Report from the Commission - General Report on pre-accession assistance (Phare - Ispa - Sapard) in 2002 [SEC(2003) 1477]
Date: 2004-01-05
Institutions: European Commission
Subjects: EU financial instrument, EU programme, accession to the European Union, pre-accession aid, report

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 5.1.2004
COM(2003) 844 final

REPORT FROM THE COMMISSION

GENERAL REPORT
ON PRE-ACCESSION ASSISTANCE
(PHARE – ISPA – SAPARD)
IN 2002

[SEC(2003) 1477]

.

EN

  EN

TABLE OF CONTENTS

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...................................................... 14

Decentralisation of implementation under Article 12 of the Co-ordination
Regulation .................................................................................................................. 15

Monitoring and Evaluation ........................................................................................ 16

PHARE....................................................................................................................... 16

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

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

Co-ordination ............................................................................................................. 19

General ....................................................................................................................... 19

Co-ordination inside the Commission........................................................................ 20

Co-ordination in the candidate countries ................................................................... 21

Co-ordination with the EIB and International Financial Institutions......................... 21

2

 
SUMMARY

This is the third 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  assistance.1  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.  In  this  context,
concurrently  with  ISPA,  it  may  also  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 (€ 1.699 million);

ISPA  finances  large  infrastructure  projects  in  the  transport  and  environment  sectors  (€
1,107.4 million);

SAPARD finances measures to support agriculture and rural development (€ 554.5 million).

SAPARD  follows  a  programming  approach  similar  to  the  one  used  in  Member  States’
agricultural  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 III 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  are 
introducing  an  Extended  Decentralised
Implementation System (EDIS), in which procurement and contracting by applicant countries
will only be subject to ex post controls by the date of accession.

the  process  of 

in 

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  2002  was  the  third  operational  year  for  SAPARD  and  ISPA.  All  SAPARD
programmes had already been approved in 2000; one of them (Latvia) was modified in 2001,
nine  of  them  (all  but  Slovenia)  in  2002.  Bilateral  Multi-Annual  and  Annual  Financing
Agreements were negotiated and concluded, and annual allocations for 2001 were committed.
The establishment of SAPARD Implementing Agencies progressed substantially with all ten-
candidate  countries  having  received  conferral  of  management  for  their  respective  SAPARD
Agencies resulting in SAPARD funds being transferred to them in 2002.

With  the  financing  decisions  taken  in  2002,  the  Commission  allocated  already  75%  of  the
ISPA funds foreseen for the period between 2000 and 2006.

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 per cent
of the aid aims to support  Institution Building, the main instrument of which was  Twinning
(secondment  of  experts  from  Member  States’  administrations  to  candidate  countries)  and
approximately  70  per  cent  went  on  investments  designed  to  improve  the  regulatory
framework  and  Economic  and  Social  Cohesion,  thereby  facilitating  the  adoption  of
the acquis.

The co-ordination of the three instruments is ensured by a clear division of responsibilities
between the instruments, by a common basis for programming and regular contacts between
the different parties involved. A committee at Directorate level ensures co-ordination between
the  Commission  services  concerned.  A  General  Assistance  Document  covering  all  three
instruments  was  presented  in  April  2002  to  the  PHARE  Management  Committee,  the  body
which 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  contact  with  the  EIB  and  other  International
Financial  Institutions,  in  particular  the  EBRD,  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 2002 was the third year when all three pre-accession instruments came on stream. In
line with accession negotiations that culminated in a positive outcome at the end of the year,
an  increased  emphasis  was  put  on  creating  the  administrative  capacity  required  for  a
successful  implementation  of  the  acquis  and  participation  in  present  or  future  European
Community programmes as of membership in 2004. The  co-operation between the different
Commission  services  was  stepped  up  and  further  developed  in  line  with  the  Co-ordinating
Regulation.  Putting  structures  in  place  for  the  pre-accession  instruments  in  the  candidate
countries also provided an important exercise in  Institution Building and helped prepare  the
candidate  countries build up  the administrative  capacity  required to absorb  future  Structural
and Cohesion Funds upon membership.

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 State 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  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 2002
was as follows: € 1,699 million for PHARE, € 1,107.4 million for ISPA and € 554.5 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 efforts
to  take  on  the  full  acquis  by  the  date  of  membership  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 of this process.

In 2001,  accession  negotiations were  underway  with the 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.  This  was  successfully  achieved  for  Poland,  Hungary,  the
Czech  Republic,  Slovakia,  Slovenia,  Estonia,  Lithuania,  Latvia,  Malta  and  Cyprus  at  the
Copenhagen Summit in December 2002. . As a result 2003 will be the last programming year
for pre-accession aid in the countries due to accede in 2004 (final disbursements should run
till December 2006 at the latest)  but increased  aid will  be  given  to  the  remaining  candidate
countries  in  negotiation,  namely  Romania  and  Bulgaria,  in  order  to  improve  administrative
and judicial structures, and their capacity to implement the acquis.

This Report covers the calendar year 2002, which was also the third operational year for both
ISPA and SAPARD. It provides information about financial allocations for each country and
per  instrument,  as  well  as  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, combined 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(2003)  497  final;  ISPA  Report  -  COM(2003)  655  final;  SAPARD
Report - COM(2003) 582 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 1999 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  2002  amounted  to  €  1,699  million.  The  operations
financed were:

– 

national programmes: € 1,168 million, of which:

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Bulgaria : € 95 million

Czech Republic: € 85 million

Estonia : € 30 million

Hungary : €112 million

Latvia : € 32 million

Lithuania : € 62 million

Poland : € 394 million

Romania : € 266 million

Slovakia : € 57 million

Slovenia : € 35 million

– 

– 

– 

Nuclear Safety: € 108 million

cross-border co-operation : € 163 million

regional and horizontal programmes : € 260 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.

Projects  in  2002  were  managed  through  the  National  Fund  and  a  limited  number  of
Implementing  Agencies  in  each  country.  A  key  role  is  played  by  the  Central  Finance  and
Contracts  Unit  (CFCU)  in  each  candidate  country  that  manages  all  institution  building
programmes  (in  some  cases  the  CFCU  also  manages  investment  activities).  The  other
Implementing Agencies, and in particular those managing the Economic and Social cohesion
investments, are precursors to the administrative structures that will be needed to implement
the Structural Funds after accession.

6

 
A  major  focus  in  early  2002  was  the  establishment  of  Action  Plans  by  the  Candidate
Countries  in  response  to  specific  problems  in  the  adoption  of  the  acquis  identified  in  the
Commission’s  Strategy  Reports  2001  and  2002,  and  at  implementing  specific  measures
(principally administrative and judicial reforms) aimed at resolving them in order to fulfil all
the  criteria  necessary  for  accession.  The  main  instruments  of  this  remained  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  20003.)  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.

As a result, the adoption of National Programmes within Candidate Countries was somewhat
delayed yet remained a vital element of accession planning.

In addition to National Programmes, PHARE funding was made available for several multi-
country or horizontal programmes in 2002. A major focus of the multi-country programmes
was  the  finance  facilities  implemented  in  co-operation  with  participating  IFIs,  namely  the
SME  Finance  Facility,  the  Municipal  Finance  Facility,  and  the  Municipal  Infrastructure
Facility.  For  details,  please  see  section  7.4  “Co-ordination  with  the  EIB  and  International
Financial Institutions”.

Other  areas  funded  via  multi-country  or  horizontal  programmes  were  Taiex  operations,
Participation in Community Agencies, Nuclear Safety, Small Projects Programme, Statistical
co-operation  project,  Environment,  Steel  Reconstructing,  SIGMA,  Anti-Fraud  Measures,
Information  and  communication  and  preparation  for  EDIS  (see  also  section  5.3
“Decentralisation of implementation under Article 12 of the Co-ordination Regulation”).

A  renewed  emphasis  has  been  placed  on  cross-border  co-operation  programmes  at  the
Candidate Countries’ borders with member states and at borders between candidate countries,
implemented on the basis of Joint Programming Documents established in 2001 by authorities
on both sides of the border. As regards future EU external borders, Candidate countries were
encouraged (through the revised PHARE Guidelines adopted on 6 September 2002) to make
use of their PHARE national funds to support social and economic activities of a cross-border
nature. In order to underpin such a move, it has been decided that in 2003 around €30 million
of PHARE funds  will be  allocated  for  CBC-type  actions  at  the  candidate  countries  external
borders (External Border Initiative 2003).

Programming  in  2002  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  ISPA  and  SAPARD  Regulations  that  took  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). Institution Building in 2002
accounted  for  40%  of  commitments  within  national  programmes.  When  combined  with
associated Investment, this accounted  for 71% of the PHARE  budget, reflecting the priority
placed  in  the  2001  and  2002  Strategy  Reports  on  establishing  an  adequate  level  of
administrative and judicial capacity in the candidate countries for the proper enforcement of
the acquis, and participating successfully in future EU programmes.

3

4

C(2000) 310382.
SEC(1999) 1596.

7

 
                                                
Economic and Social Cohesion remained another important aim of PHARE assistance and, as
in previous years, in 2002 it was based on preliminary National Development Plans (pNDPs).
ESC  investment  is  increasingly  being  used  to  pilot  test  the  types  of  activities  that  will  be
financed  from  Structural  Funds  on  accession.  In  2002,  DG  Regional  Policy  and  DG
Enlargement  pursued  the  “Roadmaps”  for  moving  from  pNDPs  to  Structural  Funds
programming documents. ESC investment in 2002 accounted for 29% of commitments.

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.  The  Delegations  also  monitor  the  progress  of  the
project execution in the candidate countries, which are presently moving towards a system of
Extended Decentralisation, as Delegations will be phased out in acceding countries from the
date of accession.

3.

ISPA SUMMARY

The  “Instrument  for  Structural  Policies  for  Pre-Accession”,  ISPA,  is  the  European  Union’s
financial  instrument  designed  to  assist  the  ten  Central  and  Eastern  European  beneficiary
countries to 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. Thus the experience gained through the programming for
the implementation of ISPA provides also for a smooth transition to Cohesion Funds and for
familiarising  the  candidate  countries  with  the  procedures  for  the  Community’s  structural
support.

Main achievements in 2002

Implementation  of  Community  environmental  policy  and  strengthening  of  European
transport links

In 2002 ISPA commitment appropriations from budget line B7-020 were mainly used for the
80 new ISPA measures and tranches5 for projects decided in 2000 and 2001 (€ 1,107 million).
Of this, € 4.2 million was committed for technical assistance for EDIS, and € 35.1 million for
project preparation. A total of 80 new projects with a total eligible project cost of € 2.4 billion
were decided on by the Commission, Community funding for these new projects is over € 1.5
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 65 % of project cost in 2002.

With  the  decisions  taken  between  2000  and  2002,  the  Commission  approved  a  total  of  249
ISPA  measures,  amounting  to  €  8.75  billion  of  investment,  of  which  the  EU  is  financing  €
5.65 billion. With these decisions, the Commission already allocated about 75% of the funds
foreseen for the entire period 2000-6.

5

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

 
                                                
Commitments in 2002 were divided equally between the environmental and transport sectors;
since 2000, 49 % was allocated to environmental projects and 50 % to transport (1 % is made
available for TA to prepare for EDIS and for flood relief).

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.

As in earlier years, projects focused primarily on sewerage works to extend, replace or repair
current  systems  in  the  beneficiary  countries.  About  18%  of  the  funding  in  this  sector  were
applied to solid waste management, primarily to landfill projects.

Through ISPA, the Community provides financial assistance to those environmental projects
that  require  particularly  large  infrastructure  investments,  namely  for  water  supply  and
wastewater treatment, as well as waste management and covering the whole life-cycle of the
project  investments.  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.

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  allocated  to  this  sector  in  2002  have  again  been  focused  on  upgrading  and
extending the TINA network. With 45.7 %, a  substantial  share of  the  transport  sector  funds
has been allocated to road projects including new construction and improvements to meet EU
capacity  and  safety  standards.  However,  more  than  50%  of  the  transport  sector  funds  are
financing projects aimed at the rehabilitation and upgrading of  existing rail  infrastructure to
EU  standards,  thus  demonstrating  the  priority  given  to  the  development  of  environmental-
friendly transport.

Enhancing  administrative  and  institutional  capacity  for  project  management  and  policy
implementation

As regards the implementation of the transport component of the ISPA programme a number
of  difficulties  have  been  encountered.  These  difficulties  notably  relate  to  delays  in  land
acquisition, problems of forecasting traffic flows and assessing environmental impact, as well
as  managing  tendering  procedures.  In  some  cases  this  resulted  in  delays  of  project

9

 
implementation  and  insufficient  quality  of  the  tenders.  For  more  details  on  the  problems
encountered, please see the Annual ISPA Report 20026.

As  in  previous  years,  the  Commission  provided  technical  assistance  through  ISPA  for
enhancing  the  administrative  and  institutional  capacity  of  national  bodies  in  the  fields  of
environmental  policy  implementation,  where  weaknesses  still  exist,  as  well  as  public
procurement.  A  series  of  seminars  were  organised  aimed  at  training  officials  in  the
beneficiary countries in the drafting of tender documents, as well as in tender evaluation and
contract supervision.

The  Commission  promoted  a  better  understanding  of  the  opportunities  and  risks  regarding
public-private  partnerships  for  utility  services  and  the  ways  to  structure  such  partnerships
while  integrating  grant  financing.  A  broad  multilateral  forum  and  several  dissemination
seminars were organised and, in March 2003, guidelines were due to being published.

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  7, 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 granted on the basis of a single agricultural 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' agricultural and
rural development programmes. The programming exercise was  an entirely new concept 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, one of them (Latvia) was modified in 2001, and nine of them (all but Slovenia) were
modified  in  2002,  mostly  to  take  into  account  the  work  associated  with  the  conferral  of
management  to  the  SAPARD  agency,  consequently  becoming  the  first  outcome  of  the
implementation on the ground.

Another implication flowing  from the programme approach  applied under  SAPARD is  that,
unlike the other two pre-accession instruments, PHARE and ISPA, where some key elements
are  subject  to  ex-ante  control  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

6

7

ISPA Report - COM(2003) 655 final.
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

 
                                                
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 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  a  Multi-Annual  Financing
Agreements  (MAFA)  with  each  of  them.  By  the  end  of  2001  these  negotiations  had  been
completed  and  all  bilateral  MAFAs  were  negotiated  and  concluded  (with  the  exception  of
Romania),  and  annual  allocations  2000  were  committed.  In  2002,  the  MAFA  and  Annual
Financing Agreement 2000 (AFA) were concluded with Romania, and the AFAs 2001 were
negotiated  and  concluded  with  all  countries,  with  the  exception  of  the  Czech  Republic  and
Estonia. The Commission Decision authorising the signing of the AFA 2002 was taken on 22
October 2002.

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
MAFAs.  By  the  end  of  2002,  the  conferral  of  management  to  the  National  Authorities  was
decided by the Commission for all candidate countries; therefore, in addition to € 30.5 million
transferred  to  these  countries  in  2001,  €  123.8  million  was  transferred  to  these  countries  in
2002:  €  109.212  million  as  payments  on  account,  and  €  14.547  as  interim  payments
(reimbursements) 8.

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
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 Multi-Annual 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  are  summarised  below.:In  addition,  in  order  to
guarantee the efficient protection of the Communities’ financial interests and to combat fraud
and  irregularities,  the  financing  decisions  and  the  agreements  and  contracts  adopted  under

8

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

11

 
                                                
these  foresee  for  all  pre-accession  instruments  supervision  and  financial  control  by  the
Commission (OLAF) and the Court of Auditors, including the possibility to conduct on-the-
spot checks.

PHARE

– 

– 

– 

– 

– 

– 

– 

– 

ISPA

– 

– 

– 

– 

– 

– 

– 

– 

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.

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  (they  will  be  updated  when  needed  to  ensure  that  priority  projects
financed through ISPA remain focused on policy objectives)

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 inter-
service  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)

12

 
– 

– 

– 

– 

First transfer of funds (10%)

Second transfer of pre-financing (10%) once first works contract has been signed (for
investment  projects),  and  subject  to  certain  conditions  stipulated  in  the  Financing
Memorandum

Intermediate  payments  for  reimbursement  of  actual  payments  to  contractors  on  the
ground and subject to certain conditions in the Financing Memorandum

Payment  of  final  balance  upon  fulfilment  of  conditions  stipulated  in  the  Financing
Memorandum.

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)

Reimbursement of incurred expenditures

13

 
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.  In  order  to  strengthen  the  capacity  of  the  Delegations  to  undertake  these  ex-ante
controls, € 1.55 million was made available  at the Commission’s initiative from budget line
B7–020A for the recruitment of specialised staff (ALAT).

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  totalled  around  €  200  million  in  that  year,  as  the  first
ISPA projects were decided not much before the end of 2000. Payments accelerated in 2002
when almost € 390 million was disbursed. At present, the procedures for managing measures
financed by ISPA and PHARE require ex ante control, i.e. decisions concerning procurement
and  award  of  contracts  are  taken  by  the  contracting  authority  and  referred  to  the  EC
Delegation in the beneficiary country 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 indicated under section 4 are fulfilled.

Such  delegation of  management responsibility  requires  each candidate country  to  set 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  2222/20009  as  modified  by  the  Commission
Regulation 2252/2001 10 sets 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. All candidate countries managed to receive decision on conferral of management
by the end of 2002. However, these decisions are not related to the whole scope of measures
covered by the SAPARD programmes and work is on going to complete this process.

9

10

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

 
                                                
5.3.

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

In  2002,  PHARE  and  ISPA  continued  to  be  implemented  through  the  Decentralised
Implementation System (DIS), introduced for PHARE in 1990 and revised in 1998. However,
serious  progress  to  move  to  Extended  Decentralised  Implementation  System  (EDIS)  on  the
basis  of  the  Co-ordination  Regulation  was  noted  in  2002  in  the  acceding  and  candidate
countries. The Co-ordination Regulation provides the legal basis to “waive the Commission’s
ex  ante  approval  for  project  selection,  tendering  and  contracting  by  applicant  countries”
(Article 12).

The  advancement  towards  EDIS  is  laid  down  in  the  documents  entitled  “Preparing  for
Extended Decentralised Implementation System of the PHARE and ISPA programmes” sent
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. In a
meeting  in  Brussels  with  the  National  Aid  Co-ordinators  of  all  acceding  and  candidate
countries,  the  Commission  indicated  the  necessity  to  move  to  EDIS  for  the  PHARE
programme prior to accession. For the acceding countries the deadline is 1 May 2004 and for
Bulgaria and Romania the Commission strongly encourages moving to EDIS by end 2004.

During  2002  the  acceding  and  candidate  countries  embarked  on  the  gap  assessment,  which
was completed in some countries.

For  PHARE,  the  Commission  also  established  High  Level  Working  Groups  on  EDIS  in  all
PHARE countries to supervise and guide the progress on EDIS for the PHARE programme.
In 2002, a Multi-Country Programme of €5.9 million was allocated on a needs’ basis to help
candidate countries with their preparations for EDIS.

For ISPA, all but one country completed the first stage systems gap assessment in 2002. One
country  already  applied  for  the  waiving  of  ex  ante  control,  confirming  that  the  minimum
criteria and conditions stipulated for granting EDIS had been met.

New  systems  audits  that  were  undertaken  by  the  Commission  in  2002  to  assess  the
management  and  control  systems  in  the  candidate  countries  indicate  that  there  has  been
significant progress towards meeting the requirements in this respect of the ISPA Regulation.

15

 
6.

6.1

MONITORING AND EVALUATION

PHARE

Monitoring

The  PHARE  monitoring  and  Interim  Evaluation  Scheme  adopts  a  participatory  approach  to
providing the parties involved in programme management with a regular, reliable assessment
of the implementation of on-going measures.

– 

– 

– 

Monitoring Reports are drafted by the implementing agencies

Interim Evaluation Reports give the independent view of the external evaluators.

The Sectoral Monitoring Subcommittees (SMC) and the Joint Monitoring Committee
(JMC)  for  each  Candidate  Country  discuss  and  decide  on  remedial  actions  to
improve programme implementations based on the reports above.

The  JMC  meets  annually  and  may  propose  remedial  actions  to  improve  the  programme
management  and  design  of  future  projects  and  may  also  recommend  to  re-allocate  funds
within each of the pre-accession programmes from any unsatisfactorily performing activities.
As  regards  the  SMSC,  each  of  these  meet  in  principle  twice  a  year  and  address  specific
sectoral issues within the given candidate country and may likewise make recommendations
for future Interim Evaluation Reports.

Interim and Ex-Post Evaluation

During 2002, some 125 sectoral and thematic interim evaluation reports were issued, covering
all sectors of PHARE assistance. Findings indicate 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.  The  evaluators'  view  is  that  the
implementation process of the PHARE programme is highly successful yet more needs to be
done in order to improve project  design. The  evaluators noted a  substantial  improvement in
administrative capacity, yet still noted some difficulties with financial and time management,
as well as the difficulty of recruiting and retraining specialists.

The  Interim  Evaluation  system  was  revised  in  2002  to  help  ensure  the  sound  financial
management of PHARE measures. The revision included improvements in methodology and
formats, and a  faster, more differentiated  reporting  system  with  clearer  targeting  of  specific
audiences.  A  monitoring  template  was  also  introduced:  this  enables  a  more  user-friendly
synoptic and analytic presentation of relevant information.

A  large  ex-post  evaluation  of  PHARE  country  support  to  the  “Laeken  Group”  of  pre-
accession country partner states was delivered in 2002/2003 and is currently published on the
DG  Enlargement  public  website.11The  evaluated  sample  was  the  PHARE  support  due  for
completion at the end of 2001, that is, the National PHARE programmes launched in 1997/98
for Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, the
Slovakia and Slovenia.

11

http://europa.eu.int/comm/enlargement/phare_evaluation_reports_2.htm

16

 
                                                
In organisational terms, the ex-post evaluation process involves:

– 

– 

– 

The formal nomination of a country evaluator by the National Aid Co-ordinator.

The approval of each country's separate terms of reference by this national evaluation
representative.

The  appointment of  local  "external" evaluators in each  country  to  provide  country-
level evaluation reporting under the supervision of the selected evaluation contractor.

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.

Two  rounds  of  Monitoring  Committees  were  organised  in  2002  in  all  candidate  countries.
Summaries from these meetings are communicated to the ISPA Management Committee.

Requirements  for  ex-post  evaluation  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.

17

 
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
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 has 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 2002.
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.

In the same way two seminars on the evaluation of SAPARD were held, each involving the
participation of representatives of five candidate countries. Afterwards, the specific details for
mid-term  evaluation  were  discussed  in  another  seminar  (held  on  Brussels  on  17-18  June
2002) on “Aspects of management and implementation of the SAPARD Programmes”. During
this seminar, special attention was given to the organisational and methodological aspects of
the mid-term evaluation. Draft “Guidelines for the mid-term evaluation of rural development
programmes  supported  by  SAPARD”  were  presented  and  discussed  with  the  candidate
countries  who  were  reminded  of  their  obligations  to  send  the  evaluation  report  to  the
Commission  by  31  December  2003.  In  August  2002,  after  revision  of  the  document,  the
Commission  sent  an  official  letter,  including  the  Guidelines,  to  the  candidate  countries  in
order to initiate the first steps of the process of mid-term evaluation, and to give guidance on
this. These Guidelines were also presented for information purposes to all Member States in
the  STAR  Committee,  and  are  available  on  the  Commission’s  Directorate-General  for
Enlargement web-site.12

12

http://europa.eu.int/comm/agriculture/external/enlarge/index_en.htm

18

 
                                                
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. In this context, concurrently with ISPA, it may  also  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  should  assist  the  Commission  for
co-ordinating operations under the three instruments and the Commission should 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
instruments  and  IFIs.  This  information  is  provided  to  the  Committee  in  the  General
Assistance Document  2002.  Moreover,  the  Committee is 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.

19

 
In order  to avoid possible  overlaps between operations  receiving  support  from  SAPARD  or
PHARE  (in  particular  PHARE  Economic  &  Social  Cohesion  and  PHARE  Cross-Border
Co-operation), 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), 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-ordination Committee at Directors level for the pre-accession instruments has
been  set  up  in  the  various  Commission  services  (DGs  Agriculture,  Regional  Policy,
Enlargement, Budget and Legal Service) involved. This committee pays particular attention to
the preparation of the extended decentralisation (EDIS) of PHARE and ISPA. The agenda for
the meetings in 2002 included issues such as a stock-take on the progress towards EDIS and
the Accession Treaty clause on pre-accession funds.

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

To  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  which  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.

20

 
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 candidate countries

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  programming  and  implementing  PHARE
Economic  &  Social  Cohesion.  In  several  countries  such  interministerial  coordination  needs
further improvement.

As  decentralised  management  is  provided  for  from  the  outset  (for  SAPARD),  or  will
gradually  increase  through  the  implementation  of  EDIS  (for  PHARE  and  ISPA),  the
responsibility  of  the candidate country for  proper  co-ordination  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. The checklist transmitted to the candidate countries
and  Commission  Delegations,  which  allows  the  latter  to  verify  that  the  IA  is  capable  of
managing a PHARE Economic & Social Cohesion ‘scheme’ in a sound and efficient manner,
states  that  an  assessment  must  be  made  to  show  that  the  established  co-ordination
mechanisms are adequate, and that appropriate mechanisms are in place, in order to ensure no
overlap occurs between the other Community instruments, notably PHARE Cross-Border Co-
operation, SAPARD and ISPA.

7.4.

Co-ordination with the EIB and International Financial Institutions

Pre-accession aid can play its full role when it mobilises funds from the international financial
institutions  (IFIs).  Therefore,  co-operation  with  the  EIB  and  other  IFIs  continued  in  2002
under  the  framework  of  the  “Memorandum  of  Understanding  on  co-operation  in  the  pre-
accession assistance”13.

Figures available for the years 2000 to 2002 show that the yearly operations of the IFIs is in
excess  of  EUR  5  billion  Euro  in  loans  signed  with  the  10  enlargement  countries.  This  is  a
significant  amount  also  demonstrating  the  leverage  effect  of  Community  pre-accession
assistance having itself been reinforced since 2000.

13

On 2 March 1998, 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 co-operation 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
(CEB). 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 IFI’s in the spirit of the Memorandum of Understanding.

21

 
                                                
The  Commission  has  a  good  working  relationship  with  all  IFIs.  At  programme  level,  the
Commission mainly co-operates with the EIB, the EBRD and to a lesser extent, the Council
of Europe Development Bank (CEB) and the Kreditanstalt für Wiederaufbau (KfW).

The Commission services organise periodical meetings with these  IFIs  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.

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.

Commission  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.

At  the  level  of  the  individual  pre-accession  instruments,  the  co-operation  in  2002  can  be
summarised as follows:

– 

– 

For PHARE, the main co-financing instrument in 2002 was again the SME Finance
Facility (commitments in 2002: € 50 million), where the Commission works together
with the EBRD, the CEB and the KfW. This Facility involves the supply of finance
and capacity building measures to local banks and equity funds, in order to expand
their operations with SMEs in the region.

In addition, the Commission agreed with the EIB, the EBRD, and the CEB/ KfW on
co-financing  the  Municipal  Lending  Facility  (€  44  million),,  which  focuses  on
finance  and  capacity  building  measures  to  local  banks  in  order  to  expand  their
lending operations to local municipalities.

The  Commission  also  finalised  discussions  with  the  EIB  on  a  Municipal
Infrastructure  Facility  (€  35  million),  to  finance  local  municipalities  in  border
regions, as outlined in the Commission Communication on Border Regions.14

In the area for transport and  environment, the pre-accession instrument  ISPA is the
main facility for co-financing large infrastructure projects that are commonly subject
to  international  co-financing  by  the  IFIs.  Thus,  DG  Regional  Policy  is  the  major
partner for co-financing with IFIs.

The results of the co-operation between ISPA and participating IFIs, mainly EIB and
the EBRD, are very positive. 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  and EBRD
resulted in the joint co-financing of several projects in 2002.

14

COM(2001) 437 final of 25 July 2001.

22

 
                                                
Several  periodic  co-ordination  meetings  were  held  in  order  to  set  up  the  working
framework  and  make  operational  improvements  to  the  Co-operation  Agreement
(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
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.

Discussions  regarding  co-operation  after  accession  once  Candidate  Countries
become eligible for the Cohesion  and  Structural  Funds  were  also  held.  The  EIB  as
well EBRD contributed to the preparation of Guidelines for successful public-private
partnerships”  which  were  prepared  by  DG  Regional  Policy  and  published  early  in
2003.

– 

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.
The  Commission  also  began  discussions  with  the  EBRD  in  2002  on  how  to  better
ensure  access  of  beneficiaries  of  the  SAPARD  programme  (and  especially  of
farmers) to bank credit.

23

 
FINANCIAL OVERVIEW

The allocations per country for PHARE, ISPA and SAPARD in 2002

PHARE

SAPARD

ISPA

TOTAL

€ million

€ million

€ million

€ million

Bulgaria

122.9

Czech
Republic

108.2

Estonia

33.4

Hungary

130.7

Latvia

36.3

Lithuania

147.6

Poland

451.7

Romania

278.5

Slovakia

79.1

Slovenia

41.9

Other15

268.7

55.6

23.5

12.9

40.6

23.3

31.8

179.9

160.6

19.5

6.8

104.6

80.5

30.4

94.1

46.5

61.2

362.8

256.6

54.1

16.6

283.1

212.2

76.7

265.4

106.1

240.6

994.4

695.7

152.7

65.3

Total

1699.0

16554.5

1107.4

3092.2

15

16

Horizontal, regionaland part of the nuclear safety programmes.
Total  of  commitments  following  annual  financing  agreement  2002;  the  figures
presented for each beneficiary country have been rounded.

24