Proposal for a Council Regulation amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction
Date: 2006-04-06
Institutions: European Commission
Subjects: European Agency for Reconstruction, North Macedonia, Serbia and Montenegro, cooperation policy, economic reconstruction, peacekeeping

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 6.4.2006 
COM(2006) 162 final 

2006/0057 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

With Council Regulation (EC) No 2667/2000 of 5 December 20001,the European Agency for 
Reconstruction  was  set  up,  for  the  implementation  of  the  Community  assistance  for  Serbia 
and  Montenegro  and  the  former  Yugoslav  Republic  of  Macedonia.  According  to  its  Article 
16, this Regulation shall apply until 31 December 2006. 

Article 14 of that Regulation states however that : “ By 31 December 2005 the Commission 
shall report to the Council on the future of the mandate of the Agency. Any proposal to extend 
the mandate of the Agency beyond 31 December 2006 should be made by the Commission to 
the Council by 31 March 2006.” 

The Commission issued the report to the Council, and to the Parliament for information, on 23 
December  2005  (COM  (2005)710  final).  In  that  report  the  Commission  proposed  to 
discontinue the European Agency for Reconstruction, but to seek its extension for two years, 
until  31  December  2008,  with  its  current  mandate  and  status,  to  gradually  phase  out  its 
activities  under  the  CARDS  Programe  (Council  Regulation  (EC)  No  2666/2000  of  5 
December 20002 

This draft Regulation aims therefore to amend Regulation (EC) No 2667/2000 accordingly. 

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2 

OJ  L306,  7.12.2000,  p.  7.  Regulation  as  last  amended  by  Regulation  (EC)  No  2068/2004  (OJ  L358, 
3.12.2004, p. 2). 
OJ  L306, 7.12.2000, p. 7.  Regulation  as  last  amended by  Regulation (EC)  No 2112/2005  (OJ  L  344, 
27.12.2005, p. 23). 

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2006/0057 (CNS) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
181a (2), first sentence thereof, 

Having regard to the proposal from the Commission3, 

Having regard to the opinion of the European Parliament4, 

Whereas: 

(1) 

Community assistance provided for in Regulation (EC) No 2666/2000 of 5 December 
2000  on  assistance  for  Albania,  Bosnia  and  Herzegovina,  Croatia,  the  Federal 
Republic  of  Yugoslavia  and  the  Former  Yugoslav  Republic  of  Macedonia,  repealing 
Regulation (EC) No 1628/96 and amending Regulations (EEC) No 3906/89 and (EEC) 
No 1360/90 and Decisions  97/256/EC  and 1999/311/EC CARDS)  is implemented in 
Serbia  and  Montenegro,  including  Kosovo  as  defined  by  United  Nations  Security 
Council  Resolution  1244  of  10  June  1999,  and  in  the  former  Yugoslav  Republic  of 
Macedonia  by  the  European  Agency  for  Reconstruction  stablished  by  Council 
Regulation (EC) No 2667/20005 

(2) 

Regulation (EC) No 2667/2000 applies until 31 December 2006. 

(3) 

(4) 

(5) 

Regulation  (EC)  No  2667/2000  provides  for  a  report  from  the  Commission  to  the 
Council on the future of the mandate of the European Agency for Reconstruction.  

The  Commission  submitted  the  said  report  to  the  Council,  and  to  the  European 
Parliament for information, on 23 December 2005. 

In  that  report,  the  Commission  proposed  to  discontinue  the  European  Agency  for 
Reconstruction,  but  to  extend  its  existence  for  two  years,  until  31  December  2008, 
with its current mandate and status, to gradually phase out its activities under CARDS. 

(6) 

Regulation (EC) No 2667/2000 should therefore be amended accordingly, 

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OJ C p. 
OJ C p. 
OJ L 306, 7.12.2000, p. 7. Regulation as last amended by Regulation (EC) No 2068/2004 (OJ L 358, 
3.12.2004, p.2). 

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HAS ADOPTED THIS REGULATION: 

Article 1 

In  Article  16  of  Regulation  (EC)  No  2667/2000,  the  date  "31  December  2006"  shall  be 
replaced by " 31 December 2008". 

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

Article 2 

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

Done at Brussels, 

For the Council 
The President 

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LEGISLATIVE FINANCIAL STATEMENT 

Phasing out Agency for Reconstruction/Upgrading 

Delegations/Offices 

1. 

POLICY AREA CONCERNED 

Enlargement 

2. 

BUDGET LINES INVOLVED 

XX.01.01.01: Expenditure related to staff working with the Institution 
XX 01.03.02: Buildings and related expenditure in Delegations 
XX.01.01.02: Expenditure related to staff in active employment of Community Delegations 
XX.01.02.02: External staff 
XX.01.02.12: Other management expenditure 
XX.01.02.02: External staff of Community Delegations 
21.01.04.nn: Expenditure on operations support in the policy area of enlargement 

3. 

DURATION OF THE ACTION AND FINANCIAL IMPACT 

The action is limited to a two-year transitional period (2007-2008). During this time, the Agency will 
focus  its  efforts  on  the  implementation  and  finalisation  of  CARDS  projects.  At  the  same  time,  the 
Delegations will begin to make preparations to contribute to the implementation of aid under the IPA 
instrument. The Delegations should be ready to handle any outstanding business of the Agency at the 
end of the transitional period, as part of a responsibility transfer plan that will be finalised in 2006 and 
organised on the basis of priority sectors. 

The number of permanent officials in Delegations and Offices will be gradually raised in 2007, with 
the aim of reaching capacity in 2008.  

By 2009 the transition will be complete and activities will continue under the IPA instrument. 

3.1. 

Budgetary characteristics 

Budget line 

Type of expenditure 

New  EFTA 

participation 

Applicant  country 
participation 

in 

Heading 
financial 
perspective 

Several, 
all 
listed 
in point 2  

NON-
COMP 

DIFF/NON-
DIFF 

3.2.  What the Agency will do 

IPA  NO 

NO 

No [, 4, 5, 7] 

During  the  transitional  period,  the  Agency  will  focus  its  efforts  on  the  finalisation  of  CARDS 
programmes, the gradual transfer to Commission Delegations of programmes that cannot be closed by 
the EAR,  and on the administrative closure of its activities. Programming  and contracting under the 
new  IPA  instrument  will  be  taken  care  of  by  Headquarters  and  the  Delegations.  The  Agency  will 
provide the necessary assistance. 

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4. 

SUMMARY OF RESOURCES 

In 2006, total funds managed by the Agency’s operating centres are as follows: 

Commitment appropriations: 

- Fyrom : EUR 28 million 

- Kosovo: EUR 45.5 million 

- Montenegro: EUR 18 million 

- Serbie: EUR 142 million 

- State Union S&M: EUR 7.5 million 

RAC (non-committed balance): EUR 409.3 million 

In 2007 and 2008 there will be no new commitments. The funds to be managed can be estimated as 
follows:  

- 2007: RAC: EUR 400 million ; RAL (outstanding balance) : EUR 690 million (including RAC);  

- 2008: RAC: EUR 200 million ; RAL : EUR 470 million (including RAC). 

In EUR millions 

Type of expenditure 

EAR 
expenditure 
operating appropriations 

administrative 
from 
funded 

Line 22 05 01/02/03 CARDS 

n - 1 

Year n 

n +1 

n + 2 

2006 

2007 

2008 

2009 

C.E. 

C.P. 

68.76 

24.8 

23.96 

20 

- 

During the transitional period (2007-2008), the Agency’s administrative expenditure will come from 
commitments from the operating appropriations made in 2006. 

The  forecasts  for  the  Agency’s  expenditure  for  2007  and  2008  are  based  on  the  need  to  pay  for  the 
staff  required  to  manage  funds  estimated  (between  now  and  the  end  of  2008)  at  RAL  of  EUR  580 
million and RAC of EUR 870 million, in line with the Report from the Commission to the Council on 
the future of the EAR (COM(2005)710). 

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Some staff will probably leave the Agency before the end of 2008, but it is essentiel to set aside at this 
stage enough budgetary resources to enable the Agency to offer staff (temporary agents, contract staff, 
local staff) contracts until the end of 2008 where necessary. This will prevent a situation of uncertainty 
which might make staff leave early and thus hamper the EAR in fully carrying out its mission. Any 
unused funds will be repaid to the General Budget. 

Administrative 
expenditure  on 
permanent officials in delegations: 
allowances, 
salaries, 
reimbursement 
expenses, 
transfer  allowances,  entertainment 
expenses,  missions,  remuneration 
adjustments  (lines  xx.010102  to 
xx.010212)  

of 

and 

fuel 

Administrative 
expenditure  on 
infrastructure: rent and water, gas, 
charges, 
electricity 
refurbishment,  security  for  staff 
and  offices,  furniture  and  office 
equipment,  cost  of  transport  and 
same, 
maintenance 
telecommunications  and  IT,  other 
administrative expenditure: line  

of 

1.37 

3.06 

2.92 

- 

- 

1.23 

1.20 

1.04 

Total costs (xx 01 01 02 

 2.60 

4.26 

3.96 

xx.01.03.02 

Administrative  expenditure  for 
external staff in delegations, IPA 
operating  line,  22.01.04.n  (ex 
BA) 

- Staff costs  

- Infrastructure costs 

1.82 

3.08 

12.44 

10.75 

7.80 

7.35 

___________________ 

________ 

________ 

_______ 

TOTAL  

4.90 

20.24 

18.10 

TOTAL additional  cost 
delegations (ex A6 + ex BA) 

for 

- 

7.50 

24.50 

22.06 

The  cost  of  external  staff  in  2007  was  calculated  on  the  basis  that  a  large  number  of  recruitments 
would not take place until the second half of the year, thus at 50% of the annual cost. 

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Cost of permanent staff at Headquarters 

Cost  of  permanent  staff  at 
Headquarters (including staff for 
Relex/K). 

2007 

2008 

2009 

(8) 

0.44 

(15) 

1.06 

(15) 

1.27 

Average cost used: EUR 55 000 per person for the first year (6 months); EUR 85 000 per person for 
the other years. 

Summary table for officials and external staff for each delegation/office during the transitional 
period and in 2009 

2007 

2008 

2009 

SERBIA 

KOSOVO 

FYROM 

MONTENEGRO 

Permanent 

4 
officials (PO) 
7  Contract  staff 
(CS) 
10  Local  staff 
(LS) 

4 PO 
6 CS  
10 LS 

2 PO 
5 CS  
7 LS 

2 PO 
1 CS  
3 LS 

€M 
0.80 

1.56 

0.81 
1.44 

0.43 
1.28 

0.55 
0.61 

4 PO 

29 CS 
43 LS 

4 PO 
24 CS  
43 LS 

4 PO 
22 CS  
28 LS 

5 PO 
4 CS  
13 LS 

€M 
0.94 

7.24 

0.94 
6.32 

1.04 
5.31 

1.34 
1.35 

4 PO 

29 CS  
43 LS 

4 PO 
24 CS  
43 LS 

4 PO 
22 CS  
28 LS 

5 PO 
4 CS  
13 LS 

€M 
0.93 

6.46 

0.93 
5.67 

0.93 
4.72 

1. 170 
1.24 

The  above  staff  are  due  to  manage  the  new  IPA  instrument  as  early  as  2007,  overseeing  the 
programming and implementation of the first operations financed by it.  

In the second part of 2008, this staff will also have to begin looking after CARDS, which cannot be 
closed until the end of the year and which the Delegations will have to administer from 1.1.2009. 

2007 

2008 

2009 

PO in Del. 

CS  

LS in Del. 

PO Headquarters 

TOTAL  

12 

19 

30 

8 

69 

2.60 €M 

17 

4.26 €M 

17 

3.96 

4.90 €M 

79 

20. 243 €M  79 

18.10 €M 

127 

127 

0.44 €M 

15 

1.06 €M 

15 

1.27 €M 

7.94 €M 

238 

25.56 €M 

238 

23.33 €M 

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The average costs were calculated as follows: 

Permanent  officials:  EUR  13  363/month  (salary)  +  EUR  647/month  (missions)  +  EUR  321/month 
(remuneration  adjustments)  +  EUR  28  220  lump  sum  for  the  first  year  (costs  incurred  in  taking  up 
duties 

Contract staff: EUR 7 230/month 

Local staff: EUR 1 953/month 

For permanent officials and contract staff, the amount of EUR 2 587 and EUR 10 000/year was also 
calculated to cover expenditure relating to housing rental and staff security respectively 

As accommodation costs for local staff are not paid for by the Commission, the cost for LS contracts is 
as indicated (EUR 1.953/month) plus general Delegation infrastructure costs on a prorata basis. 

If Delegations and Offices are to be ready for their new tasks, staff will have to be in place in 2007 to 
organise  the  transfer  of  activities  and  enable  the  Delegations  and  Offices  to  be  fully  operational  in 
2008.  In  addition,  the  work  of  the  Delegation  and  Offices  will  centre  on  implementing  the  IPA, 
whereas the Agency’s work will centre on phasing out CARDS. 

Summary table of human resources permanent staff at HQ and in Delegations 

2006 

2007 

2008 

Total 

Delegations/Offices 

Headquarters 

12 

8 

5 

7 

17 

15 

This breakdown of the 32 posts between Headquarters and the Delegations/Offices is indicative, and 
may be modified to reflect administrative, information security and policy requirements. 

This  estimate  of  resources  concerns  only  the  transfer  of  activities  linked  to  the  implementation  of 
Community  aid  as  part  of  the  pre-accession  strategy.  The  upgrading  of  Delegations/Offices  in  line 
with  other  priorities  the  Union  may  have  in  the  light  of  political  developments  on  the  ground  (in 
Kosovo and Montenegro) will be dealt with separately. 

Administrative  and  human  resources  requirements  will  be  covered  within  the  appropriation 
given to the managing DGs under the annual allocation procedure. 

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