Amended proposal for a Council Regulation establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community and amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction
Date: 2004-10-21
Institutions: European Commission
Subjects: Cyprus, EU financial instrument, European Agency for Reconstruction, delegation of power, development aid, economic development

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.10.2004 
COM(2004) 696 final 

2004/0145 (CNS) 

Amended proposal for a 

COUNCIL REGULATION 

establishing an instrument of financial support for encouraging the economic 
development of the Turkish Cypriot community and 
amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

The overall objective of the proposal for a Council Regulation establishing an instrument of 
financial support1 is to provide assistance to the Turkish Cypriot community with particular 
emphasis  on  economic  development,  on  the  economic  integration  of  the  island  and  by 
improving  contacts  between  the  two  communities  and  with  the  EU  in  order  to  facilitate  the 
reunification of Cyprus. The considerable amount of € 259 million available (to be committed 
over  2004-2006  and  to  be  implemented  until  2009)  requires  specific  means  of  management 
and implementation of the assistance.  

According to Article 3 of the proposal the Commission shall be responsible for administering 
the aid. Article 5 of the proposal provides for different ways of implementation according to 
the rules set down in Title IV of part 2 of Council Regulation 1605/20022. The aid in the field 
of infrastructure projects will focus inter alia on power plants, waste and water management, 
renovation and development of transport projects including links connecting the two sides of 
the island. It is therefore obvious that a large part of the funds will be used for infrastructure 
investments.  The  best  solution  appears  to  be  to  entrust  the  European  Agency  for 
Reconstruction (hereafter: EAR) with the implementation of assistance. 

The EAR was set up in the aftermath of the Kosovo crisis to manage the EU’s assistance to 
UN  administered  Kosovo.  Its  mandate  covers  the  full  project  cycle,  from  identification 
(including preparatory studies) to final payments, monitoring and evaluation of projects under 
its  responsibility.  The  EAR  is  Contracting  Authority  on  behalf  of  the  Commission  (and 
eventually of other donors). It has got legal personality and is legally fully responsible vis-à-
vis third parties (e.g. staff, contractors, beneficiaries). 

Since its establishment, the mandate of the EAR was extended already twice: in late 2000 to 
the Republic of Yugoslavia (today State Union of Serbia & Montenegro), and in late 2001 to 
the former Yugoslav Republic of Macedonia. On 28 June 2004 the Commission proposed to 
extend  the  Agency’s  mandate  to  the  countries  concerned  for  another  two  years  until 
31 December  20063.  The  mandate  of  the  EAR  could  be  extended  further  to  cover  also  the 
northern part of Cyprus. 

The EAR is already well established. Its status allows it to recruit all necessary staff under the 
programme  itself.  It  has  a  long  and  recognised  experience  at  implementing  major 
infrastructure projects, which will represent the bulk of the aid to the northern part of Cyprus. 
The  EAR  has  the  capability  to  attain  the  objectives  in  time  and  to  achieve  the  results.  It 
appears  to  be  the  only  possible  option  to  deliver  the  aid  programme  to  northern  Cyprus 
rapidly.  

Finally, the EAR is perceived as politically neutral. Its mandate is assistance implementation 
where  political  decision-making  rests  with  the Commission.  This  is  clearly  an  advantage  in 
the  complex  and  complicated  situation  of  a  divided  Cyprus.  Located  in  Thessaloniki,  it  is 
much closer to Cyprus than the Commission headquarters for support services.  

1 
2 
3 

COM(2004) 465 final. 
OJ L 248, 16.9.2002, p. 1. 
COM(2004) 451 final. 

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2004/0145 (CNS) 

Amended proposal for a 

COUNCIL REGULATION 

establishing an instrument of financial support for encouraging the economic 
development of the Turkish Cypriot community and 
amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction 

1. 

The following recital (7) is inserted: 

‘(7) 
In  order  to  supply  assistance  in  accordance  with  the  principles  of  sound 
financial  management,  the  Commission  should  be  in  a  position  to  delegate  to  the 
European  Agency  for  Reconstruction  implementation  of  assistance  under  this 
Regulation.  Therefore,  Council  Regulation  (EC)  No  2667/2000  on  the  European 
Agency for Reconstruction4 needs to be amended accordingly.’ 

The subsequent recitals are renumbered. 

2. 

Article 5 paragraph 2 shall start with the words: 

‘Without prejudice to a decision taken in  accordance with Article 2 paragraph 5 of 
Council Regulation (EC) No 2667/2000, …’ 

3. 

The following Article is inserted after Article 5: 

‘Article 5a 

Council Regulation (EC) No 2667/2000 is amended as follows: 

In Article 2, the following paragraph 5 is added: 

– 

‘The  Commission  may  entrust  the  Agency  with  the  implementation  of 
assistance  for  encouraging  the  economic  development  of  the  Turkish  Cypriot 
community within the framework of Council Regulation (EC) xx/2004.’ 

4 

OJ L 306, 7.12.2000, p.7. 

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