Report from the Commission - 2004 Report on Phare, pre-accession and transition instruments {SEC(2005)1773}
Date: 2005-12-23
Institutions: European Commission
Subjects: Bulgaria, EU financial instrument, EU programme, Romania, Türkiye, accession to the European Union, activity report, cooperation policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.12.2005 
COM(2005)701 final 

REPORT FROM THE COMMISSION 

2004 REPORT ON PHARE, PRE-ACCESSION AND TRANSITION 
INSTRUMENTS  

{SEC(2005)1773} 

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SUMMARY 

Together  with  two  other  instruments  financed  by  the  European  Communities,  namely  ISPA 
(Instrument  for  Structural  Policies  for  Pre-Accession)  and  SAPARD  (Special  Accession 
Programme  for  Agriculture  and  Rural  Development),  the  Phare  Programme  aims  to  assist 
candidate  and  acceding  countries  in  their  preparations  for  joining  the  European  Union.  In 
2004,  following  the  accession  of  the  10  new  Member  States,  Phare  provided  support  to  the 
remaining  candidate  countries  Bulgaria  and  Romania.  Turkey  continued  to  receive  support 
under its own pre-accession assistance instrument.  

The  objectives  of  Phare  pre-accession  assistance  are  to  assist  candidate  and  acceding 
countries in their efforts to strengthen their public administrations and institutions to function 
effectively  inside  the  European  Union,  to  promote  convergence  with  the  European 
Community’s legislation, to reduce the need for transition periods and to promote Economic 
and Social Cohesion (ESC). 

Programming  was  based  on  the  Phare  Guidelines  that  were  revised  in  2004  in  order  to 
accompany  the  further  alignment  of  the Cross Border Co-operation (CBC) Regulation with 
INTERREG, to accommodate the unique approach required in the area of nuclear safety and 
to emphasise the transition to Extended Decentralisation Implementation System (EDIS).  

The  programming  and  implementation  of  pre-accession  assistance  for  Turkey  largely 
mirrored the procedures and content of Phare support. In order to prepare for the decentralised 
approach  to  programme  management  established  under  the  Structural  Funds,  the  European 
Commission has increasingly intensified the support to Bulgaria and Romania to allow for a 
further  transfer  of  responsibility  for  the  management  and  implementation  of  Phare 
programmes to the national authorities.  

This report also contains information on the Transition Facility for new Member States which 
was introduced to allow for the continuation of institution building support with a view to 
strengthening and consolidating institutional and administrative capacity to implement the 
acquis communautaire. Programming is based on needs identified in the Commission’s 
Comprehensive Monitoring Report (November 2003).

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1. 

THE YEAR IN REVIEW 

1.1. Main evolutions of the Enlargement Process in 2004 

On 1 May 2004, the Europe of 25 became a reality. The accession of 10 new Member States 
to the European Union was the biggest enlargement ever in the history of the Union.  

Of course, the enlargement process continues. On 6 October 2004, the Commission adopted 
its  enlargement  package  including  regular  reports  for  Bulgaria,  Romania  and  Turkey,  a 
strategy  paper  on  enlargement  and  an  impact  assessment  on  issues  arising  from  Turkey's 
membership perspective. 

The  accession  negotiations  were  completed  with  Bulgaria  and  Romania  to  allow  both 
countries to join the EU in 2007. The December European Council endorsed the closing of the 
negotiations with a view to signing the Accession Treaty as early as possible in 2005. 

In  the  light  of  a  recommendation  delivered  by  the  Commission  on  6  October  2004,  the 
December  European  Council  also  decided  to  open  accession  negotiations  with  Turkey  in 
October 2005. The decision was taken in recognition of the progress on reforms achieved by 
Turkey  and  provided  that  key  pieces  of  legislation  would  enter  into  force  and  the  Protocol 
extending the Ankara Agreement to the new Member States would be signed before opening 
negotiations.1 

On  20  April  2004,  the  Commission  recommended  opening  accession  negotiations  with 
Croatia.  Based  on  this  recommendation,  the  June  European  Council  decided  to  convene  a 
bilateral  intergovernmental  conference  with  Croatia  early  in  2005  in  order  to  begin 
negotiations.2 

Regarding financing, on 29 September 2004, the Commission proposed, in conjunction with 
its proposals on the financial perspectives for 2007–2013, the establishment of an instrument 
for  pre-accession  assistance  (IPA)  to  replace  Phare,  ISPA,  Sapard  and  CARDS,  and  cover 
current  and  future  applicants.  Within  the  same  decision  it  was  proposed  to  set  up  a 
neighbourhood  programme  along  the  external  borders  of  the  EU  and  Candidate  Countries, 
involving Phare cross-border cooperation, TACIS and Interreg funding. For the period 2004–
2006, the Council laid down a general approach for reallocating the resources still available 
under  Sapard  and  ISPA.  As  part  of  the  pre-accession  strategy  for  Croatia,  the  Commission 
proposed allowing that country access to all three of the existing pre-accession instruments. 

1.2. Main conclusions of the 2004 European Councils 

Brussels European Council of 17-18 June 2004: 

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The European Council, on December 17, 2004, accepted the recommendation of the Commission and 
decided  to  start  negotiations  with  Turkey  on  October  3,  2005,  providing  the  Protocol  adapting  the 
Ankara Agreement to the current membership of the EU is signed before that date. The signature took 
place on 29 July 2005 and a formal decision signalling the beginning of negotiations was taken on the 3 
October 2005. 
EU Member States decided in Luxemburg on 3 October to launch accession negotiations with Croatia. 
The  opening  of  the  accession  negotiations  was  made  possible  by  the  assessment  of  the  Council  of 
Ministers that Croatia was fully cooperating with the International War Crimes Tribunal for the former 
Yugoslavia (ICTY) set up by the UN 

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The  European  Council  underlined  that  Bulgaria  and  Romania  are  an  integral  part  of  the 
ongoing  enlargement  round  and  recalled  that  the  guiding  principles  which  applied  to  the 
accession negotiations with the ten new Member States should continue to apply to Bulgaria 
and Romania, which are part of the same inclusive and irreversible enlargement process. 

The  European  Council  welcomed  the  significant  progress  made  by  Turkey  in  the  reform 
process, including the important and wide-ranging constitutional amendments adopted in May 
as well as the sustained efforts of the Turkish Government to meet the Copenhagen political 
criteria.  The  Union  reaffirmed  its  commitment  that  if  the  European  Council  decides  in 
December  2004  that  Turkey  fulfils  the  Copenhagen  political  criteria,  the  EU  will  open 
accession negotiations with Turkey without delay. 

Brussels European Council of 4-5 November 2004: 

The European Council heard a presentation by the President of the European Commission on 
the Progress Reports, the Strategy Paper on Enlargement and Recommendations regarding 
the  candidate  States  as  well  as  the  study  on  issues  arising  from  Turkey's  membership 
perspective published by the Commission on 6 October 2004. 

Brussels European Council of 16-17 December 2004:  

The  European  Council  welcomed  the  findings  and  recommendations  presented  by  the 
Commission on 6 October 2004 in its regular reports on Bulgaria, Romania and Turkey, the 
strategy paper on enlargement, its recommendation on Turkey and the impact assessment on 
issues arising from Turkey's membership perspective. 

The  European  Council  recalled  that  the  Union's  capacity  to  absorb  new  members,  while 
maintaining  the  momentum  of  European  integration,  is  an  important  consideration  in  the 
general interest of both the Union and the candidate countries.  

The European Council considered that Bulgaria will be able to assume all the obligations of 
membership at the envisaged time of its accession, provided that it continues its efforts to that 
end  and  completes  in  a  successful  and  timely  way  all  necessary  reforms  and  commitments 
undertaken in all areas of the acquis. Safeguard clauses will provide for measures to address 
serious problems that may arise before accession or in the three years following accession.  

The  European  Council  noted  with  satisfaction  that  progress  made  by  Romania  in 
implementing the acquis and commitments entered into as regards, in particular, Justice and 
Home  Affairs  and  Competition,  made  it  possible  to  formally  close  all  of  the  outstanding 
chapters  with  this  candidate  on  14  December  2004  and  accordingly  looked  forward  to 
welcoming it as a member from January 2007. 

The  European  Council  recalled  its  previous  conclusions  regarding  Turkey,  in  which,  at 
Helsinki, it agreed that Turkey was a candidate State destined to join the Union on the basis of 
the same criteria as applied to the other candidate States. It requested the Council to agree on 
a  framework  for  negotiations,  to  be  presented  by  the  Commission,  with  a  view  to  opening 
negotiations on 3 October 2005. 

The European Council agreed that accession negotiations with individual candidate States will 
be  based  on  a  framework  for  negotiations.  Each  framework,  which  will  be  established  by 
the Council on a proposal by the Commission will take into account the experience of the fifth 

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enlargement and of the evolving acquis, and will address a series of elements according to the 
candidate countries’ own merits and their specific situations and characteristics. 

2. 

2.1. 

PROGRAMMING  AND  IMPLEMENTATION  OF  THE  PROGRAMMES:  GENERAL 
OVERVIEW 

Phare  and  Pre-Accession  for  Turkey  and  the  Special  Aid  Package  for  the 
Northern Part of Cyprus 

From  2004,  the  eight  Central  and  Eastern  European  countries  and  the  two  Mediterranean 
countries which acceded to the EU on 1 May 2004 have no longer been beneficiaries of pre-
accession aid. However, a special Phare phasing-out mechanism for a maximum period of 15 
months was established in order to allow an orderly transition of the EU delegations’ role in 
the management of Phare programmes to the national authorities.  

Bulgaria and Romania were the sole recipients under Phare in 2004. 

The current Phare Guidelines state that approximately 65% of Phare resources is earmarked 
for institution-building and associated investment (of which a minimum of 30% for IB). The 
main  instruments  for  institution-building  and  transfer  of  know-how  are  Twinning  and 
Twinning  Light.  These  involve  the  secondment  of  experts  from  public  administrations  in 
Member  States  to  those  in  candidate  countries  to  help  develop  the  capacity  to  implement 
specific  aspects  of  the  acquis.  A  maximum  of  35%  is  allocated  to  investments  designed  to 
promote economic and social cohesion (ESC). 

In addition to the National Programmes and CBC elements funded under Phare, a number of 
multi-country  horizontal  programmes  were  carried  out.  These  programmes  covered  nuclear 
safety,  statistical  co-operation  and  participation  in  Agencies,  a  networking  facility,  TAIEX 
operations and an information and communication programme. 

Turkey benefits from its own pre-accession instrument and, through this, from multi-country 
horizontal  programmes.  The  2004  pre-accession  financial  assistance  programme  for  Turkey 
focused mainly on addressing the Copenhagen political criteria, approximation to the acquis, 
strengthening  the  public  administration,  justice  and  home  affairs,  and  economic  and  social 
cohesion.  The  programme  also  included  co-financing  for  Turkey’s  contribution  for 
participation in the sixth Framework Programme and the Community education programmes.  

The Commission Decision on the 2003 Special Aid Package for the northern part of Cyprus 
was amended on 11 August 2004 (Commission Decision C(2004)3030) in order to refocus the 
assistance  programme  following  the  outcome  of  the  April  2004  referenda  by  increasing  the 
allocation for TAIEX assistance and for feasibility studies. Assistance under this programme 
is  managed  centrally  by  the  Commission.  By  the  end  of  2004,  contracts  were  signed  with 
UNDP, British Council and the British Council for a total amount of €10.3 million. 

Funding in 2004 was in line with the conclusions of the Copenhagen European Council which 
endorsed  the  revised  roadmap  for  Bulgaria  and  Romania  as  well  as  the  transfer  of  aid  for 
Turkey to Heading 7 (pre-accession).  

Total Phare operational commitments amounted to € 757.7 million comprising: 

National Programmes 

€577.8 million

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Nuclear Decommissioning 
(Kozloduy) 

Cross-Border Co-operation 

Multi-Country/Horizontal 
Programmes  

€85.0 million

€ 64 million

€28.4 million

(N.B.  The  remaining  €  2.5  million  represent  Phare  commitments  to  the  European  Training 
Foundation managed under the Education and Culture policy area.) 

National programmes were divided as follows: 

Bulgaria 

Romania 

€172.5 million

€405.3 million

The pre-accession assistance programme was agreed for Turkey: 

Turkey 

€245.9 million

This  includes  the  National  Programme  (€236.7  million),  as  well  as  horizontal  measures 
including TAIEX and support expenditure.  

Detailed  information  about  Phare  in  each  country  and  Pre-accession  financial  assistance  for 
Turkey can be found in the Annex - Part I: Country section- to this report. 

2.2. 

Transition Facility 

The  ten  countries  which  used  to  receive  pre-accession  financial  assistance  under  Phare  (or 
specific  pre-accession  facilities  in  the  cases  of  Cyprus  and  Malta)  instead  benefited  for  the 
first time in 2004 from a special Transition Facility for institution building aimed at allowing 
the  then  new  Member  States  to  strengthen  and  consolidate  institutional  and  administrative 
capacity  to  implement  the  acquis  communautaire  and  thus  continue  the  institution-building 
measures initiated under Phare.  

instrument.  Programming 

The Transition Facility was created by article 34 of the Act of Accession, as a temporary post-
accession  financial 
the 
Commission’s Comprehensive Monitoring Report (November 2003). The article gives a non-
exhaustive  list  of  examples  of  key  acquis  where  weaknesses  may  still  persist,  but  also 
excludes  any  area  which  is  eligible  for  funding  under  the  Structural  Funds.  Reflecting 
continuity with Institution Building support funded by Phare, part of each annual envelope of 
the Transition Facility has been allocated to certain multi-beneficiary programmes.  

is  based  on  needs 

identified 

in 

Total commitments amounted to €189.6 million, comprising: 

National Programmes 

Horizontal 
Programmes and others 

and  Multi-country 

€166.6 million

€23.0 million

National programmes were divided as follows: 

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Cyprus 

€9 million 

Czech Republic 

€17.1 million 

Estonia 

€8.4 million 

Hungary 

€18.4 million 

Malta 

Latvia 

€11.8 million 

€6.7 million 

Lithuania 

€22.4 million 

Poland 

Slovenia 

Slovakia 

€49.9 million 

€8.7 million 

€14.2 million 

2.3. 

Co-ordination of the Community Pre-accession assistance 

SAPARD3  (Special  Accession  Programme  for  Agriculture  and  Rural  Development)  aims  to 
help  candidate  countries  deal  with  the  problems  of  the  structural  adjustment  in  their 
agricultural  sectors  and  rural  areas,  as  well  as  in  implementing  the  acquis  communautaire 
concerning  the  CAP  (Common  Agricultural  Policy)  and  related  legislation.  Detailed 
information on SAPARD activities can be found in the SAPARD annual report for 2004. 

ISPA4  (Instrument  for  Structural  Policies  for  Pre-Accession)  is  directed  mainly  towards 
aligning the applicant countries on Community infrastructure standards. It also finances major 
environmental  and  transport  infrastructure.  Detailed  information  on  ISPA  activities  can  be 
found in the ISPA annual report for 2004. 

The  Commission’s  Co-ordination  Committee  for  the  3  pre-accession  instruments,  set  at 
Directors level, convened once in 2004.  

A  General  Assistance  Document,  through  which  the  Commission  informed  the  Phare 
Management Committee of the co-ordination of pre-accession aid in 2004, was presented to 
Member  States  at  the  Phare  Management  Committee  on  10  June  2004.  In  particular,  this 
document provided the indicative financial allocations for the year for each country in relation 
to the three instruments, information on co-ordination with EIB and IFIs and about progress 
and perspectives for decentralised management. A separate annual report on co-ordination of 
pre-accession assistance provides more detailed information on co-ordination between Phare, 
ISPA and SAPARD. 

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information  on  SAPARD,  we 
For  general 
http://europa.eu.int/comm/agriculture/external/enlarge/index_en.htm 
For  general 
http://europa.eu.int/comm/regional_policy/funds/ispa/ispa_en.htm 

information  on 

ISPA,  we 

refer 

refer 

to 

to 

the  website  of  DG  Agriculture 

the  website  of  DG  Regional  policy 

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2.4. 

Co-operation  with  the  European  Investment  Bank  (EIB)  and  International 
Financial Institutions (IFIs) 

As in previous years, Co-operation with the EIB and other IFIs continued in 2004 under the 
framework  of  the  Memorandum  of  Understanding  on  co-operation  in  pre-accession 
assistance. 

The Commission Services periodically organise meetings with the EIB and other IFIs to co-
ordinate issues related to programming and implementation, as well as procedural issues. In 
view of organising the transition from pre-accession support to full membership of the EU for 
countries acceding in May 2004, the Commission also chaired on 26 March 2004 the EC/IFI 
Working Group, as well as the EC/IFI High-Level Group, which consist of meetings at senior 
management level between EC and all IFIs.  

Given the fact that large infrastructure projects which are commonly subject to international 
co-financing are now financed under ISPA, co-financing under Phare was limited.  

The main co-financing instrument in 2004 was again the SME Facility in which the EIB, the 
EBRD and the Council of Europe Development Bank / KfW are participating. The objective 
is to continue co-financing capacity building of the financial sector to develop financing for 
SMEs  (through  the  SME  Facility)  and  municipalities  (through  the  Municipal  Lending 
Facility). For more details on these facilities, see details in Annex Part II.  

3. 

PROGRAMME MANAGEMENT  

3.1.  Moving towards Extended Decentralisation Implementation System (EDIS)  

The concept of the EDIS accreditation process is to facilitate the full decentralisation of the 
management  and  implementation  of  EU  funds  to  candidate  country  administrations.  When 
EDIS is fully achieved, the Commission no longer exercises systematic ex-ante control over 
individual transactions, but is limited to an ex-post control, whilst retaining the overall final 
responsibility for general budget execution. 

Concerning  the  10  new  member  states,  the  obligation  to  have  EDIS  in  place  by  the  date  of 
accession was included in the Act of Accession (article 33) and provided a clear impetus for 
the  then  acceding  countries  to  complete  the  final  preparations  for  this  to  be  achieved.  As  a 
result, the preparations for EDIS were completed in all the 10 new member states countries 
during  2004.  By  the  end  of  2004,  EDIS  had  been  formally  granted  -  in  the  form  of  a 
Commission Decision to waive ex-ante control on management of pre-accession funds - to 9 
out of the 10 new member states (Cyprus, Czech Republic, Estonia, Hungary, Lithuania, 
Latvia, Malta, Slovakia and Slovenia). Poland was the only new Member State not to have 
received  EDIS  accreditation  in  2004,  though  a  decision  was  expected  in  the  first  weeks  of 
2005.5  Details  concerning  the  EDIS  decision  in  each  of  the  10  new  member  states  can  be 
found in point 1 of each of the country sections. 

For the Bulgaria and Romania, the state of play at the end of 2004 was the following: both 
Bulgaria and Romania had completed EDIS  Stage  1 (Gap assessment) and had progressed 
onto Stage 2 (Gap plugging), with the target to move to EDIS during the first half of 2006. 

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Poland was granted EDIS accreditation in January 2005. 

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The Commission and the national administrations in these countries continued to monitor the 
process  through  the  High  Level  Working  Groups  (HLWG),  set  up  in  2002  in  all  Phare 
countries to oversee and provide guidance for the transition to EDIS.  

Turkey  moved  to  a  DIS  (decentralised  implementation  system)  in  October  2003,  with  the 
indicative target to proceed with EDIS in 2007. 

3.2.  Monitoring and Evaluation 

The monitoring and evaluation function aims firstly to monitor and evaluate the effectiveness 
of  the  financial  support  given  to  beneficiary  countries  in  achieving  their  pre-accession 
objectives by assessing the programme performance and deriving lessons learned. The second 
objective  is  to  support  the  development  of  local  monitoring  and  evaluation  capacity  as  a 
means to strengthen the states’ capacity to manage and control pre-accession aid. 

3.2.1.  Ex ante evaluation 

During  2004,  discussions  on  the  2003  internal  ex-ante  evaluation  of  programming 
mechanisms exercise for Phare in 2004 and beyond continued and focused on the only set of 
recommendations  still  pending,  that  being the introduction of a  more systematic and  formal 
quality control mechanism. 

3.2.2.  Monitoring and Interim Evaluation 

In  2004,  the  external  interim  evaluation  schemes  generated  some  45  individual  country, 
sectoral,  ad-hoc  or  thematic  evaluation  reports  covering  Phare  and  other  pre-accession 
financial instruments measures, as well as a Consolidated Summary Report of Phare support 
allocated in 1999-2002 and implemented until November 2003. 

Concrete  actions  in  this  area  included:  the  completion  of  programme/project  design 
workshops in most candidate countries to address design weaknesses; and a special seminar 
with  relevant  stakeholders  involved  in  twinning  to  identify  actions  to  further  strengthen  the 
twinning instrument. 

3.2.3.  Ex post evaluation 

The  Evaluation  Unit  launched  the  tendering  process  for  a  major  external  ex  post  evaluation 
exercise  of  Phare  national  programmes  allocated  in  1999-2001,  with  a  view  to  starting  the 
evaluation work in the first quarter of 2005. The exercise will conclude at the end of 2006, 
after a planned duration of 20 months  

3.3. 

Other activities 

A number of other activities were undertaken by the Commission services in order to improve 
the  quality  of  the  programmes  for  the  year  2004,  as  well  as  to  support  the  development  of 
local monitoring and evaluation capacity. Specific actions are described in Annex Part II.2.3.  

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