Communication from the Commission - Paving the way for a New Neighbourhood Instrument
Date: 2003-07-01
Institutions: European Commission
Subjects: Commonwealth of Independent States, EU programme, Mediterranean third countries, Russia, cross-border cooperation, enlargement of the Union

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 1.7.2003
COM (2003) 393 final

COMMUNICATION FROM THE COMMISSION

Paving the way for a New Neighbourhood Instrument

TABLE OF CONTENTS

I.

II.

III.

IV.

INTRODUCTION ........................................................................................................3

OBJECTIVES ..............................................................................................................4

STATE-OF-PLAY OF CURRENT CO-OPERATION ....................................................6

TOWARDS A NEIGHBOURHOOD INSTRUMENT: A TWO PHASE APPROACH......7

First Phase 2004-2006: Introducing Neighbourhood Programmes...............................................8

Second Phase Post-2006: A New Neighbourhood Instrument....................................................10

V.

NEXT STEPS.............................................................................................................12

ANNEX 1: Proposed List of Neighbourhood Programmes ........................................................14

2

I.

1.

2.

3.

4.

1 

INTRODUCTION

In  its  Communication  “Wider  Europe  –  Neighbourhood:  A  New  Framework  for
Relations with our Eastern and Southern Neighbours”1 (hereafter “the Wider Europe
Communication”), the Commission proposed  that “the European Union  should  aim
to  develop  a  zone  of  prosperity  and  a  friendly  neighbourhood  …  with  whom  the
European  Union  enjoys  close,  peaceful  and  co-operative  relations.”  “…  Over  the
coming  decade  and  beyond,  the  Union’s  capacity  to  provide  security,  stability  and
sustainable  development  to  its  citizens  will  no  longer  be  distinguishable  from  its
interest  in  close  co-operation  with  the  neighbours.  ”The  development  of  such  a
the
policy 
Communication “gives new impetus to the effort of drawing closer to the 385 million
inhabitants  of  the  countries  who  will  find  themselves  on  the  external  land  and  sea
border, namely Russia, the Western NIS, and the Southern Mediterranean.”

logical  consequence  of  enlargement,  which,  as  stated 

is  a 

in 

One of the elements of the Wider Europe Communication was the specific possibility
of  creating  a  new  Neighbourhood  Instrument,  “which  builds  on  the  experience  of
promoting  cross-border  co-operation  within  the  PHARE,  Tacis  and  INTERREG
programmes”,  and  which  could  focus  “on  ensuring  the  smooth  functioning  and
secure  management  of  the  future  Eastern  and  Mediterranean  borders,  promoting
sustainable  economic  and  social  development  of  the  border  regions  and  pursuing
regional  and  transnational  co-operation”.  The  new  Instrument  could  also  “help  to
avoid drawing new dividing lines in Europe and to promote stability and prosperity
within  and  beyond 
the  Union.”  The  Wider  Europe
Communication  also  emphasises  that  cross-border  cultural  links  gain  additional
importance in the context of proximity.

the  new  borders  of 

The  General  Affairs  and  External  Relations  Council  in  June  2003  welcomed  the
Wider  Europe  Communication  and 
to  present  a
Communication  on  the  concept  of  a  new  Neighbourhood  Instrument  as  well  as
examining  measures  to  improve  interoperability  between  the  different  instruments.
The Thessaloniki European Council endorsed these conclusions.

the  Commission 

invited 

The Commission has examined the possibility of creating such an Instrument, using
as a starting point the co-ordination work that has been taken forward in recent years
between  INTERREG,  PHARE  and  Tacis.  In  order  to  ensure  a  comprehensive
approach,  the  Instrument  should  also  cover  those  neighbouring  countries  which
benefit from CARDS and Euro-Med  partnership, even though  the Western Balkans
fall outside the political scope of the Wider Europe Communication.  Following  the
accession  of  Bulgaria  and  Romania  to  the  European  Union,  their  borders  with  the
Western NIS and the Western Balkans will be future external borders of the Union,
and are therefore also considered. The Wider Europe Communication does not bring
Turkey  within  the  scope  of  this  Instrument,  since  Turkey  benefits  from  a  close
relationship  with  the  EU  which  goes  well  beyond  the  relationship  between  the  EU
and non-candidate neighbours.

This  Communication  provides  an  assessment  of  the  possibilities  of  creating  a  new
Neighbourhood Instrument. Taking into account the short-term constraints in the co-

COM(2003) 104, 11 March 2003

3

                                                
5.

II.

6.

ordination  between  existing  financial  instruments  (INTERREG,  PHARE  Cross-
border  Co-operation  Programme,  Tacis  Cross-border  Co-operation  Programme,
CARDS  and  Meda),  the  Commission  proposes  that  a  two-step  approach  should  be
adopted. An initial phase from 2004-2006 will focus on significantly improving co-
ordination between the  various financing instruments concerned within the  existing
legislative and financial framework. In a second phase, for the period after 2006, the
Commission  intends  to  propose  a  new  legal  instrument  addressing  the  common
challenges identified in the Wider Europe Communication.

This Communication  is  divided into  four sections. After this introduction,  a second
section  identifies  the  key  objectives,  while  the  third  section  describes  the  current
situation  in  relation  to  the  existing  co-operation  instruments.  The  fourth  section
firstly  sets  out  the  practical  steps  that  the  Commission  intends  to  implement
immediately for the period up to 2006, in order to strengthen co-operation activities
along the  external border  within the current  legal framework,  and  then  provides  an
initial analysis of further options for the period post-2006 by identifying key issues to
be examined in relation to the  creation of a future new Neighbourhood  Instrument.
The  final  section  describes  the  actions  to  be  taken  in  order  to  implement  the
proposals set out in the Communication.

OBJECTIVES

The  positive  impact  of  enlargement  on  current  and  future  Member  States  and  on
neighbouring countries will be considerable. At the same time the new opportunities
brought by enlargement will be accompanied by new challenges: existing differences
in  living  standards  across  the  Union’s  borders  with  its  neighbours  may  be
accentuated  as  a  result  of  faster  growth  in  the  new  Member  States  than  in  their
external  neighbours;  common  challenges  in  fields  such  as  the  environment,  public
health,  and  the  prevention  of  and  fight  against  organised  crime  will  have  to  be
addressed; efficient and secure border management will be essential both to protect
our shared borders and to facilitate legitimate trade and passage. No less importantly,
the long-standing cultural links across these borders should be enhanced rather than
hindered.

THE EXTERNAL BORDERS OF THE ENLARGED EUROPEAN UNION AFTER 2006

In the East, the future eastern border of the EU with the NIS will be between eight
Member States and four neighbouring countries. This land border will run from the
Barents Sea in the North to the Black Sea in the South, stretching over 5000 km and
covering regions with very different geographic, economic and social characteristics.
The  poverty  gap  on  this  border  is  substantial.  Cultural  ties  on  these  borders  are
particularly  important  as  the  communities  have  a  long  history  of  living  together
across borders which have moved back and forth many times.

In the South-east, the future borders will concern the five Western Balkan countries,
surrounded by six Member States. These countries have had historical links for many
centuries. The current economic exchanges and the experience of legal development
and the public administration reform process in the accession countries constitute the
major interests for this type of co-operation.

4

In the South, the border between the European Union and the Eastern and Southern
Mediterranean  countries  is  almost  exclusively  maritime  in  nature  and  will  be
between eight Member States and ten neighbouring countries. It covers the length of
the  Mediterranean  Sea  (c.  5500  km)  with  the  various  maritime  crossings  varying
significantly in distance. It is characterised by a significant development gap between
the  North  and  South  of  the  Mediterranean  but  has  close  historical,  cultural  and
human links.

7.

8.

Although the political, economic and social context varies from border to border (see
box below), the key co-operation objectives to be addressed are broadly valid for all.
The approach to be followed under the future new Neighbourhood Instrument should
thus be applied equally, mutatis mutandis, to the current and future EU/Western NIS
borders, EU/Western Balkans borders and EU/Mediterranean borders.

Within  the  broader  context  of  the  Wider  Europe  Communication,  the  above
considerations suggest the following issues as relevant objectives both for the future
new Neighbourhood Instrument, as well as for a first transitional phase.

8.1.

Promoting sustainable economic and social development in the border areas

Closer co-operation between the European Union and its neighbours should help to
accelerate  economic  and  social  development  and  poverty  reduction  in  the  border
areas by increasing trade and investment flows, enhancing cross-border co-operation
on  economic  and  social  policy  issues,  promoting  co-operation  in  the  fields  of
transport  and  energy,  and  integrating  the  neighbouring  countries  more  deeply  into
wider European co-operation.

As  a  rule,  proximity  to  EU  markets  will  increase  the  economic  attractiveness  of
external neighbouring areas and create new opportunities for them. Currently, these
regions  often  have  natural  economic  advantages  such  as  cheaper  labour  and  lower
transport costs.

8.2.

Working  together  to  address  common  challenges,  in  fields  such  as  environment,
public health, and the prevention of and fight against organised crime

As  indicated  in  the  Wider  Europe  Communication,  “threats  to  mutual  security,
whether  from  the  trans-border  dimension  of  environmental  and  nuclear  hazards,
communicable diseases, illegal immigration, trafficking, organised crime or terrorist
networks, will require joint approaches  in  order  to  be  addressed  comprehensively.”
While broader international co-operation is required to address many of these issues,
regional  and  cross-border  co-operation  have  an  important  role,  and  this  should  be
specifically taken up by the new Instrument.

8.3.

Ensuring efficient and secure borders

Efficient  border  management  is  essential  for  joint  prosperity  and  security.
Facilitating  trade  and  passage,  while  securing  European  Union  borders  against
smuggling,  trafficking,  organised  crime  (including  terrorist  threats)  and  illegal
immigration  (including  transit  migration),  will  be  of  crucial  importance.  Regional
and cross-border  co-operation can  assist in facing these challenges,  although  action
at national level will also be required.

5

8.4.

Promoting local, “people-to-people” type actions

Bearing  in  mind  the  long-standing  social  and  cultural  links  across  the  external
borders of the Union, it is important that the new external EU border is not seen as a
barrier  to  existing  contact  and  co-operation  at  the  local  level.  This  type  of  co-
operation  has  a  long-standing  tradition  in  particular  on  the  land  borders  of  the
enlarged  Union.  Therefore,  cross-border  contacts  at  regional  and  local  level  should
be  encouraged,  enhancing  exchanges  and  deepening  economic,  social,  cultural  and
educational co-operation between local communities.

This  Instrument  should  complement  and  be  coherent  with  other  relevant  EU  policies  and
instruments, including national  financial  assistance programmes,  as  well  as  specific  sectoral
policies and instruments (e.g. Schengen Facility, EQUAL, TEMPUS, etc.).

III.

STATE-OF-PLAY OF CURRENT CO-OPERATION

9.

At present, co-operation on the external and future external borders of the European
Union is  supported by  a variety  of  instruments  (see  box  below).  These  instruments
are  governed  by  different  regulations,  and  thus  operate  with  different  project
identification,  selection  and  implementation  procedures,  making  it  difficult  to
implement genuine joint projects (i.e. those serving a joint objective and operating on
both  sides  of  the  border  at  the  same  time).  This  diversity  of  instruments  and
procedures, and the  consequent weaknesses in implementation have led  to  frequent
criticism by the Court of Auditors, the European Parliament and the Council.

EU INSTRUMENTS PROMOTING CROSS BORDER AND
SUB-REGIONAL/TRANSNATIONAL CO-OPERATION

(cid:1)  The  INTERREG  Community  Initiative2,  a  financial  instrument  within  the
framework of the European Union’s Structural  Funds, supports cross-border  and
transnational  co-operation  among  Member  States  and  neighbouring  countries.
Although  INTERREG  programmes  involve  neighbouring  countries  directly,
Structural Funds can only  be used inside the  Union.  INTERREG programmes at
the  European  Union’s  external  border  therefore  require  a  source  of  finance  for
activities taking place within the neighbouring country.

(cid:1)  In the framework of the pre-accession driven PHARE instrument in the candidate
countries,  the  PHARE  CBC  programmes3  support  cross-border  co-operation
with Member States and between the candidate countries. So far, cross-border co-
operation  on  candidate  countries’  external  borders  has  been  financed  through
national PHARE programmes. For the period 2004-2006, the geographical scope
of  PHARE  CBC  will  be  extended  to  cover  the  external  borders  of  Bulgaria  and
Romania.

2 

3 

Council  Regulation  (EC)  No  1260/1999  of  26  June  1999  and  the  INTERREG  III  Guidelines,
OJ C143, 23 May 2000
Commission Regulation (EC) No 2760/98 of 18 December 1998

6

                                                
(cid:1)  In  the  NIS  countries  the  Tacis  CBC  programme4  supports  cross-border  co-
operation in the western border regions of Russia, Belarus, Ukraine and Moldova.
Of  particular  relevance  in  the  present  context  is  the  “Small  Project  Facility”,
which  has  provided  increasing  support  for  cross-border  and  other  co-operation
initiatives with INTERREG.

(cid:1)  In  the  Western  Balkans,  CARDS5  is  a  key  instrument  of  the  Stabilisation  and
Association process and supports a range of activities in this regard. The CARDS
regulation identifies the goal of fostering regional, transnational, cross-border and
interregional  co-operation  among  the  recipient  countries,  between  them  and  the
European  Union  and  between  the  recipient  countries  and  other  countries  of  the
region.  No  cross-border  co-operation  programme  yet  exists  in  the  CARDS
framework.

(cid:1)  In  the  Mediterranean,  the  Meda  programme6  provides  support  for  regional  co-
operation  in  the  broader  sense  between  countries  on  the  southern  and  eastern
shore of the Mediterranean but has not as yet funded direct co-operation activities
with Member States.

The  current  legal  frameworks  and  procedures  for  this  co-operation  have  been
effective in their own right, but have created a number of difficulties, which limit the
impact  of  co-operation  along  the  external  borders.  These  difficulties  arise  from  the
fundamentally diverging systems applied to the financial management of Community
funds,  implying  different  roles  and  responsibilities  for  the  Commission  and  the
national,  regional  or  local  authorities.  Differences  arise,  in  particular,  in  the
mismatched  levels  of  funding,  the  programming  process  (separate  programming
exercises),  project  selection  (separate  assessment  and  selection  processes  and
decision procedures), project implementation (different rules governing internal and
external  procurement  processes),  and  project  monitoring  (different  reporting,
monitoring and evaluation procedures).

TOWARDS A NEIGHBOURHOOD INSTRUMENT: A TWO PHASE APPROACH

The  Commission  has  made  considerable  progress  in  improving  co-ordination
between  INTERREG  and  PHARE  CBC,  where  joint  co-ordination  structures,  joint
programming and selection procedures have been in place for several years. Progress
has  also  been  made  in  co-ordinating  INTERREG  and  Tacis  CBC,  notably  on  the
Finnish/Russian  border.  The  impact  of  such  co-ordination  measures  will  always  be
constrained  by  the  existence  of  different  legal  and  budgetary  frameworks.  The
concept  of  a  new  Neighbourhood  Instrument  offers  the  opportunity  to  develop  a
single  approach  to  co-operation  across  the  external  borders  of  the  Union,  which
would resolve the problems faced at present.

10.

IV.

11.

4 
5 
6 

Council Regulation (EC, Euratom) No 99/200 of 29 December 1999
Council Regulation (EC) No 2666/2000 of 5 December 2000
Council Regulation (EC) No 2698/2000 of 27 November 2000

7

                                                
12.

However, a new Neighbourhood Instrument raises a number of significant legal and
budgetary questions related in particular, to the present separation between external
and  internal  funding  sources.    These  cannot  be  resolved  immediately.  In  addition,
given  that  the  current  financial  perspectives  extend  to  the  end  of  2006,  and  taking
account  of  the  fact  that  financial  commitments  have  already  been  made  for  some
instruments  up  to  that  date,  the  Commission  intends  to  proceed  in  two  separate
phases: the initial phase, up to 2006, should involve working within the existing legal
framework  and  should  seek  in  a  pragmatic  and  dynamic  way  to  improve  current
procedures and increase the effectiveness and visibility of co-operation. A more far-
reaching solution, involving the creation of a new Neighbourhood Instrument should
be sought for the period from 2007 onwards, following an assessment of the relevant
legal and budgetary issues.

FIRST PHASE 2004-2006: INTRODUCING NEIGHBOURHOOD PROGRAMMES

13.

14.

15.

16.

For the 2004-2006 period the key objective should be to build on existing progress
made in co-ordinating the various instruments, while fulfilling existing commitments
and obligations regarding the current programming period up to the end of 2006. In
this context, the  particular pre-accession needs  of  Bulgaria  and  Romania  should  be
fully taken into account.

As a first step, the Commission therefore proposes for this period the introduction of
Neighbourhood Programmes covering the external borders of the enlarged Union.
These programmes will be prepared jointly by relevant stakeholders on both sides of
the  border.  The  Neighbourhood  Programmes  will  cover  a  broad  range  of  actions
flowing  from  the  objectives  in  point  8  above  and  may  include,  for  example,
infrastructure  in  the  sectors  of  transport,  environment,  energy,  border  crossings,
electronic communications; investments in economic and social cohesion (productive
investments,  human  resource  development,  business-related  infrastructure,  co-
operation in the fields of research and technology and innovation); people-to-people
actions  (like  cultural  and  educational  exchanges  and  co-operation);  promoting  the
management  of  the  movement  of  people  and  support  to  institution  building
(including  justice  and  home  affairs,  border  and  customs  management  and  meeting
other common challenges). It should be noted however that certain issues related to
proximity  policy  may  still  need  to  be  taken  up  within  the  national  programmes.  In
preparing  the  Neighbourhood  Programmes,  co-ordination  with  other  current  and
ongoing co-operation programmes, and full coherence with the relevant country and
regional strategy papers, will be assured.

Such  Neighbourhood  Programmes  would  permit  a  single  application  process,
including  a  single  call  for  proposals  covering  both  sides  of  the  border,  and  would
have  a  joint  selection  process  for  projects.  The  funding  for  these  Neighbourhood
Programmes  would  come  from  the  allocations  already  earmarked  for  existing
programmes, and the formal decision processes would remain as at present. A list of
possible Neighbourhood Programmes is given in Annex 1.

INTERREG programmes are prepared in the border areas by partnerships involving
the  national,  regional  and  local  level  of  the  countries  concerned.  As  such,  they  are
already decentralised and could therefore form a useful basis for the Neighbourhood
Programmes.  The  current  geographical  distribution  of 
INTERREG
programmes  will  be  an  appropriate  basis  for  the  geographical  scope  of  the

these 

8

Neighbourhood Programmes. These programmes include both bilateral cross-border
co-operation programmes (INTERREG A) and wider sub-regional and transnational
co-operation  programmes  (INTERREG  B).  The  latter  also  allow  for  bilateral
projects,  if  they  are  expected  to  have  a  wider  transnational  impact.  Where
programmes  already  exist  (e.g.  the  Finland-Russia  border),  they  may  need  to  be
modified  in  the  sense  of  covering  a  broader  range  of  objectives,  and  taking  full
account  of  issues  and  priorities  on  both  sides  of  the  border.  In  addition,  the
Commission  will  amend  the  INTERREG  guidelines  to  allow  the  possibility  of
developing more direct co-operation between Member States and the Meda partners.

On  the  Tacis  side,  a  new  Strategy  Paper  and  Indicative  Programme  for  the  Cross
border  co-operation  Programme  for  2004-2006  and  the  yearly  action  programmes
thereunder  will  be  drawn  up  incorporating  the  necessary  changes  required  by  the
Neighbourhood  Programmes,  i.a..  separate  indicative  budget  allocations  per  each
Neighbourhood Programme.

For CARDS, the considerations required by the Neighbourhood Programmes will be
incorporated  into  the  Multiannual  Indicative  Regional  Programme  and  the  yearly
action programmes thereunder.

For  Meda,  the  multiannual  indicative  programming  exercise  for  2004-2006will
incorporate the Neighbourhood approach with specific programmes for co-operation
with the Member States.

For the Bulgarian and Romanian borders with the Western NIS and Western Balkans
(future external borders), PHARE CBC programmes will be established to cover the
2004-2006  period  and  will  provide  a  useful  basis  for  the  Neighbourhood
Programmes.

17.

The Neighbourhood Programme approach will result in single projects operating on
both sides of the border. The internal and external components of  each project will
therefore be implemented concurrently, rather than consecutively or separately.

NEW NEIGHBOURHOOD PROGRAMMES FOR THE EXTERNAL BORDERS

In  order  to  create  a  Neighbourhood  Programme  including  INTERREG,  PHARE
CBC, Tacis, CARDS and Meda, the main steps will include the following:

(cid:1)  A  specific  funding  allocation,  within  the  current  financial  perspectives,  will  be
made  within  the  relevant  external  instruments  to  the  area  covered  by  each
Neighbourhood  programme.  The  funding  for  the  Member  State(s)  concerned
would be fixed by the Commission decision adopting the Structural Fund element
of the programme;

(cid:1)  The  programme’s  priorities  will  take  account  of  necessary  objectives  and
activities  on  both  sides  of  the  border  and  the  aims  and  objectives  of  the  Wider
Europe Communication;

(cid:1)  The rules governing the programme’s committee structures will ensure a balanced
membership  from  both  sides  of  the  border,  and  include  the  appropriate
representation of the Commission;

9

18.

19.

20.

(cid:1)  A single  application  process and a single  selection  process  will  operate  for each
programme covering both the internal and the external element of a single project;

(cid:1)  Procedures  for  a  final  decision  on  the  external  and  internal  components  of  the
jointly  selected  projects,  and  for  contracting  and  making  payments,  will  remain
those required by the relevant regulations;

(cid:1)  Procedures for monitoring, reporting and evaluation will be harmonised for both
components. A system for a regular exchange of best practices and experiences on
the basis of the results of the various projects should also be encouraged.

Such a process will not require new financial rules, as Structural Funds will still be
used inside the Union, and external funds outside. It will allow the selection  of the
joint  projects  (each  with  an  internal  and  external  component)  to  be  made  by  the
Neighbourhood  Programme’s  selection  committee  in  which  relevant  local  and
national officials from both sides of the border will participate.

Legally, the components of these programmes relating to activity within the Member
States  will  still  be  INTERREG  programmes,  and  they  will  therefore  remain  in  the
Structural  Funds  framework.  The  external  components  of  these  programmes  will
remain  within  the  framework  of  the  respective  Regulation,  and  will  implement  the
respective  Strategy  and  Indicative  and  Action  programmes  adopted  by  the
Commission  following  consultation  of  the  relevant  management  committee.  From
the perspective of the stakeholders, however, the two components will operate as one
single Neighbourhood Programme.

Although  the  Neighbourhood  Programmes  will  operate  within  the  current  financial
perspectives and programming for the years 2004-06, it is important that a sufficient
volume of funding is made available to permit the real impact and visibility of these
programmes, and to encourage the active involvement of stakeholders on both sides
of  the  border.  Neighbourhood  Programmes  must  also  take  account  of  practical
questions  of  management  and  absorptive  capacity.  Without  prejudging  the  normal
budgetary and programming processes, the Commission foresees at this stage that it
should  be  possible,  within  the  existing  instruments  and  financial  programming,  to
propose a total volume of funding for these programmes over the period 2004-06 of
the  order  of  €955  million,  representing  €700m  from  INTERREG,  €90m  from
PHARE,  €75m  from  Tacis,  €45m  from  CARDS  and  €45m  from  Meda.  The
Commission will present more detailed proposals on the external instrument funding
per  Neighbourhood  Programme  to  the  relevant  Management  Committees  in  the
normal way, at a later stage.

SECOND PHASE POST-2006: A NEW NEIGHBOURHOOD INSTRUMENT

21.

22.

The approach described in the previous section provides a positive solution to many
of  the  barriers  already  identified  concerning  the  co-ordination  of  the  various
instruments. It also paves the way to establish a new Neighbourhood Instrument post
2006.

Such an Instrument, capable of operating on an identical footing on both sides of the
EU’s external border, would provide a more complete approach, allowing for a mix
of  cross-border  and  regional  co-operation  activity  to  be  developed  around  the

10

external border. In addition, it would address the practical difficulties that are likely
to  remain  even  after  the  actions  described  above  are  implemented,  including
restrictions on where and how funding can be used.

DIFFERENT AGENDAS FOR DIFFERENT REGIONS

A  Neighbourhood  Instrument  for  the  external  borders  of  the  enlarged  European
Union  would  logically  be  linked  to,  and  coherent  with,  the  various  external  policy
agendas  and  processes  and  should  take  account  of  the  different  regional  priorities
already developed.

In the East, the cross border dimension would be of key importance given the length
of  the  land  border.  However,  the  Communication  on  Wider  Europe  mentions  that
“New  initiatives  to  encourage  regional  co-operation  between  Russia  and  the
countries of the  Western NIS might also be considered. These could draw upon the
Northern  Dimension  concept  to  take  a  broader  and  more  inclusive  approach  to
dealing with neighbourhood issues.”

In the Western Balkans, CARDS provides a strategic approach to the provision of
assistance to the countries of the region and aims to help the Balkan countries in the
process towards future membership, and to establish a strategic framework for their
relations with the EU. As defined in the CARDS regulation, regional, cross-border,
transnational and interregional co-operation must play a key role in this regard.

In the Mediterranean, land borders are of less significance, but short-sea crossings
provide  frequent  and  intensive  connections  between  Member  States  and  Southern
and  Eastern  Mediterranean  partners.  Moreover,  the  Wider  Europe  Communication
states that “further regional and sub-regional co-operation and integration amongst
the countries of the Southern Mediterranean will be strongly encouraged.”

23.

24.

25.

A  Neighbourhood  Instrument  would  combine  both  external  policy  objectives  and
economic and social cohesion. Such a combination of issues would offer continuity
with the type of local and regional co-operation already developed successfully under
INTERREG and PHARE CBC for example, while introducing into the scope of the
co-operation  additional,  wider  geopolitical  objectives  which  will  become
increasingly  important  after  enlargement,  as  outlined  in  the  Wider  Europe
Communication.

Such  an  Instrument  should  draw  on  lessons  learned  from  previous  experience  of
implementing cross-border co-operation. In particular, it should be simple to operate
and, in order to engender full ownership among all concerned stakeholders, it should
involve all relevant partners at European, national, regional and local level.

Before developing such a concept further, the critical issue to be examined concerns
the  legal  and  budgetary  constraints  on  the  integration  of  internal  and  external
European  Union  funding.  At  present,  Community  Structural  Funds  cannot  be  used
outside the European Union, and external instruments cannot be used internally. As a
response to this problem, the following alternatives may be considered:

(cid:1)  expanding  the  content  and  geographical  scope  of  an  existing  co-operation
instrument  to  allow  these  funds  to  be  used  on  both  sides  of  the  external  border,

11

26.

V.

27.

thus  creating  a  Neighbourhood  Instrument  from  an  existing  instrument  (for
example, permitting the use of INTERREG funds outside the Union);

(cid:1)  creating a single new Regulation to govern a Neighbourhood  Instrument to fund
activities both inside and outside the Union, and be based on a single budget line.
Consideration  should  be  also  given  to  a  single  instrument  operating  on  two
separate  budget  lines.  However,  in  this  case  questions  relating  to  joint  external
and internal financing of projects would need to be resolved;

(cid:1)  focusing  further  on  co-ordination  between  already  existing  instruments  on  the
basis of the Neighbourhood Programmes proposed for 2004-2006, learning from
the  experience  subsequently  acquired,  and  perhaps  expanding  on  the  objectives
and  financing  of  these  programmes,  while  further  improving  procedures  as
appropriate.

These  long-term  options  require  further  study,  and  the  Commission  is  currently
examining them to assess their feasibility and the impact that they would have on co-
operation along the external borders.

NEXT STEPS

The  Commission intends to introduce Neighbourhood Programmes,  as  described  in
Section IV, immediately. This will involve:

(cid:1)  amending  existing 

INTERREG  programmes 

to 

take  account  of 

the

Neighbourhood Programme concept;

(cid:1)  ensuring that the Neighbourhood Programme concept is fully  taken into account
in the current preparations of INTERREG programmes in the acceding countries
for their new external border programmes;

(cid:1)  amending  the  INTERREG  Guidelines  to  add  the  southern  regions  of  Spain,
France,  Italy  and  Greece as eligible  for co-operation  activities  with  the  southern
Mediterranean partners so as to allow bilateral cross-border co-operation;

(cid:1)  adopting  the  Indicative  Programme  for  Tacis  CBC  2004-2006  in  autumn  2003

which incorporates the changes required;

(cid:1)  allocating  specific  funds  for  Neighbourhood  Programme  co-operation  under  the

Multiannual Indicative Regional Programme under CARDS for 2004-2006;

(cid:1)  allocating  specific  funds  for  Neighbourhood  Programme  co-operation  under  the

Meda multiannual programming exercise for 2004-2006;

(cid:1)  integrating  the  Neighbourhood  Programme  concept  in  the  preparation  of  2004-
2006  PHARE  CBC  programmes  at  the  Bulgarian  and  Romanian  borders  with
Western NIS and Western Balkans.

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28.

29.

The  legal  and  budgetary  issues  identified  in  part  2  of  Section  IV  require  further
reflection  within  the  Commission  before  a  definitive  position  can  be  established.
This  reflection  work  is  already  underway  and  will  continue  in  the  second  half  of
2003.

The  Commission intends to  present orientations for  the  next  Financial  Perspectives
by  the  end  of  2003.  In  the  light  of  these  orientations  and  of  the  Third  Cohesion
Report  The  Commission  will  come  forward  with  more  detailed  proposals  for  the
New Neighbourhood Instrument post-2006.

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ANNEX 1

Proposed initial list of Neighbourhood Programmes

Neighbourhood Programme

Countries involved

Nord (Kolarctic)
Karelia
South-East Finland/Russia
Estonia/Latvia/Russia
Latvia/Lithuania/Belarus
Lithuania/Poland/Russia
Poland/Ukraine/Belarus
Hungary/Slovakia/Ukraine
Slovenia/Hungary/Croatia
Hungary/Romania/Serbia &
Montenegro
Italy/Adriatic
Italy/Albania
Greece/Albania
Greece/FYROM
Spain/Morocco
Gibraltar/Morocco
Romania/Ukraine
Romania/Moldova
Bulgaria/Serbia & Montenegro
Bulgaria/FYROM
Baltic Sea
CADSES

Western Mediterranean
Archimed

Fin, S, N, Rus
Fin, Rus
Fin, Rus
EE, LV, Rus
LV, LT, Bel
LT, PL, Rus
PL, UKR, Bel
Hun, SLK, UKR
SLN, Hun, HR
HUN, Rom, SeM

I, HR, BiH, SM, ALB
I, ALB
GR, ALB
GR, FYROM
E, MAR
UK, MAR
Rom, UKR
Rom, MOL
Bul, SeM
Bul, FYROM
D, DK, S, FIN, EE, LV, LT, PL, N, Rus, Bel
D,  A,  I,  GR,  CZ,  SLK,  SLN,  PL,  HUN,  ROM,
BUL, HR, SeM, BiH, FYROM, ALB, UKR, MOL
I, F, E, P, UK, Mal, (MAR, ALG, TUN)
GR, I, Mal, Cyp, (TUR, EGY, ISR, LEB, SYR, Pal,
Jor)

This  list  of  programmes  is  only  indicative  and  is  based  on  INTERREG  programmes  for
current  and  future  Member  States  and  on  future  PHARE  CBC  programmes  on  the  external
borders of the enlarged Union.

14