
is concentrated on large national and cross-border projects
when smaller, localised projects could effect a more immediate
improvement of peoples’ daily lives. There is a lack of
transparency and information of the public on the state of
negotiations. The socio-economic actors are not adequately
involved in pre-accession aid schemes. There is a perception
that the participation of NGOs and voluntary organisations is
not always appreciated. This could be alleviated by the creation
of a database of information that could be accessed by NGOs
and other civil society organisations; if this cannot be done at
national level, it should be done at the European level.

4.3.1.1.
Representatives felt that the social and civil dia-
logues need to be strengthened. Phare is engaged in capacity
building within the public sector but assistance is necessary to
build the capacity of NGOs and other elements of civil society
in order to enable them to participate more effectively in the
process. Government ministries do not recognise civil society
representatives as partners or stakeholders. Even where civil
society is represented on monitoring committees and other
bodies, it can be difficult for them to make a real contribution.
Monitoring committees often deal only with purely technical
questions; they do not address substantive issues, such as
whether or not the project objectives are being achieved.
Meetings are called at short notice and papers are frequently
not available sufficiently in advance of the meeting to allow
for adequate preparation. When consultation with civil society
does take place, the deadlines set
for the submission of
representations are often so short as to undermine the validity
of the process. The criteria for the selection of the civil society
organisations to be consulted are not clear. It often appears
is merely an exercise to endorse a fait
that ‘consultation’
accompli. Many civil society representatives state that,
‘We
only find out about things after they have happened’. Even
where documents are publicly available by law, the procedures
for obtaining access to them are so cumbersome and protracted
that they seem to be designed to discourage people from
exercising their rights. Too often, government officials simply
do not comply with the regulations.

Public participation and, in particular, the involve-
4.3.1.2.
ment of the representatives of civil society should take place at
the earliest possible stage.

4.3.2.
People find that the pre-accession aid programmes
are far too complex. The problem lies not so much in a lack of
information as in a surfeit of it. There is a plethora of
information but a lack of knowledge. In the jumble of data it
is difficult to find that which is appropriate to a specific
situation. Moreover, the language is often too sophisticated
and verbose. Project guidelines are frequently unclear, confus-
ing and easy to misinterpret. There is a need for rationalisation,
simplification and a reduction in volume. Frequently, project
proposals are abandoned or not put forward in the first place
because there is so much work involved in preparing them
with no guarantee that they will be accepted.

There is a perception, particularly under Sapard,
4.3.2.1.
that, in order to have a project selected,
it is necessary to
employ one of a limited number of firms of consultants to
prepare it. Projects are often prepared by one European firm
of consultants and then assessed in Brussels by another
European firm of consultants, who disagree with the first firm.

4.3.2.2.
Under Sapard, the condition that the beneficiary
must finance 50 % of the project cost is preventing small and
medium-sized farms from participating. Because the Sapard
funds are only made available once the project is up and
running, the beneficiary must, in fact, finance 100 % of the
cost initially. Only the larger farmers can obtain the necessary
bank support or fund it out of their own resources. Smaller
farmers, who are most in need of assistance, are, therefore,
effectively excluded from the programme. Another constraint
is the requirement that, in order to qualify, beneficiaries must
derive at least 50 % of their income from farming. This also
has the effect of excluding many potential beneficiaries,
particularly in those countries where there are large numbers
of very small farms operated on a part-time basis.

4.3.2.3.
Under the transport dimension of ISPA, there is a
perception that the orientation of the programme towards the
TENs is limiting access for other projects which would be of
greater immediate benefit.

4.3.3.
Civil society organisations argue that better coordi-
nation is needed between the agencies involved. Too often,
projects are put forward simply because the funds are available,
without a proper assessment of their impact and effectiveness.
For example, some water purification plants are running at
only 20 % of capacity. There is a need for in-depth analysis of
completed projects to ascertain why some things work and
others do not. There is also a need for regional operational
plans in addition to national strategic plans. The regional
dimension is lacking, which leads to apathy amongst regional
authorities.

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in the outcome.

4.3.3.1.
In several countries it was stated that there is
corruption in all areas but chiefly in the corridors of power.
Project contracts are sometimes awarded to surprising tender-
ers. People are involved in project selection who have a vested
interest
Impact analyses are prepared by
supposedly independent experts, appointed by the government
ministries. It is difficult, if not impossible, to ascertain how
these experts have been selected or appointed. Frequently,
their role appears to be to ‘rubber-stamp’ decisions which have
already been taken. Nor is it always easy to understand the
basis on which projects are selected. The regional distribution
of projects sometimes appears to owe more to political
influence than to an objective assessment of project value.
Civil society organisations have reported apparent irregularities
to politicians, government officials and Commission del-
egations but with no response.

4.3.7.
There are sometimes problems with the availability
of documentation in the national language of the beneficiary
country, including strategic plans drawn up within the country.

4.3.8.
There is a general feeling that the systems by which
the pre-accession aid is being delivered or, more often, not
delivered, are fundamentally flawed and in need of a thorough-
going, root-and-branch revision. This should involve greater
transparency and a mandated requirement for the intervention
of the social partners and other civil society organisations.

4.3.9.
The public sector does not possess the administrative
capacity to absorb the available funds. The issue of absorption
capacity is an ongoing problem and will be for many years.

The situation in one country was summarised
‘There is no public control, no accountability and no

4.3.3.2.
as,
transparency’.

4.3.10.
Project administrators frequently have problems
with documentation being delayed for lengthy periods by the
Commission in Brussels or in the local delegation. There are
also extended delays in receiving payment for work done.

Respondents

4.3.3.3.
being
implemented that are not sustainable because they do not
reflect the needs or the characteristics of the country.

that projects

said

are

The process of project selection is seen as long-
4.3.4.
winded, formalised and ritualistic. The preparation of a project
for pre-accession funding is an art form in itself. The drawing-
up of plans is a very expensive and time-consuming process,
requiring the extensive use of highly-paid foreign experts and
consultants. Too much attention appears to be paid to the
content of the project rather than its likely impact in terms of
the level of unemployment or living standards. Projects are
frequently rejected for trifling errors in the formal presentation.
There is a tendency to focus on larger projects because they
are easier to manage.

4.3.5.
There is a perception that the beneficiary countries
are having to adjust their policies to conform to the priorities
of those who are dispensing the funds. This leads people to
feel that there is an agenda to which they are not privy and
which does not reflect their primary concerns. Projects are
based on procedures rather than needs and there is no sense
of partnership. The approach is essentially top-down and not
bottom-up.

There is no formal mechanism for feedback from
4.3.11.
civil society to the national administrations and the Com-
mission on the ex post evaluation of project impact and
success.

5. Results of the questionnaire

A questionnaire was sent

5.1.
candidate countries.

to respondents in nine

5.2.

Responses to the first four questions varied widely:

— opinions of the results achieved ranged from ‘Very
positive’ through ‘Quite good’
to ‘Poor’ with several
respondents saying that they had insufficient information
to form a judgment;

— the degree of involvement of the respondents in the aid

programmes also varied significantly;

— there was a wide disparity in their views on how easy it is
to obtain information; some said that it was relatively
easy, others that it was difficult and still others that the
information is available but that it takes considerable
effort to unearth it;

4.3.6.
The availability of pre-accession funding assistance is
too often seen as a prerequisite for taking remedial action to
deal with identified local problems, even where these could be
addressed within the limitations of national resources.

— in some countries it is said that there is a great imbalance
between regional and national involvement in the process
while in others the situation is deemed to be reasonably
balanced.

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On a weighted average of responses, the priorities
in descending order of

5.3.
for aid programmes in the future,
importance, are:

— reductions

in economic

(infrastructure,
environment, entrepreneurship) between your country
and the Member States of the EU;

disparities

— reduction of economic disparities within your country;

— education and training;

— access to new information technologies;

— reduction in social disparities and combating exclusion;

— better administration and capacity-building in govern-
ment and amongst the economic and social players;

— softening the impact of economic disciplines required by

the EU;

— meeting the acquis communautaire;

— the question of minorities;

— promoting the social dialogue.

5.4. Most of the mechanisms for financial assistance were
deemed to be appropriate, depending on the circumstances,
but the one most frequently mentioned was public/private co-
financing.

On a scale of one to ten, the average rating for how

5.5.
well the aid programmes had performed was 6,25.

The answers to the remaining questions are incorpor-

5.6.
ated in sections 4.2 and 4.3 above.

6. Comments

Undoubtedly, the pre-accession funds have contributed
6.1.
significantly to the development of the candidate countries
and have been largely responsible for the Commission being
able to say (1) that, ‘negotiations are progressing satisfactorily
and negotiating countries are generally meeting their commit-
ments up till now,’. However, the same document identifies
the management of Community funds as being one area which
still requires particular attention.

6.1.1.
The aggregate sums allocated to the candidate
countries under the three pre-accession instruments are sub-
stantial. This amount of financial aid will create profound
changes in the economies of the countries concerned; it will
also have an irreversible impact on the societies of the CEEC
countries, where civil transformation is still an ongoing process
that sometimes seems to lack both impetus and direction. It is,
therefore, of paramount importance, as the Commission itself
has acknowledged (2), that these instruments should operate in
line with the principles of sustainable development.

6.2.
There are wide disparities in the rate of progress made
by the different candidate countries. All of the countries
concerned are on a learning curve but their positions on that
curve are widely dispersed.

6.3.
Important differences also exist in the perspectives of
different participants. While the Commission still points to
fundamental administrative weaknesses in many candidate
countries, which are limiting their capacity to absorb the
allocated funds, government departments in those same
countries take a more sanguine view of the situation and their
ability to design,
implement and control projects in the
remaining pre-accession period. Most probably, this difference
reflects the gap between an assessment by the national
government ministries of how far they have come and the
knowledge of the Commission of how far they have still to go.
The view of civil society organisations in the countries
concerned is most often aligned with that of the Commission;
in several instances, they have expressed reservations about
the absorption capacity of their national government adminis-
trations.

It seems clear that the Commission assessment most
6.3.1.
closely reflects the realities of the situation and that the view
of the government ministries is coloured by wishful thinking.
Questions arise, however, of why this state of affairs continues
to exist. Phare is a programme which is specifically designed
to assist in institution-building. Why, after so many years of
operation and the expenditure of not inconsiderable sums of
money, does the administrative capacity in so many candidate
countries remain so weak?

6.3.2.
This also calls into question the role of experts in the
preparation of projects and the conduct of impact assessments.
From all accounts, experts are widely involved in all stages of
the projects and frequently play a decisive role in project
selection. These experts are usually drawn from firms of
consultants based outside the beneficiary country or with only
a token presence within it. The relatively high incidence of
rejected, failed or withdrawn projects raises doubts about the
quality of their contribution to the process.

( 1) COM(2002) 256 final.

(2) EU Sustainable Development Strategy.

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6.4.
There is also widespread disagreement between the
government ministries and the representatives of civil society
concerning the nature and extent of civil society involvement.
While the situation obviously varies from country to country,
it would appear that, in many of the candidate countries, there
is a lack of true public participation. Civil servants deem it
politic to pay lip service to the principle of consultation but
generally regard it as an obstacle to the smooth and quick
preparation of projects. In such cases, public participation
remains a formal exercise without substance. This is in part
the legacy of regimes in which the questioning of government
officials was actively discouraged.

6.4.1.
In order to improve the quality of public partici-
pation, it will be necessary to strengthen the social dialogue
and the civil dialogue in many of the beneficiary countries. In
this context, it is disturbing that respondents to the question-
naire attributed the lowest priority to this function of the aid
programmes.

6.4.2.
Quite apart from the question of the participation of
the social partners and other elements of civil society, there is
often a lack of involvement by regional administrations. This
is variously attributed to apathy and weakness in the regional
administrations and a desire by national authorities to retain
these matters within their own purview.

6.4.3.
Representatives of civil society claim that Phare is
directed too much towards central government and that more
could be achieved if it were refocused to provide institution-
building assistance for local government and for civil society
organisations. However, given the relatively slow progress
made with central government administrations, this might be
impractical in most countries.

6.5.
There is a broad measure of unity between government
ministries and the representatives of civil society on the
complexity of the procedures laid down for access to funding
under all three instruments. Almost without exception, they
agree that
they are unnecessarily complicated and time-
consuming. On the other hand, there are legitimate concerns
in some countries about the representativity of civil society
organisations.

6.6.
As in other areas, there is a tendency for the players
involved to blame each other for the shortcomings in the
system and to overlook their own responsibility for ensuring
that it works efficiently. There are also some popular miscon-
ceptions that result in misplaced criticisms; for instance, it is
claimed by some environmental NGOs that public transport
has not been supported by ISPA but this contention is not
reflected in the statistics. This points to a clear need for
improvement in the quality and quantity of information being
made available to the public and in the methods of
its
dissemination.

it

In many countries,

is clear that civil society
6.6.1.
organisations such as NGOs,
trade unions, chambers of
commerce and employers’ associations, could do more to
provide information to their members and to assist them in
other ways with project submissions.

6.7.
A worrying factor is that SMEs do not appear to be
benefiting from the pre-accession instruments to the extent
that is desirable, given their importance to these emerging
economies. Particularly in relation to Sapard, SMEs are failing
to derive benefits due to:

— lack of capacity to fulfil the formal criteria;

— lack of knowledge about the programme;

— lack of means to fund the co-financing element.

The most important criterion in relation to the assess-
6.8.
ment of any project is not its fulfilment of stated objectives
but its impact on the real economy. Projects have a dual
function — to achieve the project objectives and to provide the
candidate countries with experience in project management.

6.9.
Transparency and public participation in decision-
making should be one of the key and obligatory rules for pre-
accession funding under all three instruments. The public
participation process should be used to improve the quality of
plans and projects and to build up a sense of ‘ownership’
amongst the citizens of the beneficiary countries.

6.10.
One of the objectives of the Council Regulation
establishing Sapard was to set the framework for Community
support for sustainable agriculture and rural development.
However, the CAP, which is in need of reform, should be
orientated more towards fulfilment of the criteria for sustain-
able development. The question thus arises of the extent to
which Sapard, which is aimed at CAP implementation, can
the
promote sustainable development
accession countries.

in rural areas of

The relatively low levels of aid actually delivered in
6.11.
comparison to the sums allocated result from a number of
factors, including the lack of administrative capacity in some
countries and problems in meeting the complementarity
requirements. However, the lack of visible aid is fuelling anti-
European sentiment in some candidate countries.

6.12.
There are concerns in several countries with very low
levels of per-capita GDP that it will be difficult to obtain
private sector funding for ISPA projects because of the inability
of people to pay the higher prices for energy supplies and
public transport that would be needed to provide an adequate
return to the private-sector investors. A study in one country
by independent experts from an international firm of consult-
ants estimated that the necessary water treatment and sewage
facilities would require water charges equivalent to 5 % of
average wages; it was thought that this would be sustainable
the likely
but this evaluation did not
additional burden of similarly increased charges for energy
and public transport.

take into account

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7. Recommendations

7.1.
The Committee makes the following recommendations
(not necessarily in order of importance) for improving the
operation and effectiveness of the pre-accession instruments:

— The transparency of the pre-accession funds needs to be

increased in all beneficiary countries.

— The funds should be reorientated to promote more
sustainable solutions and the guidelines of the instru-
ments, especially ISPA and Sapard, should be revised in
the spirit of the EU Strategy on Sustainable Development.

either the co-financing requirements should be relaxed or
a system of government-backed guarantees should be
provided for bank loans. Romania has recently taken
positive steps to address this issue.

— The question of corruption should be tackled openly,

frankly and fearlessly, wherever it arises.

— The Commission should set and publish targets for the
amount of aid to be actually delivered to each beneficiary
country in each year for each of the three instruments.

— Formal processes should be established for obtaining ex
post feedback from civil society organisations on project
impact.

— There should be a mandatory requirement for the active
involvement of the social partners and other elements of
civil society; this involvement should take place at the
earliest possible stage.

— The system of communication and coordination between
the relevant DGs in Brussels and the European Com-
mission delegations in the candidate countries should be
reviewed.

— The social and civil dialogues need to be strengthened in
every country concerned; one effective way of promoting
this would be the creation of a civil society forum on the
model of the European Economic and Social Committee
in each country which does not currently have one.

— Information is too often spread through personal, infor-
mal contacts between government ministries and other
agencies; there is a need for clear and binding guidelines
on access to information; these can only emanate from
the EU.

— There is a need for more effective dissemination of
information and wider publicity in general; if this cannot
be provided by the authorities in the countries concerned,
it should come from the EU.

— The social partners, NGOs and other civil society organis-
ations in the candidate countries need to be more pro-
active in seeking information, providing assistance for
their members and making their voices heard.

— The procedures imposed by the EU in relation to all three
instruments should be reviewed with the object of
streamlining and simplifying them. A clear set of unam-
biguous, binding and enforceable rules and guidelines
should be drawn up, which should remain stable over
time.

— The capacity and quality of performance of Western-
based consultants and experts should be closely monito-
red, both to ensure project quality and improve their
credibility. Non-performing consultants should be black-
listed.

— The eligibility rules for Sapard should be reviewed to
improve access for small and part-time farmers, who
stand to derive the greatest potential benefit; in addition,

— The various players involved need to learn to work
together in closer cooperation rather than blaming each
other for the lack of results.

— The concentration of

the transport element of ISPA
financing on TENs should not be to the exclusion of the
development of local and regional transport infrastruc-
tures.

The Committee proposes to prepare a follow-up
7.2.
Opinion in due course in order to assess the extent to which
these recommendations have been implemented and to update
its evaluation of the operation of the pre-accession funds.

The Committee believes that, after the first wave
the pre-accession funds should be
the applicant countries

7.3.
of accession in 2004,
restructured to deliver aid to all
remaining outside the Union at that time.

8. Conclusions

8.1.
The pre-accession funds have provided valuable assist-
ance to the beneficiary countries. Without them, it is doubtful
in the extreme whether so much progress could have been
made towards accession. The importance of their role is likely
to continue to increase. Nonetheless, it is clear that there is
room for considerable improvement in the way these funds
are administered and operated. It is unfortunate that continu-
ing lack of capacity in the administrative structures in the
beneficiary countries should still be acting as a severe con-
straint on the ability of the instruments to actually deliver aid.
There is a need for greater transparency and accountability. It
is not acceptable that public participation and access to
information should be at the whim of government ministers
and civil servants.

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8.1.1.
Civil society organisations have a great deal to con-
tribute to the process, especially in the analysis of potential
project impact, but they need to adopt a more proactive stance.
In particular, the social partners and other elements of civil
society need to strengthen their dialogue with each other and
present a common position to their national governments.
This process would be facilitated by the creation of national
Economic and Social Committees, based on the European
model.
8.2.
There must be a greater focus on the funds as an
instrument for promoting sustainable development. Access to
Sapard should be facilitated for small and part-time farmers;
an improvement in their situation offers the greatest potential
benefit to agriculture and rural development in the countries
concerned.
8.3.
if not all, of the
candidate countries is that there are fundamental problems
with the operation of the pre-accession funds and that these
stem in large part from the overly-bureaucratic nature of the
structures laid down by the EU and the insistence upon
the involvement of external firms of consultants. However
misplaced these perceptions may be, it is a fact that they exist
and, while they do, they will undermine support
in the
beneficiary countries for the objective of European accession.
It would be dangerous to ignore these views simply because
they appear to be misconceptions. There is a pressing need for
a public relations exercise to convey the true picture to the
peoples of these countries.

The public perception in most,

Brussels, 19 September 2002.

8.4.
It might seem that the imminence of the first wave of
accession, which is planned to enlarge the Union by up to ten
new Member States, renders it unnecessary to address these
issues. Nothing could be further from the truth. Not only is it
essential to restore credibility and efficiency to the disburse-
ment of large amounts of public funds but it is also vital that
the candidate countries should acquire sufficient expertise in
the handling of these funds and the delivery of the related
projects. This is far from being the case at present in most
countries and, without this, their ability to absorb the much
larger amounts of Structural and Cohesion Fund assistance
post-accession must be called into question and, hence, their
state of preparedness for membership of the Union. To bridge
the gap between their present condition and the required state
of readiness is, in most cases, a daunting task and there is not
much time left in which to complete it.

The Committee has set out a number of specific
8.5.
recommendations for improving the status quo. The list is not
exhaustive; it needs to be tackled with energy and celerity;
time is of the essence. To be effective, any action plan must be
a shared agenda between the Commission, the governments of
the beneficiary countries and civil society in those countries. It
is to be hoped that the political will exists to achieve this.

The President

of the Economic and Social Committee

Göke FRERICHS