Report from the Commission to the Council, the European Parliament and the European Economic and Social Committee 2008 ANNUAL Report on the implementation of the instrument for pre-accession assistance (IPA) SEC(2009)1719
Date: 2009-12-23
Institutions: European Commission
Subjects: Central and Eastern Europe, EU financing, Türkiye, accession to the European Union, cross-border cooperation, institutional reform, pre-accession aid, pre-accession strategy, regional development, report, rural development

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EUROPEAN COMMISSION  

Brussels, 23.12.2009 
COM(2009)699 final 

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

2008 ANNUAL REPORT ON THE IMPLEMENTATION OF THE INSTRUMENT 
FOR PRE-ACCESSION ASSISTANCE (IPA) 

SEC(2009)1719 

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Introduction 

Since 1 January 2007, EU pre-accession funding has been channeled through a single, unified 
instrument,  the  Instrument  for  Pre-accession  Assistance  (IPA),  designed  to  deliver  focused 
support  to  both  candidate  countries1  and  potential  candidates2.  IPA  (Council  Regulation  No 
1085/2006  of  17  July  2006)  replaces  the  former  pre–accession  instruments  Phare3,  ISPA4, 
SAPARD5, the Turkish pre-accession instrument6, as well as the financial instrument for the 
Western Balkans, CARDS7. 

IPA aims to provide targeted assistance to 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  between 
candidate/potential candidate and with EU countries. It may also fund relevant participation in 
trans-national  co–operation  programmes  (Structural  Funds)  and  Sea  Basin  programmes 
(European Neighborhood and Partnership Instrument - ENPI). 

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

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

V.  Rural  Development,  which  finances  rural  development-type  measures  and  contributes  to 
the sustainable development of rural areas. It also provides assistance to the restructuring of 
agriculture  and  its  adaptation  to  Community  standards  in  the  areas  of  environmental 
protection,  public  health,  animal  and  plant  health,  animal  welfare  as  well  as  occupational 
safety. 

Components  I  and  II  are  open  to  all  beneficiaries.  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.  This 
requires the country to have the administrative capacity and structures to take responsibility 
for  the  management  of  assistance.  For  potential  candidates,  regional,  human  resources  and 
rural development–type measures will be implemented through Component I. 

1 
2 
3 
4 

5 

6 
7 

Croatia, Turkey and the former Yugoslav Republic of Macedonia 
Albania, Bosnia and Herzegovina, Montenegro, Serbia and Kosovo under UNSCR 1244/99 
Council Regulation (EEC) No 3906/89 of 19 December 1989 
Instrument for Structural Policies for Pre-Accession, Council Regulation (EC) No 1267/1999 of 21 June 
1999 
Special  Accession  Programme  for  Agriculture  and  Rural  Development,  Council  Regulation  (EC)  No 
1268/1999 of 21 June 1999 
Council Regulation (EC) No 2500/2001 of 17 December 2001 
Community  Assistance  for  Reconstruction,  Development  and  Stabilisation,  Council  Regulation  (EC) 
No 2666/2000 of 5 December 2000. 

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This  report  deals  with  the  implementation  of  IPA  during  2008,  until  the  cut-off  date  of  31 
December 2008. As implementation of the 2007 and 2008 IPA programmes has only recently 
begun,  the  information  on  monitoring  and  assessments  of  results  achieved  through  these 
programmes are rather limited. 

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1. 

THE YEAR IN REVIEW 

1.1.  Main evolutions of the enlargement process 

The  results  achieved  in  2008  with  respect  to  the  candidate  countries  and  the  potential 
candidates were presented in the November 2008 enlargement package. The Communication 
on the enlargement strategy and main challenges 2008-09 develops the existing approach of 
the  European  Union,  based  on  the  renewed  consensus  on  enlargement  agreed  by  the 
December 2006 European Council.  

The strategy paper outlines the Commission's approach to future enlargement challenges and 
identifies  the  measures  to  help  countries  on their  way  to  membership.  It  is  accompanied  by 
progress  reports  on  candidate  countries  and  potential  candidates,  which  assess  the  progress 
each country has made towards the fulfilment of the Copenhagen membership criteria. Most 
notably, the 2008 strategy paper presented Croatia with an indicative and conditional roadmap 
for  reaching  the  final  phase  of  technical  negotiations  at  the  end  of  2009.  The  enlargement 
package  has  since  been  broadly  welcomed  by  the  Council8  and  was  well  received  in  the 
enlargement countries.  

Turkey’s  strategic  importance  to  the  EU  has  further  increased  in  key  areas  such  as  energy 
security,  conflict  prevention  and  resolution  and  regional  security  in  the  Southern  Caucasus 
and  the  Middle  East.  The  country's  engagement  with  the  EU,  through  the  negotiations  and 
related reforms which are underway, makes it a stronger force for stability in a region facing 
many challenges. Accession negotiations with Turkey continued to reflect the pace of reform. 
In  the  Commission's  2008  assessment,  Turkey  qualified  for  the  first  time  as  a  functioning 
market economy in terms of the Copenhagen economic criteria. 

As  regards  the  Cyprus  issue,  the  leaders  of  the  Greek  Cypriot  and  Turkish  Cypriot 
communities  started  full-fledged  negotiations  on  a  comprehensive  settlement  under  the 
auspices  of  the  United  Nations.  The  Commission  continued  to  support  their  efforts  and  to 
stand ready to provide technical advice on issues within EU competence. 

The  implementation  of  the  Stabilisation  and  Association  process  (SAp)  for  the  Western 
Balkans  continued.  All  the  countries  concerned  have  signed  Stabilisation  and  Association 
agreements (SAAs). For most of them, the corresponding Interim Agreement has entered into 
force  and  the  SAA  ratification  process  was  underway.  The  ratification  of  Serbia's  SAA  and 
the entry into force of its Interim Agreement is conditional on Serbia's full cooperation with 
the  International  Criminal  Tribunal  for  the  former  Yugoslavia  (ICTY).  DG  Enlargement's 
activities in the countries of the Western Balkans contributed to further securing stability in 
the region, including Kosovo9, which unilaterally declared its independence on 17th February 
2008.  Kosovo  has  since  adopted  a  plan  for  European  Integration  2008-10  which  aims  to 
facilitate  its  anchoring  in  the  SAp.  Cross-border  co-operation  in  this  region  continued  to 
develop  and  all  countries  concerned  have  been  presented  with  roadmaps  spelling  out  the 
conditions for achieving visa-free travel to the EU.  

8

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http://www.eu2008.fr/webdav/site/PFUE/shared/import/1208_CAGRE/Council_conclusions_o

n%20Enlargement_EN.pdf 
Under United Security Council Resolution 1244/99 

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Important  efforts  have  been  made  to  provide  support  for  regional  cooperation  initiatives  in 
accordance with the Thessaloniki agenda. Several new initiatives to this end were outlined in 
a Commission Communication on the Western Balkans in March 2008. The newly established 
Regional Cooperation Council (RCC) became operational in 2008. 

Montenegro  applied  for  EU  membership  in  December  2008.  The  Commission  is  well 
prepared  for  taking  up  the  resulting  challenges  as  soon  as  the  Council  mandates  the 
Commission to draw up the related opinion.  

2. 

PROGRAMMING  AND 
OVERVIEW 

IMPLEMENTATION  OF 

IPA:  GENERAL 

2.1. 

Strategic Planning & Programming 

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  following  table  provides  the  2008  IPA  allocations  in  million  euros  by  country  and  by 
component, as well as for the regional and multi-country programmes as updated in the 2010-
2012 MIFF (COM(2008)705 adopted on 5 November 2008). The figures therefore take into 
account transfers made between components I and II10 during the course of 2009 as well as 
additional funds allocated to Kosovo. 

Table 1: 2008 allocations by country and component (in €million, to the nearest €100,000) 

Component 
IPA  

a
i
n
a
b
l
A

d
n
a

a
i
n
s
o
B

a
n
i
v
o
g
e
z
r
e
H

a
i
t
a
o
r

C

v
a
l
s
o
g
u
Y

r
e
m
r
o
f

f
o

c
i
l
b
u
p
e
R

a
i
n
o
d
e
c
a

M

o
r
g
e
n
e
t
n
o
M

a
i
b
r
e
S

*
o
v
o
s
o
K

y
e
k
r
u
T

-
i
t
l
u
M

y
r
a
i
c
i
f
e
n
e
b

e
m
m
a
r
g
o
r
p

Component 
I 

Component 
II 

Component 
III 

62.1 

69.9 

45.4 

41.1 

28.1 

179.4 

184.7 

256.1 

135.7 

8.6 

4.9 

14.7 

4.1 

4.5 

11.5 

0.0 

2.9 

47.6 

12.3 

173.8 

10 

Certain  CBC  programmes  had  not  yet  commenced  as  the  relevant  conditions  had  not  been  met. 
Therefore, the following amounts were transferred from component II country envelopes to component 
I  in  the  same  countries:  €1  million  for  Albania;  €1.2  million  for  the  former  Yugoslav  Republic  of 
Macedonia; €2.7 million for Kosovo  and €5.9 million for Turkey..  

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Component 
IV 

Component 
V 

12.7 

6.0 

25.6 

6.7 

52.9 

53.0 

TOTAL 

70.7 

74.8 

146 

70.2 

32.6 

190.9 

184.7 

538.7 

135.7 

2.1.2.  Multi-annual Indicative Planning Documents (MIPDs) 

Based on the MIFF allocations, and on the priorities identified within the political framework, 
Multi-annual  Indicative  Planning  documents  (MIPD)  for  each  country  and  for  the  multi-
beneficiary programmes are prepared. The MIPD represents 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  country–based  MIPDs  as  well  as  multi-beneficiary  MIPD  covering 
2008-2010 took place during 2007 under the responsibility of the relevant DG Enlargement's 
(DG  ELARG) operational units. National authorities were consulted on the draft MIPD and 
very closely involved in its preparation in order to ensure the ownership of the process. For 
MIPDs  for  candidate  countries,  DGs  Regional  Policy  (DG  REGIO),  Employment,  Social 
Affairs  and  Equal  Opportunities  (DG  EMPL)  and  Agriculture  and  Rural  Development  (DG 
AGRI) provided their contribution for components III, IV and V respectively. Member States, 
International Financial Institutions (IFIs) and other relevant stakeholders (civil society) were 
also consulted  

All the 2008-2010 MIPDs were submitted for adoption to the IPA Management Committee11 
in  the  first  half  of  2008:  the  MIPDs  for  the  former  Yugoslav  Republic  of  Macedonia, 
Montenegro, Kosovo, Turkey and the Multi-beneficiary MIPD were submitted in May 2008, 
the MIPDs for Albania, Serbia and Croatia were submitted in June, and the MIPD for Bosnia 
and Herzegovina was submitted in July. They were all adopted by Commission Decisions in 
the second semester of 2008. 

2.1.3. 

IPA programmes in 2008 

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 
based  on  proposals  by  the  beneficiary  countries,  following  consultation  of  stakeholders  and 
donors,  and  after  the  positive  opinion  of  the  IPA  Management  Committee  for  Component  I 
and II. For Component III, the programmes are consulted by the Coordination Committee for 
the  Funds  (COCOF).  For  Component  IV,  they  are  consulted  by  the  European  Social  Fund 
(ESF) Committee and for component V, by the Rural Development Committee (RDC). 

11 

Composed  of  the  representatives  of  the  Member  States,  and  chaired  by  a  representative  of  the 
Commission,  the  IPA  Committee  assists  the  Commission  in  particular  in  ensuring  coordination  and 
coherence of assistance  

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2.1.3.1.  Component I 

Component  I  assistance  is  programmed  by  the  Commission  in  the  form  of  annual  national 
programmes  and  multi-beneficiary  programmes,  managed  either  by  the  Commission,  the 
beneficiary country or jointly with other donors, as appropriate. National programmes 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,  radiation  protection  and 
education  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.  More  detail  can  be  found  in  the 
country section of the technical annex. 

The  IPA  2008  National  Programme  for  Albania  was  adopted  by  the  Commission  on  19 
December 2008. IPA 2008 addresses key issues such as public administration reform and the 
enforcement  of  the  rule  of  law,  particularly  in  the  fields  of  good  governance  and  anti-
corruption. This reflects the increase of funds allocated to the area of political requirements 
under  MIPD  2008-2010.  Additionally,  the  programme  supports  the  Albanian  authorities  in 
fulfilling  the  requirements  of  the  SAA  by  funding  projects  which  aim  at  strengthening  the 
administrative capacities of the Albanian Institutions. The programme also reflects the need to 
further  support  structural  reforms  in  the  country  by  investing  in  regional  development  and 
acquis related infrastructure. 

The IPA 2008 National Programme for Bosnia and Herzegovina, divided in two parts, was 
adopted by the Commission on 9 October 2008 and 5 December respectively. The programme 
provides support to the police and the judiciary reforms with projects aiming at building the 
capacities  of  the  State  Court  and  Prosecutor’s  Office  or  the  construction  of  a  State  high-
security Prison. It also aims at facilitating the country's progress towards the EU membership 
through  raising  public  awareness  of  the  EU  integration  process  and  assisting  the  national 
authorities  in  planning,  programming  and  implementing  of  IPA.  The  2008  Programme  also 
provides  support  to  education  and  the  health  care  system  reforms  as  means  to  improve  the 
socio-economic  situation  of  the  country.  IPA  2008  helps  Bosnia  and  Herzegovina  to  cope 
with  the  requirement  to  approximate  to  the  European  acquis  in  areas  such  as  environment, 
trade and metrology, agriculture and rural development or integrated border management. 

The IPA 2008 National programme for Croatia was adopted on 5 November 2008. Under the 
political criteria the IPA 2008 National programme addresses the reform of the judiciary with 
several  projects  in  this  area.  It  also  contributes  to  progress  in  the  area  of  human  rights  and 
protection  of  minorities  by  enhancing  the  capacities  of  the  civil  society  and  facilitating  the 
active  and  full  participation  of  the  Roma  national  minority  in  the  Croatian  society. 
Concerning the ability to assume the obligations of membership, assistance under IPA 2008 
concentrates  on  areas  of  activity  with  a  large  volume  of  legislation  to  be  transposed  and 
implemented,  preparation  to  structural  and  rural  development  funds  as  well  as  with 
investments  requirements  in  the  acquis.  This  concerns  different  sectors  such  as  food  safety, 
veterinary  and  phytosanitary  policy,  fisheries, 
transport,  energy,  social  policy  and 
employment or environment. 

The  2008  National  Programme  for  the  former  Yugoslav  Republic  of  Macedonia  was 
adopted by the Commission on 11 December 2008. The programme aims at strengthening the 

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administrative capacity of the relevant institutions to ensure sound and efficient management 
of  EU  funds  and  to  strengthen  central  and  local  administrative  capacity  to  implement  the 
decentralisation  process.  It  also  supports  the  development  of  an  independent  and  efficient 
judicial system, and promotes an active civil society sector. Under the socio-economic criteria 
the aim is to reinforce the institutional capacity to regulate and supervise fully funded pension 
system institutions and to promote the transition to market economy. As concerns the ability 
to  assume  the  obligations  of  membership,  the  2008  programme  funds  projects  which 
contribute  to  the  free  movement  of  goods,  the  improvement  of  customs  operations,  or  the 
development of the agricultural sector. 

The Montenegro 2008 National Programme was adopted by the Commission on 2 December 
2008.  Under  the  Political  criteria,  the  2008  IPA  National  Programme  focuses  on  public 
administration reform, particularly decentralisation and local government, sustainable support 
to  refugees  and  displaced  persons  and  media.  Assistance  is  also  provided  to  improve  the 
business  environment  and  to  generate  employment  in  order  to  contribute  to  more  balanced 
regional development, increased employment and poverty reduction. Other measures such as 
the upgrading of the environmental infrastructure are also receiving assistance in 2008. IPA 
2008  helps  Montenegro  to  cope  with  the  requirement  to  introduce  and  implement  the 
European  acquis  in  some  areas  including  financial  markets,  rural  development,  food  safety, 
veterinary services, customs administration, integrated border management and migration.  

The 2008 National Programme for Serbia was adopted by the Commission on 19 December 
2008. Under the political criteria priority has been given to the strengthening of democratic 
institutions, the further implementation of the public administration reform and the separation 
of powers and the media. Other important aspects which receive funding are the fight against 
corruption, the strengthening of the rule of law, human rights and the respect and protection of 
minorities.  Under  the  economic  criteria,  the  programme  will  finance  projects  targeting 
employment  generation,  development  of  the  SMEs  and  capacity  building  of  the  National 
Employment Services. Furthermore, health and education reforms receive particular attention 
under  the  2008  programme.  Finally,  concerning  the  ability  to  assume  obligations  of 
membership,  particular  attention  is  paid  to  the  development  and  implementation  sectoral 
policies  and  of  a  regulatory  framework  compatible  with  European  standards,  in  key  sectors 
such as agriculture, environment, transport or Integrated Border Management. 

The  Turkey  2008  National  Programme  was  adopted  by  the  Commission  on  15  December 
2008.  Under  the  political  criteria  priority  is  given  to  the  judicial  reform,  the  public 
administration reform and the strengthening of Civil Society. Concerning the adoption and the 
implementation of the acquis and in line with the MIPD, projects have been selected on the 
basis  of  their  priority  for  accession  negotiations  and  preparations  and  in  the  light  of  costly 
investments needed for harmonisation and where the volume of legislation to be harmonised 
is very large. Priority has therefore been given to projects in the area of agriculture/veterinary 
issues, justice, freedom and security, customs union and environment. The 2008 programme, 
however,  also  includes  projects  in  new  areas  such  health  and  research  and  development. 
Furthermore  four  projects  have  been  selected  on  the  basis  of  their  importance  for  the 
continuation  of  an  efficient  and  effective  EU-Turkey  civil  society  dialogue  and  in  view  of 
developing new and innovative areas of that dialogue.  

The IPA Annual Programme for Kosovo was adopted by the Commission on 6 October 2008 
for Part 1 and on 19 December 2008 for Part 2. One of the priorities of the programme is the 
fulfilment  of  the  EU's  political  criteria  and  consolidation  of  Kosovo's  institutional, 
administrative  and  judicial  set  up,  including  the  fight  against  corruption,  the  protection  of 

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human  rights  and  the  rights  of  the  Serbs  and  minorities  and  the  promotion  of  civil  society 
activities. Under the economic criteria, support is given to develop Kosovo's economy and to 
improve the socio-economic environment of all communities in a sustainable way. IPA 2008 
helps Kosovo to cope with the requirement to introduce and implement the European acquis 
in  some  areas  including,  freedom,  security  and  justice  issues,  food  safety,  veterinary  and 
phytosanitary and statistics. 

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  projects.  Activities  of  particular  importance  under  the  2008 
programme include support to the Regional Cooperation Council (RCC) and to the Office of 
the  High  Representative  (OHR)  and  the  establishment  of  the  Regional  School  of  Public 
Administration (ReSPA). Disaster Risk Reduction, refugee return in the Western Balkans and 
further development of civil society through the Civil Society Facility are areas also covered 
under  2008  programme.  Furthermore,  support  is  also  provided  to  education  and  youth 
programmes  (Tempus,  Erasmus  Mundus  and  Youth  in  Action),  international  financial 
institutions, customs and taxation, statistics and nuclear safety and radiation protection. 

2.1.3.2.  Component II 

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.  

The  cross-border  cooperation  component  shall  be  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 
promoting 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 prevention of organised crime, ensuring efficient and secure borders and 
promotion joint small scale actions involving local actors from the border regions. 

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

transnational  cooperation  programmes  (financed  by 

Assistance to cross–border cooperation under Component II takes place within the framework 
of  multi–annual  cross–border  programmes  currently  covering  the  period  2007-2009,  jointly 
drawn  up  by  the  participating  countries.  IPA  assistance  is  granted  through  annual  financing 
decisions.  

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. 

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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.  IPA  Component  II  also  finances  a  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 2008 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  the 
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  2008  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". 

As for 2007, the conditions for programmes under Component II in Kosovo in 2008 were not 
met. The funds for Component II have thus been transferred to Component I. 

IPA Component II in Montenegro consists in four bilateral cross–border programmes with its 
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. 

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

In  2008,  IPA  Component  II  supported  the  cross–border  programme  between  Turkey  and 
Bulgaria.  Additionally,  IPA  Component  II  funds  have  been  granted  to  Turkey  for  the 
participation in the ENPI Sea Basin programme. 

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2.1.3.3.  Components III and IV  

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. 

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. 

2.1.3.3.1. 

Component III 

Component III covers three distinct areas of assistance: transport,  environment and regional 
competitiveness which mirror Cohesion Fund interventions in Member States. Component III 
will  thus  be  implemented  through  separate  operational  programmes  (OP)  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).  

Three multi-annual operational programmes for 2007-2009 were adopted in 2007 for Croatia. 
The  Regional  Competitiveness  OP  consists  of  3  priority  axes:  Improving  development 
potential  of  the  lagging  behind  regions,  Enhancing  the  competitiveness  of  the  Croatian 
economy,  and  Technical  Assistance.  The  OP  Transport  encompasses  3  priority  axes: 
Upgrading Croatia's rail transport system, Upgrading Croatia's inland waterway system, and 
Technical  Assistance.  The  OP  Environment  consists  of  3  priority  axes:  Developing  Waste 
Management  Infrastructure  for  Establishing  an  Integrated  Waste  Management  System  , 
Protecting  Croatia's  Water  Resources  Through  Improved  Water  Supply  and  Integrated 
Wastewater Management Systems, and Technical Assistance 

The  former  Yugoslav  Republic  of  Macedonia  Regional  Development  OP  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 should focus on the continuation 
of  the  development  of  the  South  East  Europe  Core  Regional  Transport  Network  (corridors 
VIII and X). The priorities shall be progressively shifted from corridor X to corridor VIII as 
well  as  from  road  to  rail.  Concerning  assistance  in  the  environment  sector,  clearly  targeted 
investments  should  focus  on  waste  water  treatment  and  solid  waste  management  where  the 
impact to the population and natural environment is the greatest. 

Turkey's  operational  programmes  were  adopted  by  Commission  Decision  on  29  November 
2007  (OPs  Regional  Competitiveness  and  Environment)  and  on  7  December  2007  (OP 
Transport). The OP Regional Competitiveness encompasses three priorities: Improvement of 
business  environment,  Strengthening  of  enterprise  capacity  and  foster  entrepreneurship  and 
Technical Assistance. The OP Transport consists of two priority axis: Improvement of railway 

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infrastructure and Improvement of port infrastructure. Finally, the OP Environment includes 
three  priorities:  mproved  water  supply,  sewerage  and  wastewater  treatment  services, 
Improved integrated solid waste management and Technical Assistance. 

2.1.3.3.2 

Component IV 

Under  Component 
IV,  a  multi-annual  operational  programme  Human  Resources 
Development  for  Croatia  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.  

In  the  former  Yugoslav  Republic  of  Macedonia,  the  Human  Resources  Development 
operational  programme  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. 

Turkey's Human Resources Development multi–annual operational programme was adopted 
by  the  Commission  on  7  December  2007.  It  includes  four  priority  axes:  Employment, 
Education, Adaptability by Promoting Lifelong Learning and Social Inclusion.  

2.1.3.4 Component V 

Based on the approach used for preparing the rural development programmes for the Member 
States, Component V assistance is programmed  on a multi-annual basis covering the period 
2007-2013. However, as the financial envelope, in line with the MIPD, was specified for the 
years  2007-2009  only  and  is  subject  to  a  yearly  update  in  order  to  include  the  subsequent 
years, Component V programmes are modified annually to take account of the new financial 
allocation as well as all technical changes necessary. Subsequent to stakeholder consultations, 
the  programmes  as  well  as  the  modifications  are  adopted  by  the  Commission  following 
consultation of the Member States in the Rural Development Committee (RDC). 

In  view  of  the  time  necessary  to  set  up  the  fully  decentralised  implementation  system  and 
based on related SAPARD12 experience, the financial allocations for Component V follow a 
phasing-in approach with a back loading of IPA  Rural  Development funds. Funding for the 
first four years of the implementation period, 2007, 2008, 2009 and 2010 therefore represents 
a lower percentage of the full Component V allocation which is due to increase considerably 
in  the  following  years.  Croatia  represents  the  only  exception  to  this  rule  as  it  was  the  only 
Candidate Country which set up the SAPARD system to profit from SAPARD funds prior to 
the implementation of the IPA Rural Development component. 

A  multi-annual  2007–2013  OP  for  Rural  Development  for  Croatia  was  adopted  by  the 
Commission  on  25  February  200813.  It  consists  of  3  priority  axes:  Improving  market 
efficiency  and 
for 
implementation  of  the  agri-environmental  measures  and  local  rural  development  strategies, 
and Development of the rural economy. 

implementation  of  Community  standards,  Preparatory  actions 

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Special Accession Programme for Agriculture and Rural Development 
Commission Decision C/2008/650 

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In  the  former  Yugoslav  Republic  of  Macedonia,  a  multi-annual  programme  for  the  Rural 
Development  for  2007-2013  was  adopted  in  200814.The  programme  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 multi-annual operational programme for agriculture and rural development was prepared 
by  Turkey  in  2007,  and  adopted  by  the  Commission  on  25  February  200815.  It  consists  of 
three  priority  axes:  Improving  market  efficiency  and  implementing  Community  Standards, 
Preparatory actions for the implementation of agri-environmental  measures  and  Leader,  and 
Development of the rural economy. 

2.2. 

Implementation Modalities and Structures 

The  aim  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.  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.  Each  country  should  therefore  have  specific 
strategies, action plans and timetables in place for moving towards this objective, while at the 
same  time  preparing  national  authorities  to  have  adequate  capacity  for  the  increased  related 
responsibilities.  

Annual programmes for potential candidates 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 taking on more responsibility and progressing towards decentralised management.  

Regarding  preparations  for  the  conferral  of  management  powers,  potential  candidates  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. During  2008 
Albania  and  Bosnia  and  Herzegovina  continued  their  preparations  for  the  decentralised 
management  of  IPA  funds  while  Kosovo  was  at  a  very  early  stage  as  regards  the 
establishment  of  a  roadmap  for  the  decentralisation.  The  work  leading  to  decentralised 
management system with ex-ante controls was progressing in Montenegro. The government 
set up the institutions for decentralised management and nominated the heads of its functions 
and  structures.  Serbia  established  a  decentralised  management  system  roadmap  in  January 
2008  and  a  Strategy  for  the  preparation  of  decentralised  management  accreditation  was 
prepared  in  April  2008.  All  key  stakeholders  regarding  the  preparation  of  the  system  in  the 
Serbian administration have been appointed.  

For all candidate  countries, the medium term objective is fully decentralised management, 
i.e. with Commission ex post control only. It is to be noted that Component V assistance can 
only be implemented in a fully decentralised way from the start, without ex ante controls. 

14 
15 

The programme was adopted by the Commission Decision C/2007/677 on 25 February 2008. 
Commission Decision C/2008/691 

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In  April  2008,  the  Croatian  authorities  notified  the  European  Commission  of  their  national 
accreditation of the operating structures in charge of the management and implementation of 
the  IPA  components  I  to  IV.  This  resulted  in  six  Decisions  on  conferral  of  management 
powers  to  Croatia  for  the  decentralised  management  of  IPA  components  I  to  IV.  Croatia 
envisages moving to full decentralisation in 2010, i.e. without ex ante controls. At the end of 
the  year,  the  last  Decisions  awaited  are  on  conferral  of  management  powers  for  the 
component V (agriculture and rural development). 

In  2008  the  Commission  supported  through  CARDS  the  national  authorities  of  the  former 
Yugoslav  Republic  of  Macedonia  in  their  preparation  for  decentralised  management. 
Assistance has been provided to the structures and authorities as defined in article 21 of the 
IPA  Implementing  Regulation  to  prepare  for  accreditation  of  decentralised  management 
system. Meanwhile, the 2008 IPA annual programme has been managed in a centralised way. 

In  2008  the  efforts  of  Turkey  concentrated  for  the  most  part  in  completing  the  internal 
processes for the accreditation for decentralised management. In the case of IPA components 
I and II these processes were facilitated by the fact that decentralised structures and systems 
existed  already  under  the  pre-IPA  assistance.  The  Commission  conferred  decentralised 
management powers for Component I to the Turkish authorities on 29 October 2008, and for 
Component II Turkey's participation in the ENPI Black Sea Basin programme on 1 December 
2008.  The  Rural  Development  programme  will  be  implemented  by  conferring  decentralised 
management  powers  without  ex  ante  controls  to  the  Turkish  Republic.  A  Commission  fact 
finding  mission  in  October  2008  discovered  serious  delays  in  the  preparation  of  the 
accreditation  process  and  the  new  time  planning  foresaw  accreditation  rather  in  the  second 
half  of  2009,  with  conferral  of  management  not  likely  to  be  achieved  until  2010.  The 
Commission  is  committed  to  assist  this  process  with  further  advisory  missions  and  ad  hoc 
guidance whenever necessary. 

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. 

2.3. 

Overview of IPA implemented Programmes. 

In  2008,  the  first  IPA  2007  projects  were  contracted  in  Albania,  while  there  was  no 
implementation  of  the  2008  programme.  At  the  end  of  2008,  contracting  rates  for  the  IPA 
2007  had  reached  15%.  Under  Component  I,  three  IPA  2007  projects  were  contracted  and 
under Component II no projects of IPA 2007 were contracted. The Call for Proposal for the 
ERDF South-East Europe under IPA 2007 CBC was launched, but was not yet contracted.  

In  Bosnia  and  Herzegovina,  the  IPA  Framework  Agreement  was  signed  on  20  February 
2008  and  entered  into  force  on  30  July  2008  following  the  ratification  by  Bosnia  and 
Herzegovina's Presidency. However, its tax exemption provisions were not duly implemented 
until  December  2008,  when  Bosnia  and  Herzegovina's  House  of  Peoples  adopted  the 
amendments to the Law related to the VAT exemption of IPA funds, opening the way to the 
implementation of the IPA programmes. Under component II, the Financing Decisions for the 
2008  Cross-Border  Cooperation  programmes  were  adopted  although  the  related  Financing 
Agreements for those programmes were not signed in 2008. This means that there was no IPA 
implementation during 2008 for any of the components. 

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The conferral of management powers for the decentralised management of IPA components I 
to  IV  in  Croatia  was  granted  by  the  respective  Commission  decisions  at  the  end  of  2008. 
These decisions constitute the triggering factor for the deployment of the assistance under the 
IPA  components  I  to  IV.  Consequently  the  financing  agreements  for  the  related  2007 
programmes that operate under decentralised management could not be signed as long as the 
decisions were not adopted. This effectively means that Croatia did not start deploying IPA 
assistance during 2008. 

During  2008  the  first  IPA  2007  projects  under  component  I  were  contracted  in  the  former 
Yugoslav  Republic  of  Macedonia,  reaching  a  contracting  rate  of  25%  at  year  end.  Under 
Component  II,  the  implementation  of  all  IPA  CBC  programmes  was  lagging  behind.  Four 
programmes were adopted towards the end of 2007, and all respective Financial Agreements 
were signed in 2008, but joint management structures were not in place, therefore no call for 
proposal  could  be  launched.  Under  Component  III  and  IV  there  was  no  implementation  of 
IPA Projects in 2008. Some preparatory activities have however started for two major projects 
under  the  Regional  Development  operational  programme  under  Component  III.  Under 
Component  V  for  rural  development,  the  year  2008  was  the  year  of  the  preparation  for 
accreditation of the operational structures so there was no programme implementation. 

Under Component I, the European Commission Liaison Office (ECLO) took proper action to 
ensure  an  effective  implementation  of  IPA  2007  in  Kosovo,  and  the  very  ambitious 
commitment  target  for  2008  was  met.  In  2008  the  ECLO  committed  50%  of  the  IPA  2007 
programme for which it was responsible.  

During 2008, the IPA 2007 programme started to be implemented in Montenegro. By the end 
of  the  year  a  major  road  project  and  justice  reform,  as  well  as  capacity  building  assistance 
were contracted. Additionally, preparatory activities for the implementation of IPA 2008, as 
well as the planning and preparation of IPA 2009 started in 2008. Given that the Financing 
Agreement  for  the  IPA  National  Programme  2007  was  only  signed  in  April  2008  and 
therefore procurement of IPA projects only started in the second half of the year, actual IPA 
programme implementation is still to start. 

No  IPA  programmes  were  implemented  in  2008,  as  the  Framework  Agreement  was  not 
ratified  by  the  Parliament  in  Turkey  and  did  not  enter  into  force  until  24  December  2008. 
Under Component I, the 2007 Financing Agreement was signed and entered into force on 24 
December  2008,  thus  starting  the  implementation  of  this  programme.  Under  Component  II, 
the  2007  Financing  Agreement  on  Turkey's  participation  in  the  ENPI  Black  Sea  Basin 
programme  was  signed  and  entered  into  force  on  31  December  2008.  Implementation  is 
linked to the established conditions set in the conferral of management powers Commission 
Decision  in  an  equivalent  way  as  for  component  I.  As  regards  the  remaining  components, 
actual implementation of programmes has not started pending the conclusion of the necessary 
processes for the conferral of decentralised management powers 

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 implementations of projects 
and programmes. 

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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. It shall meet at least once a year. The IPA monitoring committee is assisted by 
sectoral monitoring committees set up under each IPA component or programme. The sectoral 
monitoring  committees  shall  report  to  the  IPA  monitoring  committee.  The  first  Monitoring 
Committees took place in 2008 in Croatia (on 2 July 2008, preceded in May/June by the first 
sessions of the IPA Sectoral Committees), the former Yugoslav Republic of Macedonia (21 
November 2008) and in Turkey (1 July 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 
2008, as the IPA 2007 and 2008 programmes have only started to be implemented recently. 

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. Multi-annual 
indicative planning documents (MIPDs) shall be subject to regular ex ante evaluation, carried 
out by the Commission. 

In  2008  an  internal  ex-ante  evaluation  of  IPA  with  a  focus  on  MIPDs  was  carried  out.  It 
compared the 2007-2009 MIPDs with the 2008-2010 MIPDs and analysed the improvement 
in the quality, relevance and coherence of the second generation of programming documents 
as well as provide recommendations on how to  improve the  quality  and usefulness of  these 
documents.  

Programmes will 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  include 
identifiable  IPA  component-specific  results.  In  the  event  of  joint  management,  ex  post 
evaluation may be jointly carried out with other donors. 

No programme level evaluation was carried out during 2008 as the implementation of the first 
and second year of IPA only began in 2008 so no lessons can be identified. 

3.3. 

Reporting 

According to Commission Regulation (EC) No 718/2007, the national IPA coordinator must 
send to the Commission and the National Authorising Officer, after examination by the IPA 
monitoring committee, annual and final reports on the implementation of assistance under the 
IPA Regulation.  

Concerning Croatia, the first IPA Annual report was established in August 2008 after the IPA 
Monitoring Committee of 2 July 2008. Concerning the sectoral annual reports, the first yearly 
report  of  the  Transition  Assistance  and  Institution  Building  Committee  was  established  in 
June 2008 after the IPA Technical Assistance and Institution Building Sectoral Committee of 
26  May  2008.  The  first  Sectoral  Annual  Implementation  reports  covering  2007  activities  in 
the  three  operational  programmes  under  component  III  were  submitted  in  2008  to  the 
Commission.  Concerning  the  former  Yugoslav  Republic  of  Macedonia,  the  draft  IPA 

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Annual report was not yet ready to be sent to the members of the IPA Monitoring Committee 
for its examination. 

Concerning  Turkey,  whilst  no  progress  in  implementing  Community  Assistance  could  be 
reported, the Commission based its assessment of IPA as a whole on sectoral annual reports in 
combination  with  state  of  play  reported  at  the  IPA  Monitoring  committee.  The  IPA 
Component  I  Sector  Annual  Implementation  Report  was  submitted  to  the  Commission  in 
view of the IPA component I Sectoral Committee meeting on 12 June 2008. For Component 
II,  it  was  agreed  that  no  sectoral  annual  implementation  report  for  2007  were  required.  For 
Component  III,  The  three  sectoral  annual  reports  covering  the  operational  programmes 
Regional  Competitiveness,  Transport"  and  Environment  were  submitted  to  the  Commission 
by  30  June  2008,  following  their  discussion  and  endorsement  by  the  respective  Sectoral 
Monitoring  Committees.  Finally  for  Component  IV,  On  26  June  2008  the  sectoral  annual 
report  2007  on  the  implementation  of  the  Human  Resources  Development  Operational 
Programme in Turkey was sent to the Commission after having been examined by the HRD 
Sectoral Monitoring Committee in its meeting on 17 June 2008. 

In 2008 there was no reporting on programme implementation under Component V, due to the 
fact that the implementation had not yet started. 

4. 

DONOR  COORDINATION  WITH  MEMBER  STATES  AND  BILATERAL 
DONORS 

On the 23 and 24 October 2008 a Donor Coordination Conference was organised in Brussels. 
The Donor Coordination Conference was organised by the European Commission pursuant to 
the mandate it has received under the IPA Regulation to promote donor coordination together 
with Member States.  

The aim of this Conference was to agree on a series of recommendations on how to improve 
aid  effectiveness  through  joint  actions  by  donors  and  beneficiary  countries  and  how  to 
promote country ownership. Care was taken to avoid the creation of new structures and rather 
build on existing structures and coordination mechanisms and improve their functionality. 

The  main  conclusions  of  the  Donor  Coordination  Conference  were  the  reaffirmation  of  the 
need  for  a  common  strategic  goal  for  assistance  in  the  Western  Balkans  and  Turkey,  a 
consensus  that  the  spirit  and  the  relevant  principles  of  the  Paris  Declaration  on  aid 
effectiveness should guide donor coordination (if all five principles are already built into IPA 
Programming and implementation mechanisms, some areas need to be strengthened) and the 
need  for  Beneficiary  Countries  to  develop  ownership  by  strengthening  their  administrative 
capacity and public financial and procurement systems in order to be able to lead the donor 
coordination  process.  The  Conference  also  highlighted  the  achievement  of  cooperation  and 
synergies  between  donors  of  the  Western  Balkans  and  Turkey  on  the  basis  of  a  clear  and 
reliable  overview  of  donor  activities  in  IPA  countries  and  the  need  to  take  on  board  the 
experience of the countries which joined the EU in 2004 and 2007. Finally, it was concluded 
that  the  IPA  Multi-Annual  Indicative  Planning  Documents  should  become  a  strategic 
instrument  for  donor  coordination  in  Western  Balkans  and  Turkey,  at  EU,  regional  and 
national levels, 

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5. 

CO-ORDINATION WITH THE EIB AND IFIS  

International  Financial  Institutions  (IFIs)  have  been  instrumental  in  providing  access  to 
finance to candidate countries and potential candidates 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  IFI  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. 

The  Commission  is  committed  to  closer  coordination  with  the  European  Investment  Bank 
(EIB),  the  European  Bank  for  Reconstruction  and  Development  (EBRD),  the  Council  of 
Europe Development Bank (CEB) and other IFIs supporting modernisation and development 
in  the  Western  Balkans,  in  particular  through  the  International  Financial  Institutions  (IFIs) 
Advisory  Group  established  in  March  2007  and  chaired  by  the  European  Commission  (DG 
Enlargement). 

The  purpose  of  the  IFI  Advisory  Group  is  to  support  and  improve  the  overall  cooperation 
between  the  IFIs  and  the  European  Commission  in  the  candidate  countries  and  potential 
candidates,  including  cooperation  under  IPA.  The  IFI  Advisory  Group  consists  of 
representatives  from  the  European  Commission,  World  Bank  Group  (IBRD/IFC),  EIB, 
EBRD, the CEB, the Nordic Investment Bank, the Nordic Environment Finance Corporation, 
the Black Sea Trade and Development Bank and the Regional Cooperation Council. Its work 
is part of an overall effort to facilitate integration between the countries of South East Europe 
and  with  the  EU  through  taking  a  regional  rather  than  national  approach  to  infrastructure 
development.  

In 2008, the work programme was implemented as planned. One plenary session was held in 
June 2008 and preparations took place for a second one focused on the international financial 
crisis  to  be  held  in  January  2009.  All  four  Technical  Working  Groups  (transport,  energy, 
environment, and social) continued their activities in 2008. Finally, the secretariat of the IFI 
Advisory Group was taken over by the Commission at the end of 2008 as foreseen after the 
closure of the Joint Commission--World Bank office. 

Pursuant to the Council Conclusions of 14 May 2008, the Commission, the EIB, the EBRD 
and  the  CEB  worked  towards  establishing  a  Western  Balkans  Investment  Framework  with 
other  IFIs  and  donors,  to  further  enhance  harmonisation  and  cooperation  in  investments  for 
socio-economic development and underpin growth and stability in the region. 

Significant  efforts  were  also  made  during  2008  to  continue  the  implementation  of  the  three 
strands  of  cooperation  with  IFIs:  micro,  small  and  medium-sized  enterprises,  energy 
efficiency and infrastructure. 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. The European Fund for South East Europe (EFSE), established in 2005, 
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 

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investments 

infrastructure 

investments.Promotion  of 

of the EU and Member State contribution  is set to attract private capital to invest in micro-
lending.  As  of  the  end  of  2008,  EFSE  was  being  rolled  out  successfully.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  building  and  the  energy  end-use  efficiency  and  energy  services  (including 
renewable  energy).  Furthermore,  the  promotion  of  energy  efficiency  investments  meets  the 
the  European  Commission  Green  Paper  on  Energy  Efficiency 
recommendation  of 
encouraging  International  Financial  Institutions  to  provide  long-term  funding  to  finance 
energy  efficiency 
-  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. 
Insufficient  financial  resources  and  lack  of  experience  in  the  Beneficiaries  in  preparing 
projects suitable for consideration by IFIs and other donors for financing are among the key 
factors  hindering  improvements  in  infrastructure.  Adequate  investment  in  infrastructure  is 
essential  to  ensure  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 included the setting up of a multi-sector multi-beneficiary Infrastructure Projects 
Facility,  which  supports  Beneficiary  institutions  at  national,  regional  and  municipal  level  to 
prepare  and  implement  infrastructure  investment  projects  financed  by  IFIs  and  or  other 
donors. This Facility was made fully operational during 2008 and helps to attains 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  IFI  loans  that  complement  national  IPA  grants.  The  Infrastructure  Projects 
Facility  has  two  components,  the  Technical  Assistance  component  and  the  Municipal 
Window,  which  co-finance,  together  with  IFIs,  actual  investment  projects  in  the  Western 
Balkans.  The  Technical  Assistance  component  was  fully  operational  in  2008  supporting  18 
projects,  while  the  Municipal  Window  was  approved  and  the  first  round  of  projects  were 
submitted for appraisal at the end of 2008.  

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