Report from the Commission to the Council, the European Parliament and the European Economic and Social Committee - 2007 annual IPA report {SEC(2008) 3026}
Date: 2008-12-15
Institutions: European Commission
Subjects: EU aid, EU financing, accession to the European Union, implementing Regulation, pre-accession strategy, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15.12.2008 
COM(2008) 850 final 

REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN 
PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE 

2007 ANNUAL IPA REPORT 

{SEC(2008) 3026} 

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Introduction 

Since 1 January 2007, EU pre-accession funding has been channelled through a single, unified 
instrument,  the  Instrument  for  Pre-accession  Assistance  (IPA)  designed  to  deliver  focused 
support  to  both  candidate  and  potential  candidate  countries.  IPA  (Council  Regulation  No 
1085/2006  of  17  July  2006)  replaces  the  former  pre–accession  instruments  Phare,  ISPA, 
SAPARD,  the  Turkish  pre-accession  instrument,  as  well  as  the  financial  instrument  for  the 
Western Balkans, CARDS. The reference amount for IPA support in the period 2007-2013 is 
EUR 11,468 million.  

IPA  aims  to  provide  targeted  assistance  to  countries  which  are  candidates  or  potential 
candidates  for  membership  of  the  EU.  In  order  to  achieve  each  country's  objectives  in  the 
most efficient way, IPA consists of five different components: 

I.  Transition  Assistance  and  Institution  Building,  aimed  at  financing  institution  building 
measures and associated investment. 

II. Cross-Border Co-operation (CBC), to support cross-border cooperation at borders between 
candidate/potential candidate countries and between them and the EU countries. It may also 
fund  participation  of  beneficiary  countries  in  Structural  Funds'  trans-national  co–operation 
programmes and the European Neighbourhood and Partnership Instrument (ENPI) Sea Basins 
programmes, as appropriate. 

III. Regional Development, which finances investments and associated technical assistance in 
areas such as transport, environment and regional competitiveness.  

IV. Human Resources Development, designed to strengthen human capital and help combat 
exclusion.  

V.  Rural  Development,  which  emulates  post-accession  Rural  Development  programmes  by 
financing  rural  development-type  measures,  similar  in  nature  to  these  programmes,  though 
smaller in scale 

Component I and II are open to all beneficiary countries. Components III, IV and V are open 
to  candidate  countries  only,  and  are  designed  to  mirror  Structural,  Cohesion  and  Rural 
Development funds in preparation for the management of such funds upon accession, through 
a learning by doing process. This requires that the country has the administrative capacities 
and structures to take responsibility for the management of assistance. For potential candidate 
countries,  regional,  human  resources  and  rural  development–type  measures  will  be 
implemented through the Transition Assistance and Institution Building component. 

This report deals with the implementation of IPA during the year 2007. Detailed information 
on  the  implementation  and  monitoring  of  IPA  programmes  on  the  ground,  and  on  the 
assessment of results of such programmes, is somewhat limited in this report due to the fact 
that 2007 was the first year of IPA programming. The majority of programmes were adopted 
towards the end of the year and actual implementation will take place in 2008 onwards. 

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1. 

THE YEAR IN REVIEW 

1.1.  Main evolutions of the enlargement process 

In  2007,  progress  was  achieved  on  the  basis  of  the  renewed  consensus  on  enlargement,  as 
defined at the December 2006 European Council. 2007 began with the accession of Bulgaria 
and  Romania.  The  year  also  saw  a  number  of  important  developments  in  Turkey  and  the 
Western  Balkans:  progress  in  accession  negotiations  and  the  Stabilisation  and  Association 
process, the Kosovo status talks, and the launch of the new financial instrument, IPA. 

On 6 November, the Commission presented its annual strategy paper, together with country 
progress reports and Accession/ European partnership proposals for the candidates/ potential 
candidates1 and Kosovo under UNSCR 1244/992. The Commission's strategy paper confirmed 
the  principles  and  objectives  of  the  enlargement  strategy.  It  drew  attention  to  a  number  of 
significant  challenges  in  the  countries  concerned.  It  stated  that  higher  priority  will  be  given 
from  an  early  stage  to  basic  governance  issues,  including  institution-building,  judicial  and 
administrative reform and the prevention of organised crime and corruption. This approach is 
in  line  with  the  recommendations  emerging  from  the  DG's  internal  evaluation  of  public 
administration reform in the enlargement countries. 

Accession negotiations with Croatia and Turkey continued to make progress. For Croatia, by 
December  2007,  16  chapters  had  been  opened,  two  of  which  were  provisionally  closed.  In 
Turkey's  case  six  chapters  were  opened  of  which  one  has  been  closed.  In  line  with  the 
December  2006  Council  conclusions,  there  are  eight  negotiation  chapters  which  will  not  be 
opened until Turkey implements the Additional Protocol to the Association Agreement. DG 
Enlargement  monitored  the  implementation  of the  Association Agreement with Turkey,  and 
the Stabilisation and Association Agreements with Croatia and the former Yugoslav Republic 
of  Macedonia.  None  of  the  three  countries  had  made  sufficient  progress  addressing  the 
priorities which have been set. 

On  the  other  hand  in  2007  Candidate  Countries  made  significant  progress  in  setting  up 
structures  and  management  systems  for  the  implementation  of  IPA  assistance  under 
components III and IV, the precursors of structural funds. These structures will play a key role 
in the preparation and implementation of the Community's cohesion policy and its instruments 
upon accession, in a learning by doing process.  

2007  saw  progress  towards  the  completion  of  Stabilisation  and  Association  Agreements 
(SAA) with the  countries of  the Western Balkans. Albania continued the implementation of 
its  Interim  Agreement.  An  SAA  with  Montenegro  was  signed  in  October  2007.  SAA 
negotiations with Serbia were resumed in June 2007 and led to the initialling of the SAA in 
November. An SAA with Bosnia and Herzegovina was initialled in December. The signature 
of these SAAs was conditional on the fulfilment of the relevant conditions. 

Concerning  the  Western  Balkans,  the  Commission  continued  to  foster  the  Stabilisation  and 
Association  process  and  coordinate  the  implementation  of  the  Thessaloniki  agenda.  By  the 

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Candidates: Croatia, former Yugoslav Republic of Macedonia, Turkey 
Potential candidates: Albania, Bosnia and Herzegovina, Montenegro, Serbia, 
United Nations Security Council Resolution 1244 of 10 June 1999. 

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end of 2007, visa facilitation and readmission agreements had been concluded with Albania, 
Bosnia  and  Herzegovina,  the  former  Yugoslav  Republic  of  Macedonia,  Montenegro  and 
Serbia. The strategy paper announced the launch of a dialogue on the conditions for visa-free 
travel and the provision of further higher education scholarships for students from the region. 

Kosovo  status  talks  under  the  auspices  of  the  Special  Envoy  of  the  UN  Secretary  General, 
Martti Ahtisaari, were concluded in 2007, but did not produce a final status settlement. The 
subsequent direct Kosovo status talks between the two parties mediated by a EU-US-Russia 
troika  did  not  result  in  an  agreement.  The  Commission  continued  to  provide  advice  and 
support to the status process. 

At  the  May  summit  of  the  South-East  Europe  Cooperation  Process  (SEECP)  in  Zagreb,  the 
decision  was  taken  to  move  towards  regional  ownership  of  the  process  of  regional  co-
operation.  The  Stability  Pact  has  largely  accomplished  its  mission  and  is  in  the  process  of 
being  replaced  by  a  new  Regional  Cooperation  Council  (RCC)  linked  to  the  SEECP.  A 
Secretary-General  of  the  RCC  has  been  appointed, and Sarajevo  has been designated as the 
seat  of  its  secretariat.  In  July,  the  new  Central  European  Free  Trade  Agreement  (CEFTA) 
entered into force. 

2007 saw the successful launch of the new financial Instrument for Pre-accession Assistance, 
IPA.  The  commitments  in  financial  assistance  to  candidate  countries  in  2007  amounted  to 
EUR 497.2 million for Turkey, EUR 141.2 million for Croatia and EUR 58.5 million for the 
former  Yugoslav  Republic  of  Macedonia.  Concerning  the  potential  candidates,  IPA 
allocations  amounted  to  EUR  61.0  million  for  Albania,  EUR  62.1  million  for  Bosnia  and 
Herzegovina,  EUR  68.9  million  for  Kosovo,  EUR  31.4  million  for  Montenegro,  and  EUR 
189.7 million for Serbia. A further amount of EUR 109.0 million was committed for regional 
cooperation  and  horizontal,  multi-country  programmes  benefiting  both  the  candidate  and 
potential candidate countries 

Communicating  enlargement  continued  to  be  a  priority.  For  the  third  anniversary  of  EU-10 
enlargement  on  1  May  activities  included:  a  special  web  section  on  the  EUROPA  web-site 
dedicated  to  case  studies,  a  facts  and  figures  section  and  a  picture  gallery;  audiovisual 
material on Europe by Satellite; visits for journalists to three of the new Member States; and a 
series of seminars co-organised with Chambers of Commerce in seven Member States. 

The Commission started work on a new Civil Society facility, which will focus on three areas 
of  intervention:  (i)  support  to  local  civic  initiatives  and  capacity  building;  (ii)  a  people-to-
people  dialogue  programme  familiarising  all  types  of  stakeholders  with  EU  policies, 
institutions and bodies, and; (iii) support to (international) partnership actions. 

1.2.  Main 2007 Council conclusions  

The  General  Affairs  and  External  Relations  Council  of  December  2007  welcomed  the 
enlargement strategy with the following conclusions on the 2007 enlargement strategy: 

"In line with the enlargement strategy agreed by the December 2006 European Council and 
the  Council  conclusions  of  11  December  2006,  the  Council  welcomes  the  Commission's 
communication on the enlargement strategy and main challenges 2007-2008 of 6 November 
and  takes  good  note  of  the  analysis  and  recommendations  contained  therein.  The  renewed 
consensus  on  enlargement,  which  is  based  on  consolidation  of  commitments,  fair  and 
rigorous conditionality and better communication, together with the capacity to integrate new 

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members, continues to form the basis of the EU's enlargement strategy. An improved quality 
of the enlargement process will ensure that enlargement continues to foster peace, democracy 
and  stability  throughout  the  continent  and  to  bring  concrete  benefits  in  terms  of  increased 
trade, investment and economic growth.  

Next year is crucial to further consolidate and implement the EU's enlargement strategy and 
support the transition process in the Western Balkans. The Council recalls various proposals 
made  on  this  issue  and  that  the  future  of  the  Western  Balkans  lies  in  the  European  Union. 
Against  this  background,  the  consistent  implementation  of  the  renewed  consensus  is  more 
important than ever.  

The  Council  reaffirms  that  the  pace  of  the  negotiations  depends  notably  on  the  negotiating 
countries'  progress  in  addressing  opening  and  closing  benchmarks  as  well  as  the 
requirements of the Negotiating Frameworks, including the implementation of the Accession 
Partnerships,  currently  in  course  of  revision,  with  each  country  being  judged  on  its  own 
merits.  The  Council  recalls  that  chapters  for  which  technical  preparations  have  been 
completed  will  be  opened  in  accordance  with  established  procedures,  in  line  with  the 
Negotiating Frameworks. In this context, the Council looks forward to the Intergovernmental 
Conferences  with  Turkey  and  Croatia  later  this  month.  It  is  also  essential  that  the 
enlargement  policy  maintains  fair  and  rigorous  conditionality  at  all  stages  of  the 
negotiations.  In  this  regard  the  Council  welcomes  the  Commission's  intention  to  continue 
enhancing the quality of the enlargement process by tackling key priorities in areas of public 
administration  and  judicial  reform  and  the  fight  against  corruption  at  an  early  stage,  by 
making full use of benchmarks and impact studies, and by bringing more transparency into 
the process. This will be instrumental for ensuring broad and sustained public support for the 
enlargement process." 

The  subsequent  December  2007  European  Council  then  went  on  to  endorse  these  above 
conclusions: 

"The  European  Council  takes  note  of  the  communication  from  the  Commission  on  the 
Enlargement  Strategy  and  endorses  the  General  Affairs  and  External  Relations  Council 
conclusions of 10 December." 

2. 

PROGRAMMING  AND 
OVERVIEW 

IMPLEMENTATION  OF 

IPA:  GENERAL 

2.1. 

Strategic Planning & Programming 

The  annual  enlargement  package  (Strategy  Paper,  Progress  Reports,  Accession  or  European 
Partnerships  and  Stability  and  Association  Agreements)  is  presented  each  Autumn  by  the 
Commission  to  the  Council  and  the  Parliament  and  sets  the  overall  strategic  framework  for 
the  pre-accession  process  within  which  IPA  must  operate.  The  Multi-annual  Indicative 
Financial Framework (MIFF) is also part of this package and translates the priorities defined 
within the political framework into financial terms for countries and components. 

At  the  strategic  planning  level,  Multi-annual  Indicative  Planning  Documents  (MIPDs)  are 
established for each beneficiary country (with an additional MIPD covering the regional and 
multi-country  programmes)  by  the  European  Commission  in  close  consultation  with  the 

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countries  concerned,  covering  all  IPA  components  applicable  to  the  country.  They  are 
established for a three-year rolling period, with annual reviews. 

Finally,  at  the  programming  level,  national  authorities  establish  specific  programmes  by 
country and by component (for the cross–border component: joint programmes between two 
or more beneficiary countries and between them and neighbouring Member States) – or, in the 
case  of  the  regional  development  component,  by  theme.  The  regional  and  horizontal 
programmes are proposed by the Commission. 

2.1.1.  Multi-annual Indicative Financial Framework (MIFF) 

The MIFF is part of the annual enlargement package and it is designed to provide information 
on  the  indicative  breakdown  of  the  overall  IPA  envelope  proposed  by  the  Commission  by 
country  and  by  component  for  a  three  year  rolling  period.  It  acts  as  the  link  between  the 
political framework within the enlargement package and the budgetary process. The MIFF is 
established and presented annually to the Council and the European Parliament, in accordance 
with Article 5 of IPA Regulation (EC) No 1085/2006. 

The MIFF is based on a rolling three-year programming cycle. Under normal circumstances, a 
MIFF  for  years  N,  N+1  and  N+2  is  presented  in  the  last  quarter  of  year  N-2  as  part  of  the 
enlargement  package,  representing  a  proposed  financial  translation  of  the  political  priorities 
set out within the package itself, taking into consideration the Financial Framework. Due to 
delays in the agreement of a new Financial Framework for 2007-2013, as well as those in the 
adoption of the IPA Regulation, it was not possible to present a MIFF for 2007-2009 in this 
timeframe. The MIFF which covers 2008-2010, adopted in November 2007 was therefore the 
first MIFF under IPA and also updated the 2007 figures which were provided to Council and 
Parliament in the Commission's Preliminary Draft Budget 2007. 

The  following  table  provides  the  2007  IPA  allocations  in  million  euros  by  country  and  by 
component, as well as for the regional and multi-country programmes as updated in the 2008-
2010 MIFF (COM(2007)689 adopted on 6 November 2007).  

Component IPA  

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Component I 

54.3 

58.1 

49.6 

41.6 

68.3 

27.5 

181.5 

256.7 

109.0 

Component II 

6.7 

4.0 

9.7 

4.2 

3.9 

8.2 

2.1 

Component III 

Component IV 

Component V 

45.1 

7.4 

11.4 

3.2 

25.5 

2.1 

167.5 

50.2 

20.7 

TOTAL 

61.0 

62.1 

141.2 

58.5 

68.3 

31.4 

189.7 

497.2 

109.0 

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2.1.2.  Multi-annual Indicative Planning Documents (MIPDs) 

Based on the MIFF allocations, and on the priorities identified within the political framework, 
MIPDs for each country and for the multi-beneficiary programmes are prepared. The MIPD 
represent the Commission's view of major areas of interventions and main priorities that the 
beneficiary country is expected to develop in detail in the programming documents. 

The  preparation  of  the  first  country–based  MIPDs  as  well  as  multi-beneficiary  MIPD 
covering  2007-2009  took  place  during  2006  and  early  2007  under  the  responsibility  of  DG 
Enlargement's  operational  units,  in  cooperation  with  the  DGs  responsible  for  the  relevant 
components.  National  authorities  were  consulted  on  the  draft  MIPDs  and  very  closely 
involved in its preparation in order to ensure the ownership of the process. Concerning MIPDs 
for  candidate  countries,  DGs  Regional  Policy,  Employment,  Social  Affairs  and  Equal 
Opportunities and Agriculture and Rural Development were responsible for the drafting of the 
sections  related  to  components  III,  IV  and  V  respectively.  Additionally,  Member  States, 
International Financial Institutions (IFIs) and other relevant stakeholders (civil society) were 
consulted during the preparation of the MIPDs. 

All the 2007-2009 MIPDs were submitted for adoption to the IPA Management Committee in 
the first half of 2007. 

2.1.3. 

Strategic  Coherence  Frameworks  and  multi-annual  programming  (Components  III 
and IV) 

In the case of components III and IV, a similar approach is followed as for Structural Funds. 
Strategic  planning  takes  place  within  a  7  years  framework  (2007-2013),  in  the  form  of 
Strategic Coherence Frameworks (equivalent to National Strategic Reference Frameworks for 
Structural  Funds),  prepared  by  Candidate  Countries.  These  documents  set  out  a  seven  year 
strategy, constituting a reference document for the programming of IPA components III and 
IV.  The  Strategic  Reference  Frameworks  are  discussed  with  the  Commission  but  remain 
national  documents.  The  Strategic  Coherence  Frameworks  for  components  III  and  IV  were 
prepared  by  each  Candidate  Country  and  agreed  with  the  Commission  in  the  course  of  the 
first semester of 2007. Programming of components III and IV was then made through multi-
annual  programmes,  prepared  initially  for  three  years,  but  which  can  be  extended  to  cover 
additional years. 

Stakeholders'  consultation,  partnership  and  coordination  are  overarching  principles  which 
guide  the  preparation  and  approval  of  the  strategic  coherence  frameworks  and  multi-annual 
operational  programmes  under  components  III  and  IV.  Good  practices  learned  in  these  and 
other areas will be of key importance for the preparation and negotiation of similar strategic 
documents and multi-annual programmes for structural funds upon accession. 

2.1.4. 

IPA Programmes 

Annual  or  multi-annual  programmes  are  designed  in  accordance  with  the  relevant  MIPDs. 
Component  I  is  implemented  through  annual  programmes  while  the  other  components  are 
implemented through multi-annual programmes. Programmes are adopted by the Commission 
following  consultation  with  the  beneficiary  countries  and  other  stakeholders  and  after  the 
positive opinion of the relevant Member States committees: IPA Management Committee for 
components I and II, COCOF for components III and IV, ESF committee for component IV 
and the Rural Development Committee for component V. 

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2.1.4.1.  Component I 

Component  I  assistance  shall  be  programmed  by  the  Commission  in  the  form  of  annual 
national  programmes  or  regional  or  horizontal  programmes,  managed  either  by  the 
Commission,  the  beneficiary  country  or  jointly  with  other  donors,  as  appropriate.  National 
programmes shall consist of financing proposals prepared by the Commission on the basis of 
project  fiches  submitted  by  the  beneficiary  country,  or  prepared  by  the  Commission  in  the 
case of regional and horizontal programmes.  

The  implementation  of  projects  in  the  areas  of  nuclear  safety  and  radiation  protection, 
education and customs were funded from the national allocations adopted in the MIFF but are 
being implemented centrally on a horizontal basis; the funding for these projects are therefore 
not  included  in  the  national  programmes  under  component  I.  The  table  shows  the 
contributions to these projects by country. More detail can be found in the country section of 
the technical annex. 

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National Programme 

49.3 

49.7 

45.4 

34.9 

62.0 

23.9 

164.8 

256.2 

Allocations to Nuclear 
Safety, Customs and 
Education implemented 
horizontally 

Total Component I - 
TAIB 

5.0 

8.4 

 4.2 

 6.7 

 6.3 

3.6 

16.7 

0.5 

54.3 

58.1 

49.6 

41.6 

68.3 

27.5 

181.5 

256.7 

109.0 

The  IPA  2007  national  programme  for  Albania  was  adopted  by  the  Commission  on  20 
September  2007.  The  programme  supports  Albania  to  comply  with  the  political  criteria 
through support to the police mission PAMECA III and assistance to prepare the accreditation 
for decentralised management of EU funds. In the economic area, the programme supports the 
SME  sector  through  a  joint  programme  with  the  European  Bank  for  Reconstruction  and 
Development  (EBRD).  IPA  2007  also  assists  the  country  to  align  with  the  acquis  through 
projects on statistics alignment, water management and support to the General Directorate of 
Tax of Albania.  

The  IPA  2007  national  programme  for  Bosnia  and  Herzegovina  was  adopted  by  the 
Commission  on  20  December  2007.  The  programme  assists  Bosnia  and  Herzegovina  to 
comply  with  the  political  requirements  of  the  Copenhagen  criteria  by  supporting  social 
inclusion and return, the rule of law, and public administration and constitution reform. Under 
the  economic  criteria,  the  programme  will  provide  assistance  to  labour  and  economic 
development and to health and education. IPA assists the country to align with the acquis by 
supporting  the  establishment  of  regulatory  systems  in  the  financial  sector,  justice  and  home 
affairs,  an  improved  quality  infrastructure,  energy  and  telecommunication  as  well  statistics 
and information systems. IPA further assists the country by supporting  agriculture and rural 
development, environment and transport sectors. 

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The IPA 2007 national programme for Croatia was adopted on 20 December 2007. Under the 
political criteria the programme will address the fight against corruption and will contribute to 
progress  in  the  area  of  human  rights  and  the  protection  of  minorities.  Under  the  economic 
criteria, the programme will contribute to the improvement of the business environment. The 
IPA  2007  projects  in  the  area  of  ability  to  assume  the  obligations  of  membership  focus  on 
institutional and administrative capacity building for acquis transposition and implementation 
in  the  following  chapters:  competition  policy,  information  society  and  media,  agriculture, 
energy,  social  policy  and  employment,  justice,  freedom  and  security,  environment,  customs 
union.  

Due  to  the  urgent  need  to  continue  the  support  the  police  reform  which  began  under  the 
CARDS programme, it was decided to split the IPA 2007 national programme for the former 
Yugoslav  Republic  of  Macedonia  into  two  parts.  The  first  part  (for  EUR  12  million) 
included  projects  linked  to  the  police  reform  and  a  project  preparation  facility.  The  second 
part  (EUR  22.94  million)  was  adopted  by  the  Commission  on  16  November  2007.  This 
second  part  aims  at  supporting  the  implementation  of  the  public  administration  reform 
strategy, the judicial reform as well as capacity building for the decentralised management of 
EU funds. Under socio-economic requirements the programme will assist municipalities with 
building  the  essential  infrastructure  to  support  both  social  and  economic  development.  As 
regards  acquis  related  activities,  substantial  support  will  be  given  to  tax  administration,  the 
statistical  office  and  customs.  Additionally,  the programme  supports the  participation of the 
country in certain Community programmes. 

The  Montenegro  2007  national  programme  was  adopted  by  the  Commission  on  21 
November  2007.  Under  political  criteria,  the  programme  supports  civil  society,  the  fight 
against  organised  crime  and  corruption  and  judiciary  reform.  Under  socio-economic 
requirements,  the  programme  supports  the  establishment  of  a  national  qualification 
framework,  the  development  of  the  transport  sector  including  the  implementation  of  the 
European Common Aviation Agreement and energy market approximation. Under European 
standards, the programme includes projects on the following sub-sectors: legal harmonisation, 
veterinary  services,  statistical  office  MONSTAT,  public  procurement  system,  quality 
Infrastructure (standardisation and metrology) and tax administration.  

The 2007 national programme for Serbia was adopted by the Commission on 20 December 
2007. It aims at assisting Serbia to implement the reforms needed to fulfil EU requirements, 
make  progress  in  the  Stabilisation  and  Association  Process  and  to  lay  the  foundations  for 
fulfilling the Copenhagen criteria. Under political criteria the programme provides assistance 
to  the  following  projects:  municipal  support  programme,  support  to  refugees  and  internally 
displaced persons, improvement of the efficiency and transparency of the judicial system and 
of the penalty system, police reform, support to the establishment of the Ombudsman and the 
public  procurement  office  as  well  as  support  to  civil  society.  The  2007  annual  programme 
places significant emphasis on socio-economic requirements with projects supporting regional 
economic  and  social  development  and  health  sector  reform.  Under  European  standards,  the 
programme includes projects on customs and tax administrations, border controls and aviation 
standards, including the implementation of the European Common Aviation Area Agreement 
and capacity building to implement rural development policies.  

The  Turkey  2007  programme  was  adopted  on  20  December  2007.  Under  political  criteria, 
assistance will be provided to consolidate the reforms that have been adopted and to improve 
their implementation on the ground. This will include supporting institutions concerned by the 
reforms  within  the  judiciary,  the  law  enforcement  services  and  parts  of  the  public 

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administration.  Assistance  will  also  be  given  to  promote  women's  rights,  human  rights  and 
children rights. As concerns the adoption and implementation of the acquis, assistance will be 
concentrated  on  areas  of  activity  with  a  large  volume  of  legislation  to  be  transposed  and 
implemented as well as with high investment requirements. Under IPA 2007, these areas are: 
justice, liberty and security (particularly border management; and migration and visa policy); 
environment;  and,  to  a  lesser  extent,  food  safety  and  customs  and  taxation.  Assistance  will 
also be provided to ensure alignment and institution building in the areas of energy, financial 
control,  fisheries,  the  internal  market,  social  policy  and  employment,  statistics,  transport. 
Priority issues to be addressed under civil society dialogue in 2007 are culture and arts, and 
fisheries and agriculture. Continuing well-established forms of assistance, support is provided 
for  Turkey's  participation  in  Community  programmes  and  agencies  as  well  as  in  the  Jean 
Monnet scholarship programme. 

The IPA annual programme for Kosovo under component I was adopted by the Commission 
on 28 November 2007. Under political requirements, the programme focuses on the fulfilment 
of  the  EU's  political  criteria  and  the  consolidation  of  Kosovo's  institutional,  administrative 
and  judicial  set-up.  This  includes  the  fight  against  corruption,  the  protection  of  human  and 
minority  rights  and  the  promotion  of  civil  society  activities.  Under  socio-economic 
Requirements  the  programme  will  focus  on  enhancing  Kosovo’s  investment  climate  and 
support  to  small  and  medium  enterprises,  promoting  rural  development,  developing 
infrastructure  and  improving  the  quality  of  the  education  system.  Finally  under  European 
standards,  the  programme  addresses  the  need  to  build  effective  institutional  capacity 
especially  in  public  procurement,  food  safety  and  veterinary  services  and  standards  in  the 
energy sector. 

The multi-beneficiary programme is designed to complement the national programmes and 
to strengthen multi-lateral experiences in the Western Balkans and Turkey. It provides support 
through  regional  and  horizontal  programmes.  Activities  of  particular  importance  under  the 
2007 programme  include  support to regional cooperation initiatives,  the Regional School of 
Public  Administration, 
interim  civilian  administrations,  civil  society  dialogue  and 
development,  education  and  youth  programmes  (Tempus,  Erasmus  Mundus  and  Youth  in 
Action), international financing institutions, and customs and taxation. 

2.1.4.2.  Component II 

The  cross-border  cooperation  (CBC)  component  is  aimed  at  strengthening  cross-border 
cooperation  through  joint  local  and  regional  initiatives,  combining  both  external  aid  and 
economic  and  social  cohesion  objectives.  In  particular,  the  cooperation  shall  pursue  the 
promotion of sustainable economic and social development in border areas, working together 
to  address  common  challenges  in  fields  such  as  environment,  natural  and  cultural  heritage, 
public health and the fight against organised crime, ensuring efficient and secure borders and 
the  promotion  of  joint  small  scale  actions  involving  local  actors  from  the  border  regions. 
Cross-border  cooperation  helps  reconciliation  and  good  neighbourly  relations,  while  also 
facilitating  the  integration  of  the  beneficiary  countries  into  the  EU.  This  is  particularly 
relevant in a region with a recent history of conflict.  

IPA  component  II  cross-border  cooperation  encompasses 
two  strands:  cross-border 
cooperation  between  candidate/potential  candidate  countries  and  cross-border  cooperation 
between  them  and  neighbouring  Member  States.  Additionally,  IPA  component  II  may  also 
financially  support  the  participation  of  candidate/potential  candidate  countries  in  Structural 
the  European  Regional 
Funds' 

transnational  cooperation  programmes  (financed  by 

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Development Fund - ERDF, in the context of the European Territorial Cooperation objective) 
and in ENPI Sea-Basin cooperation programmes. 

Assistance to cross-border cooperation under component II takes place within the framework 
of  multi–annual  cross–border  programmes  jointly  drawn  up  by  the  participating  countries. 
IPA  assistance  is  granted  through  annual  financing  decisions,  except  for  cross-border 
programmes  with  member  States  implemented  under  the  integrated  approach,  where  the 
whole  EU  contribution  for  the  programme  is  adopted  through  multi-annual  financing 
decisions  covering  three  years.  Concerning  the  participation  in  ERDF  transnational 
programmes  or  ENPI  Sea-Basin  programmes,  IPA  assistance  is  granted  through  annual 
financing decisions on a country-by-country basis. The final 2007 appropriations per country 
under IPA component II are specified in section 2.1.1. 

IPA  component  II  supports  the  participation  of  Albania  in  two  bilateral  cross-border 
programmes with neighbouring candidate/potential candidate countries: Montenegro and the 
former  Yugoslav  Republic  of  Macedonia.  With  regards  to  cross-border  cooperation  with 
Member  States,  IPA  component  II  finances  a  bilateral  programme  Albania–Greece  and  the 
participation  of  Albania  in  the  multilateral  cross-border  programme  "Adriatic",  where 
Albania,  Bosnia  and  Herzegovina,  Croatia,  Montenegro  and  Serbia  cooperate  with  Greece, 
Italy  and  Slovenia  across  the  Adriatic  Sea.  Moreover,  IPA  component  II  also  finances  a 
unilateral programme concerning the development of the Kukes region of Albania, bordering 
Kosovo, as well as the participation of Albania in the ERDF transnational programme "South-
East Europe". 

With regards to Bosnia and Herzegovina, IPA component II supports the participation of the 
country  in  three  bilateral  cross-border  programmes  with  Croatia,  Montenegro  and  Serbia. 
Concerning CBC with Member States, IPA component II finances the participation of Bosnia 
and Herzegovina in the IPA CBC Adriatic programme. Finally, in 2007 the IPA component II 
finances the participation of Bosnia and Herzegovina in the ERDF transnational programme 
"South-East Europe". 

Under  IPA  component  II,  Croatia  participates  in  three  bilateral  cross-border  programmes 
with  neighbouring  potential  candidate  countries:  Bosnia  and  Herzegovina,  Montenegro  and 
Serbia.  Croatia  is  also  involved  in  three  IPA  CBC  programmes  with  neighbouring  Member 
States: two bilateral programmes respectively with Slovenia and Hungary, and participation in 
the  multilateral  cross-border  programme  IPA  CBC  Adriatic.  Finally,  IPA  component  II 
finances  the  participation  of  Croatia  in  two  ERDF  transnational  programmes  "South-East 
Europe" and "Mediterranean". 

With  the  support  of  IPA  component  II,  in  2007  the  former  Yugoslav  Republic  of 
Macedonia  participates  in  a  bilateral  programme  with  Albania  and  in  two  bilateral 
programmes with neighbouring Member States Bulgaria and Greece. IPA component II also 
finances  the  participation  of  the  former  Yugoslav  Republic  of  Macedonia  in  the  ERDF 
European Territorial Co-operation transnational programme "South-East Europe". 

IPA component II in Montenegro consists in four bilateral cross–border programmes with its 
candidate  and  potential  candidate  neighbours  Croatia,  Serbia,  Bosnia  and  Herzegovina  and 
Albania,  as  well  as  the  participation  in  the  IPA  CBC  Adriatic  programme  with  Member 
States.  Concerning  participation  in  the  ERDF  transnational  programmes,  IPA  component  II 
finances  the  participation  of  Montenegro  in  the  "South–East  Europe"  and  in  the 
"Mediterranean" programmes. 

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The  CBC  programmes  in  Serbia  include  three  bilateral  programmes  with  Montenegro, 
Croatia  and  Bosnia  and  Herzegovina,  three  bilateral  programmes  with  the  neighbouring 
Member  States  Hungary,  Romania  and  Bulgaria,  and  the  participation  of  Serbia  in  the 
multilateral IPA cross-border "Adriatic" programme. Moreover, IPA component II finance as 
the  participation  of  Serbia  in  the  ERDF  European  Territorial  Cooperation  transnational 
programme "South-East Europe". 

In  2007,  IPA  component  II  supported  the  cross–border  programme  between  Turkey  and 
Bulgaria. Additionally, IPA component II funds have been grated to Turkey in 2007 for the 
participation in the ENPI Sea Basin programme. 

2.1.4.3.  Components III, IV and V 

Programming of components III and IV is made through multi-annual programmes, prepared 
initially for three years, but which can be extended to cover additional years. On the basis of 
the  Strategic  Coherence  Frameworks,  beneficiary  candidate  countries  draft  multi-annual 
operational  programmes  per  component  (component  IV)  or  per  theme  (component  III),  in 
consultation with the relevant stakeholders, which are then agreed with the Commission for 
formal  adoption,  following  the  consultation  of  the  relevant  Member  States  Committee: 
Coordination  Committee  for  the  funds  (COCOF)  for  component  III  and  COCOF  and 
European Social Fund (ESF) Committee for component IV. 

Component  III  covers  three  distinct  areas  of  assistance:  transport  and  environment  which 
mirror  Cohesion  Fund  interventions  in  Member  States,  and  regional  competitiveness  which 
covers some areas of assistance as under the competitiveness and employment objective of the 
European  Regional  Development  Fund.  Component  III  will  thus  be  implemented  through 
separate  programmes  covering  each  of  these  themes  (in  the  case  of  the  former  Yugoslav 
Republic  of  Macedonia,  for  2007-2009  only  one  programme  for  environment  and  transport 
will be implemented). This implied three separate process of negotiation and adoption of the 
programmes  per  country,  with  similar  repercussions  for  the  conferral  of  decentralised 
management as described hereunder.  

Similarly to Structural Funds, multi-annual programmes under components III and IV provide 
a  stable  financial  framework  over  a  three  year  period.  This  is  fundamental  for  the 
implementation  of  medium  term  investment  strategies  in  transport,  environment,  regional 
competitiveness and human resources development. Similarly to Structural Funds, this longer 
term  financial  framework  goes  hand  in  hand  with  rigorous  financial  management,  to  ensure 
the  full  absorption  of  funds  which  might  otherwise  be  lost  due  to  the  automatic 
decommitment  rule  (N+3)  established  by  the  Financial  Regulation.  In  accordance  with  the 
MIPDs,  the  following  resources  were  available  for  programming  under  multi-annual 
programmes for components III, IV and V: 

Component 
/year  

Croatia 

former Yugoslav Republic of 
Macedonia  

Turkey 

2007 

2008 

2009  Total 

2007 

2008 

2009  Total 

2007 

2008 

2009 

Total 

Component III 

45.1 

47.6 

49.7 

142.4 

7.4 

12.3 

20.8 

40.5 

167.5 

173.8 

182.7 

524.0 

Component IV 

11.4 

12.7 

14.2 

38.3 

3.2 

6.0 

7.1 

16.3 

50.2 

52.9 

55.6 

158.7 

Component V 

25.5 

25.6 

25.8 

76.9 

2.1 

6.7 

10.2 

19.0 

20.7 

53.0 

85.5 

159.2 

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Three  multi-annual  (2007–2009)  operational  programmes  (OP)  were  adopted  in  2007  under 
component III for Croatia, following the positive opinion of the COCOF Committee (October 
2007). The programmes cover acquis-related investments in environmental protection (waste 
water, drinking water and waste management) and sustainable transport (railways and inland 
waterways).  Along  with  these  efforts  directed  at  basic  infrastructure,  further  assistance  is 
aimed  at  modernising  and  restructuring  the  productive  capacity  of  disadvantaged  regions  in 
particular by providing services to enterprises, particularly small and medium sized.  

The multi-annual OP for Croatia component IV was adopted on 7 December 2007. It consists 
of 4 priority axes: "Enhancing access to employment and sustainable inclusion in the labour 
market",  "Reinforcing  social  inclusion  of  people  at  a  disadvantage",  "Enhancing  human 
capital and employability", and Technical Assistance.  

The  multi-annual  programme  for  Rural  Development  2007–2013  for  Croatia  was  prepared, 
although not adopted during 2007 (adopted by Commission Decision on 25 February 2008). It 
consists of 3 priority axes: "Improving market efficiency and implementation of Community 
standards", "Preparatory actions for implementation of the agri-environmental  measures  and 
local rural development strategies" and "Development of the rural economy". 

The former Yugoslav Republic of Macedonia component III OP "Regional Development" 
for 2007-2009 was adopted by the Commission on 29 November 2007. Its overall objective is 
to support the sustainable development of the country through the improvement of transport 
and environment infrastructure. Assistance in the transport sector focuses on the continuation 
of the development of the South East Europe Core Regional Transport Network. Concerning 
assistance  in  the  environment  sector,  clearly  targeted  investments  focus  on  waste  water 
treatment  and  solid  waste  management  where  the  impact  to  the  population  and  natural 
environment is the greatest. 

Concerning component  IV  in  the  former  Yugoslav  Republic  of  Macedonia,  the  OP  "Human 
Resources Development" was adopted on December 2007. It encompasses three priority axis: 
"Employment  –  Attracting  and  retaining  more  people  in  employment",  Education  and 
Training  –  Investing  in  human  capital  through  better  education  and  skills",  and  "Social 
Inclusion – Promoting an inclusive labour market". 

The  former  Yugoslav  Republic  of  Macedonia  multi-annual  programme  for  Rural 
Development 2007-2013 was prepared but not adopted during 2007 (adopted by Commission 
Decision  C(2008)677  on  25  February  2008).  It  consists  of  three  priority  axes:  "Improving 
market  efficiency  and  implementation  of  Community  standards",  "Preparatory  actions  for 
implementation  of  the  agri-environmental  measures  and  local  rural  development  strategies" 
and "Development of the rural economy". 

Turkey's component III OPs were adopted by Commission Decision on 29 November 2007 
(OPs Regional Competitiveness and Environment) and on 7 December 2007 (OP Transport). 
The  overall  objective  of  the  "Transport"  programme  is  to  increase  the  competitiveness  of 
Turkey  by  supporting  investments  in  transport  infrastructure  sector.  In  this  framework  the 
scope of the intervention in Turkey will cover transport infrastructure, including in particular 
interconnection,  interoperability  and  intermodality  of  national  networks  and  with  the  trans-
European  networks.  The  "Environment"  programme  objective 
the 
competitiveness of Turkey by supporting investments in environment infrastructure sector, in 
particular  in  water  supply,  sewerage  and  waste  water  treatment  and  in  intergraded  waste 
management.  The  overall  objective  of  the  "Regional  Competitiveness"  programme  is  to 

increase 

to 

is 

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increase the competitiveness of the poorest regions of Turkey by supporting enterprises. This 
objective  will  be  achieved  through  four  specific  objectives:  enhancement  of  physical  and 
financial infrastructure, increasing business stock, increasing employment creation capacity of 
the productive sector and enhancing the added value of the production base. 

The Turkey component IV Human Resources Development multi–annual OP was adopted by 
Commission  decision  on  7  December  2007.  It  includes  four  priority  axis:  "Employment", 
"Education", "Adaptability by Promoting Lifelong Learning" and " Social Inclusion".  

Under  component  V  the  multi-annual  programme  for  Rural  Development  2007-2013  was 
prepared by Turkey in 2007. It was adopted by Commission Decision C(2008)691 on the 25 
February  2008.  It  consists  of  three  priority  axis:  "Improving  market  efficiency  and 
implementing  Community  Standards",  "Preparatory  actions  for  the  implementation  of  agri-
environmental measures and Leader approach", "Development of the rural economy". 

2.2. 

Implementation Modalities and Structures 

The central point of IPA is to transfer know-how and experience to beneficiary countries, by 
enhancing ownership and responsibility of the implementation of assistance on the countries' 
side. On the other hand, IPA components III and IV aim to prepare Candidate Countries for 
the implementation and management of the Community's cohesion policy and its instruments 
upon accession. They contribute therefore to set up structures and systems which will ensure 
the  proper  management  and  absorption  of  structural  funds  implemented  through  shared 
management, through a process of learning by doing. The benefits of these must be regarded 
therefore in a long term perspective, beyond the life of current IPA programmes. 

During the lifetime of the instrument, it is therefore expected that decentralised management – 
i.e. national authorities of beneficiary countries assuming full ownership in programming and 
implementation  –  should  become  the  norm  in  the  management  of  IPA.  The  prompt 
achievement  of  this  objective  will  depend  on  the  administrative  capacities  of  individual 
recipient  countries,  and  on  their  capacity  to  ensure  that  the  appropriate  management  and 
control  systems  are  in  place.  This  means  that  each  country  should  therefore  have  specific 
strategies,  action  plans  and  timetables  in  place  for  moving  towards  more  decentralisation, 
while  at  the  same  time  preparing  national  authorities  to  have  adequate  capacity  for  the 
increased responsibilities related to this. 

2007 annual programmes for potential candidate countries under components I and II (with 
the exclusion of CBC programmes with Member States implemented in shared management) 
are  implemented  mostly  on  a  centralised  basis,  with  a  clear  focus  on  assisting  countries  to 
gradually 
towards  decentralised 
management.  This  means  that  the  programmes  are  mainly  implemented  either  by  the 
Commission  Delegation  (centralised  de–concentrated  management)  or  by  the  Commission 
services at Headquarters (essentially multi–beneficiary and horizontal programmes). 

taking  on  more  responsibility  and 

in  progressing 

Regarding preparations for the conferral of management powers, potential candidate countries 
are  at  various  stages  and  some  of  them  have  already  started  setting  up  the  necessary 
management  structures  and  have  prepared  their  roadmap  toward  decentralised  management. 
Albania adopted  in  December a decision setting up  the structures and  defining the roles for 
decentralised  management.  Montenegro  has  established  the  roadmap  to  decentralised 
management  and  foresees  to  be  accredited  in  three  years  time.  In  Serbia,  a  strategy  for 

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decentralised  management has been produced and  it is planned  to prepare capacity building 
plans for decentralised management institutions during 2008. 

For  candidate  countries,  decentralised  management  initially  with  Commission  ex–ante 
control  is  the  norm  but  the  objective  is  decentralised  management  without  ex-ante  controls. 
During 2007, Croatia and Turkey underwent preparation for moving from DIS accreditation 
granted under the previous pre–accession instruments to the IPA accreditation and conferral 
of decentralised management powers. In 2007, the former Yugoslav Republic of Macedonia 
also prepared for IPA decentralised management accreditation. 

IPA  accreditation  for  decentralised  management  has  to  be  obtained  separately  for  each 
component,  or  in  the  case  of  component  III  for  each  programme.  The  timing  for  the 
attainment of this objective may vary depending on the IPA component and on the capacities 
of the beneficiary country. For Croatia and Turkey, it is expected that IPA accreditation for 
decentralised  management  will  take  place  before  the  end  of  2008  (Croatia)  or  beginning  of 
2009  (Turkey).  For  the  former  Yugoslav  Republic  of  Macedonia,  this  objective  should  be 
achieved in the first half of 2009. However, considering that the former Yugoslav Republic of 
Macedonia  was  not  DIS  accredited  under  the  pre–IPA  instruments,  in  an  initial  phase 
implementation  of  components  I  and  II  can  be  carried  out  on  a  centralised  basis  until  the 
relevant  national  authorities  obtain  the  relevant  IPA  accreditations.  On  the  other  hand, 
implementation for components III, IV and V is subject to the prior accreditation. To be noted 
that  component  V  assistance  can  only  be  implemented  through  decentralised  management 
without ex-ante controls. 

For all candidate countries, the medium term objective is fully decentralised management, i.e. 
with Commission ex-post control only. 

The Multi-beneficiary programmes are managed through centralised and joint management. 
Centralised management is mainly in the form of implementation by the Commission services 
at  Headquarters.  Joint  management  is  complementary  to  the  central  management  in  that  the 
Commission is managing the funds jointly with an international organisation. 

3. 

MONITORING AND RESULTS 

3.1.  Monitoring 

The  overall  objective  of  monitoring  is  to  enhance  the  relevance,  effectiveness,  efficiency, 
impact  and  sustainability  of  the  assistance  to  the  Western  Balkans  and  Turkey.  Monitoring 
provides  the  Commission  with  regular  analytical  assessments  of  implementation  of  projects 
and programmes. 

In  the  case  of  decentralised  management,  the  beneficiary  country  shall  set  up  an  IPA 
monitoring committee to ensure coherence and coordination in the implementation of the IPA 
components.  The  IPA  monitoring  committee  shall  satisfy  itself  to  the  overall  effectiveness, 
quality  and  coherence  of  the  implementation  of  all  programmes  and  operations  towards 
meeting  the  objectives  set  out  in  the  financings  agreements  as  well  as  in  the  multi-annual 
indicative  planning  documents.  The  IPA  monitoring  committee  shall  include  among  its 
members  representatives  of  the  Commission,  the  national  IPA  co-ordinator,  the  national 
authorising officer, representatives of the programmes' operating structures and the strategic 
co-ordinator for components III and IV, and shall meet at least once a year. 

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The  IPA  monitoring  committee  is  assisted  by  sectoral  monitoring  committees  set  up  under 
each  IPA  component  or  programme.  The  sectoral  monitoring  committees  have  a  duty  to 
ensure the overall effectiveness and quality of implementation of the programmes concerned 
and report to the IPA committee. They provide it in particular with information relating to the 
progress  made  in  implementing  the  programmes,  including  the  results  achieved,  financial 
implementation indicators, and other factors and shall be established with a view to improving 
the implementation of the programmes. 

No formal monitoring committees took place in 2007, as the first IPA programmes were only 
adopted  in  the  end  of  2007  and  implementation  had  not  yet  started.  However,  Sectoral 
Monitoring Committees regarding  each programme under components I,  III, IV and V took 
place  in  November  and  December  2007  in  a  "shadow  form"  pending  the  signature  of  the 
framework agreements and financing agreements concerned. The formal set up of sectoral and 
IPA  monitoring  committees  in  Croatia,  Turkey  and  the  former  Yugoslav  Republic  of 
Macedonia is expected in the spring 2008. 

In  the  case  of  programmes  under  centralised  or  joint  management,  the  IPA  implementing 
regulation  stipulates  that  the  Commission  may  undertake  any  actions  it  deems  necessary  to 
monitor  the  programmes  concerned.  No  monitoring  of  IPA  projects  was  carried  out  during 
2007, as the IPA 2007 programmes were generally only adopted at the end of the year and the 
actual implementation only started in 2008. 

3.2. 

Evaluation Results 

Evaluations shall aim to improve the quality, effectiveness and consistency of the assistance 
from Community funds and the strategy and implementation of the programmes. MIPDs shall 
be subject to regular ex ante evaluation, carried out by the Commission. 

Programmes shall be subject to ex ante evaluations, as well as interim and, where relevant, ex 
post  evaluations  in  accordance  with  the  specific  provisions  laid  down  under  each  IPA 
component  in  the  Commission  Regulation  (EC)  No  718/2007.  During  the  period  of 
implementation  of  a  programme,  at  least  one  interim  evaluation  shall  be  carried  out,  and 
specifically  when  the  monitoring  of  the  programme  reveals  significant  departure  from  the 
goals  initially  set.  Ex  post  evaluation  of  the  implementation  of  assistance  shall  be  the 
responsibility  of  the  Commission.  Ex  post  evaluation  shall  include  identifiable  IPA 
component-specific  results.  In  the  event  of  joint  management,  ex  post  evaluation  may  be 
jointly carried out with other donors. 

During 2007 multi-annual operational programmes under components III and IV were subject 
to  ex-ante  evaluations  carried  out  in  accordance  with  Structural  Funds  guidelines  and 
requirements,  forming  an  integrant  part  of  the  process  for  the  adoption  of  the  programmes. 
Likewise all adopted operational programmes under component V were the object of an ex-
ante evaluation. 

No  other  interim  or  ex-post  evaluation  was  carried  out  during  2007  as  the  first  IPA 
programmes  were  only  adopted  at  the  end  of  2007  and  the  actual  implementation  is  only 
starting in 2008. 

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4. 

DONOR  COORDINATION  WITH  MEMBER  STATES  AND  BILATERAL 
DONORS 

Prior to adopting the multi-annual programmes under components III and IV, the Commission 
organised meetings in each candidate country, with Member States' representatives and IFIs, 
to  present  the  programmes  strategies  and  priorities  and  to  collect  the  views  of  the  other 
donors. These meetings were of particular importance where programmes or actions financed 
by Member States and IFIs are complementary with programmes or actions financed by IPA, 
or where co-financing will be necessary to implement certain projects.  

On the 13 December 2007, a donor co-ordination meeting was organised with EU and non–
EU  donors,  in  which  the  IFIs  participated  as  observers.  The  purpose  of  the  meeting  was  to 
share information on priorities and activities of donors in the IPA beneficiary countries and to 
look  for  complementary  action  and  synergies.  It  was  one  element  in  the  context  of  the  IPA 
requirements  to  strengthen  coordination  among  donors.  The  common  goal  is  to  increase 
effectiveness  and  efficiency  in  the  delivery  of  the  assistance  to  candidate  and  potential 
candidate countries, by improving complementarity and avoiding duplications. 

The main conclusions of the donor co-ordination meeting were the following: 

•  enhanced  donor  coordination  is  a  priority  on  the  agenda  of  the  donor  community.  In 
particular, the meeting has proved that coordination between the Commission, EU Member 
States and non–EU donors, to be effective, must be a two–way process, where stakeholders 
discuss their respective programmes and priorities; 

•  substantial  progress  on  donor  coordination  has  been  achieved  both  in  the  beneficiary 
countries and on the European level. The feedback received in the meeting underlines that 
the  consultation  process  in  the  context  of  IPA  –  in  particular  at  local  level  in  the 
beneficiary  countries  –  which  has  been  put  in  place  in  the  course  of  2007,  is  working 
increasingly better; 

•  ownership of assistance by beneficiary countries is vital in order to maximize the impact of 
aid. Donor coordination shall be ultimately the responsibility of authorities of beneficiary 
countries,  although  the  donor  community  shall  provide  guidance  and  assistance  in  this 
respect. To this aim, the capacities of the beneficiary countries to assume ownership needs 
to be strengthened. 

5. 

CO-ORDINATION WITH THE EIB AND IFIS 

International  Financial  Institutions  (IFIs)  have  been  instrumental  in  providing  access  to 
finance to candidate and potential candidate countries and territories and have allowed them 
to start carry out necessary investments. At the same time the Beneficiaries have been obliged 
to adopt prudent fiscal and monetary policies to maintain economic growth. Today this leads 
to a situation where investment needs are still high while the Beneficiaries` capacities to incur 
an  ever  increasing  external  debt  are  moving  towards  a  ceiling.  Non-repayable  grants  both 
from the EU and from other donors including the Member States combined with International 
Financial  Institutions  loans  have  become  a  crucial  resource  for  private  sector  development, 
investments  in  energy  efficiency,  and  infrastructure  remediation  and  upgrading  without 
overburdening the Beneficiaries with excessive debts. 

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The Commission is committed to closer coordination with the EIB, the EBRD, the CEB and 
other  IFIs  supporting  modernisation  and  development  in  the  Western  Balkans.  The  second 
meeting  of  the  IFI  Advisory  Group,  which  is  linked  to  the  implementation  of  the 
Memorandum of Understanding signed with the IFIs in mid-2006, was scheduled for January 
2008.  Technical  Working  Group  meetings  were  established  for  Transport  and  Energy 
(September 2007) and Environment (October 2007). A first meeting for the Social sector was 
not possible in 2007 but was held in January 2008. A two-day IFI coordination meeting with 
participants of all major IFIs, DG Enlargement geographical teams and Delegations as well as 
line DGs was held on 10-11 December 2007. 

Furthermore, the Commission, the EIB, the EBRD and the Council of Europe Development 
Bank  have  committed  to  establish  a  Western  Balkans  Investment  Framework  by  2010  with 
other  IFIs  and  donors  to  further  enhance  harmonisation  and  cooperation  in  investments  for 
socio-economic development in the region. 

Significant efforts were also made during 2007 to identify a coordination strategy with IFIs. 
In particular, it was agreed to focus on three priority areas: micro-, small and medium-sized 
enterprises  (SMEs),  energy  efficiency  and  infrastructure.  The  reasons  for  cooperating  with 
International  Financial  Institutions  and  the  reasons  for  using  the  regional  approach  in  the 
years to come are further explained below for each strand: 

– 

– 

– 

3 
4 

5 

Strand I - Private sector development: On the supply side, EU assistance to promote 
access  to  finance  for  micro  and  small-sized  enterprises  has  been  channelled  to  the 
region in the past through numerous individual agreements with various International 
Financial Institutions. In 2005 a regional multi-donor initiative was inaugurated – the 
European  Fund  for  South  East  Europe  (EFSE).  It  led  to  the  consolidation  of  the 
numerous micro-credit agreements throughout the region into one single instrument, 
it  has  provided  sustainability  to  previous  funding  and  it  has  led  to  management 
efficiency gains. The most striking feature of EFSE is the fact that the risk cover of 
the  EU  and  Member  State  contribution  is  set  to  attract  private  capital  to  invest  in 
micro-lending. EFSE has so far been rolled out successfully. 

Strand  II  –  Energy  efficiency:  This  strand  aims  to  promote  investments  in  energy 
efficiency  and  renewable  energy  in  the  SME  and  public  sectors  by  capitalising  on 
actions  supported  by  the  National  programmes,  which  aim  at  (i)  increasing  public 
awareness  regarding  energy  efficiency  and  the  potential  for  energy  savings;  (ii) 
implementing  legislation  with  regards  to  the  Directive  on  energy  performance  of 
building3  and  the  energy  end-use  efficiency  and  energy  services4  (including 
renewable  energy).  Furthermore,  the  promotion  of  energy  efficiency  investments 
meets  the  recommendation  of  the  European  Commission  Green  Paper  on  Energy 
Efficiency5  encouraging  International  Financial  Institutions  to  provide  long-term 
funding to finance energy efficiency investments. 

Strand  III  –  Promotion  of  infrastructure  investments:  Adequate  infrastructure 
networks  and  services  in  the  transport,  energy,  environment  and  social  sectors  are 
crucial in ensuring sustained socio-economic development and stability in the region. 

Directive 2002/91/EC of the European Parliament and of the Council of 16 December 2002 
Directive 2006/32/EC of the European Parliament and of the Council on energy end-use efficiency and 
energy services of 5 April 2006 
Doing more with less: Green Paper on energy efficiency. COM(2005) 265 final of 22 June 2005 

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Insufficient financial resources and lack of experience of Beneficiaries in preparing 
projects  suitable  for  consideration  by  International  Financial  Institutions  and  other 
donors  for  financing  are  among  the  key  factors  hindering  improvements  in 
infrastructure.  Adequate  investment  in  infrastructure  is  essential  in  ensuring  that 
many indispensable services such as water and sanitation, heating, energy provision, 
transport,  health  and  education  come  into  existence  in  order  to  improve  the  living 
conditions  of  people.  For  all  of  this,  access  to  finance  is  essential.  The 
implementation of this strand will thus include the setting up of a multi-sector multi-
beneficiary  Infrastructure  Projects  Facility,  which  will  support  Beneficiary 
institutions  at  national,  regional  and  municipal  level  to  prepare  and  implement 
infrastructure investment projects financed by International Financial Institutions and 
or  other  donors.  This  Facility  will  help  cooperation  and  coordination  with 
International  Financial  Institutions,  reach  economies  of  scale  in  mobilising  the 
necessary  technical  expertise  to  prepare  and  support  infrastructure  investment 
projects, facilitate networking and exchange of know-how among Beneficiaries, and 
leverage  International  Financial  Institutions  loans  that  complement  national  IPA 
grants.  In  this  context,  the  promotion  of  infrastructure  investment  must  be 
coordinated and developed in a coherent manner so as to take into account the sub-
regional  context  (i.e.  neighbouring  countries,  in  particular  the  Neighbourhood 
region). 

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