Report from the Commission - General Report on pre-accession assistance (PHARE - ISPA - SAPARD) in 2001 [SEC(2003)656]
Date: 2003-06-04
Institutions: European Commission
Subjects: EU programme, European Regional Development Fund, European Social Fund, accession to the European Union, agricultural policy, environmental policy, report, rural development, transport policy

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 4.6.2003
COM(2003) 329 final

REPORT FROM THE COMMISSION

GENERAL REPORT
ON PRE-ACCESSION ASSISTANCE
(PHARE – ISPA – SAPARD)
IN 2001

[SEC(2003)656]

TABLE OF CONTENTS

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

1.

2.

3.

4.

5.

5.1.

5.2.

5.3.

6.

6.1.

6.2.

6.3.

7.

7.1.

7.2.

7.3.

7.4.

Background .................................................................................................................. 5

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

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

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

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

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

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

Decentralisation of implementation under Article 12 of the Co-ordination Regulation14

Monitoring and Evaluation ........................................................................................ 15

Phare........................................................................................................................... 15

ISPA ........................................................................................................................... 17

SAPARD.................................................................................................................... 18

Co-ordination ............................................................................................................. 18

General ....................................................................................................................... 18

Co-ordination inside the Commission........................................................................ 19

Co-ordination in the country ...................................................................................... 20

Co-ordination with the EIB and International Financial Institutions......................... 20

ANNEX22

2

SUMMARY

This is the second report by the Commission to the European Parliament and the Council 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 assistance1. This 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 (€
1,634 million);

ISPA finances large infrastructure projects in the transport and environment sectors (€ 1,109
million);

SAPARD finances measures to support agriculture and rural development (€ 539.6 million).

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  same  vein,  the  Cross-Border  Co-operation  Programme  mirrors  the  Community’s
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
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.

1

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 of June 1999, p. 68).

3

                                                
The  year  2001  was  the  second  operational  year  for  SAPARD  and  ISPA.  All  SAPARD
programmes had already been approved in 2000; one of them (Latvia) was modified in 2001.
Bilateral multiannual and annual financing agreements were negotiated and concluded  (with
the  exception  of  Romania)  and  annual  allocations  for  2000  were  committed.  The
establishment of SAPARD implementing agencies progressed substantially and five candidate
countries  have  received  conferral  of  management  for  their  respective  SAPARD  agency  and
hence SAPARD funds were transferred to them in 2001.

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 other two pre-accession instruments. Approximately 30% 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%  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 committee at Directorate level ensures co-ordination 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 2001 was the second year when all three pre-accession instruments came on stream.
Much progress was achieved in setting up and implementing the new instruments of ISPA and
SAPARD.  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.

A  technical  document,  which  is  presented  as  an  annex  to  this  report,  contains  sections  on
programming and implementation of the pre-accession instruments in each of the beneficiary
countries.

4

1.

BACKGROUND

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 and Eastern Europe
since  the  year  2000: as  proposed  by  the  European  Commission  in  Agenda  2000,  €  3,174
million  (2001  figures)  were  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 in 2001
was as follows: € 1,634 million for Phare, € 1,109 million for ISPA and € 539.6 million for
SAPARD.

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.

In  2001,  accession  negotiations  were  underway  with  the  first  twelve  countries,  and  the
objective affirmed at the European Council in Göteborg was to complete them by the end of
2002 with those countries that are ready to join, so that they can take part as members in the
European Parliament’s  elections  of 2004. The  Laeken  European  Council  in  December  2001
confirmed  the  Union’s  determination  “to  bring  closer  the  accession  negotiations  with  the
candidate countries that are ready to a successful conclusion by the end of 2002, so that those
countries can take part in the European Parliament elections in 2004 as members”.

This Report covers  the  calendar  year 2001, which was the  second  operational  year  for  both
ISPA and SAPARD. It provides information about 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 Reports2. It is hoped that this
Report  with  its  annexes  will  serve  as  a  useful  documentation  of  the  essential  role  that  pre-
accession assistance plays in preparing the candidate countries for membership.

2

Phare Report: COM( ), ISPA Report: COM(2002) 596 final, SAPARD Report: COM(2002) 434 final.

5

                                                
2.

PHARE SUMMARY

Introduced  in  1989  to  assist  Poland  and  Hungary,  and  later  other  countries  of  Central  and
Eastern Europe, 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 2001 amounted to € 1,634 million. The operations financed
were:

– 

national programmes: € 1,091 million, of which:

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Bulgaria : € 83 million

Czech Republic: € 65 million

Estonia : € 26 million

Hungary : 90 million

Latvia : € 31 million

Lithuania : € 46 million

Poland : € 411 million

Romania : € 274 million

Slovakia : € 44 million

Slovenia : € 21 million

– 

– 

– 

Special nuclear decommissioning programme € 168 million

cross-border co-operation : € 163 million

regional and horizontal programmes : € 212 million

The  European  Commission  has  increasingly  transferred  responsibility  for  the  management
and implementation of Phare programmes to the authorities in the candidate countries. This is
part of the process of helping them to prepare for accession to the European Union and their
subsequent management of cohesion and structural funds.

As  older  Phare  programmes  were  completed  and  new  programmes  initiated,  projects
implemented in 2001 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

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 [SEC (1998) 1012].

6

                                                
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).

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  2001  was  based  on  the  revised  guidelines  for  Phare  approved  by  the
Commission  in  19994.  These  guidelines  build  on  the  changes  decided  in  1998  and  take
account  of  the  new  ISPA  and  SAPARD  Regulations  that  take  effect  from  2000.  They  also
emphasise the need to use Phare to  help the  candidate countries prepare  to benefit  from  the
Structural Funds after accession (economic and social cohesion). The  guidelines provide for
around 30% of the aid to be devoted to institution building. In fact, in 2001, the figure  was
about  40%,  the  main  instruments  of  which  were  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  Twinning  Light  (a  shorter  scale
version of Twinning introduced in 2001, as recommended in the Phare Review of 20005.) The
balance  of  assistance  went  on  investments  designed  to  improve  the  regulatory  framework,
thereby facilitating adoption of the acquis, and to support economic and social cohesion.

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.

In  its  2001  Strategy  Paper,  the  European  Commission  identified  the  need  for  an  adequate
level  of  administrative  and  judicial  capacity  in  the  candidate  countries  for  the  proper
enforcement of the acquis. The Commission, therefore, proposed to establish an action plan,
which should analyse with each of the candidate countries their approach to implement their
priorities and, if necessary, their intentions to reinforce efforts for institution building.

4

5

SEC (1999) 1596.
C (2000) 3103/2

7

                                                
3.

ISPA SUMMARY

The  “Instrument  for  Structural  Policies  for  Pre-Accession”,  ISPA,  is  the  European
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 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.

Main achievements in 2001

Implementation of Community environmental policy and strengthening of European transport
links

In 2001 ISPA commitment appropriations from budget line B7-020 were mainly used for the
94 new ISPA measures and second tranches6 for projects decided in 2000 (€ 1,109 million).
Of this, € 2.7 million was committed for technical  assistance for EDIS, and € 26.1 million for
project preparation. A total of 94 new projects with a total project cost of € 2.3 billion were
decided  on  by  the  Commission,  Community  funding  for  these  new  projects  is  over  € 1.1
billion.  The  remainder  is  to  be  co-financed  by  the  beneficiary  states  (national  sources  at
central, regional, and local level),  and international financial institutions (IFIs).  The  average
Community grant rate stood at 64% of project cost in 2001.

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
concentrates, 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.

51.92% of the ISPA budget this year went to environment projects. More than half of ISPA
funding  in  the  environmental  sector  for  the  year  2001  was  dedicated  to  sewage  treatment
projects. Primarily the projects focused on sewerage works to extend, replace or repair current
systems in the beneficiary countries. Approximately 26% of funding was assigned to drinking
water projects, the majority in conjunction with waste water treatment projects. About 15% of
the  funding  in  this  sector  was  applied  to  solid  waste  management,  primarily  to  landfill
projects.

6

ISPA  measures  are  committed  in  annual  tranches,  i.e.  committed  are  spread  at  least  over  two  years.
Consequently, commitments for the  budget  year  2001  also  include  second  tranches  for  some  projects
already decided in 2000.

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.

ISPA  funds  spent  in  this  sector  in  2001,  have  been  focused  on  further  extending  the  TINA
(Transport  Infrastructure  Needs  Assessment)  network.  57.5%  of  the  transport  sector  funds
have  been  allocated  to  road  projects  including  new  construction  and  improvements  to  meet
EU  capacity  and  safety  standards.  Around  40%  have  financed  projects  aiming  at  the
rehabilitation and upgrading of existing rail infrastructure to EU standards.

Through ISPA, the Community provides financial assistance to those environmental projects
that require particularly large infrastructure investments, namely for water supply and waste
water  treatment  as  well  as  waste  management.  Furthermore,  ISPA  has  proved  to  be  a
successful instrument to help candidate countries to strengthen their understanding and their
administrative capacity to implement key environmental legislation.

In 2001, ISPA provided technical assistance to candidate countries with a view to enhancing,
through  training,  their  capacity  for  implementing  key  horizontal  environmental  legislation,
notably  the  Environmental  Impact  Assessment  Directives  (85/337/EEC  and  97/11/EC).  By
requesting  an  assessment  of  the  potential  effects  of  ISPA  projects  on  environmentally
sensitive  areas,  the  Commission  has  facilitated  the  candidate  countries  understanding  of  the
legislation  protecting  wild  birds  and  habitats.  Furthermore,  additional  guidance  has  been
provided to help candidate countries avoiding irreversible damage to areas that might become
part of a future Natura 2000 network.

In the transport  sector, the role of  ISPA  has been to contribute  to  the  building  of  the  future
trans-European  transport  network  and  to  support  the  interconnection  and  interoperability
within national networks and between those and the EU’s network.

Enhancing the administrative capacity for project management

Projects  to  be  financed  through  ISPA  must  be  compatible  with  Community  policies  and
comply  with  competition  and  public  procurement  rules.  However,  candidate  countries
experienced  difficulties  to  implement  these  high  standards  for  tendering  and  contracting,
which led to delays in project implementation. To redress these deficiencies, the Commission
undertook  in  2001  various  training  seminars  and  other  initiatives  to  provide  assistance  for
improving  the  candidate  countries’  capacity  for  tendering  and  procurement,  and  ensuring
compliance with Community rules. The activities will continue in 2002.

The Commission also decided technical assistance measures to make funds available for the
preparation of high-quality projects. With decisions taken in 2000 and 2001, a total of € 59.9
million for 30 technical assistance measures was allocated to strengthen the project  pipeline
for 2002 and beyond. These measures include support to prepare projects to be financed  by
the Cohesion Fund after accession.

9

Financial management and control systems

In 2001, the Commission undertook systems audits to assess the extent to which the candidate
countries  have  established  management  and  control  systems  that  comply  with  the
requirements  defined  in  the  ISPA  Regulation7.  These  audits  found  that  candidate  countries
made significant efforts in setting up management and control systems, but further steps need
to be taken in some central areas. candidate countries are now addressing the observations and
recommendations  included  in  the  audit  reports.  In  2002  the  Commission  audit  services  will
follow up on these actions.

Technical  assistance  was  made  available  to  prepare  candidate  countries  for  the  Extended
Decentralised Implementation System (EDIS). The preparation of EDIS focuses on achieving
compliance of the financial management and control systems with requisite standards as well
as the adequacy of procedures for tendering and contracting.

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  8, 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, and one of them (Latvia) was modified in 2001, mostly to take into account the work
associated with the conferral of management to the SAPARD agency.

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
of  the  SAPARD  instrument  to  be  realised.  One  is  to  implement  numerous  small-scale

7

8

EC n° 1267/1999, as amended.
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

                                                
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.

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 end of 2001 these negotiations had been completed and
all  bilateral  multiannual  financing  agreements  and  annual  financing  agreements  were
negotiated and concluded (with the exception of Romania) and annual allocations 2000 were
committed.

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 2001 a considerable  amount  of work was
accomplished  by  the  applicant  countries  to  build  their  SAPARD  agencies,  and  conferral  of
management  to  the  national  authorities  was  decided  by  the  Commission  for  5  out  of  10
countries;  therefore  about  €  30.5  million  were  tran sferred  to  these  countries  by  that  time:  €
30.47  million  as  accounts  and  €  21,570  as  interim  pa yments  (reimbursements)  to  Estonia
relating to third quarter of 20019.

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,  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:

9

The  reimbursement  payment  for  Bulgaria  (€  411,153)  was  made  in  February  2002  after  reception  of
information concerning changes in the SAPARD Agency staff requested by the Commission.

11

                                                
Phare

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

Annual  programming  by  priorities  identified  in  the  Regular  Reports  and  the  Accession
Partnerships

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

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

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

ISPA

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  documents  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%)

In 2001 ISPA commitment appropriations from budget line B7-020 were mainly used for the
94 new  ISPA  measures  and  second tranches for  projects  decided in  2000  (€ 1,109  million).
The amounts  committed  from  the  2001  B7-020  budget  were  divided  fairly  equally  between
environmental (52%) and transport sectors (48%).

12

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 the multi-annual financing agreement and the annual financing agreement

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)

In order to guarantee the efficient protection of the financial interests and to combat fraud and
other  irregularities,  the  financing  decisions  and  the  agreements  and  contracts  adopted  under
these  foresee  for  all  pre-accession  instruments  a  monitoring  and  financial  control  by  the
Commission and the Court of Auditors, if necessary on the spot.

5.2.

Implementation structures in candidate countries

Funds from each of the three pre-accession instruments are 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. The projects that ISPA finances are large infrastructure projects that are implemented
over several years. Actual implementation progress on the ground requires, as with any major
public  infrastructure  investment,  very  detailed  preparations,  including  tender  dossiers,  and
procedures (with the strict application of Community procurement rules). The first substantial
payments were made in 2001, which total around € 200 million in that year, as the first ISPA
projects were decided not much before the end of 2000. These payments include 21% of the
amounts committed in 2000. At present, the procedures for managing measures financed by
the ISPA and Phare fund require ex-ante control, i.e. decisions concerning procurement  and

13

award of contracts are taken by the contracting authority and referred to the EC Delegation in
the beneficiary for endorsement.

Unlike Phare and ISPA, which 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
management.  The  Commission  Regulation  2222/200010  as  modified  by  the  Commission
Regulation 2252/2001 11sets out the detailed financial rules for this conferral of management.
The  countries  are  all  engaged  in  preparing  the  required  institutional  set-up  for  managing
SAPARD. Five candidate countries managed to receive decision on conferral of management
by the  end of 2001. However these decision are not related to  the whole scope of  measures
covered by the SAPARD programmes and work is on going to complete this process.

5.3.

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

In  2001,  Phare  and  ISPA  were  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 objective of the Commission is that candidate countries likely to join the EU in
2004  will  move  to  the  final  stage  of  the  Extended  Decentralisation  Implementation  System
(EDIS) in the course of 2003.

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). The progress towards EDIS
is laid down in the documents entitled “Preparing for Extended Decentralised Implementation
System  of  the  Phare  and  ISPA  programmes”  send  to  acceding  countries  in  December  2000
and the “Roadmap to EDIS for ISPA and Phare” sent to acceding countries in October 2001.
The Roadmap sets out the procedural stages leading to an EDIS decision. Stages I, II and III
are  the  responsibility  of  the  candidate  countries  and  contain  Gap  assessment,  Gap  Plugging
and Compliance assessment. The fourth stage is preparation for Commission decision and is
the  responsibility  of  the  Commission.  During  2001  the  candidate  countries  launched
preparatory activities and some countries initiated stage I.

10

11

Commission  Regulation  (EC)  N°  2222/2000  of  7  June  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
Commission Regulation (EC) N° 2252/2001 of 20 November 2001, amending Commission Regulation
(EC)  N°  2222/2000  of  7  June  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

14

                                                
6.

MONITORING AND EVALUATION

6.1.

Phare

Ex Ante Evaluation

Since  the  2003  Phare  programming  cycle  is  the  last  for  the  "Laeken  Group"  of  candidate
countries,  it  will  herald  a  step-change  in  the  scope  of  Phare's  operations,  and  Phare's
mechanisms will require adaptation to a new set of needs.

On  this  basis,  the  first  steps  were  taken  in  2001  to  prepare  an  ex  ante  evaluation,  to  be
launched in 2002, of programming mechanisms for Phare in 2004 and beyond. The evaluation
will  aim  to  do  this  based  on  an  assessment  of  lessons  learned  from  the  current  method  of
Phare  programming  and  an  examination  of  programming  mechanisms  in  comparable
interventions.

A key input to this evaluation will be a report on programming and project design prepared in
2001  by  the  contractor  responsible  for  preparing  monitoring  and  assessment  reports  from
1996 to 2001, covering projects financed from 1990 to 1999. The  contractor  concluded  that
these projects had often had poorly specified objectives, technically weak logical frameworks
(logframes), and inadequate indicators.

Remedial  measures  involving  the  systematic  checking  of  these  features  at  the  project
formulation stage is introduced in 2002.

Monitoring and Interim Evaluation

the  re-orientation  of  Phare 

implementation  responsibilities, 

towards  a  pre-accession  strategy  and 

the
Following 
decentralisation  of 
the  previously  centralised  Phare
Monitoring  and  Assessment  System  was  replaced  in  September  2000  by  a  Decentralised
Monitoring System and an Interim Evaluation Scheme. The revision is based on the candidate
countries  assuming  responsibility  for  monitoring  the  progress  of  Phare  measures  while  the
Commission  keeps  responsibility  for  assessing  progress  through  regular  sectoral  Interim
Evaluations performed by independent evaluators.

New monitoring structures — a Joint Monitoring Committee (JMC) and Sectoral Monitoring
Sub-Committees  (SMSC)  —  have  been  established  in  each  candidate  country.  The  Phare
Monitoring  Committee  also  acts  as  Joint  Monitoring  Committee  for  the  three  accession
instruments. Annual reports of each instrument's Monitoring Committee are submitted to this
Joint Monitoring Committee for its consideration.

A new contractor has undertaken the Interim Evaluations since July 2001 through operating
offices  staffed  with  EU  and  local  evaluators  in  Bulgaria,  the  Czech  Republic,  Estonia,
Hungary,  Latvia,  Lithuania,  Poland,  Romania,  the  Slovak  Republic  and  Slovenia.  The
Brussels-based central office is also responsible for monitoring and evaluating multi-country
and multi-beneficiary programmes.

The  Phare  Monitoring  and  Interim  Evaluation  scheme  provides  the  parties  involved  in
programme management with a regular, reliable assessment of the implementation of all on-
going  measures  by  two  means:  firstly,  through  monitoring  reports  drafted  by  the
implementing  agencies  that  provide  the  stakeholders'  view;  and  secondly,  through  Interim
Evaluation reports providing the independent view of the evaluators.

15

During  2001,  42  Monitoring  and  Assessment  reports  based  on  the  old  monitoring  and
assessment  scheme  were  issued,  covering  all  sectors  of  Phare  assistance.  Furthermore,  25
sectoral  Interim  Evaluation  reports  were  produced  based  on  sectoral  monitoring  reports
drafted  by  the  implementing  agencies  and  data  collection  and  interviews  carried  out  by  the
evaluators.

Findings indicated that Phare programming, on the whole, generates projects whose priorities
are in line with those of the Accession Partnerships and take into account Regular Reports and
Action Plans.

However, an appreciable number are poorly designed or prepared, with vague aims, imprecise
indicators,  poor take-up of lessons  learnt, and no feasibility studies.  The  evaluators'  view  is
that Phare's achievements owe more to the ability of those implementing the programme "to
get something done" than to good project design. The evaluators also note that while projects'
administrative  capacity  has  improved,  financial  and  time  management  remain  weak,  and
specialists are difficult to recruit and retain.

lead 

through  on  evaluation 

they  contain.  Following 

to  sustained  consideration  of 

Interim  Evaluation  itself  is  accepted  by  almost  all  candidate  country  beneficiaries  as  an
integral  part  of  the  project  management  cycle.  Reports  receive  serious  attention,  generate
the
healthy  debate  among  stakeholders,  and 
recommendations 
findings  and
recommendations  has  a  cascade  of  beneficial  effects.  These  include  institutional  changes
within implementing agencies; better coordination within and between ministries and donors;
improvements in project design; re-allocation of resources; gaining of additional co-financing;
and  more  attention  paid  to  sustaining  the  results  of  projects  after  completion.  Following  up
recommendations  is  also  leading  to  the  diffusion  of  an  evaluation  culture  that  promotes
accountability and, in turn, sound financial management; to improvements in monitoring and
thus management capacity; and the development of a real participatory approach to evaluation
on  the  part  of  all  stakeholders.  In  this  regard,  the  strong  involvement  of  Delegations  has  a
considerable impact on the quality of the outcome of interim evaluations.

The Interim Evaluation system is further adapted in 2002 to help ensure the sound financial
management of Phare measures. A new Interim Evaluation guide is issued in mid-2002. It is
anticipated  that  the  Interim  Evaluation  team  will  publish  about  70  reports  during  2002  on
Phare assistance in the 10 candidate countries receiving Phare funds. The evaluation team will
also  assist  in  setting  up  evaluation  schemes  for  the  other  three  candidate  countries,  namely
Cyprus, Malta and Turkey.

Ex Post Evaluation

During  the  second  half  of  2001,  DG-Enlargement  prepared,  carried  out  the  procurement
process for and launched the ex post evaluation of a € 1 million sample of Phare support. The
contract is set to start in January 2002. The sample selected for evaluation is the Phare support
due  for  completion  at  the  end  of  2001  and  given  to  the  "Laeken  Group"  of  candidate
countries,  that  is,  the  national  programmes  launched  in  1997/1998  for  Bulgaria,  the  Czech
Republic,  Estonia,  Hungary,  Latvia,  Lithuania,  Poland,  Romania,  the  Slovak  Republic  and
Slovenia.

This  exercise  differs  from  earlier  ex  post  evaluations  (carried  out  by  EuropeAid)  by  being
cross-sectoral and organised on a country basis. It is effectively ten separate country-level ex
post evaluations within the same envelope.

16

Organisational aspects included the formal nomination of a country evaluator by the National
Aid Coordinator; the approval of each country's terms of reference by this national evaluation
representative; and the appointment of local "external" evaluators in each country to provide
country-level evaluation reporting under the supervision of the selected evaluation contractor.
There  is  a  built-in  component  of  local  evaluation  capacity-building  based  on  a  learning-by-
doing philosophy supported by training workshops and an e-learning package.

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.
Implementation progress is reviewed systematically and periodically by Commission services,
in  particular  through  the  Monitoring  Committees.  They  are  organised  twice  a  year  by  the
national authorities.

Statistical data to monitor the physical and financial progress serves as useful indicators with
which to assess the effectiveness of implementation, and in addition to offer an evaluation of
the broader economic and social impacts of ISPA. The National ISPA Co-ordinator (NIC) is
responsible for the organisation of the Monitoring Committees.

The main responsibilities of the Committee include:

– 

– 

– 

– 

– 

monitoring the overall implementation of ISPA projects in the country;

monitoring the implementation of each ISPA project in the beneficiary country; this
monitoring shall use financial and physical indicators;

examining progress reports, and approving the annual progress reports;

proposing (for submission to the Commission) any adjustments in terms of amounts
and conditions which may be required on the basis of the outcome of the monitoring;

deciding, with the agreement of the Commission, any additional responsibilities for
the Committee.

The  first  two  rounds  of  Monitoring  Committees  were  organised  in  2001  in  all  candidate
countries.  Summaries  from  these  meetings  are  communicated  to  the  ISPA  Management
Committee.

Requirement  for  ex-post  are  stipulated  in  Section  XIII  of  the  Annex  to  the  Financing
Memorandum,  which  is  concluded  for  each  project  between  the  Commission  and  the  ISPA
beneficiary  state.  This  section  states  that  after  the  completion  of  a  project,  the  Commission
and  the  beneficiary  countries  will  evaluate  the  manner,  including  the  efficient  and  effective
use of resources,  in which it has been  carried out. The evaluation will also cover  the  actual
impact of their  implementation  in  order  to  assess  whether  the  original  objectives  have  been
achieved.  This  evaluation  will,  inter  alia,  address  the  contribution  made  by  measures  to  the
implementation  of  Community  policies  on  the  environment  or  its  contribution  to  extended
Trans-European  networks  and  common  transport  policies.  They  will  also  assess  the
environmental impact of the measures.

Ex-post analysis should normally not  take  place immediately  after  closure  of  an  investment
project since a sufficiently long period of running-in, testing and normal operation is required
before an extensive technical and economical ex-post analysis is carried out. The Commission

17

reckons that the adequate time to undertake a fully-fledged ex-post analysis is between two to
four years after provisional reception of works. Consequently - given the early stage of ISPA
implementation - no ex-post evaluation have been launched.

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 has been established for each SAPARD programme and
each of the Monitoring Committees has met at least once and sometimes twice during 2001.
During  their  initial  work  the  committees  have  discussed  and  taken  decisions  on  topics  as
required by Article 7, Section B of the Multi-Annual Financing Agreement, such as the rules
of procedure,  selection  and  ranking  criteria, monitoring indicators, preparation for mid-term
evaluation and modifications to their Programmes.

Moreover  the  Commission  services  have  worked  closely  with  the  beneficiary  countries  to
prepare the monitoring and evaluation systems. A seminar was held to train the countries in
monitoring  techniques  used  in  Member  States  and  the  Commission  has  elaborated  a  set  of
minimum monitoring indicators that the SAPARD beneficiary countries have been advised to
apply. On this basis all countries have established their monitoring arrangements which have
been discussed and approved by the monitoring committees. The arrangements include a set
of  monitoring  indicators  described  in  the  programmes  and  a  set  of  monitoring  tables  to  be
completed and updated for monitoring committee meetings.

On the same way two seminars were held, each involving the participation of representatives
of five candidates countries, on evaluation of the SAPARD programmes.

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:

– 

– 

– 

Phare  deals  with  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;

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

SAPARD finances measures to support agriculture and rural development.

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 about action it has taken as regards co-ordination with the EIB, other Community

18

instruments  and  IFIs.  This  information  is  provided  to  the  Committee  in  the  General
Assistance  Document  2001.  Moreover,  the  Committee  will  be  informed  about  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.

At  programming  level,  the  Accession  Partnerships,  one  for  each  of  the  ten  candidate
countries, as adopted by the Council on 13 November 2001, 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  are  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  [the  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.

19

To  avoid  duplication,  the  Commission  has  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 are  eligible under SAPARD if they relate  to private  activities (for  example, in-
house  laboratories  for  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.

As  decentralised  management  is  provided  for  from  the  outset  (for  SAPARD),  or  will
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.

7.4.

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. In 2001, the main
co-financing instrument in Phare was again the SME Facility, where the Commission works
together with the EBRD, the Council of Europe Development Bank and the Kreditanstalt für

20

Wiederaufbau. The Commission also started discussions with the EIB on a Facility to finance
local  municipalities  in  border  regions,  as  outlined  in  the  Commission  Communication  on
Border Regions.12

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
possible,  joint  missions  to  candidate  countries  are  envisaged,  which  is  an  important
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 two years of co-operation between ISPA and the EIB are very positive.
Several  co-ordination  meetings  were  held  during  the  first  two  years  of  implementation  of
ISPA  in  order  to  set  up  the  working  framework  and  make  the  Co-operation  Agreement
operational. The main objective was to maximise the leverage effect of the EC grants and to
especially  target  the  EC  budget  resources  towards  those  projects  that  require  a  larger  grant
contribution.

At the project level, the exchange of information was carried out at a very early stage in the
procedure  of  project  identification  in  order  to  identify  possible  proposals  for  co-financing.
Collaboration with the EIB resulted in the joint co-financing of several projects in 2001.

The  Commission  continued  its  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.

The Commission organised with EBRD  regular exchanges of information and co-ordination
meetings, continued harmonisation of approaches to the appraisal of projects and also detailed
discussions  of  methodological  issues.  The  Commission  had  known  since  2000  that  it  was
necessary to modify the ISPA Regulation to enable expenditure financed by the EBRD to be
considered as matching eligible expenditure. This modification  was  completed  in  December
2001 ensuring that projects could be financed by combinations of ISPA and loan finance from
the EBRD.

For SAPARD, given its full decentralisation to candidate countries, the co-operation with IFIs
mainly involves general consultations and exchange of information. This is carried out both in
Brussels  headquarters  and  in  the  candidate  countries  on  the  occasion  of  Monitoring
Committees, with the view to deepening this co-operation.

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.

12

COM(2001) 437 final of 25 July 2001.

21

                                                
ANNEX

The allocations per country for Phare, ISPA and SAPARD in 2001

Phare

SAPARD

ISPA

Total

€ million

€ million

€ million

€ million

Bulgaria

185.3

Czech
Republic

86.6

Estonia

29.3

Hungary

109.85

Latvia

36.2

Lithuania

106.2

Poland

468.45

Romania

289.14

Slovakia

80.5

Slovenia

28.45

Other13

221.09

54.1

22.9

12.6

39.5

22.7

30.9

175.1

156.3

19

6.6

106.8

66.9

29.9

90.8

48.1

50.5

406.6

245.6

48.1

16

346.2

176.4

71.8

240.15

107

187.6

1,050.15

691.04

147.6

51.05

Total

1,641

539.614

1,109.3

3289.9

13

14

Horizontal, regional and part of the nuclear safety programmes
Total  of  commitments  following  annual  financing  agreement  2001;  the  figures  presented  for  each
beneficiary country have been rounded.

22