Report from the Commission - General Report on pre-accession assistance (Phare - ISPA - SAPARD) in 2000 {SEC(2002) 1418}
Date: 2003-01-09
Institutions: European Commission
Subjects: Central and Eastern European countries, Community acquis, EU programme, accession to the European Union, coordination of aid, economic and social cohesion, enlargement of the Union, pre-accession aid

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 9.1.2003
COM(2002) 781 final

REPORT FROM THE COMMISSION

GENERAL REPORT
ON PRE-ACCESSION ASSISTANCE
(PHARE – ISPA – SAPARD)
IN 2000

{SEC(2002) 1418}

TABLE OF CONTENTS

SUMMARY.......................................................................................................................... 3

1.

2.

3.

4.

Introduction.................................................................................................................. 6

Phare Summary............................................................................................................ 6

ISPA Summary............................................................................................................. 8

SAPARD Summary .................................................................................................... 10

5. Overall description of mechanics of the pre-accession instruments ......................... 11

5.1.

5.2.

5.3.

Commitments and transfer of funds...................................................................... 11

Implementation structures in candidate countries................................................ 13

Decentralisation of implementation under Article 12 of the Co-ordination

Regulation............................................................................................................. 14

6. Monitoring and Evaluation........................................................................................ 14

6.1.

6.2.

6.3.

Phare ....................................................................................................................... 14

ISPA ........................................................................................................................ 15

SAPARD ................................................................................................................. 15

7. Co-ordination ............................................................................................................. 15

7.1. General.................................................................................................................... 15

7.2.

7.3.

Co-ordination inside the Commission.................................................................... 16

Co-ordination in the country.................................................................................. 17

8. Co-ordination with the EIB and International Financial Institutions ..................... 17

9. Conclusion .................................................................................................................. 18

ANNEX: The allocations per country for Phare, ISPA and SAPARD in 2000 ............... 19

2

SUMMARY

This is the first report produced by the Commission on the three pre-accession instruments
and their co-ordination in accordance with Article 13 of the Council Regulation on the co-
ordination of pre-accession assistance (Co-ordination Regulation)1.

On the basis of the strategy endorsed by the European Council at the Luxembourg Summit in
December 1998 and the financial framework agreed at the Berlin Summit in March 1999, the
three pre-accession instruments – Phare, Instrument for Structural Policies for Pre-accession
(ISPA) and Special Accession Programme for Agriculture and Rural Development
(SAPARD) – provide annually up to
3,174 million in pre-accession assistance (2000
figures) to the ten applicant countries in central and eastern Europe2 for the 2000-6 period.

€

The Co-ordination Regulation sets out the division of labour between the three pre-accession
instruments:

–

–

–

Phare addresses priority measures concerning the adoption of
the acquis
communautaire, whether through improving administrative capacity or supporting
related investment. This instrument also has an element for Economic and Social
Cohesion. It may support measures in the fields of the environment and transport if
they constitute a secondary but essential component of integrated programmes for
regional development or industrial restructuring (

1,587 million);

€

ISPA finances large infrastructure projects in the transport and environment sectors
€
(

1,058 million);

SAPARD finances measures to support agriculture and rural development (
million).

€

529

SAPARD follows a programming approach similar to the one used in Member States’
agriculture and rural development programmes while ISPA follows an approach similar to
that of the Cohesion Fund, operating in the fields of environment and transport. The Phare
programme does not have any direct counterpart in the Community’s Structural Funds, given
its focus on the adoption of the acquis communautaire. However, the component of the Phare
programme on Economic and Social Cohesion is designed to support similar projects to those
supported under the European Regional Development Fund and the European Social Fund. In
the Cross-Border Co-operation Programme mirrors the Community’s
the same vein,
INTERREG Programme.

All three instruments are programmed on the basis of the Accession Partnerships and the
National Programmes for the Adoption of the Acquis developed with the candidate countries
for accession. SAPARD operates on the basis of a multi-annual programme covering the
period 2000-2006 while ISPA and Phare have an annual programme that is approved by the

1

2

Council Regulation (EC) No 1266/1999 of 21 June 1999 on coordinating aid to the applicant countries
in the framework of the pre-accession strategy and amending Regulation (EEC) No 3906/89, OJ L 161,
26.6.1999, p. 68.
Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and
Slovenia

3

Commission on the proposal of the candidate countries. For Phare and ISPA, projects are also
approved by the Commission (Delegation or Headquarters) before they are implemented.

All three programmes are implemented by the candidate countries. For Phare and ISPA the
Commission checks in advance the procurement and contracting documents. The Commission
confers management for SAPARD measures on implementing agencies in the beneficiary
countries and is not involved in the management of SAPARD in the beneficiary countries, the
execution of projects being subject to ex post controls only. This approach is made possible
by Article 12 of the Co-ordination Regulation. On the same legal basis, Phare and ISPA plan
to introduce an extended decentralised implementation system (EDIS) in which procurement
by applicant countries will only be subject to ex post controls by the date of accession.

The year 2000 was the first operational year for SAPARD and ISPA. All SAPARD
programmes were approved in 2000, bilateral multiannual financing agreements were
negotiated and the work to establish SAPARD implementing agencies was started. However,
no applicant country had a SAPARD agency ready to receive funds and therefore no
SAPARD funds could be transferred to any applicant country by the end of 2000.

For ISPA, the investment strategies were prepared and presented to the ISPA Management
Committee. 85 projects (that had been prepared under the Phare programme in 1998 and
1999) were approved in 2000.

For Phare, the aid to the applicant countries was provided in accordance with the revised
guidelines adopted in 1999 that retain the focus of the programme on preparing for accession,
while taking into account the two new pre-accession instruments. Approximately 30 per cent
of the aid supported Institution Building,
the main instrument of which was Twinning
(secondment of experts from Member States’ administrations to candidate countries) and 70
per cent went on investments designed to improve the regulatory framework and economic
and social cohesion, thereby facilitating the adoption of the acquis.

The co-ordination of the three instruments is ensured by a clear division of responsibilities
between the instruments, by a common basis for programming and regular contacts between
the different parties involved. A co-ordination committee at Director level was set up between
the Commission services concerned. A General Assistance Document covering all three
instruments was presented to the Phare Management Committee that assists the Commission
in co-ordinating the instruments. At the country level, and in line with the objective of
decentralisation, the Commission strongly encourages the applicant countries to enhance
inter-ministerial co-ordination, which is a key pre-condition for the candidate countries’
successful future management of the Structural Funds.

The Commission also maintained regular contacts with the EIB and other International
Financial Institutions with a view to ensuring maximum complementarity of project and
programme funding. In particular ISPA, given its emphasis on large-scale infrastructure
projects, offers good opportunities for co-operation with other sources of finance.

The year 2000 was the first year when all three pre-accession instruments came on stream.
Much progress was achieved in setting up the new instruments of ISPA and SAPARD The
pre-accession assistance for the candidate countries doubled, the Phare programme had to be
adapted in order to take into account the new instruments and more emphasis was put on
Economic and Social Cohesion. The co-operation between the different Commission services
was stepped up and further developed in line with the Co-ordinating Regulation. Setting up of
the structures for the pre-accession instruments in the candidate countries also provided an

4

important exercise in Institution Building and started to prepare the candidate countries for
the Structural Funds.

5

1.

INTRODUCTION

At the Summit in Luxembourg in December 1998 the European Council endorsed a new
strategy for the preparation of applicant countries for enlargement. It made available
substantial additional financial resources to assist membership. On 26 March 1999, at the
Berlin European Council, the Heads of Government or States concluded a political agreement
on Agenda 2000. Agenda 2000 objectives were to strengthen Community policies and to give
the European Union a new financial framework for the period 2000-2006 with a view to
Enlargement.

In line with the conclusions of the Berlin European Council, the Community has more than
doubled its pre-accession assistance to the candidate countries of central Europe since the year
2000: as proposed by the European Commission in Agenda 2000,
3,120 million (1999
figures) was made available annually between 2000 and 2006 through the Phare Programme
and the two other pre-accession instruments, ISPA and SAPARD which were introduced in
2000. The breakdown of the Community pre-accession assistance (2000 figures) was as
follows:

1,058 million for ISPA and

529 million for SAPARD.

1,587 million for Phare,

€

€

€

€

Following the Nice Summit which led to an acceleration of the accession negotiation process,
an optimal use of pre-accession assistance for helping the candidate countries in their own
efforts to take on the full acquis in a few years time is of utmost importance. Taking into
account the magnitude of the task ahead, it is vital to ensure that Community assistance can
be used in the most effective manner. Co-ordination between the three instruments is clearly
an important element thereof.

The Coordination Report 2000 is the first report of the Commission to the European
Parliament and to the Council which presents the overall pre-accession aid for each country
and the co-ordination between Phare, ISPA and SAPARD, in line with Article 13 of the
Coordination Regulation. It covers the calendar year 2000, which was the first operational
year for both ISPA and SAPARD.

This Report provides information about priorities and financial allocations for each country
and per instrument and their implementation mechanisms. Finally, it focuses on co-ordination
between the three pre-accession instruments, an in-depth description of each of the pre-
accession instruments being available in the respective Annual Reports. It is hoped that this
Report with its annexes will serve as a useful documentation of the pre-accession aid’s
essential role in preparing the Candidate Countries for membership. The annual reports of the
three pre-accession instruments are annexed to this report.

2.

PHARE SUMMARY

Funded in 1989 by the European Communities to assist the applicant countries of central
Europe in their preparations for joining the European Union, Phare’s exclusive “pre-
accession” focus was put in place in 1997 in response to the Luxembourg European Council’s
launching of the present enlargement process. Phare’s general orientations were adjusted in
1998 to reflect the coming on stream of SAPARD in agriculture and rural development and of
ISPA in transport and environment infrastructure.

The total Phare commitments for 2000 amounted to
were:

€

1,569 million. The operations financed

6

–

national programmes:

€

853 million, of which:

€

Bulgaria :

66 million
€

Czech Republic:

59 million

€

Estonia :

24 million

Hungary : 70 million

€

Latvia :

Lithuania :
€

Poland :

Romania :

Slovakia :

Slovenia :

25 million
€

38 million

313 million
€

215 million

€

€

28 million

16 million

–

–

–

–

–

–

–

–

–

–

–

Special nuclear decommissioning programme
€

cross-border co-operation :

163 million

participation in Community programmes :

€

188 million

regional and horizontal programmes :

€

284 million

–

–

–

€

82 million

The European Commission has increasingly transferred responsibility for the management
and implementation of Phare programmes to the authorities in the candidate countries of
eastern and central Europe. This is part of the process of helping them to prepare for accession
to the European Union.

As older Phare programmes were completed and new programmes initiated, projects
implemented in 2000 were increasingly based on the accession-driven approach set out in the
1998 new orientations for Phare3. They are managed through the National Fund and a limited
number of Implementing Agencies in each country. A key role is played by the Central
Finance and Contracts Unit (CFCU) in each candidate country that manages all institution
building programmes (in some cases the CFCU also manages investment activities). The
other Implementing Agencies are precursors to the administrative structures that will be
needed to implement the Structural Funds after accession.

The new implementation mechanisms reflect the lessons learned from implementation of the
Phare Programme in previous years and, in particular, the need to ensure that a limited
number of ‘centres of excellence’ be responsible for handling EU funds. This is an essential
precondition for full
transfer of responsibility for tendering and contracting from the
Commission to the candidate country (extended decentralisation).

3

The ‘Guidelines for Phare programme implementation in candidate countries, 1998-1999’ were adopted
in June 1998 and cover the Phare budgets for 1998 and 1999.

7

The accession-driven focus that underpins the new orientations of Phare implies an increasing
emphasis on national programmes designed to address the specific weaknesses identified in
the Regular Reports that the Commission prepares on each candidate country. The corollary is
a reduction in the importance of multi-country programmes. Previously these were very
useful in raising awareness of issues - especially those relating to the acquis - of common
interest to several candidate countries. The stage of awareness raising is past and the need
now is to help the countries put in place the capacity on the ground to implement the acquis.

Programming in 2000 was based on the revised guidelines for Phare that were approved by
the Commission in 1999. These guidelines build on the changes decided in 1998. They take
account of the new ISPA and SAPARD Regulations that take effect from 2000. The new
guidelines also emphasise the need to use the Phare Programme to help the candidate
countries prepare to benefit from the Structural Funds after accession (economic and social
cohesion). Therefore, approximately 30 per cent of the aid went on institution building, the
main instrument of which was Twinning (secondment of experts from Member State
governments and agencies to the candidate countries to help develop the capacity to
implement a specific part of the acquis) and 70 per cent went on investments designed to
improve the regulatory framework and economic and social cohesion, thereby facilitating
adoption of the acquis.

In addition, the Commission has revised and strengthened the internal arrangements within its
Delegations for overseeing the tendering and contracting carried out by the authorities of the
candidate countries. This has allowed the Commission to approve tendering and contracting
of Phare in-country by its Delegation (rather than having to send them back to Headquarters
for approval). The Delegations also monitor the progress of the project execution in the
candidate countries.

3.

ISPA SUMMARY

for Structural Policies for Pre-Accession”,

is the European
The “Instrument
Community’s financial instrument designed to assist the ten Central and Eastern European
beneficiary countries meet the requirements of the acquis communautaire in the fields of
environment and transport.

ISPA,

ISPA is guided by the Accession Partnerships and the National Programmes for the Adoption
of the Acquis, and follows an approach similar to that of the Cohesion Fund, operating in the
fields of environment and transport.

In the field of environment, support
from ISPA is intended to contribute to the
implementation of Community environment policy. In order to maximise the impact of
Community assistance on achieving the objectives of the environmental legislation, ISPA will
concentrate, in the first instance, on the investment-heavy environmental Directives i.e. the
Directives that will be most costly to implement. These concern the following four sectors :

–

–

–

–

drinking water supply;

waste water treatment;

management of solid waste and hazardous waste; and

air quality improvement.

8

The orientation for the ISPA transport component is to build the future Trans-European
Transport Network (Decision 1692/96 of the European Parliament and of the Council of 23
July 1996), as defined in the TINA (Transport Infrastructure Needs Assessment) Report,
which will cover the beneficiary countries of Central Europe. Along the TINA Network,
priority should be given to the integrated development of the 10 Pan-European Transport
Corridors which where endorsed by the third Pan-European Transport conference in Helsinki
in June 1997.

The year 2000 was the first operational year for ISPA. Before projects were presented to the
ISPA Management Committee, beneficiary countries were required to prepare ISPA
investment strategies for the transport and environment sectors. These documents provide
guidance for the selection of ISPA projects and establish the link between investment
requirements for achieving compliance with the acquis in these sectors and the selected ISPA
projects. By autumn 2000, the strategies for all ten countries had been presented to the ISPA
Management Committee.

In total, 85 projects received a positive opinion from the ISPA Management Committee,
which met four times in 2000 (in June, July, October and November). These projects
represent a total ISPA contribution of
997
million) were committed; the ten other projects that received a positive opinion are being
committed from the 2001 budget.

€
2.09 billion. For the 2000 budget, 75 projects (

€

The average value of the projects approved for the 2000 ISPA budget is approximately
13
million. The average Community grant rate stood at 64 % of project cost, which is lower than
the normal ISPA maximum funding level of 75 %. Co-financing is provided either from
national sources (central, regional and local government), international financial institutions
(IFIs) or bilateral donors. With the exception of Slovakia and Slovenia, the forecast mid-point
percentage range of the annual country allocation was reached.

€

The projects accepted in 2000, including the technical assistance projects, were divided fairly
evenly between the environmental and transport sectors: 39 environmental projects received
over 46 % of the 2000 budget, and 36 transport projects received over 53 % of the 2000
budget. The slight inequality between the two sectors was a result of the transfer of two
environmental projects in Poland (valued at over

41 million) to the 2001 budget.

€

In the environmental sector, over 64 % of the funds are used for sewage installations and
water treatment projects. In the transport sector, the focus was on rail projects, which
constitute more than half of the budget. This is in accordance with Community policy on
transport initiatives which places a strong emphasis on shifting the balance between transport
modes through notably the revitalisation of the railways and calls for the promotion of
intermodality and the development solutions for the financing of infrastructures. In addition,
projects which addressed the need to enhance safety and the separation of traffic were
prioritised. An analysis of the sector by Pan-European Transport Corridor indicated that more
than 30 % of the transport budget is concentrated on Corridor IV. Projects on Corridor III
received about 14.2 %, with Corridor II receiving 13.5 %.

Thirteen technical assistance (TA) projects have been committed from the 2000 budget, four
for environment and nine for transport project preparation. These TAs are essential for the
preparation of the projects that will be presented to the Management Committee in 2001 and
2002.

9

Funds have also been allocated in support of the Community Contribution to the International
7.5 million was committed from the 2000
Fund “Clearance of the Fairway of the Danube”.
budget. Phare and OBNOVA – the Community programme related to aid for Bosnia and
Herzegovina, Croatia, the Federal Republic of Yugoslavia and the Former Yugoslav Republic
of Macedonia - also contributed to this project, in the tune of
7 million
respectively.

7.5 million and

€

€

€

As far as projects are concerned, approximately
390 million of the appropriations for 2001
have already been committed through projects decided on in 2000 (as investment projects that
are financed through ISPA are implemented over several years, projects generally require a
commitment for more than one year).

€

4.

SAPARD SUMMARY

Using financial support from the Community budget amounting to over half a billion euro per
year in the period 2000 to 2006, SAPARD's main priorities, as set out in the SAPARD
Regulation (Council Regulation (EC) 1268/19994, are to contribute to the implementation of
the acquis concerning the Common Agricultural Policy and related policies, and to solve
priority and specific problems for the sustainable adaptation of the agricultural sector and
rural areas in the applicant countries. In addition to primary agricultural production, projects
to improve product processing, marketing and quality are eligible for support, as are more
general rural development measures.

Support under SAPARD is to be granted on the basis of a single agriculture and rural
development programme per applicant country covering the period 2000-2006. The content of
each programme reflects priorities established by the national authorities, depending on the
particular circumstances and needs of their country, within limits set under the SAPARD
Regulation.

SAPARD programmes are to a large extent comparable with Member States' agriculture and
rural development programmes. The exercise of programming was entirely new for the
candidate country administrations that had to draw up those programmes. Nonetheless the
programmes for all 10 countries were ready and approved by the Commission in the autumn
of 2000.

Another implication flowing from the programme approach applied under SAPARD is that,
unlike the other pre-accession instruments Phare and ISPA, where at least some key elements
are managed by the Commission, with SAPARD the Commission is not involved in the
management, not even project selection. For SAPARD an alternative approach was chosen,
whereby the national authorities in the applicant countries would assume entire responsibility
through fully “decentralised management”. This was done to enable the underlying objectives
to be realised. One is to implement numerous small-scale
of the SAPARD instrument
projects, in principle, throughout the rural areas of each country and the other to create
structures which will be capable also of applying the acquis immediately upon accession.
However, this approach required two major exercises to be accomplished before aid could be
granted.

4

Council Regulation (EC) No. 1268/1999 of 21 June 1999 on Community support for pre-accession
measures for agriculture and rural development in the applicant countries of central and eastern Europe
in the pre-accession period (OJ L 161 of 26 June 1999, p.87)

10

The first exercise was essentially regulatory. Because of the novelty of the instrument, new
Community legislation needed to be introduced. It was also necessary to negotiate with the
applicant countries an appropriate set of provisions covering all aspects relevant to the proper
use, control and accountability of funds which was laid down in multi-annual financing
agreements with each of them. By the late autumn of 2000 these negotiations had been
completed and the first agreement with Bulgaria was signed on 18 December 2000.

The other exercise required the establishment in each applicant country of an agency capable
of implementing SAPARD in a manner consistent with the legal provisions concluded in the
multi-annual financing agreements. By the end of 2000 a considerable amount of work was
accomplished by the applicant countries to build their SAPARD agencies. However, no
applicant country had a SAPARD agency ready to receive funds and therefore no Community
SAPARD monies were transferred to any applicant country by the end of 2000.

5.

OVERALL DESCRIPTION OF MECHANICS OF THE PRE-ACCESSION INSTRUMENTS

5.1.

Commitments and transfer of funds

Before funds from all three instruments can be actually transferred to the countries, they will
require:

–

–

–

a Commission Decision, in order to be committed into the Budget,

a framework agreement (existing Phare framework agreements for Phare, extended
to ISPA, and a new multiannual financing agreement for SAPARD), and

an annual bilateral financing agreement or memorandum determining the financial
commitment of the Community for the measure concerned towards the recipient
country, i.e. fixing rights and obligations for both parties.

However, procedures leading to decision making and commitment of funds are different for
each instrument, and the different steps can be summarised as follows:

Phare

–

–

–

–

–

–

Framework agreement signed between the Commission and each country (has
existed for each country for several years)

Annual programming by priority: working document based on the Accession
Partnership

Candidate countries prepare draft programmes and project fiches for comments and
final decision by the Commission

Financing proposals for annual National Programmes prepared by DG Enlargement;
consultations with other Commission services, and presentation to the Phare
Management Committee for an opinion

Commission Decision

Commitment of funds

11

–

–

ISPA

–

–

–

–

–

–

–

–

–

Signature of annual financing memorandum by the candidate country and the
Commission; exchange of letters on each project fiche

First transfer of funds (advance payment of 20%) upon request from the National
Fund

Existing framework agreements for Phare are extended to ISPA

National ISPA strategies for transport and environment prepared by the countries,
other Commission services are consulted, and the strategies are approved by the
Commission

Identification and preparation of projects by the countries

Project application on standard form, acceptance (i.e. check whether all douments are
included) and appraisal

Financing proposal for each project prepared by DG Regional Policy, put into
interservice consultation, and presented to the ISPA Management Committee for an
opinion

Commission Decision (for each project)

Commitment of funds (one project may receive commitments from different years,
e.g. 2000 and 2001 ISPA programmes)

Signature of financing memorandum (for each project)

First transfer of funds (10%)

SAPARD

–

–

–

–

–

–

–

–

Submission to the Commission of a draft agriculture and rural development plan
(RDP) for 2000-2006 by each country before the end of 1999

Inter-service consultations with Commission services and consultations with each
country

Agreement with the country on the plan

Final inter-service consultation with Commission services

Submission of the plan to and opinion by the STAR (management) Committee

Formal adoption by the Commission of a programme for agriculture and rural
development

Commission Decision to authorise the signature of the multi-annual financing
agreement and the annual financing agreement

Signature of
agreement

the multi-annual

financing agreement and the annual

financing

12

–

–

–

–

Commitment of the annual SAPARD appropriation

Conclusion of the multi-annual financing agreement and the annual financing
agreement

Formal decision by the Commission conferring management of aid on the
implementing agencies

First payment to the country (max 49% of the first annual allocation)

5.2.

Implementation structures in candidate countries

Funds from each of the three pre-accession instruments will be channelled through the
National Fund, established in the Ministry of Finance in each country, under the responsibility
of the National Authorising Officer.

The concrete implementation of Phare and ISPA is carried out in Implementing Agencies
(such as the Central Finance and Contracts Unit, CFCU) that receive the funds from the
National Fund (unless the National Fund acts as a paying agent). The EC Delegations are
responsible for endorsing procurement documents before tenders are launched or contracts
signed.

Contrary to Phare and ISPA that make maximum use of the existing agreements and
structures set up under the Phare Decentralised Implementation System (DIS), SAPARD is
implemented on a fully decentralised basis from the outset, provided all the necessary
conditions are fulfilled.

Such delegation of management responsibility requires that each candidate country sets up the
relevant management and control systems to be approved at national level by the national
Authorising Office. Once these conditions are met, the Commission services carry out the
compliance verification prior to the Decision by the Commission conferring financial
managemen. The Commission Regulation 2222/20005 set out the detailed financial rules for
this conferral of management. It was adopted by the Commission on 7 June 2000 after
agreement of the EAGGF Committee on 22 May 2000.

The countries are all engaged in preparing the required institutional set-up for managing
SAPARD. One country (Bulgaria) managed to complete the work to set up their management
and control systems and pass their National Act of Accreditation by the end of 2000.
However, no applicant country had a SAPARD agency approved to receive funds by the end
of 2000. Actual transfer of funds only takes place if and when the accredited SAPARD
Agency has been subject to a Commission Decision conferring management on the Agencies
concerned.

5

Commission Regulation (EC) N° 2222/2000 of June 7 2000 laying down financial rules for the
application of Council Regulation (EC) N° 1268/1999 on Community support for pre-accession
measures for agriculture and rural development in the applicant countries of central and eastern Europe
in the pre-accession period

13

5.3.

Decentralisation of implementation under Article 12 of the Co-ordination
Regulation

Phare and ISPA are currently implemented through the Decentralised Implementation System
(DIS), introduced for Phare in 1990 and revised in 1998. In the light of the conclusions of the
Nice European Summit, the Commission and the candidate countries will step up their efforts
towards further transferring management responsibilities to the candidate countries.

The Coordination Regulation therefore provides a legal basis to “waive the Commission’s ex
ante approval for project selection, tendering and contracting by applicant countries” (Article
12). The situation after waiving the Commission's ex ante approval is hereafter called the
Extended Decentralised Implementation System (termed EDIS).

Contrary to Phare and ISPA, SAPARD is managed in a fully decentralised manner from the
outset. Phare and ISPA intend to introduce EDIS at a later stage.

6.

MONITORING AND EVALUATION

6.1.

Phare

Phare monitoring and assessment provides all the parties involved in programme management
with a regular and reliable flow of information on the implementation of all on-going
programmes.

During the year 2000, 121 Monitoring and Assessment reports have been issued covering all
sectors of Phare assistance. These resports have been produced by an independent external
contractor that has operated offices staffed with EU and local evaluators in Albania, Bulgaria,
Czech Republic, Estonia, FYROM, Hungary, Latvia, Lithuania, Poland, Romania, Slovak
Republic and Slovenia. A Central Office operated in Brussels assessing multi-country/multi-
beneficiary programmes.

In line with deconcentration, monitoring (control and follow-up) of programmes is done
locally by the Phare Task Managers at the Delegations, with an independent and external
assessment as a complementary activity.

implementation responsibilities,

Following the re-orientation of Phare towards pre-accession strategies and the decentralisation
of
the previously centralised Phare Monitoring and
Assessment System was replaced in September 2000 by a Decentralised Monitoring System
and a revised Interim Evaluation Scheme. The revision is based on the candidate countries
assuming responsibility for reporting on facts by preparing Monitoring Reports as a bridging
step towards the management of future Structural Funds.

New monitoring structures - a Joint Monitoring Committee (JMC) and around 6 Sectoral
Monitoring Sub-Committees (SMSC) - have been established in each Candidate Country and
these meet twice a year.

Annual reports of each instruments’ Monitoring Committee will be submitted to the Joint
Monitoring Committee, that should hold a debate on co-ordination of monitoring during its
annual meeting.

14

6.2.

ISPA

All ISPA projects are subject to the provisions of the ISPA Regulation and the Financing
Agreement for each ISPA measure in respect of both monitoring and evaluation. Evaluation is
not yet an issue as projects are at an early stage of implementation.

The first round of Monitoring Committees, which will be held twice a year, was scheduled for
spring 2001. Taking into account the limited experience in candidate countries to monitor
large-scale infrastructure projects in conformity with Commission requirements, DG Regional
Policy has provided guidance documents to them that should facilitate the organisation of
these first meetings.

6.3.

SAPARD

Implementation of SAPARD programmes is subject to the provisions of the Multi-annual
Financing Agreement
in respect of both monitoring and evaluation. According to these
provisions a monitoring committee shall be established for each SAPARD programme. In
support of these commitments and activities, guidance for establishing rules of procedure for
the SAPARD Monitoring Committees was given by the Commission to all applicant countries
during 2000.

7.

CO-ORDINATION

7.1.

General

As required by Council Regulation (EC) No 1266/99, the Commission ensures close co-
ordination between the three pre-accession instruments. The Regulation carefully specifies the
field to which each instrument provides assistance thereby minimising potential overlaps
between the different instruments:

–

–

–

SAPARD finances measures to support agriculture and rural development;

ISPA finances large infrastructure projects in the transport and environment sectors;

the acquis
Phare deals with priority measures concerning the adoption of
communautaire, whether through improving administrative capacity or supporting
related investment. This instrument also has an element for Economic and Social
Cohesion. It may support measures in the fields of the environment and transport if
they constitute a secondary but essential component of integrated programmes for
regional development or industrial restructuring.

The Phare Management Committee plays a key role in general co-ordination. Pursuant to
Article 9 of the Co-ordinating Regulation, the Committee shall assist the Commission for co-
ordinating operations under the three instruments and the Commission shall inform the
Committee about the indicative financial allocations for each country and per pre-accession
instrument and about action it has taken as regards co-ordination with the EIB, other
Community instruments and IFIs. This information is provided to the Committee in the
General Assistance Document 2001. Moreover,
the
decisions whereby the Commission confers on implementing agencies in applicant countries
management of aid on a decentralised basis in accordance with Article 12 of the Co-
ordinating Regulation. No such decision was taken in 2000.

the Committee is informed about

15

At programming level,
the Accession Partnerships, one for each of the ten candidate
countries, as revised by the Council on 6 December 1999, remain the general framework for
assistance under the three pre-accession instruments. They are supplemented, in the case of
Phare, by the National Development Plans, and in the case of ISPA, by the national strategies
for the environment and transport. SAPARD projects will be selected on the basis of the Rural
Development Programmes for 2000-2006, as prepared on the basis of the candidate countries’
plans and approved for each of these countries by the Commission in 2000.

In order to avoid eventual overlaps between operations receiving support from SAPARD or
Phare (in particular Phare ESC and Phare CBC, for which a more programmatic approach will
be followed, including the establishment of ‘schemes’), appropriate provisions are being
included in relevant programming documents and agreements:

–

–

For Phare, any Financing Decision and Financing proposal provides, as from 2001,
that ‘the National Aid Co-ordinator and the National Authorising Officer shall be
jointly responsible for co-ordination between Phare (including Phare Cross-Border
Co-operation, CBC), ISPA and SAPARD’.

For SAPARD, the multi-annual financing agreements which have been signed with
all 10 candidate countries provide, under section C, Article 1 that the Commission
and [applicant country] shall ensure co-ordination of assistance between the
Programme, ISPA, Phare and assistance from the EIB and other international
financial instruments; the country shall ensure in particular that where a SAPARD
project, due to its nature, could also be potentially eligible in full or in part for
assistance under the other above mentioned instruments, any risk of expenditure
being aided more than once shall be avoided (notably by means of ‘stamping
‘invoices).

7.2.

Co-ordination inside the Commission

The Phare programme comes under the responsibility of the Enlargement Directorate General,
which also assumes the overall co-ordination between the three instruments, supported by the
Phare Management Committee. The ISPA programme is under the responsibility of the
Regional Policy Directorate General, and the SAPARD programme is under the responsibility
of the Agriculture Directorate General.

In practice, programming is co-ordinated through extended inter-service consultations. In
addition, a co-ordinating committee for the pre-accession instruments has been set up in the
various Commission departments involved. This committee pays particular attention to the
preparation of the extended decentralisation (EDIS) of Phare and ISPA.

In the case of project monitoring, co-ordination takes the form of the Joint Monitoring
Committee (JMC), supported, where possible, by the ISPA Monitoring Committees and the
relevant Phare sub-committees.

To draw the line between actions which could receive support from either SAPARD or Phare,
the Commission clarified the interface between Phare and SAPARD, taking into account the
provisions of the Co-ordination Regulation. This was needed particularly for investments in
the veterinary area. The demarcation is that Phare may support investments if they concern
public works carried out by national authorities or other public authorities to whom the
competence has been sub-delegated by the national authorities. Investments could be eligible
under SAPARD if they relate to private activities (for example, in-house laboratories for

16

processing plants, or upgrading of farm equipment). SAPARD programmes may also include
investments to improve small, local public structures for quality, veterinary and plant health
controls, for food quality and for consumer protection. In addition, Phare will continue to
provide institution building support, notably for SAPARD agencies.

For ISPA, it should be noted that for projects in 2000, the first year of operation of this
instrument, the feasibility and preliminary draft studies were financed from Phare in 1998 and
1999.

Furthermore, the implementation of Phare and ISPA is monitored by the Delegations in the
candidate countries.

7.3.

Co-ordination in the country

At the country level and in line with the objective of decentralisation, the Commission
strongly encourages the candidate countries to enhance inter-ministerial co-ordination which
is a key pre-condition for the candidate countries’ successful future management of the
Structural Funds and, in the short term, for implementing Phare ESC. In several countries
such interministerial coordination needs further improvement.

is provided for from the outset (for SAPARD), or will
As decentralised management
gradually increase (for Phare and ISPA), the responsibility of the candidate country for proper
coordination of operations receiving pre-accession support and avoiding overlaps must be
developed accordingly. Taking into account the decentralised nature of SAPARD, only the
countries themselves will be able to ensure full complementarity at project level.

Therefore, the Commission has requested from the countries that they take the necessary steps
for effective and efficient co-ordination.

8.

CO-ORDINATION WITH THE EIB AND INTERNATIONAL FINANCIAL INSTITUTIONS

Pre-accession aid can play its full role when it mobilizes funds from the international financial
institutions (IFIs). With this in mind, the European Commission signed a Memorandum of
Understanding on 2 March 1998 with the European Bank for Reconstruction and
Development (EBRD) and the World Bank, to reinforce their cooperation and to facilitate co-
financing under the Phare programme. Four new partners joined this agreement in October
1998: the Nordic Environment Finance Corporation (NEFCO), the Nordic Investment Bank
(NIB), the International Financial Corporation (IFC) and the Council of Europe Development
Bank. In 2000, the Memorandum of Understanding was extended to cover the two other pre-
accession instruments, ISPA and SAPARD. Though not a signatory to the Memorandum, the
EIB works closely with the European Commission in serving the EU’s policy objectives and
collaborates with the other IFIs in the spirit of the Memorandum of Understanding.

Since 2000, the new accession instrument ISPA for transport and environment is the main
facility for co-financing infrastructure projects with the EIB and other IFIs. The main co-
in Phare remains the SME Facility, where the Commission works
financing instrument
together with the EBRD, the Council of Europe Development Bank and the Kreditanstalt für
Wiederaufbau. Co-financing within Phare National Programmes
small
municipalities water and wastewater investment project in Estonia, and an electricity and gas
markets projects in Romania.

included a

17

The Commission services organise periodical meetings with the EIB and the EBRD to co-
ordinate issues related to programming and implementation, as well as procedural issues. If
joint missions to candidate countries are envisaged, which is an important
possible,
component for ensuring co-operation on a project
level to the benefit of the candidate
countries.

As regards ISPA, a Co-operation Agreement was signed on 19 January 2000 between the
Commission and the EIB on Community structural assistance, including ISPA, for the period
2000-2006. The main objective of the Agreement is to maximise the leverage effect of the EC
grants and to restrict EC budget support to that which is strictly necessary. The results of the
first year of co-operation are very positive: several co-ordination meeting were held in order
to set up the working framework and to make the Agreement operational. In addition, possible
proposals for co-financing were identified by exchanging information at a very early stage of
the project preparation. The Commission has also developed good working relationships with
the European Bank for Reconstruction and Development (EBRD) and the Nordic Investment
Bank (NIB) and the Nordic Environment Finance Corporation (NEFCO). Several co-financed
projects were identified with these IFIs.

For SAPARD, co-operation with IFIs was limited to general consultations and exchange of
information given its full decentralisation to candidate countries.

Delegations also play an important role in the co-ordination of pre-accession instruments with
the IFIs and bilateral donors by periodically organising donor meetings on the spot to
exchange information about planned and on-going projects.

9.

CONCLUSION

The year 2000 was the first year when all three pre-accession instruments came on stream.
Much progress was achieved in setting up the new instruments of ISPA and SAPARD. The
pre-accession assistance for the candidate countries doubled, the Phare programme had to be
adapted in order to take into account the new instruments and more emphasis was put on
Economic and Social Cohesion. The co-operation between the different Commission services
was stepped up and further developed in line with the Co-ordinating Regulation. Setting up of
the structures for the pre-accession instruments in the candidate countries also provided an
important exercise in Institution Building and started to prepare the candidate countries for
the Structural Funds.

18

ANNEX

The allocations per country for Phare, ISPA and SAPARD in 2000

Phare

SAPARD6

ISPA

Total

€

million

€

million

Bulgaria

Czech

Estonia

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Other7

Total

150.6

101.5

33.5

119.8

34.8

87.1

484.4

260.3

78.8

33.4

185.1

1569.2

€

million

104.0

70.0

28.2

88.0

46.7

52.2

307.0

239.2

42.5

19.6

€

million

307.6

193.9

74.0

246.5

103.7

169.6

962.9

652.7

139.9

59.4

53

22.4

12.3

38.7

22.2

30.3

171.5

153.2

18.6

6.4

528.9

997.4

3095.5

6

7

Commission decision 1999/495/EC of 20 July 1999 on the indicative allocation of the annual
Community financial contribution to pre-accession measures for agriculture and rural development (OJ
L 226 of 27 August 1999 p.23); for the year 2000, numbers for Countries are rounded, but the total of
committed appropriations amounts to
Multi-country and horizontal programmes

528.9 millions as mentioned for the total

€

19