Proposal for a Regulation of the European Parliament and of the Council extending and amending Council Regulation (EC) No 1659/98 on decentralised cooperation
Date: 2003-07-11
Institutions: European Commission
Subjects: EU financial instrument, EU policy, budget, cooperation policy, developing countries, development aid, development policy

EN

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 11.7.2003
COM(2003) 413 final

2003/0156 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

extending and amending Council Regulation (EC) No 1659/98 on decentralised
cooperation

(presented by the Commission)

 
EXPLANATORY MEMORANDUM

The Declaration of the Council and of the Commission of 10 November 2000 on the Community's
development  policy  stresses  the  importance  of  ownership  of  development  strategies  by  partner
countries  and  the  widest  possible  participation  by  all  sections  of  society.  The  White  Paper  on
European  Governance  COM  (2001)  428  final  stresses  that  the  Commission  will  improve  the
dialogue with governmental and non-governmental actors in third countries when developing policy
proposals with an international dimension.

On  7  November  2002,  in  line  with  and  in  addition  to  the  principles  enshrined  in  those  texts,  the
Commission  adopted  the  Communication  on  the  Participation  of  Non-State  Actors  in  EC
Development Policy COM (2002) 598 final . In the context of a policy geared to the objective of
poverty reduction, the Communication clarified what is expected of non-state actor organisations in
partner countries. The aim of non-state actor involvement is to create conditions for greater equity,
for the inclusion of the poor in the benefits of growth and for strengthening the democratic fabric of
society. Support for the  development of  the  capacities  of  non-state  actors  in  the  partner  countries
should help facilitate the participation  of  a  broad  spectrum  of  actors  in  the  dialogue  on  strategies
and the implementation of  aid  programmes.  This  is  also  one  of  the  fundamental  principles  of  the
new  ACP-EC  Partnership  Agreement  signed  in  Cotonou.1  The  Communication  (COM/2002/598)
concluded  that  non-state  actors  are  increasingly  being  involved  in  EC  development  policy
throughout the various co-operation programmes and policy dialogues with partner countries. 

The Commission ordered an evaluation of the budget instrument on decentralised co-operation (B7-
6002) which was completed in March 2003. This evaluation shows that the budget heading is still
important as a complementary instrument recommending better geographical and thematic targeting
for the eligible actions, further involvement of decentralised actors from developing  countries and
further diversification of decentralised non-state  actors.  The  evaluation concluded that the  Budget
Line  should  still  be  maintained  as  a  necessary  complement  to  the  different  instruments  of  co-
operation. Its main recommendations aim at increasing the Budget Line coherence and at clarifying
its specific character. Different options are proposed to better target eligible actions and to facilitate
the involvement of decentralised co-operation actors from partner countries.

The  decentralised  co-operation  instrument  has  a  specific  added  value  for  supporting  well-focused
actions in specific situations where traditional instruments cannot be used or are not relevant. This
is  particularly  the  case  in  difficult  partnerships  where  official  co-operation  is  still  unable  to
contribute significantly to the intended participatory development. The budget instrument can also
contribute  in  extreme  cases  where  official  co-operation  is  suspended  allowing  to  sustain  vibrant
civic structures. The budget instrument can also support the diversification of decentralised actors
as  potential  partners  (trade  unions,  economic  and  social  partners,  local  and  municipal  authorities,
universities, the media etc) and the participation of decentralised actors in international fora to put
forward their needs and be consulted on development policy. 

1

OJ No L 317, 15.12.2000, p.1

2

                                                
Regulation  (EC)  No1659/98  amended  and  extended  by  Regulation  (EC)  No  955/2002,  which
establishes  the  implementing  procedures  of  the  measures  concerned,  is  due  to  expire  on  31
December  2003.  Its  period  of  validity  should  now  be  extended  for  a  three-year  period,  with
financial  reference  amounts  fixed  until  31  December  2006.  The  financial  reference  amount  will
have to be adjusted. In the current regulation, the figure was EUR 24 million. The attached proposal
specifies a reference amount of EUR 18 million for the period of 2004 - 2006. This amount is being
justified on the grounds of the strategic  approach  to  provide  a  balanced and  equitable support for
decentralised co-operation where the traditional instruments of co-operation do not exist or are not
relevant.

That amount has been calculated on the one hand on the committed credits performed from 1998 to
2003 (EUR 25,4million) giving an average rate per year of EUR 4,2 million and on the other hand
on  an  amount  of  EUR  6million  committed  in  2003  and  a  EUR  5million  anticipated  for  2004
However, it should be pointed out that financing needs observed in recent years have far exceeded
the  sums  provided  by  the  budget  authority  and  that  the  quality  of  requests  has  improved
appreciably.

For these reasons the Commission proposes that the European Parliament and the Council adopt the
attached regulation.

3

2003/0156 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

extending and amending Council Regulation (EC) No 1659/98 on decentralised cooperation

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 179(1)
thereof,

Having regard to the proposal from the Commission,2

Acting in accordance with the procedure laid down in Article 251 of the Treaty,3

Whereas:

(1)

(2)

(3)

(4)

(5)

Council  Regulation  (EC)  No  1659/98  of  17  July  1998  on  decentralised  cooperation  was
applicable until 31 December 2001.4

The above Regulation was amended and extended by Regulation (EC) No 955/2002 of the
European Parliament and of the Council until 31 December 2003.5 

An evaluation completed in 2003 has led to the conclusion that the Budget Line should be
more focused.

The  decentralised  co-operation  instrument  has  a  specific  added  value  to  supporting
operations  in  specific  situations  and  difficult  partnerships  where  traditional  instruments
cannot  be  used  or  are  not  relevant  as  well  as  to  supporting  the  diversification  of
decentralised actors as potential partners in the development process.

Regulation  (EC)  N°  1659/98  should  be  amended  and  extended  until  31  December  2006
following  the  completion  of  the  evaluation  and  the  adoption  of  the  Commission
Communication on the Participation of Non-State Actors in EC Development Policy COM
598 (2002). The financial framework and reference period indicated in Article 4(1)  should
be adjusted.

(6)

Regulation (EC) No 1659/98 should be amended accordingly,

HAVE ADOPTED THIS REGULATION:

Regulation (EC) No 1659/98 is hereby amended as follows:

1.

Article 1 shall be replaced by the following:

2

3

4

5

OJ C ...
OJ C ...
OJ L 213, 30.07.1998, p. 6.
OJ L 148, 6.6.2002, p.1

4

                                                
The  Community  shall  support  operations  and  initiatives  undertaken  by  decentralised  co-
operation  agents  of  the  Community  and  the  developing  countries  centred  on  poverty
reduction  and  sustainable  development  in  particular  in  situations  of  difficult  partnerships
where other instruments cannot be used. Such operations and initiatives shall promote:

- a more participatory approach to development, responsive to the needs and initiatives of
the populations in the developing countries,

-a  contribution  to  the  diversification  and  reinforcement  of  civil  society  and  grassroots
democracy in the countries concerned.

All  developing  countries  shall  be  eligible  for  operations  to  promote  decentralised  co-
operation.

2.

The following sentence shall be added to Article 2:

- information and the mobilisation of decentralised co-operation agents and participation in
international fora to enhance dialogue on policy formulation

3.

Article 3 shall be replaced by the following :

-  The  cooperation  partners  eligible  for  financial  support  under  this  Regulation  shall  be
decentralised  cooperation  agents  in  the  Community  or  the  developing  countries,  such  as:
local  (including  municipal)  authorities,  non-governmental  organisations,  local  trader’s’
associations  and  local  citizens’  groups,  cooperatives,  trade  unions,  economic  and  social
actors  organisations, consumer organisations, women’s  and  youth  organisations,  teaching
and research institutions, universities, churches, media, political foundations and any non-
governmental associations likely to contribute to development.

4.

Article 4(1) shall be replaced by the following:

"1. Community financing of the operations referred to in Article 1 shall cover a period of
three years time ). The financial framework for the implementation of this programme for
the period 2004 to 2006 shall be EUR 18 million.
The annual appropriations shall be authorised by the budgetary authority within the limits
of the financial perspective."

5.

In paragraph 2 of Article 7:

ECU shall be replaced by EURO 

6.

The following sentence shall be added to paragraph 3 of Article 7 :

Particular  needs  of  countries  where  official  cooperation  is  unable  to  contribute
significantly to the objectives defined in Article 1.

7.

In Article 10:

ECU shall be replaced by EURO 

8.

Article 12 shall be replaced by the following:

Before the end of 2006, the Commission shall submit to the European Parliament and the
Council  an  overall  assessment  of  the  operations  financed  by  the  Community  under  this
Regulation, accompanied by the suggestions concerning the future of the Regulation. 

9.

The second subparagraph of Article 13 shall be replaced by the following:

5

"It shall apply until 31 December 2006 ."

Article 2

This  Regulation  shall  enter  into  force  on  the  third  day  following  that  of  its  publication  in  the
Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, [….]

For the European Parliament
The President

For the Council
The President

6

LEGISLATIVE FINANCIAL STATEMENT 

Policy area(s): Development and relations with ACP countries

Activity/ies: 6803 – Development cooperation policy and sectoral strategies

TITLE OF ACTION: DECENTRALISED COOPERATION

1.

BUDGET LINE(S) + HEADING(S)

B7- - 210213 "Decentralised cooperation"

2.

2.1

2.2

(a)

OVERALL FIGURES

Total allocation for action (Part B): €14 million for commitment

Period of application: 2.3 Overall multiannual estimate of expenditure:

Schedule 
of 
intervention)(see point 6.1.1)

commitment 

appropriations/payment 

appropriations 

(financial

(€ million to three decimal places)

Commitments

Payments

Year n
2004

 4.8

 1.4

[n+1]
2005

6.1

[n+2]
2006
6.1

 3.23

5.06

4.26

2.44

0.61

[n+3]
2007

[n+4]
2008

[n+5]
2009

Total

 17

17

(b)

Technical and administrative assistance and support expenditure(see point 6.1.2)

Commitments

0.2

0.4

0.4

Payments

Subtotal a+b

Commitments

Payments*

5

1,5

RAL au 31/12/2003* 2,5

6,5

3,45

1,5

6,5

5.4

1,0

* Estimations

4,4

2,6

0,65

18

18

5

7

(c)

Overall financial impact of human resources and other administrative expenditure (see
points 7.2 and 7.3) 

Commitments/
payments

TOTAL a+b+c

Commitments

Payments

2.4

Compatibility with financial programming and financial perspective

[x]

Proposal is compatible with existing financial programming.

[… ] Proposal  will  entail  reprogramming  of  the  relevant  heading  in  the  financial

perspective. 

Proposal  may  require  application  of  the  provisions  of  the  Interinstitutional
Agreement.

2.5

Financial impact on revenue6

Proposal  has  no  financial  implications  (involves  technical  aspects  regarding
implementation of a measure).

[x]

OR

Proposal has financial impact - the effect on revenue is as follows:

NB.  All  details  and  observations  relating  to  the  method  of  calculating  the  effect  on
revenue should be shown in a separate annex.

Budget line Revenue

(€ million to one decimal place)

Prior to
action
[year n-
1]

Situation following implementation of action

[n+1] [n+2]

[n+4] [n+5]

[Yea
r n]

[n+3
]

a) Revenue in absolute terms

b)Change in revenue

 (cid:1)

6

For further information, see separate explanatory note.

8

                                                
3.

BUDGET CHARACTERISTICS

Type of expenditure

New

EFTA
contribution

Contribution
from
applicant
countries

Heading in
financial
perspective

Non Comp.

Diff.

NO

NO

NO

No 4

4.

LEGAL BASIS

Regulation (EC) No 1659/98 (to be renewed)

5.

5.1

DESCRIPTION AND GROUNDS

Need for Community intervention7

5.1.1 Objectives pursued

is 

intended 

Budget  heading  B7-  210213  (ex  B7-6002  and  ex  B7-6430)  on  "Decentralised
initiatives  undertaken  by
to  support  operations  and 
cooperation" 
decentralised cooperation actors of the Community and the developing countries centred
on poverty reduction  and sustainable development  in  particular in the case of difficult
partnerships  where  other  instruments  cannot  be  used.  Such  operations  and  initiatives
shall promote: 

- a more participatory approach to development, responsive to the needs and initiatives
of people in developing countries;

- a contribution to the diversification and reinforcement of civil society and grassroots
democracy in the countries concerned;

This  merely  requires  the  legal  basis  of  the  existing  heading  to  be  renewed  for  an
additional three-year period from 2004 to 2006.

5.1.2 Measures taken in connection with ex ante evaluation

/

5.1.3 Measures taken in connection with ex post evaluation

An external evaluation was carried out in 2000 and a new one was concluded in March
2003. 

The main conclusions of the two evaluations and lessons for the future were as follows:

The  heading  had  played  an  experimental  role  but  the  current  approach  of  practical
implementation  of decentralised  cooperation  exceeded the scope of the  current  budget
instrument.  The  importance  of  closer  involvement  of  non-state  actors  in  development
cooperation has meanwhile been confirmed at political level. It is now time to move to a
phase of consolidation of the concept on a larger scale mainly in the context of official

7

For further information, see separate explanatory note.

9

                                                
aid.  This  results  in  a  commitment  for  EU  cooperation  because  implementation  of
decentralised  cooperation  on  a  wider  scale  will  depend  on  the  use  of  EDF,  ALA,
MEDA and TACIS funds and, in the immediate term, on the extension of programming
dialogue,  as  recommended  by  the  Cotonou  Agreement,  to  decentralised  actors  as
cooperation  partners.  However,  not  all  the  conditions  for  such  a  change  of  scale  have
been met and, in many individual cases, official cooperation is not yet able to contribute
significantly  to  the  intended  participatory  development.  The  evaluation  therefore  also
recommends  that  a  revamped  budget  heading  be  provisionally  maintained  so  as  to
improve  the  quality  of  EU  assistance,  have  a  catalysing  effect  on  the  change  of  scale
and  allow  time  to  examine  alternative  financing  solutions  for  the  future  in  the
meantime.

This  heading  should  be  maintained  as  a  necessary  complement  to  the  EDF  and  other
instruments  of  co-operation  and  ensure  better  geographical  and  thematic  targeting  of
eligible actions, further involvement of decentralised  actors from developing countries
and  further  diversification  of  the  decentralised  non-state  actors.  Therefore,  it  will  be
necessary  to  reduce  the  minimum  amount  requested  for  the  eligibility  of  individual
proposals.

5.2

Actions envisaged and budget intervention arrangements

The  heading  allows  for  the  (co)financing  by  means  of  grants  of  individual  development
operations  submitted  directly  by  decentralised  actors  in  the  Community  and  the  developing
countries.  The  EU's  contribution  corresponds  as  a  rule  to  80%.  In  exceptional  and  duly
substantiated cases, the financing can sometimes be 100%.

5.3

Methods of implementation

Direct management by the Commission using regular staff.

6.

6.1

FINANCIAL IMPACT

Total financial impact on Part B (over the entire programming period)

(The method of calculating the total amounts set out in the table below must be explained by the
breakdown in Table 6.2. )

10

6.1.1 Financial intervention

Commitments (€ million to three decimal places)

Breakdown

[Year n]
2004

[n+1]
2005

[n+2]
2006

[n+3]

[n+4]

Action  1:  the  development

4.2

5.5

5.5

of  human  and 

technical

resources and local rural and

urban  social  and  economic

development 

in 

the

developing countries

Action  2:  information  and

0.4

0.4

0.4

the 

mobilisation 

of

decentralised 

co-operation

agents  and  participation  in

international fora to enhance

dialogue 

on 

policy

formulation

Action 

3: 

support 

strengthening 

for

the

institutional  capacities  of

such 

agents 

and 

their

capacity for action

0.1

0.1

0.1

Action  4:  methodological

0.1

0.1

0.1

back  up  and  follow-up  for

operations

TOTAL 4.8

6.1

6.1

[n+5
and
subs.
Years]

Total

15.2

1.2

0.3

0.3

17

11

6.1.2

Technical  and  administrative  assistance,  support  expenditure  and  IT  expenditure
(Commitment appropriations)

[Year
n]
2004

[n+1]
2005

[n+2]
2006

[n+3]

[n+4]

Total

[n+5
and
subs.
Years]

1) 
administrative assistance:

Technical 

and

(a)  Technical 
offices

assistance

(b)  Other 
administrative assistance:

technical  and

0.2

0.4

0.2

- intra-muros:

- extra-muros:

of  which  for  construction
and 
of
maintenance 
computerised  management
systems

Subtotal 1

0.2

0.4

0.2

2) Support expenditure:

(a) Studies, evaluations

(b) Meetings of experts

(c) Information and
publications

Subtotal 2

TOTAL 0.2

0.4

0.2

0.2

0.4

12

0.8

0.2

1

6.2

Calculation of costs by measure envisaged in Part B (over the entire programming
period)8

(Where  there  is  more  than  one  action,  give  sufficient  detail  of  the  individual  measures  to  be
taken for each one to allow the volume and costs of the outputs to be estimated.)

Breakdown

Commitments (€ million to three decimal places)

Number of
outputs
(total for years
1....n)
2

Average unit
cost

Total cost
(total for years
1…n)

3

4=(2X3)

Type of
outputs(projects,
files)

1

Not available

Action 1

- Measure 1

- Measure 2

Action 2

- Measure 1

- Measure 2

- Measure 3

Etc.

TOTAL COST

Not available

(If necessary, explain the method of calculation)

IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE

Description of tasks arising from the
action

If necessary, a fuller description of
the tasks may be annexed

7.

7.1

Impact on human resources

Types of post

Staff to be assigned to management of the
action using existing and/or additional
resources

Number of 
permanent posts

Number of 
Temporary posts

Total

A
B
C

Officials or
Temporary staff

Other human
resources
Total

Not  available  yet

Not available yet

Not
available

8

For further information, see separate explanatory note.

13

                                                
7.2

Overall financial impact of human resources

Type of human resources

Amount €

Method of calculation *

Officials
Temporary staff

Other human resources

Not available

Not available

(specify budget line)

Total

The amounts are total expenditure for twelve months.

7.3

Other administrative expenditure deriving from the action

Budget line
(number and heading)

Overall allocation (Title A7)
A0701 – Missions
A07030 – Meetings
A07031 - Compulsory committees (1)
A07032 - Non-compulsory committees (1)
A07040 – Conferences
A0705 - Studies and consultations
Other expenditure (specify)

Information systems (A-5001/A-4300)

Other expenditure - Part A (specify)

Amount €

Method of calculation

Not available 

Not available

Not available

Total

The amounts are total expenditure for twelve months.

(1) Specify the type of committee and the group to which it belongs.

I.
II.
III.

Annual total (7.2 + 7.3)
Duration of action
Total cost of action (I x II)

Not
available
Years
Not
available

(In  the  estimate  of  human  and  administrative  resources  required  for  the  action,  DGs/Services
must take into account the decisions taken by the Commission in its orientation debate (APS) and
when adopting the preliminary draft budget (PDB). This means that DGs must show that human
resources can be covered by the indicative pre-allocation made when the PDB was adopted. 

Exceptional cases  (i.e. those  where the action concerned could not be  foreseen  when  the  PDB
was being prepared) must be referred to the Commission for a decision on whether and how (by
means  of  an  amendment  of  the  indicative  pre-allocation,  an  ad  hoc  redeployment  exercise,  a
supplementary/amending budget or a letter of amendment to the draft budget) implementation of
the proposed action can be accommodated.

14

8.

8.1

FOLLOW-UP AND EVALUATION

Follow-up arrangements

Once  approved  by  Commission  departments,  projects  are  implemented  by  decentralised  actors
under  the  supervision  of  the  Commission's  departments  (EuropeAid)  and  delegations  in  the
developing countries concerned. 

8.2

Arrangements and schedule for the planned evaluation

Before  the  end  of  2006,  operational  proposals  will  be  put  forward  regarding  the
introduction  of  a  revised  budget  instrument  based  on  new  strategic  guidelines  and
taking  account  of  the  conclusions  and  recommendations  of  the  external  evaluation
carried out in 2006. 

9.

ANTI-FRAUD MEASURES

EuropeAid  will  be  responsible  for  the  administrative  monitoring  of  contracts  and
payments.  Implementation  of  projects  is  checked  at  each  stage  of  the  project  cycle
(selection,  contracts,  performance  of  contracts,  payments)  by  Commission  officials  in
Brussels  and  the  delegations.  These  checks  respect  contractual  obligations  and  the
principles  of  cost/benefit  analysis  and  sound  financial  management.  In  addition,
EuropeAid,  DG  Audit  and  the  Court  of  Auditors  will  carry  out  audits  and  checks,
including  some  on-the-spot,  on  expenditures  authorised  under  the  budget  heading  and
the satisfactory implementation of operations.

15