Communication from the Commission Report on the International Fund for Ireland pursuant to Article 5 of Council Regulation (EC) No 177/2005 {SEC(2006) 1226}
Date: 2006-10-12
Institutions: European Commission
Subjects: EU financing, Ireland, Northern Ireland, financial aid, peacekeeping, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.10.2006 
COM(2006) 563 final 

COMMUNICATION FROM THE COMMISSION 

Report on the International Fund for Ireland pursuant to Article 5  
of Council Regulation (EC) No 177/2005 

{SEC(2006) 1226} 

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TABLE OF CONTENTS 

1. 

2. 

Introduction .................................................................................................................. 3 

Survey of the IFI's Activities ....................................................................................... 4 

2.1. 

Overall Description of the IFI ...................................................................................... 4 

2.1.1.  Objectives and Priorities .............................................................................................. 4 

2.1.2.  Organisation and functioning....................................................................................... 4 

2.1.3.  Budget .......................................................................................................................... 4 

2.1.4.  Activities ...................................................................................................................... 5 

2.2. 

EU Involvement in the IFI ........................................................................................... 5 

3. 

4. 

4.1. 

4.2. 

4.3. 

5. 

6. 

Audits of IFI activities ................................................................................................. 5 

IFI activities and EC Structural Funds ......................................................................... 6 

Matching Objectives .................................................................................................... 6 

Organising Coordination between IFI and EC Programmes........................................ 7 

Sharing the Space” - the strategy for the last five years of the IFI .............................. 8 

Publicity and information............................................................................................. 8 

Conclusion and Proposals ............................................................................................ 9 

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1. 

INTRODUCTION 

This  report  on  the  activities  of  the  International  Fund  for  Ireland  (IFI)  is  required  under 
Council Regulation (EC) No 177/2005 (Annex I – “The IFI Regulation”)1, which provided for 
the continuation of the funding of the IFI for the period 2005-2006. The primary purpose of 
the  report  is  to  review  the  activities  of  the  IFI  during  that  period.  This  review  comprises  a 
description of the IFI and its activities, its sources of finance, past assessments of its activities, 
publicity and complementarity with other EC programmes. In addition, this report also looks 
forward  to  the  new  five  year  strategy  of  the  IFI  to  its  anticipated  winding-up  in  2010,  the 
twenty-fifth  anniversary  of  its  creation,  and  outlines  a  proposal  for  EU  involvement  during 
this final phase of the IFI's work.  

Since the 1960's, political divisions and inter-community violence have dominated Northern 
Ireland, impacting also on the Republic of Ireland.  

In  1985,  13  years  before  the  Belfast/Good  Friday  Agreement  (April  1998),  the  Anglo-Irish 
Treaty provided for the two Governments to "co-operate to promote the economic and social 
development of those areas of both parts of Ireland which have suffered most severely from 
the consequences of the instability of recent years" and "to consider the possibility of securing 
international support for this work". 

This  gave  birth  in  1986  to  the  International  Fund  for  Ireland,  an  independent  international 
organisation with its own governing body. 

The European Community  has  been  contributing to the IFI since 1989. At the end of 2006, 
European Union support will represent about 57% of the annual contribution to the Fund and 
39% of cumulative contributions to that date.  

The IFI Regulation provides the current legal basis for the Community contributions for 2005 
and 2006. Article 5 of that Regulation provides that the Commission shall submit a report to 
the  EC  Budgetary  Authority  (European  Parliament  and  Council  of  the  European  Union), 
assessing the need for support beyond 2006.  

This report and its annexes build on the 2004 Report on the International Fund for Ireland2, 
and  fulfil  the  requirements  for  the  assessment  mentioned  above.  Devolution  has  been 
suspended  in  Northern  Ireland  throughout  the  period  since  the  last  report  and  given  the 
ongoing  fragility  of  the  peace  process,  this  report  includes  an  assessment  of  the  need  for 
continuing contributions beyond 2006. 

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OJ L 30 of 3.2.2005, p. 1 
Communication  from  the  Commission:  Report  on  the  International  Fund  for  Ireland  pursuant  to 
Article 5 of Council Regulation (EC) No 214/2000 - COM(2001) 548 and SEC(2001) 1579, 1.10.2001. 

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2. 

SURVEY OF THE IFI'S ACTIVITIES 

2.1. 

Overall Description of the IFI 

2.1.1.  Objectives and Priorities 

The  IFI  was  established  by  an  agreement  between  the  governments  of  the  United  Kingdom 
and  Ireland  in  1986  (ANNEX  II)  and  came  into  existence  in  December  of  that  year.  The 
agreement sets out the IFI’s principal objectives namely: 

•  to promote economic and social advance, and 

•  to  encourage  contact,  dialogue  and  reconciliation  between  nationalists  and 

unionists throughout Ireland. 

Approximately 75 % of the IFI’s resources shall be distributed in Northern Ireland. 

2.1.2.  Organisation and functioning 

The  UK  and  Irish  governments  jointly  appoint  a  Chairman  and  a  Board  of  six  members, 
which  oversee  the  direction,  and  operation  of  the  IFI.  The  Board  is  representative  of  the 
communities  in  both  parts  of  Ireland  and  meets  on  average  four  times  per  year. 
Representatives  of  the  EU  and  donor  countries3  participate  in  Board  meetings  as  Observer. 
Annexes III – V contain further details of the organisation of the IFI.  

Since  the  last  report  on  the  IFI,  it  has  committed  a  further  € 103  million  to  580  projects  in 
total.  A  list  of  these  projects  which  have  received  aid  since  the  previous  2004  report  is 
presented  in  Annex  VI.  The  IFI  has  committed  over  € 830  million  to  nearly  6 000  projects 
across the various programmes of support.  

The  Board  of  the  IFI  regularly  reviews  its  activities  and  introduces  new  initiatives  to  meet 
identified  needs,  as  and  when  appropriate.  Currently,  the  IFI’s  activities  are  carried  out 
through various programmes and schemes which can be grouped under three headings: the 
regeneration of deprived areas, community capacity building and economic development.  

The IFI has, over the years, continually adapted itself to a changing environment. While in its 
early years it supported expressly major capital investments, the IFI is now concentrating an 
increasing  proportion  of  its  resources  (approximately  30%)  on  people-centred  projects.  As 
such,  education-related  interventions  have  become  an  increasingly  common  feature  and  the 
IFI  hopes  that  an  initiative  involving  the  integrated  schools  sector  between  the  two  major 
traditions of the region will be brought to the Board for decision. 

2.1.3.  Budget 

The IFI’s legal status is similar to that of a trust or a foundation.  

Since  its  inception,  the  IFI  has  received  approximately  € 743  million  (current  prices).  Over 
the lifetime of the IFI, the United States has been the largest contributor (59.9 %), while the 

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United States, Canada, New Zealand and Australia. 

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EU contribution is about 39 % of the total committed resources, the remainder coming from 
Canada, Australia and New Zealand (Annex VII).  

For the year 2006, the United States’ contribution amounts to 42 % (US $ 13,8 million), the 
EU  contribution  57 %  (€ 15 million),  and  the  Canadian  contribution  0,6 %  (CAN $ 
0.5 million).  There  is  no  certainty  of  annual  contributions  from  New  Zealand  and  Australia 
for 2006. 

General  administration  expenses,  organisational  costs,  and  provisions  for  the  Secretariat  are 
met by the UK and Irish Governments. 

2.1.4.  Activities 

Since  the  last  report,  the  IFI  has  committed  € 103  million  to  580  projects  across  various 
programmes  and  schemes  (Annex  VIII)  which  can  be  grouped  under  three  headings:  the 
regeneration of deprived areas, community capacity building and economic development. Of 
these  projects,  424  were  located  in  Northern  Ireland  with  an  expenditure  of  € 70.8  million 
whilst 156 were in Ireland or were joint projects with a contribution of € 32.9 million.  

2.2. 

EU Involvement in the IFI 

The  IFI  differs  from  conventional  EC  Structural  Funds'  forms  of  assistance  (such  as  the 
PEACE  programme)  in  that  it  is  an  independent  international  organisation.  The  European 
Commission  (through  the  Director-General  for  Regional  Policy)  has  observer  status  at  the 
Board of the IFI, along with other donor countries. 

Since  the  EU  decided  to  contribute  to  the  IFI,  its  financial  contributions  have  been  € 15 
million  annually  from  1989  to  1994,  € 17  million  annually  from  1995  to  1999  and 
€ 15 million  annually  from  2000  onwards.  Each  payment  is  preceded  by  an  analysis  of  the 
annual  report  and  accounts  and  a  financial  needs  analysis.  Further  verifications  of  the  IFI's 
financial  position  are  carried  out  in  the  preparation  by  the  Commission's  observer  of  each 
Board meeting.  

3. 

AUDITS OF IFI ACTIVITIES 

The services of the European Community (ECA and DG REGIO) have carried out audits and 
on-the-spot checks of the IFI, as reported in the 1999, 2001 and the 2002 reports to the EC 
Budget Authority.  

The most recent audit in November 2003 noted action by the IFI to address issues raised in 
the  course  of  previous  audits,  such  as  the  IFI’s  assessment  of  procedures  at  secretariat  and 
agent level, and the forthcoming implementation of a new computerised information system 
to replace manual ledgers.  

However, other matters continued to require the attention of the Board: 

•  The  lack  of  uniform  guidelines  for  management  of  IFI  programmes  and  an  instructions 

manual for the Fund. 

•  To  avoid  double  funding  the  IFI  and  the  bodies  that  manage  Structural  Funds  should 

undertake a systematic exchange of information. 

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•  Decommitment  exercises  should  be  more  frequent,  and  particularly  thorough  before  the 

closure of annual accounts. Decommitment procedures should be strengthened. 

The IFI response stated that it would not be practicable and cost-effective to produce uniform 
guidelines for all programmes and considered there to be no weaknesses in the decommitment 
procedures  currently  in  force.  However  the  IFI  accepted  the  need  to  examine  possible 
improved cooperation between the IFI and other funders.  

Since  the  last  report  to  the  Budgetary  Authority,  the  Commission  has  continued  to  monitor 
these issues, in particular potential situations of unused funds requiring de-commitment. The 
IFI  now  regularly  produces  reports  for 
its  Board  meetings  concerning  possible 
decommitments and encourages projects to indicate whether or not they will be claiming the 
whole amount offered by the IFI.  

In addition, the IFI is audited by its own accountants (Price Waterhouse Coopers) and by the 
two  governments.  The  results  are  presented  in  the  annual  report,  which  is  approved  by  the 
Board. 

4. 

IFI ACTIVITIES AND EC STRUCTURAL FUNDS 

4.1.  Matching Objectives 

The  IFI  and  EC  Programme  PEACE  have  complementary  priorities  and  objectives4.  The 
strategic aim of PEACE - namely to reinforce progress towards a peaceful and stable society 
and  to  promote  reconciliation  -  is  one  of  IFI’s  principle  objectives,  while  both  initiatives 
share a number of complementary areas on which they focus: 

The  IFI  Regulation  requires  that  in  the  allocation  of  the  EC  contribution  priority  shall  be 
given to cross-border or cross-community projects, complementing activities or funding from 
PEACE II. However whilst all projects seeking assistance from PEACE need to demonstrate 
how  they  intend  to  develop  cross-community  reconciliation  and  mutual  understanding,  the 
cross-community dimension is only explicitly required for some IFI programmes. 

The  IFI  has  always  placed  a  particular  emphasis  on  assisting  the  most  deprived  areas  in 
Northern Ireland and the Southern Border Counties of Ireland. It does this through a number 
of programmes, which come under the title of “Regeneration of Deprived Areas” prioritising 
projects within the Fund’s key programmes of support and also special initiatives. Since 2003 
over  85%  of  the  Fund’s  commitments  have  been  to  projects  in  these  areas.  The  PEACE 
Programme,  in  contrast,  applies  impact  indicators  based  on  “disadvantaged  areas”5  in 
Northern Ireland and the “Combating Poverty” index in the Border Region. 

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The PEACE II Programme is classified as an Objective 1 Operational Programme in the period between 
2000 and 2006, for a total amount of € 609 million. For the programming period 2007-2013, there will 
be  a new  PEACE  programme  with  a  contribution from  the  European  Regional  Development  Fund of 
€ 200 million. This programme will be under the territorial co-operation objective of the new regulatory 
framework.  
Defined as a mix of interface areas, areas affected by violence and areas of deprivation. 

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As regards beneficiaries, the IFI assists basically the same categories of people as the PEACE 
II Programme6. Where projects can be funded by both IFI and EC programmes, the IFI policy 
is to be the “first money on the table” although it may offer a lower financial contribution7. 
Compared  to  the  EC  programmes,  the  IFI  processes  applications  quickly  using  streamlined 
selection procedures, and is more flexible in responding to emerging needs and opportunities 
as its budget is decided annually.  

4.2. 

Organising Coordination between IFI and EC Programmes 

The  IFI  Regulation  provides  that  the  EC  contribution  should  be  used  in  such  a  way  as  “to 
complement  the  activities  financed  by  the  Structural  Funds,  and  especially  those  of  the 
Special Programme for Peace and Reconciliation in Northern Ireland and the Border Counties 
of  Ireland”.  Coordination  between  the  two  initiatives  is  important  in  order  to  share  best 
practice and to avoid exceeding the 75% maximum threshold of EC assistance for any project 
funded both by the IFI and an EU Programme8. 

The current coordination arrangements include participation of the European Commission at 
all  IFI  Board  meetings  and  receipt  of  papers  of  the  IFI  Advisory  Committee meetings9,  and 
the attendance of representatives of the IFI as observers at the Monitoring Committees for the 
Community  Support  Framework  for  Northern  Ireland;  PEACE  II  Programme;  Building 
Sustainable  Development  Operational  Programme;  and  INTERREG  III-A  for  Northern 
Ireland and Ireland Community Initiative. 

The SEUPB10 has been invited to nominate staff to participate in the IFI’s Programme Teams 
to ensure greater harmonisation in project selection and information sharing. 

At  operational  level,  in  many  cases,  the  IFI  and  the  SEUPB  use  the  same  agents.  Where 
applicable, economic appraisals are shared between the two bodies. The 75% rule is applied 
to projects which are co-funded. 

In addition, the IFI and the SEUPB have been engaged in reconciliation-mapping projects in 
an effort to establish the gaps in provision in the reconciliation sector in Northern Ireland and 
the six Border Counties. 

The Commission believes that both organisations need to share project selection procedures 
and  information  more  comprehensively.  This  is  essential  when  the  same  project  sponsors 
apply  for  funding  from  both  from  the  IFI  and  an  EC  Programme.  Exchange  of  data 
applications  (e.g.  sharing  business  plans  or  cost  benefit  analysis)  would  accelerate  the 
selection  procedure  and  develop  a  coordinated  response  so  applicants  would  not  face 
overlapping selection criteria and requirements.  

Current  EC  programmes  have  developed  comprehensive  physical  and  financial  monitoring 
and reporting systems and the IFI could benefit from regular access to this monitoring data for 

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The PEACE II Programme explicitly targets those belonging to areas, sectors, groups or communities 
that have been ‘most affected by the conflict’, and which do not necessarily correspond to those most 
deprived in economic and social terms. 
See maximum rates of intervention in Annex VIII. 
Article 29 of Regulation (EC) No 1260/1999. 
Exchange of letters IFI/Commission : Letter to C. Trojan, 28 June 1994. 
Special EU Programmes Body – the managing authority for the PEACE II programme.  

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projects  funded.  This  would  address  the  risk  of  double  counting  programme  impact,  which 
undermines any attempt to carry out thorough and accurate evaluation studies. 

4.3. 

“Sharing the Space” - the strategy for the last five years of the IFI 

In 2003, the IFI launched a thorough strategic review of its programmes, with a clear aim to 
“reposition” itself on more “community-based” activities. Following this review, a five year 
strategy  entitled  “Sharing  the  Space”  was  launched  in  early  2006  which  will  promote 
reconciliation  in  Ireland in  a final phase of the IFI’s activity. The IFI’s existing community 
programmes  have  been  extended,  with  a  view  to  building  a  sustainable  infrastructure  for 
reconciliation operating beyond the IFI’s lifetime. Consequently, much of the IFI’s traditional 
economic-based activities have ceased, in favour of grassroots community development.  

The objectives of the IFI over the final five years will include: 

•  building and realising the vision of a shared future for Northern Ireland and both parts of 

the island; 

•  promoting understanding between the different communities in Ireland;  

•  facilitating integration between the communities; 

•  building alliances with other agencies, ensuring the long term work of the IFI beyond 2010 

and sharing the expertise with peace builders in other regions.  

The  programmes  supported  by  the  IFI  will  in  the  future  be  clustered  around  four  themes: 
building  foundations,  building  bridges,  integrating  and  leaving  a  legacy.  These  programme 
themes will support the objectives set out above.  

Given  that  the  IFI  will  be  wound  up  in  2010  or  soon  afterwards,  any  future  Regulation 
covering an EC contribution would have to ensure that appropriate arrangements were made 
for  closure  of  the  IFI,  with  regard  to  the  principles  of  sound  and  effective  financial 
management.  Any  Regulation  would  best  cover  the  four  years  2007  to  2010,  in  order  to 
ensure certainty of funding for the IFI.  

5. 

PUBLICITY AND INFORMATION 

The IFI acknowledges support of all its donors (regardless of their level of contribution or the 
regularity  of  their  payments)  by  means  of  standard  references  in  press  releases,  published 
literature  (Annual  Report,  information  brochures,  and  published  reports)  and  on  its  website. 
Reference to donors is also made in speeches made by the Chairman or Board members and 
in briefings given to visitors to IFI projects. The Commission representation offices in Belfast 
and Dublin maintain regular contacts with the IFI and are invited to all IFI project launches. 

Nevertheless as the origins of the IFI were in the US in the mid 1980s, there remains a sense 
in the community both North and South that the Fund is a US-supported organisation, despite 
the generous funding from the EU since 1989 and the continuing insistence of the Fund that 
all  projects  recognise  and  publicise  the  Community's  contribution.  The  Commission  will 
increase the profile of the EU presence in the IFI's activities more significantly, above all in 
cases where co-financing by the EC and IFI occurs.  

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6. 

CONCLUSION AND PROPOSALS 

The  European  Union  has  had  a  long  standing  support  for  the  peace  process  in  Northern 
Ireland  which  has  been  best  exemplified  by  its  commitment  to  the  IFI  since  1989  and  the 
PEACE Programme since 1995. In doing so, it recognised the long-term nature of the peace 
process’  objectives,  which  have  been  widely  supported  over  the  years  by  the  European 
Parliament, Council and Commission.  

The  political  and  social  situation  of  the  region  remains  fragile  and  the  continuing  level  of 
violence and division calls on the EU to sustain its efforts to promote peace and reconciliation 
in this part of the European Union. The European Council, in its meeting on 15/16 December 
2005, adopted the following Presidency’s conclusion in reference to the International Fund for 
Ireland11: 

The  European  Council  noted  the  important  work  carried  out  by  the  International  Fund  for 
Ireland in promoting peace and reconciliation. It asked the Commission to take the necessary 
steps with a view to continued EU support for the Fund as it enters the crucial final phase of 
its work up to 2010. 

In addition, the Financial Perspectives12 ensured the continuation of the PEACE programme 
in Northern Ireland and the Border Counties of Ireland: 

In recognition of the special effort for the peace process in Northern Ireland, a total of € 200 
million  will  be  allocated  for  the  PEACE  Programme  for  the  period  2007-2013.  This 
programme  will  be  implemented  in  full  respect  of  additionality  of  Structural  Fund 
interventions. 

The  European  Commission  reports  have  unanimously  recognised  the  very  positive 
contribution  of  the  IFI's  activities  to  peace  and  reconciliation  in  Northern  Ireland  and  the 
Border  Region  of  Ireland  thereby  fulfilling  its  objectives,  namely  to  promote  economic  and 
social advance, and to encourage contact, dialogue and reconciliation between nationalists and 
unionists throughout Ireland. 

The  current  round  of  EC  Structural  Funds  Programmes  (in  particular  the  PEACE  II 
Programme), which are the major instruments to promote economic and social progress in the 
region,  present  new  opportunities  for  the  IFI.  The  priorities  set  by  both  IFI  and  EC 
Programmes complement each other and this high potential for synergies needs to be further 
harnessed.  The  continuation  of  the  PEACE  programme  and  the  new  strategy  for  the  IFI  – 
Sharing the Space – will enable these synergies to be further realised.  

The Commission welcomes the strategy Sharing the Space. It is a realistic strategy which will 
ensure that progress is made towards a shared future, promoting integration and understanding 
and ensuring that the work of the IFI is continuing and lasting beyond the end of its life.  

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Document 15914/05. 
Document 15915/05. 

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Given that reinforcing the solidarity between Member States and between their peoples is a 
core  EU  objective,  it  is  therefore  important  for  the  EU  to  remain  committed  to  these 
objectives, alongside other international donors, and to renew its contribution to the IFI.  

In this context, the Commission believes that funding after 2006 should be still provided on 
the basis of the observations made in this report, which could be reflected either in the future 
Council Regulation on the EC contribution to the IFI, or through other appropriate means of 
co-operation between the Commission and the IFI.  

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