COMMISSION STAFF WORKING DOCUMENT Background document Accompanying the document Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee 2013 Annual Report on Financial Assistance for Enlargement (IPA, PHARE, CARDS, Turkey Pre-Accession Instrument, Transition Facility)
Date: 2014-09-30
Institutions: European Commission
Subjects: Albania, Bosnia and Herzegovina, Croatia, EU financing, Iceland, Kosovo, Montenegro, North Macedonia, Serbia, Türkiye, pre-accession aid













EUR-Lex - 52014SC0287 - EN











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52014SC0287

COMMISSION STAFF WORKING DOCUMENT Background document Accompanying the document Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee 2013 Annual Report on Financial Assistance for Enlargement (IPA, PHARE, CARDS, Turkey Pre-Accession Instrument, Transition Facility) /* SWD/2014/0287 final */









Table of Contents
A.     FINANCIAL ASSISTANCE TO THE WESTERN
BALKANS, ICELAND AND TURKEY   3
CROATIA.. 4
1.
SUMMARY.. 4
2.
STRATEGIC PLANNING AND PROGRAMMING.. 6
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 9
4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 16
MONTENEGRO.. 20
1.
SUMMARY.. 20
2.
STRATEGIC PLANNING AND PROGRAMMING.. 20
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 224
4.
IMPLEMENTATION MODALITIES AND STRUCTURES. 29
SERBIA.. 33
1.
SUMMARY.. 33
2.
STRATEGIC PLANNING AND PROGRAMMING.. 33
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 36
4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 46
THE
FORMER YUGOSLAV REPUBLIC OF MACEDONIA.. 51
1.
SUMMARY.. 51
2.
STRATEGIC PLANNING AND PROGRAMMING.. 51
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 56
4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 61
ALBANIA.. 66
1.
SUMMARY.. 66
2.
STRATEGIC PLANNING AND PROGRAMMING.. 66
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 70
4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 81
BOSNIA AND HERZEGOVINA.. 84
1.
SUMMARY.. 84
2.
STRATEGIC PLANNING AND PROGRAMMING.. 84
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 89
3.1
IPA.. 89
4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 91
KOSOVO.. 96
1.
SUMMARY.. 96
2.
STRATEGIC PLANNING AND PROGRAMMING.. 96
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 99
4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 104
TURKEY.. 107
1.
SUMMARY.. 107
2.
STRATEGIC PLANNING AND PROGRAMMING.. 107
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 114
4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES. 120
ICELAND.. 125
1.
SUMMARY.. 125
2.
STRATEGIC PLANNING AND PROGRAMMING.. 125
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 126
B.      MULTI - BENEFICIARY.. 128
1.
SUMMARY.. 128
2.
STRATEGIC PLANNING AND PROGRAMMING.. 128
3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013. 133
C.     Evaluation
findings. 138
D.     PHARE, CARDS, TURKEY PRE-ACCESSION AND
TRANSITION FACILITY FINANCIAL DATA AT 31ST DECEMBER 2012 : 142
1.
EU 12 – PHARE and Transition
Facility - Decentralised Management 142
2.
Candidates and Potential Candidates - CARDS (and PHARE for HR) or Turkey
Pre-accession Assistance - FINANCIAL DATA .................................................................................................... 146

INTRODUCTION
The
Instrument for Pre-accession Assistance (IPA) is the means by which the EU
supports reforms in the 'enlargement countries' with financial and technical
help. It accompanies the accession policy, as set out by the European Union,
with a view to implementing Article 49 of the Treaty on European Union which
offers the prospect of EU membership to all European countries that respect the
fundamental values of the EU and are committed to promoting them.  The IPA
funds build up the capacities of the countries throughout the accession
process, resulting in progressive, positive developments in the region. For the
period 2007-2013 IPA had a budget of some EUR 11.5 billion; its successor, IPA
II, will build on the results already achieved by dedicating EUR 11.7 billion
for the period 2014-2020. Beneficiaries for this period were: Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Iceland, Kosovo*, Montenegro, Serbia, and Turkey. Since its entry into the EU, in July 2013, Croatia is no longer an IPA beneficiary, but still benefits from the Transition Facility.
In
2013, the enlargement countries further advanced on their path towards the
European Union. There were a number of positive developments in the candidate
countries[1] and
potential candidates[2],
including progress made on EU-related reforms. Accession negotiations with Iceland were put on hold by the Icelandic government in May 2013 and will only be resumed
by the Icelandic side if the government decides to continue on the path towards
EU membership.
The
policy objectives of the Commission in the field of enlargement are supported
by the Instrument for Pre-Accession Assistance (IPA)[3]. The
instrument is the means by which the EU supports reforms towards alignment to
EU standards and acquis in the enlargement countries through both
financial and technical help. IPA funds build up the capacities of the
countries throughout the accession process, thus resulting in progressive,
positive developments in the region. 
IPA
replaced the previous instruments for pre-accession: PHARE, ISPA, SAPARD, the
pre-accession instrument for Turkey, and the financial instrument for the Western
Balkans, CARDS. Since 2007, the enlargement countries have
received EU funding and support through this single channel.
IPA
is divided into five components:
o   I
(Transition Assistance and Institution Building)
o   II
(Cross-Border Cooperation)
o   III
(Regional Development)
o   IV
(Human Resource Development)
o   V
(Rural Development)
Components
I and II are under the responsibility of the Directorate-General for
Enlargement (DG ELARG) and open to all beneficiary countries. The other
components, aimed at preparing the beneficiaries for the implementation of
structural funds after joining the EU, and were only accessible to candidate
countries and are managed under the responsibility, respectively, of the
Directorate-General for Regional Policy (DG REGIO), the Directorate-General
for  Employment, Social Affairs and Inclusion (DG EMPL) and the
Directorate-General for Agriculture and Rural Development (DG AGRI).
EU
pre-accession funds are a sound investment into the future of both the
enlargement countries and the EU itself. They help the beneficiaries make
political and economic reforms, preparing them for the rights and obligations
that come with EU membership. Those reforms should provide their citizens with
better opportunities and allow for development of standards equal to the ones
enjoyed by the citizens of the EU. The pre-accession funds also help the EU
reach its own objectives regarding a sustainable economic recovery, energy
supply, transport, the environment and climate change, etc.
The
2013 Annual Report is an occasion to look back at success stories and lessons
learnt from IPA which can help shape future assistance under the new IPA II for
2014-2020 .
The
present Staff Working Document accompanies the Communication presenting an
overview of the achievements of IPA in 2013.
              A.      FINANCIAL
ASSISTANCE TO THE WESTERN BALKANS, ICELAND AND TURKEY
              
              CROATIA

1. SUMMARY

Throughout
2013 Croatia continued to actively implement measures to further strengthen its
capacity to meet the obligations of membership to the European Union (EU).
Since 1 July 2013, Croatia has been an EU Member State.
Under
the National Programme for IPA Component I, the first six months allocation for
2013 was adopted in 2012 together with the IPA 2012 Transition Assistance and Institution   Building allocation. The total amount of the 2012 and 2013 National
Programmes was EUR 46.80 million (2012: EUR 35.22 million; 2013: EUR 11.58
million). 
Furthermore,
  Croatia continued to report on a quarterly basis to the Commission on the
achievements in meeting the requirements and benchmarks as regards
transactions, system and its supervision, which were agreed with the Commission
in the “Roadmap to waive ex-ante controls”. After a steady decrease of
rejection rates[4],
the Commission waived ex- ante controls on procurement and grant award
procedures for IPA component III on 24 January 2013, IPA components I and II on
12 February 2013 and IPA component IV on 19 February 2013. Since IPA component
V was implemented from the outset without ex-ante controls, as of 19 February
2013, the whole instrument was implemented in Croatia without prior controls by
the Commission.
As
far as the National Programme for IPA Transition Assistance and Institution
Building (TAIB) 2012 is concerned, the Financial Agreement was signed on 9 May
2013 with final date for contracting 29 November 2016. Concerning the National
Programme for IPA TAIB 2013, the Financial Agreement was signed on 26 July 2013
with a contracting deadline set at 14 January 2017. 
Under
IPA component I and II, an adequate institutional set up for decentralised
management of IPA funds has been fully established. A system with internal
rules of procedure and personal responsibilities was developed. Implementing
and operational agreements have been signed, defining the roles and
responsibilities within the system: between the National Authorising Officer (NAO)
and the Head of the Operating Structure and among bodies and responsible
persons within the Operating Structure. Manuals of procedures were developed
for each body within the system, with a clear description of all processes and
procedures and with audit trails developed. 
The
multi-annual Human Resources Development Operational Programme (HRDOP) under
IPA Component IV for the period 2007-2013 aimed at supporting Croatia in policy
development as well as preparation for the implementation and management of the
Union's cohesion policy; in particular regarding the European Social Fund. In
line with the Multi-annual Indicative Planning Document (MIPD), it focused on
tackling unemployment through targeted actions; promoting social inclusion,
reducing the barriers to employment, facilitating the delivery of new,
high-quality VET curricula as well as developing the administrative capacity of
the institutions in charge of the implementation.  An increasing policy focus
has been placed on improving the adaptability of enterprises and workers since
2011. A new priority axis has been introduced in 2012 targeting the civil
society organizations and the promotion of social dialogue. 

2. STRATEGIC PLANNING
AND PROGRAMMING 

2.1. Multi-annual Indicative Planning
Document (MIPD)
The
Instrument of Pre-accession Assistance (IPA) support for the period 2012-2013
had a strong focus on the new sector approach developed for IPA. A positive
effect of this new approach was the more targeted assistance allowing easier
identification of the remaining gaps as well as improved donor coordination. 
During
the first six months of 2013 EU assistance continued to be provided in the
following sectors:
1.      Justice
and home affairs and fundamental rights;
2.      Public
administration reform; 
3.      Environment
and climate change; 
4.      Transport;

5.      Private
sector development; 
6.      Social
development; 
7.      Agriculture
and rural development. 
Table 1: MIFF[5]
allocations per component, in million EUR
 Component || 2011 || 2012 || 2013 || 2011-2013 
 I – Transition Assistance and Institution Building ||    39.96 ||    39.97 ||  17.44 ||          97.37 
 II – Cross-border cooperation ||    15.87 ||    16.44 ||    9.75 ||          42.06 
 III – Regional Development ||    58.20 ||    57.45 ||  30.09 ||        145.74 
 IV – Human Resources Development ||    16.00 ||    15.90 ||    8.55 ||          40.45 
 V – Rural Development ||    26.50 ||    25.82 ||  27.70 ||          80.02 
 TOTAL ||  156.53 ||  155.59 ||  93.52 ||        405.64 
2.2. Programming
2.2.1. IPA Component I   
The
most important strategic document for the IPA Programme is the MIPD. The
purpose of the document is to set out the EU’s priorities for assistance to the
beneficiary for a three year programming period. Apart from its multi-annual
nature, the MIPD is reviewed annually. 
The
programming process for 2012 and 2013 was conducted in parallel starting from
September 2011. According to the Croatia MIPD 2011 – 2013, the focus of the
programming under the IPA 2012/2013 National Programme was primarily on the
following MIPD sectors: Justice, Home Affairs and Fundamental Rights and Public
Administration Reform. The needs identified under the other sectors are mainly
covered by the IPA components III-IV. With regard to the programming context,
the IPA 2012/2013 National Programme was the last programming cycle, with the
sector approach partially applied to Croatia. Programming of the IPA programme
for the last two consecutive years, had been officially concluded with the
ratification process in December 2013 for programming year 2012 and at the
beginning of January 2014 for the programming year 2013.
2.2.2
IPA Component II
After
the accession, the new Croatian Managing Authority (Ministry of Regional
Development and EU Funds, of the Republic of Croatia) started its negotiations
with the neighbouring IPA countries on the preparation of the next programming
period 2014-2020. Subsequently, two new programmes were agreed to be launched:
Croatia-Serbia and Croatia- Bosnia and Herzegovina and Montenegro, under the share management principle. Following the European Commission’s
favourable opinion to the preparation of the programmes falling under IPA,
namely Croatia-Serbia  (Future IPA CBC programmes between Croatia and
beneficiary countries, Ref. Ares(2013)3245615 - 15/10/2013), the Republic of
Croatia and the Republic of Serbia have decided to establish a Task Force for
the preparation of the programming period 2014 – 2020. Its first meeting took
place in November 2013.
2.2.3.
Transition Facility 
The
Transition Facility programme for Croatia for the year 2013 aims at providing
assistance in the area of Justice, Fundamental Rights and Home Affairs, Public
Administration Reform and Administrative Capacity Development, as well as the
Implementation of the EU acquis.
Overall,
the programming process for the Transition Facility programme for Croatia has been defined in article 30 of the Accession Treaty. This article establishes
the Transition Facility, with commitment appropriations of EUR 29 million in
total for 2013 to continue to support the Republic of Croatia in its efforts to
further develop and strengthen its administrative and judicial capacity to
implement and enforce EU law.
The
programming of the Transition Facility was initialized at the beginning of
October 2012, based on the information and instructions regarding the
Transition Facility provided by DG ELARG. In the first stage of programming the
potential beneficiaries drafted “Transition Facility Priority Assessment
Templates” in which they identified and justified priorities and operations for
financing under the Transition Facility. At the end of November 2012, the
Ministry of Regional Development and EU funds (MRDEUF) submitted to the Commission
the first package of the programming documents for the Transition Facility.
Following the programming mission in December 2012, beneficiaries with the support
of the DSP(?) within the MRFDEUF continued to
work on further elaboration of project proposals in the form of Operation Identification
Sheet (OIS). First drafts of respective OISs for project proposal were
submitted in February 2013. From March until October 2013 the Commission provided
three rounds of comments on the OISs while beneficiaries and NIPAC updated OISs
accordingly. Final versions of OISs were sent by the MRDEUF on 3 October 2013. The
Commission adopted the Transition Facility Programme on 22 November 2013 with
implementing decision C (2013) 8057. There are 21 projects approved in the TFP
amounting to 29 million EUR (total budget is EUR 32.1 million). The contracting
deadline is 22 November 2016.
2.2.4 Component III
Under
IPA Component III, "Regional Development", the programming exercise
continued to follow a multi-annual approach, mirroring the Cohesion and
Structural Funds programmes. 
The
three Operational Programmes related to the Environment, Transport and Regional
Competitiveness sectors focus on the support of the reforms and projects in the
following sectors: the development of waste management infrastructure, the
improvement of the water supply and the waste water management systems, the
upgrading of the rail and inland waterway systems, the support of business-related
infrastructure, to the technology transfer and support for the Small and
Medium-Size Enterprises (SMEs).
In line with the
provisions of the accession Treaty[6]
the pre-accession IPA programmes under the component III (Regional development)
have been revised following the accession. They became programmes under the
Cohesion policy, co-funded by European Structural and Investment Funds. Their
strategic focus remained unchanged; their implementation period were extended
until the end of 2016, and a new allocation of million EUR 378.2 of European
Regional Development Fund and Cohesion Fund were committed, adding to the
former million EUR 330 of IPA III funds, 
2.2.5 – Component IV
The
Operational Programme for Human Resources Development was modified on 1 August
2012 (Commission Implementing Decision C (2012) 5580). The modifications
consisted of an allocation of additional resources (for 2012 and 2013),
adaptation of indicators and addition of one new priority (Priority 5 -
Strengthening the role of civil society for better governance). Two new bodies
were also included in the Operating structure: the National Foundation for
Civil Society Development and the government's office for NGOs. 
The
Commission Decision on waiving of ex-ante controls by the Commission on the
tendering of contracts and launch of calls for proposals and the award of
contracts and grant was adopted on 19 February 2013. 
2.2.6 Component V
As regards IPA
Component V, the programme was adopted on 25 February
2008 and has been revised six times. The last modifications adopted by the
Commission on 18.10.2013 concerned mainly on the adaptation of financial tables
to take into account: a) the new financial allocation for 2013
according to the MIPD 2011-2013; b) the
automatic de-commitment of funds in 2009 due to the under spending in 2012
("n+3" rule), and c) re allocation of funds between measures and
priorities due to non-implementation of measure 201 – Agri-Environmental
measures and under spending of measure 501 – Technical Assistance.   
This
amendment included the full 2013 allocation, as the programme, contrary to
Components III and IV, is implemented by the end of 2013.

3. IMPLEMENTATION OF EU
FINANCIAL ASSISTANCE IN 2013

In
the following section, some examples are provided to show the objectives and
scope of some successful IPA projects.
3.1
Success stories 
IPA 2010 FF RAC "Strengthening
the Administrative Capacity of CTA on Mutual Cooperation in the Field of
Taxation" (budget: EUR 0.22 million)
 During
the project implementation the cooperation between twinning partners,
beneficiary´s staff and all stakeholders involved was very good. After the
project completion employees of CTA´s Central Liaison Office (CLO) are able to
transfer their knowledge to other CTA´s officials and they are well prepared
for tasks in the area of mutual assistance and cooperation with other EU Member
States tax administrations. Improved procedures, methodological tools and
knowledge acquired within the project will enable CTA staff to keep up with
legislative changes, further improve the working environment according to the
EU legislation as well as continuously strengthen administrative capacities of
the CTA.
IPA 2009 FPP RAC "Further
Enhancing the Functioning of Croatian AFCOS System with the Aim of Efficient
Protection of EU Financial Interests" (budget: EUR 0.21 million)
The
project activities aimed at strengthening the Croatian Anti-Fraud Coordination
Services (AFCOS) system through the adjustment and alignment of the structure
and functioning of the system to the framework of EU Structural Instruments.
The project's scope covered actions improving the overall functioning and
competences of each body in the AFCOS system. Enhanced procedures on managing
irregularities and fraud; cooperation agreements and trainings carried out
within the project contributed to the improvement of the AFCOS system so as to
adjust it to efficient protection of EU financial interests within the EU
Structural Instruments environment. 
IPA 2009 FPP RAC
"Strengthening the Administrative Capacity of the Agency for the Audit of
European Union Programmes Implementation System for the Audit of EU Cohesion,
Agricultural and Fisheries Instruments" (budget: EUR 0.54 million)
This
project had a direct impact on the successful setting up of the system for the
audit of EU Cohesion, Agricultural and Fisheries Instruments through the
development of relevant procedures and improvement of the capacities of the
Audit Authority (ARPA) staff. The activities implemented strengthened the sound
financial management of EU funds in Croatia.
IPA
2008 TW "Development of Probation Service in Croatia"
(budget EUR 1.8 million).
 The
overall objective of the project was to reduce the prison population and
increase the efficiency of the criminal justice system. The project's
activities were implemented successfully. The major results achieved were
strengthening  the capacities of the Ministry of Justice and the probation
service administration, developing an offender assessment tool for risks of
harm and reconviction and criminogenic needs as well as elaboration of a
national register for use throughout the probation service in Croatia.
IPA
2009 SER "Roll-out of ICMS on Selected Municipal Courts" (budget EUR 0.52
million)
 The
overall objective was to support the reform of the judiciary and enhance the
administrative and management capacities of the municipal courts to contribute
to a better and more efficient protection of citizens’ rights. The project
established a more efficient court administration and case management system in
33 selected municipal courts, provided capacity building tools for usage and
administration of ICMS(?) and finally improved the quality of services by
developing the knowledge database available to all Ministry of Justice and
court employees on internal network and also externally to the citizens by
providing the information on case status and an online public notice board
online.
3.2 Overview of the implementation
status of the different instruments and components  
One
of the main objectives of the IPA instrument is that, in addition to supporting
the efforts of the country in the negotiating process, it also prepares the
country for managing the cohesion and rural development instruments, which
become available after accession. In order to achieve this, the full potential
of IPA is reached when the beneficiary country becomes fully responsible for
managing the assistance it receives from the EU without prior controls by the
Commission.
3.2.1. Component I
By
31 December 2013, 66.66% of the IPA TAIB 2010 allocations has been contracted.
With
regards to the IPA TAIB 2011 programme, by 31 December 2013, 3.86% of the IPA
allocation has been contracted. The percentage of IPA TAIB 2011 allocation for
projects under the category "pending" stands at 8.52%. For those
projects selection procedure has been successfully completed and the signature
of contracts is expected in the first and second quarter of 2014. A significant
percentage of the IPA TAIB 2011 allocation (36.38%) falls under the category of
projects that were launched and are now under evaluation.
Under
IPA 2012, the tender for the project "Supply of IT Equipment for the
Customs Administration" was published on 28 June 2013 and was subsequently
successfully completed; which should result in two signed contracts (one for
each of the two Lots) which are expected to be signed at the beginning of 2014
with the value of EUR 1.27 million or 4.22% of allocated IPA funds.
Other
projects are in various stages of preparation of the tender documentation. Launch
of the majority of tenders is expected in the second half of 2014.
3.2.2. Component II  
The
IPA Cross-border Programmes – Bosnia and Herzegovina, Croatia-Serbia and Croatia – Montenegro have been revised in order to include the 2013 allocations till 30 June 2013.
IPA funds for the second half of 2013 are committed through separate Commission
Decisions.
After
the accession, the new Croatian Managing Authority (Ministry of Regional
Development and EU Funds, of the Republic of Croatia) started its negotiations
with the neighbouring IPA countries on the preparation of the next programming
period 2014-2020. Subsequently, two new programmes were agreed to be launched:
Croatia-Serbia and Croatia- Bosnia and Herzegovina and Montenegro, under the shared management principle. Following the Commission’s favourable
opinion on the preparation of the programmes falling under IPA, namely
Croatia-Serbia , the Republic of Croatia and the Republic of Serbia have decided to establish a Task Force for the preparation of the programming period
2014 – 2020. Its first meeting took place in November 2013.
Hungary-Croatia
IPA CBC programme: 
Overall,
3 calls for proposals have taken place under this programme. From among the 42
projects selected in the 1st Call, only one, a large infrastructural project
(developing a waste water treatment plant) was still under implementation at
the end of 2013. In the 2nd Call, 59 projects were initially selected; one
project started with delay. At the end of 2013 only one project was still under
implementation.
The
Joint Monitoring Committee (JMC) selected those projects for which the
additional ERDF funding to the Programme was needed under suspensive clause.
The Commission approved the modified Operational Programme with modifications
resulting from the accession of Croatia. Furthermore, it announced the
definitive amounts of decommitment and commitment resulting from the ERDF money
attributed to Croatia as a new EU Member State.
In
2013, the ERDF funding for the programme amounted to EUR 10.92 million and the
total progamme's ERDF amouted to EUR 54.82 million with 85% co-financing rate.
Slovenia-Croatia
IPA CBC programme: 
The
8th Joint Monitoring Committee of the Programme was set for 17-18 December
2013.
All
project partners' reports for projects co-financed under the 1st
call for proposals have been submitted and validated; whereas some of the final
reports for the 2nd call have not yet been validated.  
39
projects were selected within the 3rd (and final) Call for
proposals. It was agreed that all available money from the 2 previous calls,
together with additional ERDF of EUR 3.8 million, due to the EU accession of Croatia, should be transferred to the selected projects under the 3rd Call for
proposals.
The
Commission approved the modified Operational Programme.
In
2013, the ERDF funding for the programme was of EUR 9.02 million and the total
progamme's ERDF amouted to EUR 44.77 million, with 85% co-financing
rate.
3.2.3. Component III 
Under
IPA Component III, "Regional Development", the programming exercise
continued to follow a multi-annual approach. Three Operational Programmes
related to the Environment, Transport and Regional Competitiveness sectors were
changed to European Regional Development Fund (ERDF) programmes on the 1st of
July 2013. Despite several modifications including the transfer to ERDF and adding
further EUR 450 million to the budget, the strategic priorities of these
programmes remain the same: the development of waste management infrastructure,
the improvement of the water supply and the waste water management systems; the
upgrading of the rail and inland waterway systems, the support of
business-related infrastructure, to technology transfer and support for Small
and Medium-Size Enterprises (SMEs). 
The
IPA III allocations 2007-mid 2013 were also subject to the transfer to the ERDF
and therefore the IPA Component III for Croatia finished with the Accession.
3.2.4.
Component IV
The
Operational Programme for Human Resources Development was modified on 1 August
2012 (Commission Implementing Decision C (2012) 5580). The modifications
consisted of an allocation of additional resources (for 2012 and 2013),
adaptation of indicators and addition of one new priority (Priority 5 -
Strengthening the role of civil society for better governance). Two new bodies
were also included in the Operating structure: the National Foundation for
Civil Society Development and the government's office for NGOs. 
The
Commission Decision on waiving of ex-ante controls by the Commission on the
tendering of contracts and launch of calls for proposals and the award of
contracts and grant was adopted on 19 February 2013. 
3.2.5. Transition Facility
Financial
assistance under the Transition Facility for Croatia is aimed at developing and
strengthening its administrative and judicial capacity to implement and enforce
Union law, as well as to foster the peer exchange of knowledge and experience.
Three priority axes are built upon needs identified by the Accession Treaty.
The priorities are to provide support in the area of Justice, Fundamental
Rights and Home Affairs, Public Administration Reform and Strengthening
Administrative Capacity. The third axis is aimed at assisting the
implementation of the EU acquis with supporting measures related to the areas
of climate change and health and consumer protectionlike:
1.
Improvement of Quality of the National Cancer Screening Programmes
Implementation' - Croatia Transition Facility 2013
2.
'Ensuring Optimal Health Care for People with
Mental Health Disorders'.
All
projects under the Transition Facility are in various stages of preparation of
projects' and tender documentation.
3.2.6
– Component V
As regards Component V, after
some start up difficulties, many problems have been solved and in 2013 the
programme has achieved a cruising speed and intensive implementation is
on-going while the last calls achieved spectacular success in popularity with
the highest number of submitted projects. 
So far, through all 19 calls, Croatia
has received 1153 applications, out of which 184 have been paid (EU
contribution of 33.3 million), 350 have been contracted (EU contribution of 72
million) and about additional 400 are in a processing phase (with the EU
contribution of about 60 million EU).   
However due to increased number of
applications and a long term projects realisation, the de-commitment of  7.4
million out of 26 million from 2010 allocation could not be avoided.
Although
a number and value of submitted projects is satisfactory, Croatia still has to contract about 50% and to pay about 77 % of a total IPARD allocation. 

Moreover in 2013, the Croatian authorities received
conferral of management for the two remaining programme measures, namely
measure 501 "Technical Assistance" and the measure 202 "
Preparation and implementation of local development strategies", followed
by the first call for selection of Local Action Groups (LAGs). Implementation
of the "LEADER approach"[7]
still in the pre accession period is crucial to guarantee readiness of Croatian
LAGs for implementation of long term local rural strategies as a Member State.
Although absorption under IPARD
encountered some difficulties, it must be however mentioned that the
established pre-accession management and control system has been the effective
mean for a comprehensive capacity and institution-building to prepare Croatia for a new RDP as a member state.
3.2.6.
Sigma
During
2013 SIGMA continued to provide support to Croatia in the following major
areas:
Legal
Framework and Civil Service Management
Support
to the Ministry of Public Administration in further developing professional
civil service and adequate human resource management (HRM) practices across the
public administration through:
·          
Preparation
of the strategic documents related to the structural funds to be allocated to
administrative capacity development.
·          
Drafting
of a new code of ethics.
·          
Drafting
of a law on salaries of the public sector.
·          
Advice
on public agencies reform.
·          
Advice
on the quality of public services delivery.
Public
Finance Management
1.                 
Support
to the Ministry of Regional Development and EU Funds (MRDEUF) and the Ministry
of Finance in final preparations for the implementation of the 2014-2020
Cohesion Policy programmes including:
·        
Advice
in drafting the secondary legislation for the 2014-2020 programmes, including
horizontal (common) instructions and guidelines.
·        
Support
in optimising the management and control system for 2014-2020 programmes,
including the system for on-spot controls.
·        
Providing
EU Member States' comparative experience for ad hoc issues emerging in the
course of preparing for the implementation of the 2014-2020 Cohesion Policy
programmes.
2.                 
Support
to the Ministry of Finance in further improving the conditions for financial
management and control, as well as internal audit including:
·        
Support
in conducting internal quality assessment of the internal audit functions in a
way that enables smooth external quality assurance (or verification) according
to the IPPF standards.
·        
Advising
the Central Harmonisation Unit of the Ministry of Finance in practical
preparations for the implementation of the financial management training
programme for different target groups in the public sector.
·        
Support
in adjusting the methodology for the quality analysis of financial management
and control arrangements in budget organisations after the pilot analyses
carried out by the CHU.
Public
Procurement 
Support
to the Ministry of Economy and other institutions relevant to the public
procurement system on:
1.                 
The
preparation for transposition of the new public procurement directives.
2.                 
Advising
on the practical aspects with regard to the better integration of social and
environmental considerations, and the innovation in the procurement
procedures based on EU Member States' comparative experience.
3.2.7. TAIEX
During
the first half of 2013 the EU Delegation to Croatia continued to receive TAIEX
applications for review and approval primarily covering activities in the
following sectors: judiciary and fundamental rights, justice, freedom and
security, public administration, public finance, agriculture and rural
development, environment, consumer and health protection.
As
from 1 July 2013 these review functions have been taken up by the national
authorities in co-ordination with relevant COMMISSION services. 

4. IMPLEMENTATION AND
MONITORING MODALITIES AND STRUCTURES 

Implementation
structures have remained stable since the original conferral of management in
2008 and represent a sound basis for the design of the implementation system of
cohesion and agricultural instruments in Croatia as a Member State. The accession had no impact on internal controls within the system and external
oversight of its functioning and performance.
The
monitoring system is set up by the National IPA Coordinator office to ensure
regular follow-up on the progress made in relation to preparation and
implementation of each project approved for financing through adoption of each
annual national programme.  In particular, the monitoring system provides
support to ensure that project and programme objectives are achieved; and that
projects are sustainable and correspond to the project fiche through the
following mechanisms:
Regular
monthly Project Implementation Unit meetings in the beneficiary institution in
which NIPAC office staff participate and through participation of the NIPAC
representatives in the management boards (Steering Committees) of the projects
which are held quarterly.
1.     
Semi-annual reports on implementation
(i.e. Monitoring reports) for each project approved for financing through IPA
Component I. NIPAC office staff control the quality of the reports; and before
each reporting round, hold workshops for the beneficiaries on the preparation
of the monitoring reports. Point 5.2 of the monitoring report is referring to
the information on the sustainability of the project. Furthermore the monitoring
report template has been expanded, with additional points related to findings
of the on-the-spot checks carried out, and fulfilment of the activities
following the on-the-spot checks.  
2.     
Following the finalization of the monitoring
reports, implementation reports are prepared which represent a summary of the
key information from the separate monitoring reports; as well as from other
sources of information available to NIPAC office staff. Implementation reports
also cover the part related to the sustainability of projects and their results;
as well as the Sectoral Annual Implementation Report (SAIR).
3.     
Evaluation reports per sectors, as well
as monitoring of the fulfilment of the recommendations given by the evaluators
taken on board in the sectoral monitoring reports/implementation reports, and discussed
at the Sectoral Monitoring Committees and IPA Monitoring Committee.
Recommendations and follow-up activities carried out by beneficiaries or Central
Finance and Contract Authority (CFCA) are monitored regularly at least
biannually through the monitoring system by the NIPAC office.
4.     
The report by the evaluators in the
Country Programme Interim Evaluation 2011 also included analysis on the
sustainability of the projects which were covered by that evaluation and
relevant recommendations which were followed continuously. The TAIB Monitoring
Committee in May 2013 concluded that all recommendations were fulfilled.
5.     
In addition to the above-mentioned,
following the instructions of the Commission, NIPAC office has to prepare an
implementation report for IPA Component I, to be presented to the Transition Assistance
and Institution Building (TAIB) Monitoring Committee. This report also focuses
on the monitoring of the sustainability of projects, both ongoing and
finalized, and their results.
In
general, EU projects have broad and long-term ambitions which go well beyond
the sheer transposition of the acquis. In that sense, the issue of
sustainability of outcomes after the termination of EU funded projects appears
of vital importance. In order to boost the determination of beneficiaries to
ensure the longevity of project results and achievement of envisaged goals the
MRDEUF encourages beneficiary institutions to make assessment and measurement
of performance of the projects in their individual monitoring reports in the
context of giving rationale and more consideration regarding what results have
been achieved and what remains to be done in the projects. 
While
the ownership of beneficiary institutions had already visibly improved in the
course of 2012 throughout the institutions which are contributing to the
successful fulfilment of the projects’ purpose and the achievement of intended
results; this has continued throughout 2013. The capability of the beneficiary
institutions has become even more important in the context of Croatia’s EU accession.  In addition, the EU and national legislation provide a stable
basis for sustainable operations of the assisted institutions. In general, and
in most projects, sustainability is assured by the Croatian Government’s
commitment to the application of EU legislation and to maintaining EU
standards.
An
audit report issued by the European Court of Auditors states that in terms of
results the EU assistance has made an important contribution to building up Croatia’s capacity for managing post-accession funding, including through learning by
doing. At the beginning of 2013, MRDEUF coordinated an inter-institutional
process by creating an action plan according to which the Croatian institutions
are to tackle the recommendations given in the Report of the Court of Auditors,
and to give information on what has been done and what is to be done in order
to finalise the post-accession funds management system. NIPAC’s Office
coordinated an inter-institutional process of updating the activities to be
undertaken according to recommendations with a cut-off date 30 November 2013.
The updated version of the Action plan was sent to the Commission in March
2014.
FINANCIAL DATA (EUR million and %)
              Status of implementation of IPA financial assistance (IPA), as at 31 December 2013 -  implementation under decentralised
management
              
              
              
Status of implementation of IPA
financial assistance, as at 31 December 2013 IPA Component II, implemented
by Regional Policy DG
 IPA CBC || Committed || Paid until 31 December 2013 || Percentage 
 Hungary- Croatia || -Committed amount before the accession= 52.433.025 -Further to the accession of Croatia to the EU = 54.823.266   || 27.760.361,17    (Incl. Advance payment because of the accession of Croatia to the EU= 1.142.400,00)   || 60%   
 Slovenia-Croatia || -Committed amount before the accession= 42.703.502 -Further to the accession of Croatia to the EU = 44.774.910 || 20.976.325,64  (Incl. Advance payment because of the accession of Croatia to the EU= 1.142.400,00)   || 60%   
 Status of implementation of IPA financial assistance (Component III) as at 31 December 2013 (in million EUR) and distribution of total committed funds (2007-2013 allocations) by Operational programme 
 Operational programme (OP) || Committed || Paid* || % (with advance payment) 
 OP Regional competitiveness || 187.78 || 14.57 || 21% 
 OP Transport || 236.98 || 28.67 || 25% 
 OP Environment || 281.10 || 2.33 || 21,05 
 Total Croatia || 705.86 || 45.57 || 6% 
 * The payment of funds was possible until the end of June 2013. In line with the accession Treaty, the payments were interrupted whilst awaiting the favourable opinion of the Commission regarding the compliance of the management and control system for the three programmes; which occurred in April 2014. 
Status of implementation of IPA
financial assistance (Component IV), as at 31 December 2013 IPA, - implemented
by Employment, Social Affairs and Inclusion DG – Million EUR
 Countries || Allocated || Contracted || Paid || Percentage contracted || Percentage paid 
 Croatia || 92.41 || 43.18* || 44.74 || 45.73 || 48.4% 
* until June 2013
Status
of implementation of IPA financial assistance (Component V), as at 31
December 2013 - implemented by Agriculture and Rural Development DG: 
 Committed || Paid || Percentage paid 
 144.28 || 33.33 || 23% 
              MONTENEGRO

1.
SUMMARY 

As
regards Montenegro,
progress was made in the accession negotiations. In June 2013, the country
adopted comprehensive action plans for chapters 23 and 24. Five new chapters
were opened in December 2013, including the important rule of law related
chapters 23 and 24, bringing the total to 7 opened chapters, of which 2 were
provisionally closed. The screening meetings with Montenegro were concluded in
June 2013. 
The programming and
implementation of pre-accession assistance funds (IPA) for Montenegro during 2013 took place in the context of ongoing accession negotiations. The
reporting period has also been marked by preparations for the transition to the
IPA II framework for the financial period 2014-2020. 
The initial budgetary
allocation for 2013 had already been programmed by the end of 2012. Similarly, Operational
Programmes for 2012-2013 under Component III (EUR 22.24 million) and Component
IV (EUR 5.58 million) were adopted at the end of 2012.
However, additional funds were allocated to Montenegro in the course of 2013,
which were programmed in the second half of 2013 and adopted as amendments to
the 2012-2013 part I and II National Programmes. 
During 2013 Montenegro put significant efforts in the process of conferral of management for
decentralised implementation of IPA funds. Audits were undertaken on IPA
Component I and II, in parallel with the ones for Components III and IV. 
Preparations for IPA II
were launched with the Montenegrin authorities and gained momentum in the
second half of 2013, with a focus on the introduction of the sector approach
and the start of the preparations for the Indicative Strategy Paper for Montenegro. 

2. STRATEGIC PLANNING
AND PROGRAMMING 
2.1.
Strategic planning

The main planning
activities undertaken during 2013 have been focused on the preparation of the Indicative
Strategy Paper, in line with the sector approach foreseen under IPA II. In
January 2013, the IPA II Conference held in Brussels kicked off the IPA II
preparations, outlining to all stakeholders the main features of the new
framework for pre-accession assistance during the next financial period. As a
follow-up of the kick-off conference, a workshop was organised in Podgorica on
the new sector approach methodology and guidelines, with wide participation
from the Montenegrin administration and the international donor community.
The preparation of the Indicative
Strategy Paper for Montenegro has been based on the inputs of the Montenegrin
national authorities; the priorities outlined in the 2013 Enlargement strategy;
the needs identified during the screening exercise and during the start of the
accession negotiations. The experience accumulated in the programming and
implementation of IPA 2007-2013 and the inputs of the EU Delegation in
Podgorica contributed to its preparation. The Montenegrin authorities, under
the coordination of the NIPAC office, submitted to the Commission in May 2013
an overview of the national priorities of Montenegro as outlined in the
Montenegrin Development Direction 2013-2016 and other sectoral strategies, as
well as those priorities that would necessitate financial and technical support
from the pre-accession funds. 
The draft Indicative
Strategy Paper outlines that IPA will continue to support Montenegro throughout
the accession process; not only by providing financial resources, but also by
providing Montenegro with the expertise and technical support necessary for
meeting the EU membership criteria. The emphasis of the assistance will be on
the two most strategic sectors: Rule of law and fundamental rights and
Democracy and governance. In these sectors, IPA will support the implementation
of the Action Plans for Chapters 23 and 24, as well as the reform of the public
administration, the strengthening of civil society and improving public
financial management. 
The Montenegro Strategy
Paper also reflects the recent economic experience in Europe. Contributing to
the socio-economic development and implementing structural reforms will
represent a priority for pre-accession assistance. Therefore, the assistance to
the sectors competitiveness and innovation, as well as education, employment
and social policies will be of crucial importance for ensuring stable economic
growth and convergence towards the EU development standards. Finally, the
sectors agriculture and rural development, environment and climate action, as
well as transport are also key sectors for IPA II assistance not only due to
their strong economic potential, but also because these sectors are investment
intensive and technically demanding.
Table 1: MIFF[8]
allocations per component, in EUR million 
 Component || 2011 || 2012 || 2013 || 2011-2013 
 I – Transition Assistance and Institution Building || 29.84 || 19.61* || 12.36** || 61.81 
 II – Cross-border cooperation || 4.31 || 4.59 || 4.67 || 13.57 
 III – Regional Development ||   || 7.98 || 14.75 || 22.74 
 IV – Human Resources Development ||   || 2.78 || 2.81 || 5.58 
 V – Rural Development ||   ||   ||   ||   
 TOTAL || 34.15 || 34.96 || 34.59 || 103.70 
*
Includes a reallocation from Component V
of EUR 3.26 million, transferred from DG AGRI to DG ELARG and approved by the
Budgetary Authority in September 2012.
**
Includes a reallocation from Component V of EUR 7.29 million, transferred from
DG AGRI to DG ELARG and approved by the Budgetary Authority in November 2013.

2.2
Programming
2.2.1 Component I

The programming of the
initial 2013 allocation was successfully completed in December 2012, with the
adoption of the 2012-2013 TAIB National Programmes (Part 1) and the 2012 TAIB
National Programme part II; the latter including only measures in the
agriculture sector financed from funds that had been reallocated from IPA
Component V. However, during the course of 2013 additional funds were allocated
to Montenegro under IPA Component I, which were subsequently programmed and
adopted as amendments to the 2012-2013 part I and respectively part II National
Programmes.
Firstly, EUR 2.37
million resulting from the recovery of unused funds were allocated to Montenegro for addressing needs emerging from the accession negotiations. These additional
credits were used for two new projects; one supporting the development of a
Schengen Action Plan and a second one strengthening the capacities of the
Ministry of Foreign Affairs and European Integration, as well as topping-up the
Project Preparation Facility and Technical Assistance in addition to the
Support Measures Facility. 
Secondly, the
allocation reserved for IPA Component V, amounting to EUR 7.29 million, was
transferred to IPA Component I. This aimed at avoiding the de-commitment of a
significant amount of the allocation at a later stage, given the delays in the
preparations for conferral of management under Component V. Nevertheless, the
funds have been used in the same sector to support the implementation of rural
development measures in line with the basic rules of IPA Component V. This 2013
additional allocation has been added to the existing IPA 2012 part II National
Programme. Two projects are to be implemented: one project supporting the
establishment and implementation of the Land Parcel Identification Systems
(LPIS) and one project supporting the implementation of IPA Component V-like
measures (grant scheme and technical assistance to be implemented through a
joint management with the World Bank). 
Table 2: Indicative
financial allocations for the year 2013 under the National Programme part I,
per priority axis and per project, in EUR million:
 Priority Sector || Project || EU contribution 
 Sector 1: Justice and Home Affairs || 2.50 
   || 02 – Identifying durable solutions for (I)DPs and residents of Konik camp – II phase || 1.00 
   || 15 - Strengthening the capacities of the Ministry of Interior for the preparation and introduction of the Schengen Acquis || 1.00 
   || 16 - Strengthening the Capacities of Diplomatic-Consular Network of Foreign Affairs and European Integration || 0.50 
 Sector 2: Public Administration Reform || 0.70 
   || 04 - Enhanced statistical capacity and provision of economic and social statistics   || 0.70 
 Supporting programmes || 2.64 
   || 10 - Support for participation in Union programmes || 0.62 
   || 12 - Technical Assistance and Project Preparation Facility (TA/PPF) || 1.12 
   || 14 - Support Measures Facility || 0.90 
 TOTAL || 5.84 
Table 3: Indicative
financial allocations for the year 2013 under the National Programme part II,
per priority axis and per project, in EUR million:
 Priority Sector || Project || EU contribution 
 Sector 7: Agriculture and rural development || 7.28 
   || 02 – Strengthening Montenegrin agriculture through IPARD like measures || 5.28 
   || 03 - Strengthening Montenegrin agriculture with establishing Land Parcel Identification Systems (LPIS) || 2.00 
 TOTAL || 7.28 

2.2.2 Component II 

Montenegro,
together with the neighbouring countries and the Commission, launched in 2013
the preparations for the next generation of cross-border cooperation programmes
for the period 2014-2020; in particular defining the geographic scope and the
thematic priorities.
Under IPA II,
Montenegro will participate in the following IPA CBC programmes: IPA CBC with
Member States: Croatia - Bosnia and Herzegovina - Montenegro and Italy –
Albania – Montenegro (trilateral) and IPA CBC at intra-Western Balkan borders:
Serbia - Montenegro; Montenegro - Bosnia and Herzegovina; Montenegro – Albania
and Montenegro – Kosovo.
Each of the IPA CBC
programmes will focus on a selection of the following thematic priorities, as
listed in Annex III to the IPA II Regulation: (1) promoting employment, labour
mobility and social and cultural inclusion; (2) protecting the environment,
promoting climate change adaptation and mitigation, risk prevention and
management; (3) promoting sustainable transport and improving public
infrastructure; (4) encouraging tourism and cultural and natural heritage; (5)
investing in youth, education and skills; (6) promoting local and regional
governance, planning and administrative capacity building; (7) enhancing
competitiveness, business and SME development, trade and investment; (8)
strengthening research, technological development, innovation and ICT.
Selection of the
thematic priorities will be made jointly by the countries involved in the
cross-border programme, according to the specific situation of the border
region, and finalised in 2014. 
After the
accession, the new Croatian Managing Authority (Ministry of Regional Development and EU Funds, of the Republic of   Croatia) started its negotiations
with the neighbouring IPA countries on the preparation of the next programming
period 2014-2020. Subsequently, Croatia- Bosnia and Herzegovina and Montenegro will form the new trilateral IPA CBC Programme, under the share management
principle

2.2.3 Components III and IV

Following
the adoption of the "Regional Development" operational programme
under IPA Component III and of the Human Resource Development under Component
IV, the Montenegrin authorities officially requested the conferral of
management powers related to these programmes in Spring 2013. Consequently, a Commission
audit missions took place in in April and May 2013, and final audit reports
were communicated in the second half of 2013. The main critical findings
concerned the level of staffing in operating structures; the status of
contracts (permanent vs. short term contracts), the premises of the CFCU, and
the readiness of the Audit Authority. The national authorities have since
reported progress made on the various issues, in particular the nomination of
the Head of the Audit Authority in December 2013.
As
regards support to the implementation of IPA Component III, JASPERS[9]
technical assistance (in the volume of EUR 0,5 million) started in
2013 to provide support to Montenegro with the aim of accelerating the
preparations of projects under component III for the absorption of the EU funds
by supporting the development of a sound pipeline of infrastructure projects.
JASPERS assisted the national authorities with:
–       
Project pipeline development and screening:
advice on the maturity of each project and highlighting outstanding issues
before they are ready for submission to the EU,
–       
Advising on EU submission requirements,
–       
Cost-benefit analysis training covering water
tariff requirements,
–       
Screening of environmental impact assessment
procedures undertaken and general advice on EU requirements
 

2.2.4 Component V 

The
Montenegrin authorities decided during the year 2013 to start
the implementation of the Rural Development Assistance only under the new IPARD
II instrument. For this reason a transfer of appropriations from Component V to
Component I was approved in December 2013 by the budgetary authority, leading
to the adoption of Part 2 of the National Programme for Montenegro under Component I, as detailed in section 2.2.
During 2013, Montenegro continued its preparation for meeting the objectives for the entrustment of
budget implementation tasks for the management
of rural development funds.

3. IMPLEMENTATION OF EU
FINANCIAL ASSISTANCE IN 2013
3.1
Success stories 

IPA
2011 Support to the Integration and Voluntary
Return of Internally Displaced Persons (I/DPs)
and residents of Konik Camp (EUR 1.3
million)
This project aimed at
improving local integration of Roma and Egyptian (RE) IDP families by
facilitating access to legal status, education, health and employment, and
facilitating voluntary return. Regarding education, 62 RE children from the
camp were enrolled into 6 primary schools in Podgorica in 2013 and were
supported in the desegregation process by 72 student volunteers. The number of
children attending morning and afternoon pre-school groups increased from the
60 initially planned to 103. As regards employment, 69 grants for income
generation were awarded and a further 44 people received vocational training.
Roma health mediators were successfully introduced in Montenegro and an assessment of the health situation of all residents of Konik camp was
made. In terms of legal status, over 1,000 documents were obtained from Serbia and Kosovo and financial assistance was provided to 123 beneficiaries to regulate
their status. 278 beneficiaries participated in informative cross-border
pre-return activities, and 4 families (29 people) returned to Kosovo.

IPA
2008-2010-2011 - EU Municipal Development Grant Scheme, Inter-municipal grant
scheme and Technical Assistance (EUR 9.1 million overall IPA contribution) 
Linked to EU grant
funding for improvements to local infrastructure, this programme focused on
supporting local government units in less developed areas in the country, to
remedy regional imbalances and to improve the capacity of local administrations
in strategic planning and in working with EU funds. Various projects
were approved such as a selective waste management system in Danilovgrad,
a tourism strengthening project in Kolasin, or a beach maintenance project in
Ulcinj. Other projects included new local roads, city-street infrastructure,
construction of fire stations, car parks, a refurbished sports hall, or
equipment for improvement of waste-water and water-supply systems. The projects
resulted in immediate improvements of quality of life for local citizens, in a
country where infrastructure is run-down after decades of poor maintenance and
low investment. Other long-lasting results include the creation of a pool of
local trainers and training provided to more than 100 staff from the selected
municipalities. 
IPA
2010 - Strengthening the
Administrative Capacities of the Phytosanitary Directorate of Montenegro (EUR 0.8 million)
The project has
achieved its aim to promote co-operation between plant health services in
Montenegro and the EU, in order to more rapidly detect, identify and control
harmful plant pests and diseases many of which have the potential to devastate
both Montenegrin and European crops and cause serious damage to the economies
of affected countries. As a result of the project much
of the Montenegrin plant health legislation and operational procedures have
been harmonised with those of the EU, and knowledge of harmful pests and
diseases which are potential threats to Montenegro and the EU has been
improved. A new IT system has been developed to improve internal and external
communications and enhance the capacity of the responsible institutions to
respond effectively to future threats from harmful organisms. 

3.2
Overview of IPA implementation in 2013 

Implementation of IPA
projects advanced well in 2013: IPA 2007-2010
Component I Programmes have been fully contracted and IPA 2011-2013 is well
underway. IPA Component II also shows a high rate
of implementation. At the end of 2013, there were 368 ongoing IPA contracts for
a value EUR 105.2 million.
The size of the country, the limited absorption capacity of individual
beneficiary institutions and the high number of CBC projects are, among others,
the reasons for a high number of small value contracts. 
The
implementation of these funds directly contributed to the achievements of the
country during the screening process
in 2013, as most institutions involved in this process benefitted to some
extent from pre-accession assistance.
There were 122 TAIEX
events in Montenegro in 2013. The EU Delegation contracted 1 twinning and 3
twinning light projects with Member States
for a total value of EUR 1.75 million. While Montenegro appreciates the added value of twinning, the number of such projects remains
limited; reflecting the limited capacity in the administration which still needs
to resort largely to technical assistance. IPA
also contributed to the participation of Montenegro to the 5 Union Programmes: Culture
2007-2013; ICT Policy Support Programme, and Innovation specific programme
under the Competitiveness and Innovation Framework Programme; 7th Framework
Programme for Research; Customs 2007-2013.

3.3
Sector I: Justice and Home Affairs and Fundamental
Rights

During 2013, IPA
financial assistance supported the preparation of the Actions Plans for
Chapters 23 and 24 which have been of vital importance for the opening of the
accession negotiations of these Chapters. IPA support contributed to
strengthening the administrative capacity of the law enforcement, judicial and
prosecutorial authorities resulting in the establishment/consolidation of a
track record of investigations, indictments, prosecutions and convictions of
organised crime and corruption cases. The Centre for Irregular Migrants, which
was co-funded by IPA, was opened and put into operation during the reporting
period. Other key deliverables obtained with IPA support include the
preparation and adoption of the Serious and Organised Crime Threat Assessment,
and the implementation of a public awareness campaign on anti-corruption.
Alternative sanctions to detention have been implemented with the support of
IPA assistance which contributed to upgrading the legal and regulatory
framework in line with EU standards and provided the necessary capacity
building/training to ensure adequate enforcement. In the area of fundamental
rights, the key achievements were in gender equality and integration of Roma
and Egyptian population (see project example above). 

3.4
Sector II: Public Administration Reform (PAR)

In the area of PAR, IPA
projects supported the implementation of the new law on Civil Servants and
State Employees and the
preparation of amendments to the Law on Local Self
Governments. Support was also provided for capacity building at local level. IPA
projects supported the development and adoption of 5 new laws and
15 by-laws in the internal market area, and 3 laws and by-laws in the area of
public finance were developed. Significant support was offered to the new
Agency for protection of competition; for the system of state aid and to public
procurement, market surveillance, accreditation and metrology. Special focus
was given for the first time on analysing the deficiencies in the system of
trade with pharmaceuticals and cosmetics. In public finance, the focus was on
preparation for the decentralised management of the EU funds, on
internal and external audit. In the area of statistics, significant support was
delivered for improving the national accounts, business statistics and
agricultural statistics, which allowed Monstat to achieve transmission
of data to Eurostat for 20 domains and 27 sub-domains. 

3.5
Sector III: Environment and climate change 

The projects
implemented during 2013 in the area of environmental protection and climate
change relate mainly to the construction of water and waste infrastructure. For
water, the beneficiary municipalities are Niksic and Pljevlja where the focus
is placed on waste water (the funds are complementing EIB loans), while for
waste 35 collection trucks and over 2,000 containers have been distributed
mainly in the northern municipalities. Moreover, preparation of waste
management strategy and plans has started and awareness actions on the
environment continued. Preparations for an environmental management system, for
an approximation strategy, for a climate change strategy, for the establishment
of Natura 2000 network and assistance to the Operating Structure for IPA
Component III have commenced.

3.6
Sector IV: Transport 

In the transport
sector, IPA activities have continued focusing on railway and maritime
transport.  Technical capacities of relevant maritime authorities have been
further enhanced with the provision of equipment for prevention of sea
pollution from vessels. In the area of railway transport, works were made to further
rehabilitate the railway line Bar-Belgrade. Technical support was provided to
the Railway Infrastructure Company, increasing their capacities in dealing with
the procurement and financial management procedures of the EU and other IFIs.
An important technical
assistance was provided to the Railway Directorate to draft specific secondary
legislation and to provide training on specific issues prescribed by the new
Law on Safety and Interoperability of the Railways. 

3.7
Sector V: Social development 

The reform of the
social protection system as well as the development of the civil society sector
have continued to be priorities under IPA in 2013 and concrete improvements
have been achieved.  A basket of interventions with contribution agreements to
UN agencies and some grants to civil society organisations have made up the
bulk of EU's assistance in this field. The social and child protection system continue
to be modernised through legal harmonisation and rationalisation of standards
and procedures, trainings of stakeholders at service delivery and
administration level (centre for social works particularly), equipment, and
constructions works. A nationwide communication campaign on foster care has
also improved citizens' awareness on needs of children without parental care.
Although a lot remains to be improved, following the results of 2013,
vulnerable groups now receive more focused, better quality and more
cost-effective services and support with less red tape.

3.8
Sector VI: Agriculture and rural development 

The objective in this
area is to support the development of a sustainable agriculture sector and to
assist alignment to the common agricultural policy and EU standards. In
the veterinary area, a wide range of support
resulted in further alignment with the acquis notably for classical swine fever and rabies prevention and control. Capacity
control of rabies and classical swine fever was strengthened with the ultimate
aim of ensuring eradication of rabies and classical swine fever. The
fourth and fifth oral rabies vaccination campaigns successfully continued as
part of an EU wide campaign in the Western Balkans. The capacity of the
forestry sector was strengthened through
the establishment of, and training in, sustainable forest management systems in
line with EU standards. In the area of rural
development, support was given to the Montenegrin
administration to prepare for later decentralised management of EU
pre-accession funds dedicated to rural development.

3.9.
Cross-border Cooperation

In 2013, Cross-border
Cooperation (CBC) continued to be one of the most dynamic sectors under IPA
with 115 ongoing projects. In the framework of the five bilateral CBC
Programmes in which Montenegro participates, during 2013 the last call for
proposals under the CBC programme Albania – Montenegro was evaluated and seven
new projects were selected and contracted. Three new bilateral CBC calls for
proposals were launched with Bosnia and Herzegovina, Croatia and Kosovo. 
Milestones were the
establishment of the Joint Technical
Secretariat (JTS) for the CBC Montenegro-Kosovo
Programme in Peja/Peć with its Antenna in Bijelo Polje and the launching
of the first call for proposals as well as the approval of the strategic
project under the CBC Albania-Montenegro programme with an estimated total
value of over EUR
3 million. Through improving the infrastructure at two important
border-crossing points, the strategic project will have a significant impact
for the cross-border traffic between Albania and Montenegro and has the
potential to foster economic relations and reduce illegal border-crossing
activities. 
Another important step
was the preparation of the Montenegrin Operating Structures for the
decentralised management of the bilateral CBC Programmes. During 2013 the
Montenegrin authorities put great effort in finalising the establishment of the
structures needed to manage CBC and managed to fulfil most requirements.
It is expected that Montenegro will be granted conferral of management powers
for CBC in the near future. 
During
2013, the CBIB+ (Cross Border Institution Building) project published a list of
several best practice CBC projects. Those involving Montenegrin beneficiaries
are the “Summer school of inclusion” under CBC BIH-MNE, “Olympic Hopes” in the
framework of the CBC HR-MNE
Programme, “Active Youth for Active Societies” under the Programme with Serbia and the Project “Marubi - a cooperative model for tourism promotion”- under the Programme
with Albania. For further information, please see: http://www.cbibplus.eu/e-publications.


4.
IMPLEMENTATION MODALITIES AND STRUCTURES

All IPA 2007-2013
programmes under Component I and II were implemented in centralised management
by the EU Delegation. The Operational programmes for components III and IV have
been approved by the Commission in 2012, but implementation has not commenced
pending the completion of the conferral of management process. The approval of
the IPA Rural Development programme under Component V has been suspended as the
IPA Component V funds have been transferred to IPA Component I and will be
implemented in centralised management mode.
Montenegro
has made good progress in terms of preparations for the conferral of
management. Audit missions for IPA Components I-IV took place in April and May
2013, and a follow-up mission in October 2013. 
The verification audit
report from September 2013, outlined 17 high-risk findings and 27 medium-risk
findings in the internal control system set up by the national authorities. All
high-risk findings, except two - related to the premises of the CFCU and the
management of the Audit Authority - were addressed by November 2013, when the follow-up
audit report was issued. In December 2013, following the official appointment
and an interview of the new Head and Deputy Head of the Audit Authority, the
auditors delivered a positive opinion as regards the capacity of the Audit
Authority. 
As
regards IPA Component V, in December 2013 the IPARD Agency and Managing
Authority submitted improved Manuals of Procedures for IPA Component V to the National
Fund NF. Following the progress in preparing the procedures and legal documents
for decentralised management in January, a compliance assessment was launched
by an external auditor, with a preliminary report submitted in February 2014
and an intensive gap-plugging phase by the end of April. The submission of the
accreditation package is expected in the second half of 2014; following the
compliance assessment report. 
The Result Oriented
Monitoring (ROM) contractor produced 23 assessments in 2013 covering IPA
expenditure of a value of EUR18.9 million. There were 14 ROM ongoing
assessments, 12 of which reported satisfactory results, 1 project performing
with problems and 1 non-performing project. For the 9 ROM ex-post assessments,
6 had satisfactory results, 2 had performed with problems and 1 was
non-performing. Overall, there were high (A or B grade) scores for relevance
(91%) and impact (83%). The efficiency and effectiveness scoring for ongoing
projects was better than in 2012 but the effectiveness scoring for the ex-post
reviews was low with 5 (55%) C grades. The lessons learned included some good
examples of twinning, with a mixed participation of "old" and
"new" Member States. The lower ex-post effectiveness scores reflected
the difficulty in several sectors (food, marine fisheries, intellectual
property rights) with institutional development and horizontal cooperation. The
effectiveness of the strengthening of the Audit Authority project was affected
by difficulties in attracting a suitable complement of staff.
There were 48
monitoring missions by Task Managers outside Podgorica in 2013. In addition to
regular ongoing monitoring by Task Managers and Joint Technical Secretariats
(under CBC), three external monitors visited and completed monitoring reports
for 30 grant projects (CBC, EIDHR, Civil Society Facility) in the reporting
period. No major problems were reported. 
In addition to this
in-depth monitoring of the financial assistance, supervision by the Commission
services was done through the participation in an IPA Monitoring Committee
meeting on 23 July 2013, and a "shadow" Sectoral Monitoring Committee
for IPA Component IV on 12 July 2013. These meetings were used to monitor the
implementation of IPA funds and to identify jointly with the national
authorities mitigating strategies/solutions where problems arose. The meetings
were also an opportunity to take stock of the progress in preparing for
Conferral of Management for all IPA Components.
Evaluation
A
country programme interim evaluation of IPA assistance in Montenegro was completed in 2013. It was focused on assessing the effectiveness,
efficiency, sustainability and impact of IPA programmes 2007-2009 in the
sectors of Environment and energy and Agriculture and fisheries and to assess
the extent to which this assistance contributed to the development of the
sectors. The evaluation concluded that the assistance had contributed to the
further development of the sectors, but to varying degrees. The energy
sub-sector especially has made progress in developing by-laws and improving
market rules. There has been clear capacity building in environmental
management, but progress has been more challenging in delivering investments in
waste water and waste. The achievements in the agriculture and fisheries sector
have often been less than expected due to insufficient resources or commitment
of the beneficiary in the areas of rural development.
The
assistance was assessed as efficient and effective. The projects in both
sectors have been mostly implemented in a timely manner and strengthened
capacity in all beneficiary institutions and the public services. However,
effectiveness depends heavily on adequate recruitment of new staff. In some
areas, cost effectiveness has been compromised by the lower than expected
results where the administrative burden exceeded capacity. Human resource
capacity remains a key systemic constraint to effective utilisation of EU funds
in Montenegro.
The
evaluation concluded that prospects for sustainability vary across the sub-sectors
and in the long run, sustainability will depend on additional staff and further
political commitment. Assistance was assessed as contributory in delivering
impact objectives outlined in the European Partnerships. 
FINANCIAL
DATA (EUR and %)
Status of
implementation of financial assistance (IPA Component I + Component II), as at
31 December 2013 
 IPA- ELARG || Allocated || Contracted || Paid || % Contracted || % Paid 
 Montenegro ||   ||   ||   ||   ||   
 IPA 2007 || 27,054,128 || 26,508,864 || 26,228,321 || 97.98% || 96.95% 
 IPA 2008 || 30,047,296 || 29,206,600 || 28,127,629 || 97.20% || 93.61% 
 IPA 2009 || 31,744,421 || 30,761,314 || 28,312,244 || 96.90% || 89.19% 
 IPA 2010 || 30,938,823 || 30,874,989 || 24,706,604 || 99.79% || 79.86% 
 IPA 2011 || 29,693,599 || 13,325,728 || 7,704,585 || 44.88% || 25.95% 
 IPA 2012 || 20,954,779 || 4,640,451 || 1,431,218 || 22.15% || 6.83% 
 IPA 2013 || 16,281,056 || 315,000 || 101,653 || 1.93% || 0.62% 
 Total || 186,714,102 || 135,632,946 || 116,612,253 || 72.64% || 62.45% 
Status
of implementation of financial assistance (Component I), as at 31
December 2013 
 IPA || Allocated || Contracted || Paid || % Contracted || % Paid 
 Montenegro ||   ||   ||   ||   ||   
 IPA 2007 || 23,870,504 || 23,495,717 || 23,301,285 || 98.43% || 97.62% 
 IPA 2008 || 26,800,000 || 26,248,215 || 25,558,344 || 97.94% || 95.37% 
 IPA 2009 || 28,432,179 || 28,118,488 || 26,382,192 || 98.90% || 92.79% 
 IPA 2010 || 28,638,823 || 28,602,291 || 23,328,524 || 99.87% || 81.46% 
 IPA 2011 || 26,493,599 || 11,699,033 || 6,917,918 || 44.16% || 26.11% 
 IPA 2012 || 17,804,779 || 4,325,451 || 1,329,565 || 24.29% || 7.47% 
 IPA 2013 || 13,131,056 || 0 || 0 || 0.00% || 0.00% 
 Total || 165,170,940 || 122,489,195 || 106,817,828 || 74.16% || 64.67% 
Status
of implementation of financial assistance (IPA Component II - CBC), as at 31
December 2013 
 IPA- ELARG- CBC Programmes || Allocated || Contracted || Paid || %Contracted || % Paid 
 Montenegro ||   ||   ||   ||   ||   
 IPA 2007 || 3,183,624 || 3,013,148 || 2,927,036 || 94.65% || 91.94% 
 IPA 2008 || 3,247,296 || 2,958,385 || 2,569,285 || 91.10% || 79.12% 
 IPA 2009 || 3,312,242 || 2,642,826 || 1,930,052 || 79.79% || 58.27% 
 IPA 2010 || 2,300,000 || 2,272,698 || 1,378,080 || 98.81% || 59.92% 
 IPA 2011 || 2,900,000 || 1,626,694 || 786,666 || 56.09% || 27.13% 
 IPA 2012 || 3,150,000 || 315,000 || 101,653 || 10.00% || 3.23% 
 IPA 2013 || 3,150,000 || 315,000 || 101,653 || 10.00% || 3.23% 
 Total || 21,243,162 || 13,143,751 || 9,794,425 || 61.87% || 46.11% 
              
 Status of implementation of IPA financial assistance (Component III) as at 31 December 2013 (in million EUR) and distribution of total committed funds (2007-2013 allocations) by Operational programme – implemented by Regional Policy DG 
 Operational programme (OP) || Committed || Paid || % (with advance payment) 
 OP Regional Development || 22.24 || 0.00 || 0% 
Status of implementation of IPA financial
assistance (Component IV) as at 31 December 2013 (in million EUR) - implemented
by Employment, Social Affairs and Inclusion DG 
   || Allocated || Contracted || Paid || Percentage contracted || Percentage paid 
 Montenegro || 5.58 || 0 || 0 || 0% || 0% 
              SERBIA

1.
SUMMARY

The
decision by the June 2013 European Council to open accession negotiations with Serbia followed the historic agreement between Serbia and Kosovo reached in April 2013 in the
framework of the EU-facilitated dialogue. Subsequently, in December 2013, the
General Affairs Council adopted the negotiating framework for accession
negotiations and set the date for the first Inter-Governmental Conference (IGC)
which took place in January 2014.
The
IPA 2013 Annual Programme was adopted in December 2013 and active preparations
for IPA II (draft Indicative Country Strategy Paper) and “decentralised
implementation system”  -DIS  (conferral of management of IPA
components I and II) have taken place throughout 2013.
Serbia
received the conferral of management for indirect management (formerly called
“decentralised implementation system” - DIS) for the management of IPA funds in
March 2014. The programmed EU contribution regarding IPA Component I, allocated
in 2013 under the National Programme, was EUR 178.78 million. 
In
2013, EUR 89 million were contracted from IPA I (National programmes) and EUR
1.70 million from IPA II (CBC) coming to a total of EUR 95.15 million. Another
EUR 4.4 million were contracted from other budgets (among which: civil society
– EUR 1.97 million and The European Instrument
for Democracy and Human Rights (EIDHR) – EUR 1
million).
The
ownership of national bodies responsible for the IPA programming process
continued to improve; particularly on donor coordination. The programming
exercise benefited from lessons learned when developing the sector approach in
2013.

2.
STRATEGIC PLANNING AND PROGRAMMING
2.1
Multi-annual Indicative Planning Document

The
government of Serbia, local stakeholders, the EU Member States and other donors
have all been consulted on the design of the Multi-annual Indicative Planning
Document (MIPD) for 2011-13, which was the basis for IPA programming 2013. To
achieve the priorities selected for EU support in this programming period, IPA
support primarily focused its assistance on the following sectors: Justice and
Home affairs and Public Administration Reform, as well as Social Development
and Private Sector Development in addition to Transport, Environment and
Agriculture.
During
2013, the EU Delegation continued to play a leading role in donor coordination.
The coordination mechanisms that were established at the beginning of 2009
(regular EU Member State meetings on assistance as well as informal donor group
meetings with donors and IFIs) continued functioning well; bringing added value
to the overall international assistance in Serbia. In 2013, led by the Serbian
European Integration Office (SEIO) and with the strong support by the EU
Delegation, a reform of donor coordination system was started, in order to more
successfully align donor coordination with Serbia's Needs Assessment Document
for International Assistance. In the new set-up, which has now become fully
operational, all sector coordination groups had to be gradually taken over by
the relevant national authorities under the overall coordination of SEIO. A
lead donor will be associated to each of the groups, which have been organised
by sector. 

IPA
II preparation 

Meanwhile,
the Commission in close cooperation with Serbian authorities, main donors and
civil society organisations, prepared the implementation of the new IPA II
framework for the period 2014 – 2020, i.e. the Country Strategy Paper. The
focus of IPA II will be on key sectors, closely linked to the enlargement
strategy, such as democracy and governance, rule of law or growth and
competitiveness. 
Table
1: MIFF[1]
allocations per component, in EUR million:
 Component || 2011 || 2012 || 2013 || 2010-2013 
 I – Transition Assistance and Institution Building || 190.56 || 190.6 ||    196.68 || 577.84 
 II – Cross-border cooperation || 11.32 || 11.50 ||      11.63 || 34.45 
 TOTAL || 201.88 || 202.10 || 208.31 || 612.29 
During
2013 Serbia continued to prepare for the introduction of the indirect
management for IPA components I and II and consequently receiving the conferral
of management for these two components in March 2014. Nevertheless, the
indirect management system will need further improvements after the start of its
implementation. For example, the Commission has noted that further efforts are
needed to ensure an adequate staff recruitment and retention policy in line
with the anticipated workload and considering the risk of possible high staff
turnover. 

2.2 Programming
2.2.1 Component I

The
programming of IPA 2013 took into account the various lessons learned from
previous CARDS and IPA programming exercises: preparedness and maturity of the
selected projects, beneficiary absorption capacity and past achievement records
of implementing institutions. Project maturity was assessed against the quality
of existing project documentation such as needs assessments and feasibility
studies; especially in terms of investment projects involving works and
supplies. In line with the requirements for indirect management, joint
co-financing has become obligatory; increasing the contribution of national
authorities to the programme. The ownership of national bodies responsible for
the IPA programming process continued to rise; which was particularly evident
in the donor coordination aspect. 
The
programming exercise has proven to have benefited from the lessons learned with
the further development of the sector approach in 2013, which led to a smoother
application of the new methodology of programming, including also improved
donor coordination. For example, the programming discussions were largely conducted
in the framework of sector working groups, bringing together relevant
stakeholders in a given sector.
Table
2: Indicative financial allocations for the year 2013 under the National
Programme, per sector, in EURmillion:
 Sector || Total IPA 
 Public administration reform || 11.33 
 Justice and Home Affairs || 23.02 
 Private sector development || 32.15 
 Transport || 16.08 
 Environment, climate change and energy || 38.05 
 Social development || 23.61 
 Agriculture and rural development || 3.23 
 Other EU acquis and horizontal activities || 31.31 
 TOTAL || 178.78 

In addition to the IPA 2013 National Programme for Serbia, EUR 4 million has been allocated for the Tempus programme, EUR 2.5 million for the Civil
Society Facility and EUR 12 million for the Regional Housing Programme for
refugees (Sarajevo process). All these programmes are implemented under the IPA
2013 Multi-beneficiary programme and will be adopted by separate Financing
Proposals. Furthermore, EUR 0.6 million has been re-allocated from Component II
to Component I. Consequently, the 2013 national programme for Serbia (Component I) amounts to EUR 178.78 million.
2.2.2 Component II

Institutional
bodies involved in the programming and implementation of Cross-Border and
Transnational Programmes were already performing their roles, with a setup
which is prefiguring the indirect management system. The conferral of
management for IPA component II was subsequently granted in March 2014.
Serbia participates in
3 intra-Western Balkans Cross Border Cooperation (CBC) Programmes (between Serbia and Croatia, Montenegro and Bosnia and Herzegovina respectively) and one transnational
interregional programme (South East Europe). The impact of CBC in terms of
fostering dialogue and reconciliation is large. The bottom-up approach and
joint dialogue at grass-root level, which is the essence of the CBC produced
direct positive effects on the relations between the countries. CBC programmes
all enjoy a high degree of visibility at  local level.
The Joint Working Group for the future
Romania-Serbia IPA CBC Programme that will be implemented under the shared
management principle met twice in 2013. The preparations for the new programme
between Bulgaria and Serbia are also progressing successfully, the task force
met twice in 2013 as well. Hungary-Serbia has made the biggest progress in this
regard: their Joint Working Group has already met 7 times and begun preliminary
preparations for the new period.
A further increase of
interest was registered in the field of environmental protection, energy
efficiency and rural tourism development. This reflected the early attempt to
improve the efficiency and effectiveness of the management of the CBC programme
in view of the next Financial Perspective.
After
the accession, the new Croatian Managing Authority (Ministry
of Regional Development and EU Funds, of the Republic of Croatia)
started its negotiations with the neighbouring IPA countries on the preparation
of the next programming period 2014-2020. Subsequently, Croatia-Serbia will establish
a new IPA CBC programme, under the shared management principle. Following the
Commission’s favourable opinion on the preparation of the programmes falling
under the Instrument for pre-Accession Assistance (IPA), Croatia and Serbia have decided to establish a task force for the preparation of the programming
period 2014 – 2020. Its first meeting took place in November 2013.

2.2.3 Components III,
IV and V 

The
government has decided not to go ahead with the preparation for the management
of components III and IV under the present Financial Framework. 
Concerning
component V, the required structures, i.e. the future paying agency and the
future managing authorities, continued the setting-up process during 2013 with
the support of both a twinning project and a technical assistance project.
However, due to delays in preparations for the conferral of management, it was
ultimately decided not to allocate funds for component V in 2013.

3. IMPLEMENTATION OF EU
FINANCIAL ASSISTANCE IN 2013
3.1
Success stories

IPA 2010 – "Land management" (EUR
2.78 + EUR 1 million Member State contribution – German Ministry of
Cooperation BMZ)
Land
consolidation, effective land management in state owned land and the legal
framework of land issues are not only a problem stemming from centralised
planned economies such as the former Republic of Yugoslavia but also present a
significant challenge in several EU Member States. This project based its
inputs on EU Member States experiences to enhance and enrich technical
assistance with lessons learnt in order to improve Serbia's land management in
private and public properties.  The programme started with pilot projects
for land consolidation  and reduction of abandoned land in 2013 in 7 pilot
municipalities in south east Serbia on an area of 1,968 ha, introducing
new standards such as participation of land owners and users, environmental
assessments and other checks and balances to the processes. Acknowledging the
benefits of the approach, the beneficiary institutions and 3 municipalities
have already extended to an area of 5,273 ha. The average size of a land parcel
will rise from currently 0,21 ha by at least 40%. Furthermore the share of
abandoned land in the pilot areas will be reduced by at least 10%. The benefits
of such a program over time will include increased production and employment,
improved infrastructure, more accurate property registers and cadastral maps in
rural areas. 
IPA 2009 – "Improvement of Preschool Education
in Serbia" (EUR 2 million service contract + EUR 1.75 million supply
contract)
This
project aimed at increasing the number of children attending pre-schools
activities through several measures. The main beneficiaries of this project
were marginalised children, in particular Roma children leaving in settlements.
Specific support was provided for the development of specialised programmes for
marginalised children. More  than 1,000 children (previously not enrolled in
pre-schools) have been reached through these programmes. In order to increase
participation and access to pre-school, ten mini-vans and a mobile bus have
been delivered to provide transport for 290 children in nine municipalities. This
support is aimed at reaching socially excluded and vulnerable children from
remote and underprivileged areas. As a direct result, the increase of children
attending pre-school activities increased by more than 14% on average and
reached 50 to 80% for some small and poor rural communities. In addition, seven
prefabricated kindergartens were delivered in 6 municipalities which did not
have enough facilities to accommodate additional children. This resulted in an
additional 450 children being enrolled in pre-school in these targeted
municipalities. In total, more than 1,700 additional children for all 15
municipalities benefited from project activities and support. Compared with the
project's starting total of around 5,700 children enrolled in preschools in the
15 pilot municipalities, project support increased access to pre-school in
these municipalities by almost 30%. Many of the children that benefitted from
the assistance were Roma.

3.2
Overview of IPA implementation in 2013

In
2013, the Commission committed EUR 95.15 million in new contracts and made
payments for EUR 121.06 million, which is above the contracting and payment
targets for 2013. By the end of
the reporting period, EUR 195.95 million remains to be contracted under
centralized management, including the just adopted IPA 2013 programme. The
tendering procedures for the remaining contracts to be committed under IPA
2009, 2010 and 2011 have been initiated to ensure that the remaining resources
will be committed before the end date for contracting. Savings under IPA 2011
are in the process of reallocation.
Serbian
institutions submitted 88 TAIEX applications, of which 76 were accepted. The
largest number of applications was submitted by the Ministry of Agriculture. In
2013, a total of 3,268 representatives of the Republic of Serbia participated
in 104 events organised by TAIEX including study visits, seminars and regional
seminars.

3.3
Sector I: Public Administration Reform

Public Administration
Reform covers a broad area of activities which are reflected in the following
key projects. 
The EUR 2 million
service contract "Reforming policy coordination and the Centre of
Government" started at the end of September 2013. The objective is to
redesign the policy- making structure and processes in the Government so that
the policies are strategic, outcome focused, flexible, innovative and linked to
strategies so that proper policy coordination from the Centre is ensured. The
project touches upon systemic issues of the Government's functioning and of the
policy-making process where improvements are needed.   
The EUR 7.6 million
project (EUR 9.5 million with national contribution) "Modernisation and
strengthening of the institutional capacities of the Serbian Tax
Administration" supported the establishment of an efficient tax
administration in line with EU standards. This requires further modernisation
and strengthening of institutional capacities, both in the tax administration
itself, and in other organisations and bodies involved in the management of the
tax system. The emphasis is on the improvement of business processes; upgrading
of technical infrastructure; improving the knowledge and skills of the employees,
as well as improvement of the services that are being provided for the
taxpayers and citizens.
The EUR 2.5 million
project titled "Strengthening the institutional capacity of the National
Bank of Serbia" (NBS) ended in December, contributing to sustainable
macroeconomic and financial system stability by supporting the NBS in its
efforts to align its standards, rules and policies with those of the European
System of Central Banks as well as to align its activities with best
international practices. The project covered 13 main areas identified as
strategic priorities that need to be fulfilled in order to maintain a stable
and sustainable financial sector. All 178 activities have
been successfully completed.

3.4
Sector II: Justice, Home Affairs and Fundamental Rights 

Important activities
have also been carried out in 2013 in this sector especially improving
capacities of the judiciary system as well as improving implementation of penal
sanctions. 
In terms of supporting
the judiciary system in Serbia, some key projects have been implemented with
the aim of enhancing capacities of staff and improving transparency and
efficiency of judiciary system. In this field, an IPA 2011 project of EUR 3,2
million is specifically devoted to the "Implementation of Justice Sector
Reform and Anti-corruption Policies".
This project has two components. The first component of EUR
1 million aims to contribute to democracy and the rule of law through the
implementation of institutional reforms aimed at preventing and combating corruption
(“Strengthening the Capacities of Law Enforcement and
judiciary in the Fight against Corruption in Serbia”. It is implemented through
a Contribution Agreement with the Council of Europe. In 2013, the project
performed a set of activities, including risk assessments for judiciary
institutions and the Ministry of Interior, as well as capacity building
activities to help law enforcement agencies and the judiciary to detect,
investigate, prosecute and adjudicate corruption cases. The second component consists
of support to the Multi Donor Trust Fund for Justice Sector, implemented by the
World Bank (EUR 2 million). It aims at introducing a sector wide approach in
designing, programming and implementing justice sector reform initiatives. The
most relevant intervention in 2013 was the launching of a Functional Review for
the Justice Sector.
In this field too, the
IPA 2012 project "Implementation of the New Serbian Code of Criminal
Procedure" (EUR 1.7 million)  began implementation in January 2014. It
aims at increasing the skills of judges, prosecutors, police officers and
defence counsel in implementing the new Criminal Procedure Code (CPC),
systematically enforced as of 1st October 2013, at establishing a civil sector
mechanism able to produce fair reports and assessments of the CPC
implementation and at increasing awareness about witnesses’ and victims’
protection needs in criminal proceedings. 
In the fundamental
rights field, the EUR 1.5 million project “Implementation of
Anti-Discrimination Policies in Serbia" aims at strengthening the
institutional capacity of the Office for Human and Minority Rights and the
Office of the Commissioner for the Protection of Equality with a view to
increase the alignment of anti-discrimination policies with EU standards and
best practice. During 2013, the project provided training to judges on the
implementation of the new hate crime provisions of the Criminal Code. It also
provided training to over 100 representatives of the Ministry of Interior on
the fight against discrimination and hate crimes, as well as representatives of
the line ministries on the proper monitoring and reporting in relation to
international human rights instruments. Preventative and promotional actions
took place in 11 local self-governments of Serbia, on the prevention of
discrimination and hate speech. 
When it comes to Home
Affairs, the IPA 2011 project “Development of strategic planning at the
Ministry of Interior” (EUR 1.5 million) aims at institutionalizing strategic
planning, strategic management and evaluation and monitoring in the Ministry of
the Interior of the Republic of Serbia. For this purpose to be achieved, the
twining partner assists in applying all modern analytical techniques for a
strategic planning process, establishing a functional strategic planning system
and ensuring continuous improvement of strategic management and accountability
of the institution.
Moreover, the
"Implementation of the Strategy to Fight against Drugs" (IPA 2010,
EUR 1.5 million) project aims at strengthening Serbian institutions in the
sectors of health and home affairs by introducing internationally recognised
best practices in prevention and repression of drug abuse and trafficking from
production to destruction of drugs. 

3.5
Sector III: Social Development

An
IPA 2011 project titled "Enhancing the position of residents in
residential care institutions for persons with mental disability and mental
illness and creation of conditions for their social inclusion in the local
community" (EUR 2 million) is preparing the
transformation plans for 11 residential institutions, a feasibility study for 5
psychiatric institutions and a development plan for cross-sectorial
community-based social and health services. It also helps implement the
transformation and development plans and strengthens capacity at national and
local level to improve range and quality of services for
de-institutionalization of persons with mental health disorders. The project
also provided support to a Grant Scheme (EUR 2.55 million) awarded recently for
the provision of community-based social and mental health services.
The
"Second chance" project (EUR 4.5 million)
introduced the three years cycle of Functional Elementary Adult Education in 78
schools in Serbia. The programme is accredited and is integral part of the
adult education in state schools. It was completed in September 2013.
The
"Modernisation of VET schools in Serbia" (EUR
3.8 million) supported the revision of the curricula in VET, worked on the
National Qualification Framework and supplied equipment worth EUR 2.8 million
to nearly 150 VET schools. This project was closed in August of 2013.

3.6
Sector IV: Private Sector Development

The
IPA 2010 "Integrated Innovation Support Programme – IISP" (value: EUR
3 million) was completed end of December 2013. The project was designed to
address weaknesses in innovation support and innovation management and in
access to equity–based finance in the SME sector in Serbia. The project's main
target group was the SME sector, and over 500 SMEs participated in the various
training and support activities of the IISP. The contribution of the Project to
the development of the Serbian SME sector is positively evaluated. It enhanced
innovation, notably through the development of policy support on EU best practices
in this field, and support to local-level business-research linkages, and
contribution to a pilot project of cluster support. It financed innovation
management training for SMEs. It promoted awareness, promotion and regulatory
reform for equity-based investments and better access for SMEs to potential
investors. Finally, it contributed to the design of a National Innovation
Voucher System, which provides SMEs with small grants to contract small
innovation projects.
The
IPA 2010 project "Strengthening of the Serbian system of Market
Surveillance for non-food and food products" (EUR 2.5 million) had its
implementation peak in 2013. Aiming to improve the market surveillance system
in Serbia to effectively and efficiently perform its tasks and responsibilities
under the new legislation for products' safety and food safety, the project's
ultimate goal is in protecting consumers against products that pose serious
threats to health, safety and the environment. This project has contributed to
the enhancement of the technical capacity of Market Inspection through the
addition of new rules and regulations to the legal framework for product safety
in Serbia, in relation to the acquis, and lead the process of
transposition and implementation of EU regulations and directives. As regards
administrative capacity and coordination, it has helped to introduce and
implement a modern EU-styled approach to market surveillance in Serbia, and to set up a Management Information System, and a Product Safety Council. In
order to improve Market Inspection, the project has contributed to enhancing
the market surveillance authority staff's understanding of legal and
theoretical aspects of new regulations, as well as their surveillance skills
(practical, general, risk assessment, etc.)
The
IPA 2011 project "Enforcement of Intellectual property rights – upgrading
the technical capacities of the institutions involved in withdrawal and
destruction of the goods violating intellectual property rights" that
started in 2013 will as final result have delivery, installation and testing of
the 3 machines for the destruction of counterfeited goods with related training
for handling of the equipment. 
The
implementation of the Higher Education Teaching Infrastructure programme
(HETIP) project (EUR 30 million) started in 2013. The overall objective of
HETIP is to improve the quality of education and training in Serbian higher
education institutions which is required by the new knowledge-based society,
modern learning process, standards of industrial research and emerging labour
market's needs. The specific objective is to improve the teaching
infrastructure facilities. The project covers activities related to the
modernisation of teaching assets (lecture rooms, seminar rooms, labs, etc.).
Extensions to existing university teaching and research rooms to accommodate
more students are also supported. The rehabilitated teaching spaces will be
available for all levels of University students/researchers and there is a
focus on the rehabilitation of teaching areas that are multi-purpose in terms
of accommodating the maximum number of students in modern teaching
environments. Accessibility for students with special needs is incorporated in
the rehabilitation of teaching resources and installation of equipment. The
HETIP programme is implemented through 2 Works contracts and 16 contracts to
supply state-of-art lab equipment. The programme also includes two services
contracts: one is supervising the implementation of the EU-funded works and
supply contracts and the other one is supporting the Project Implementation
Unit which is assisting the Ministry of Science in implementing a EUR 200
million EIB loan to be invested in research and science infrastructures.  

3.7
Sector V: Transport

The
project "River Information Services"
(IPA 2007, EUR 11 million) was finalised in 2013. The goal was to improve the
inland waterway transport system on Euro Corridor VII (Danube) in Serbia, enhancing the traffic safety by monitoring and managing the traffic on the Danube waterway.
The project has been extended to the Sava River. Attention has to be paid to
allocation of national funds after the end of the project in order to secure
its sustainability.
"Technical
Assistance to Serbian Railways in restructuring of selected fields "(IPA
2008, EUR 0.5 million) assists in the implementation of the organisational reform of Serbian
Railways in line with EU Directives. Implementation of separation of accounts with
implications regarding full knowledge of costs, Public Service Obligation (PSO)
contracts, Serbian asset evaluation and other specific technical issues. The
implementation of the project was suspended due to the delayed adoption of
establishing acts for new subsidiaries (infrastructure manager, freight
operator, passenger operator, asset management) in Joint Stock Company Serbian
Railways. The contract was finalised in 2013. 
The
project "Preparation of Documentation for River Training and Dredging
Works on selected locations along the river Danube" (IPA
2010, EUR 2.2 million) will contribute to the restoration and creation of safe
and swift navigation on the Danube River (Corridor VII) in full accordance with
the Danube Commission requirements, EU standards and legislation of the Republic of   Serbia. The service contract is preparing the project documentation for
dredging and river training works on selected critical navigational sections of
the Danube River identified in the Inland Water Transport (IWT) Master Plan.
The implementation is ongoing until summer 2014.
The
project "Modernization of Railways" (IPA
2011, EUR 8.3 million) will prepare the project documentation for the upgrade
and modernization of the railway line between Novi Sad–Subotica-Hungarian
Border and the preparation of project documentation for the construction of a
railway bypass around the City of Niš. Both contracts commenced in
June/September 2013. 
The
project “Supervision of road construction works
on the Corridor X” (IPA 2010, EUR 10 million) will ensure
the efficient and effective supervision of motorway construction works on
selected Corridor X sections in line with the "Fédération Internationale
des Ingénieurs-Conseils" FIDIC rules. The works (along the southern and
eastern branches of Corridor X) are financed by IFIs. The project envisages 3
service contracts. All services commenced in summer 2013 and are ongoing.
The
project “Construction of Zezelj Bridge across
the Danube River in Novi Sad” (IPA 2009, EUR 26.2 million) - The construction
of the rail-road Bridge in Novi Sad includes: (i) preparation of final design
(ii) construction works in the factory and on site; (iii) removal of the
existing temporary bridge. The contract was built around FIDIC Yellow Book. The
project is co-financed from the Serbian side; represented by Serbian Railways.
Contract finalisation deadline was in November 2013 but serious delays have
prolonged the construction period until autumn 2015. The contract is ongoing.
The
project “Supervision of Construction of Zezelj
Bridge across the Danube River in Novi Sad” (IPA 2018, EUR 2 million) provides
technical supervision of works and contract management through activities of
the FIDIC Engineer. The service contract duration, matching the original
timeframe for works had to be extended to follow-up the delayed works. The
contract is ongoing.

3.8
Sector VI: Environment, Climate change and Energy

In
this sector significant progress was made both through closure and start-up of
capacity building interventions as well as the completion of utility
infrastructure.
The
Twinning project "Strengthening Institutional Capacity in Hazardous Waste
Management" (IPA 2008, EUR 1.5 million) closed after 30 months duration in
March 2013. The project delivered proposals for amendments to the Serbian Law
on Waste Management and closed gaps; specifically with regards to provisions
governing the management of hazardous waste. Overall, the draft Law provides
for substantial alignment with the EU Directive 2008/98/EC on waste. Management
plans for special and hazardous waste streams were completed for
asbestos-containing waste; oil wastes, electrical and electronic equipment and
waste electrical and electronic equipment, batteries and accumulators –
providing a broad stakeholder-agreed roadmap for achieving collection, reuse
and recycling targets for these waste streams, and ensuring the orderly
destruction and disposal of non-reusable/recyclable hazardous waste. The
project developed for use by all levels of government a screening method for
classification and prioritisation of contaminated sites requiring remediation –
making an important contribution to the systematic and effective clean-up of
such environmental hotspots. Twinning partners developed a Communication
Strategy focused on active involvement of key stakeholders in the process of
drafting waste management plans; smooth internal information flow and the
dissemination of key messages – with regard to hazardous waste management – to
stakeholders and the general public.
The
project "Strengthening the Serbian
Environmental Inspectorate and Relevant Stakeholders" (IPA 2010, EUR 2.5
million) has helped develop an enabling legislative framework with appropriate
provisions for effective environmental inspection and strengthening of the
necessary inter-institutional cooperation with a view to enhancing
environmental law enforcement in Serbia. Legislative amendments proposed seek
to eliminate overlapping mandates of environmental inspection services; ensure
adequate empowerment and consistency between integrated permitting and
inspection legislation as well as on reporting. Finally, the project developed
a number of tools necessary for the daily work of inspectors such as risk-based
inspection plans, manuals, checklist and guidance documents to help them plan,
implement and assess inspections more effectively. Over 200 national,
provincial and local environmental inspectors and stakeholders such as Serbian
Environmental Protection Agency, Public Health Institutes, Public Prosecution,
Custom Administration, Judiciary, Border Police, Communal Police, and Communal
Inspection were included in the over 50 seminars and workshops that conveyed
best practises from EU Member States in implementing and enforcing
environmental law. The closure of this contract was flanked by the delivery of remaining
items of a EUR 1 million package of IPA 2008 and IPA 2010 supplies providing
for inspector's mobility, field measurement and recording devices so that
infringements in environmental legislation can be more effectively detected and
documented to hold up as evidence in judicial proceedings.
The
Twinning project "Creation of a monitoring reporting and verifying system
(MRV) for the successful implementation of the EU Emissions Trading System
(ETS)" (IPA 2012, EUR 1 million) commenced in September 2013. The project
will develop the legal framework and institutional blueprint for both the
establishment of a credible system for emission data collection, verification
and reporting, and also the free allocation and auctioning of emission rights
of greenhouse gases. Whilst Serbia needs to be ready for joining the EU ETS
only upon accession; the outputs of this project would allow Serbia to reflect on an earlier introduction of a national carbon market to reduce
greenhouse gas emissions and formulate a greenhouse gas reduction commitment as
Party to the UNFCCC. 
The
"Morava regional water supply system" (EUR 9.8 million, IPA 2012)
started in April 2013. The project aims to improve potable water supply to
households of Velika Plana and Smederevska Palanka, to integrate municipal
communal water supply systems and transform them into a technically,
financially and institutionally sustainable regional water supply scheme, and
to create the pre-requisites for sustainable demographic and economic
development in an area with a population of 98,000. 
In
2013, the IPA 2012 project (EUR 1.7 million) titled
"Preparation of the Second Energy Efficiency Plan and Development of
Energy Indicators" started. The project should supplement the energy
balance sheet with data on energy consumption per sector. A detailed database of
energy indicators for the evaluation of the second National Energy Efficiency
Action Plan will be developed. Proper identification and evaluation of measures
will increase energy efficiency resulting in a reduction of energy consumption.
The
IPA 2011 project "Construction and commissioning of the new Waste Water
Treatment Plant at TPP Nikola Tesla" also started in 2013. The project
will significantly reduce the influence of wastewaters, which have huge health
implications for the nearby population, by reducing the concentration of
pollutants.
A
twinning contract titled "Capacity Building for the Energy Agency of the Republic of   Serbia" (IPA 2011, EUR 1.5 million) is now
successfully completed. The project supported the Energy Agency of the Republic
of Serbia (AERS) to perform its role and meet its statutory objectives
regarding enhancing and directing the energy market, to properly ensure
monitoring of the implementation of regulations and energy systems operation
codes, to harmonise activities of energy entities on providing a regular supply
of energy and services to customers and to ensure their protection and equal
position. 
The
IPA 2010 project (EUR 15.5 million) on the
procurement and construction of the Substations 400/110 kV Vranje 4 &
Leskovac 2 is close to finalisation. The project will increase security of the
supply in south Serbia and together with a new transmission line between Serbia and the former Yugoslav Republic of Macedonia, provide development of the regional
electricity market.

3.9
Sector VII: Agriculture and rural development 

The
first seven campaigns of oral vaccination of foxes (which are the main
reservoir and vector for spreading of rabies virus to other animals) against
rabies in autumn 2010, spring and autumn of 2011, 2012 and 2013 yielded further
results: the number of registered cases of rabies identified annually in
animals continued to substantially reduce, and was in 2013 down to only 4. 
Assistance in preparing Serbia's operating structures for the
advent of IPARD continued in the reporting period. The Twinning project “Strengthening
the capacities of the Republic of Serbia for the absorption of EU Rural
Development funds in pre-accession period” (IPA 2007, EUR 2 million) ended in April 2013 after 31 months duration.
The project delivered the draft IPARD 2013 operational programme and left
Serbia's Rural Development Department ready for accreditation as future
Managing Authority. It also completed substantially the procedures for
implementing the programme by the Directorate for Agrarian Payments- designated
as the future IPARD Agency. The IPARD 2013 accreditation objective was
abandoned in mid-2013 in the light of delays experienced in securing an amended
IPA I regulation as the legal base for Serbia to implement IPARD 2013. In order
to assure continuity of support to achieving the long-term objective of having
Serbia's Operating Systems  accredited for IPARD "Assistance to the
Directorate of Agrarian Payments" (IPA 2011, EUR 0,157 million) was launched in 04/2013 to help the Agrarian
Payments Directorate to complete its self-assessment – being the next step in
its preparation for accreditation also for the new financial perspective. This
work was successfully completed in November 2013. The Twinning Light project "Assistance to
Managing Authority of the Serbian Ministry of Agriculture, Forestry and Water
Management (MAFWE)"(IPA 2011, EUR 0.25
million) started work on the new IPARD 2014-2020 operational programme in
September 2013. Effectiveness of EU assistance to IPARD Operating Systems  suffered
from delays in IPARD preparations and lack of resources provided by beneficiary
institutions.
“Capacity Building and Technical Support for the Renewal of Viticulture Zoning and for the
System of Designation for Wine with Geographical Indications” (IPA 2008, EUR
1.2 million) was a project that supported a sector with significant rural
development potential. This measure included a twinning and two supply
contracts, which support the small and medium wine producers in different areas
of Serbia; mainly through the harmonization of the Serbian legal
framework towards the EU standards. The twinning component strengthened
the administrative capacities of the ministry and decentralised governmental
bodies through specialist trainings, study tours and specific technical
assistance from member states. The obligatory vineyard register was established
in 2012 and is extending its database systematically in order to adequately control
European harmonised PDO (Protected Designation of Origin) and PGI (Protected
Geographical Indication). 

3.10
Sector VIII: EU acquis - other horizontal activities

The
latest Project Preparation Facility (PPF5) (IPA 2012, EUR 5.2 million) started
in November 2012. The purpose of this project is to support the Serbian administration
in the programming of the new IPA financial perspective starting in 2014. The
importance of this lies in the fact that the sector approach, introduced with
IPA 2011 and more comprehensively applied in IPA 2012 and IPA 2013, needs to be
fully implemented starting from 2014. Moreover, PPF5 will continue the work of
its predecessors on the development of the project pipeline. A comprehensive
set of criteria was agreed for the project selection using as a starting point
the policy relevance, institutional set-up and a range of factors of maturity.
This has been processed into a methodology for selection of infrastructure
projects with the single project pipeline as the final output. The single
project pipeline should become the only management tool, owned and managed by
the Governmental National Investment Committee, for selection, preparation and
implementation of infrastructure projects funded by EU, IFIs, Member States and national funding, with the aim of being further extended to all donors.

3.11:
Cross-border Cooperation

The
implementation of Component II (Cross-Border Cooperation, or CBC) continued
during 2013 with a number of ongoing projects offering the opportunity to local
communities in the cross border region to address common problems jointly
manner.
The
project "School waste less", funded under the CBC programme Serbia -
Bosnia and Herzegovina (SER-BIH), is a very successful example of cooperation
between two public utility companies (Duboko Sanitary Landfill
from Uzice, Serbia and Komunalac from Tuzla, BIH) and two civil society
organisations (Teachers' Association Opstanak from Serbia and Centre for
Ecology and Energy from BIH). With a relatively small budget (EUR 0.32 million)
the project purchased and installed waste recycling bins in front of 28 schools
in the border towns of Tuzla (BIH) and Uzice (SER) and procured a truck to
transport the waste to centres for secondary waste separation. A wide campaign
aimed at raising awareness about the importance of separate waste collection
and environmental protection was conducted among around 20,000 pupils, their
teachers and the local communities (53,000 citizens of Užice and 117,000 of Tuzla). The introduced method of primary selection is very advanced compared to the national
standard and will continue as a pilot experience to be replicated elsewhere in
the region even after the end of the project. 
In
the Romania-Serbia IPA CBC Programme in 2013 there was no new Call for
Proposals as the programme`s budget had already been committed until 2013. The
n+3 target for the year 2013 was achieved. The Joint Technical Secretariat
(JTS) is fully operational, and implementing the programme accordingly.
In
the Bulgaria-Serbia IPA CBC Programme in 2013 there was no new Call for
Proposals as during the second call many good project proposals were submitted
and a decision was taken to finance those initiatives. The n+3 target for the
year 2013 was also achieved. The JTS in Sofia and its branch in Nis is fully operational, and implementing the programme in a proper way.
The
same was the case for the Hungary-Serbia IPA CBC Programme. In 2013 there was
no new Call for Proposal. The n+3 target for the year 2013 was achieved and the
JTS is fully operational, and implementing the programme successfully.

4. IMPLEMENTATION AND
MONITORING MODALITIES AND STRUCTURES

Monitoring of EU-funded
projects is a core element of the assurance strategy of the EU Delegation. The
monitoring of ongoing contracts is carried out through 3 essential channels:
regular monitoring, external Results Oriented Monitoring (ROM) and internal
monitoring through specific on the spot visits. To further prepare the national
authorities for their role under DIS, findings from the external ROM monitor
are communicated to the Serbia European Integration Office (SEIO) as central
counterpart, which can then follow-up with beneficiaries and report on
corrective actions taken where necessary.
Regular
monitoring:
·        
Monthly
project meetings of the task managers are held with the team leaders of their
projects, beneficiary organisations and other stakeholders. Moreover, quarterly
Steering Committees are held for all institution building projects. In the case
of small grants, meetings are held on an ad-hoc basis depending on
possible problems or complexity in the implementation of the projects. The EU
Delegation’s Heads of Sections have regular meetings with their task managers
to discuss problematic issues. 
·        
Ad
hoc
sector meetings between task managers, beneficiary institutions and other
stakeholders (such as other donors, contractors, project implementation units
or National Authorising Officer (NAO) are organized to discuss relevant
developments concerning both tendering and implementation from the sector point
of view. In the context of moving to sector approach and DIS, Sector Monitoring
Sub Committees (SMSCs) are now being introduced.
·        
Bi-monthly
bottleneck meetings are organised between the EU Delegation and SEIO to discuss
problematic issues that cannot be resolved at the level of monthly meetings and
Steering Committees. 
·        
IPA/Joint
Monitoring Committees: twice a year, programme level monitoring committees are
held with the participation of headquarters at high level to discuss key issues
related to programme implementation. Corrective actions are agreed at these
meetings where problems are identified at lower level monitoring activities.
Results
Oriented Monitoring
Five ROM
missions were made to Serbia in 2013. The missions produced 53 ROM reports
which monitored EUR 166.35 million of IPA national expenditure.  The ROM
reports are divided between 37 ROM ongoing reports and 16 ROM ex-post reports. 
There
were four large IPA projects (primary commitment in excess of EUR 5 million)
assessed in 2013, one of which was assessed twice due to its
significance. The portfolio also includes six small projects (primary
commitment less than EUR 1 million). The DAC criteria scoring for the monitored
projects in 2013 are shown below.
Internal
Monitoring
In 2013, the EU Delegation contributed significantly
to a strengthened monitoring system by introducing corrective actions at all
levels of monitoring. A Joint Monitoring Committee was held, co-chaired by the
NIPAC and DG Enlargement, taking necessary measures on key bottleneck issues at
the programme level. 
In addition to the regular bottleneck meetings,
project steering committees and monthly project meetings are held at project
level. Based on the annual monitoring plan for 2013, both on-the-spot
(internal) monitoring by EU Delegation staff (operations and finance) and external
expert ROM is carried out, ensuring close monitoring and corrective actions
taken. In both types of monitoring the sample of ex-post monitoring was increased
given concerns about the sustainability of results from already completed
projects of the past.
Evaluation
A
country programme interim evaluation of IPA assistance in Serbia was completed in 2013. The evaluation assessed the efficiency, effectiveness, impact
and sustainability of IPA assistance 2007-2009 in two sectors: Administration
Reform/Public Finance Management and Environment with a total EU financial
contribution of EUR
34.90 million. The evaluation reveals that implementation of IPA assistance in
the country has in general been efficient. However, the effectiveness of the
assistance was limited by the limited absorption capacity and a complicated
institutional environment. When outputs are delivered at the end of the
assistance, there is no time to absorb and embed these in the beneficiaries or
assess their functionality.
IPA has made a visible impact to institution
building in those areas of the Stabilisation and Association agreement
underpinned by technical elements of the acquis. Post-election
institutional re-organisations and the lack of a merit-based recruitment and
career progression in the public administration represent some risk to the
sustainability of assistance.
 Relevance || Efficiency || Effectiveness 
 a || b || c || d || n/a || a || b || c || d || n/a || a || b || c || d || n/a 
 51 || 15 || 0 || 0 || 0 || 21 || 35 || 8 || 1 || 0 || 24 || 31 || 10 || 1 || 0 
 77% || 23% || 0% || 0% ||   || 32% || 54% || 12% || 2% ||   || 36% || 47% || 14% || 2% ||   
 100% ||   ||   ||   || 86% ||   ||   ||   || 83% ||   ||   ||   
 Impact || Sustainability 
 a || b || c || d || n/a || a || b || c || d || n/a 
 20 || 26 || 8 || 1 || 10 || 27 || 28 || 7 || 1 || 3 
 36% || 47% || 15% || 2% ||   || 43% || 44% || 11% || 2% ||   
 83% ||   ||   ||   || 87% ||   ||   ||   
FINANCIAL
DATA (EUR and %) 
Status
of implementation of financial assistance (IPA Component I + Component II), as
at 31 December 2013
 IPA- ELARG || Allocated || Contracted || Paid || % Contracted || % Paid 
 Serbia ||   ||   ||   ||   ||   
 IPA 2007 || 174,010,580 || 170,303,761 || 167,200,477 || 97.87% || 96.09% 
 IPA 2008 || 172,229,827 || 166,245,370 || 142,579,911 || 96.53% || 82.78% 
 IPA 2009 || 174,415,926 || 173,452,193 || 161,092,266 || 99.45% || 92.36% 
 IPA 2010 || 177,406,679 || 176,399,412 || 113,445,362 || 99.43% || 63.95% 
 IPA 2011 || 181,156,810 || 143,911,752 || 72,882,914 || 79.44% || 40.23% 
 IPA 2012 || 174,200,995 || 40,228,994 || 15,385,659 || 23.09% || 8.83% 
 IPA 2013 || 181,383,533 || 0 || 0 || 0.00% || 0.00% 
 Total || 1,234,804,350 || 870,541,483 || 672,586,590 || 70.50% || 54.47% 
Status of implementation of
financial assistance (IPA Component I), as at 31 December 2013
 IPA || Allocated || Contracted || Paid || % Contracted || % Paid 
 Serbia ||   ||   ||   ||   ||   
 IPA 2007 || 164,836,352 || 161,327,708 || 158,327,920 || 97.87% || 96.05% 
 IPA 2008 || 168,641,314 || 162,974,089 || 139,812,040 || 96.64% || 82.90% 
 IPA 2009 || 170,551,643 || 169,818,368 || 158,463,925 || 99.57% || 92.91% 
 IPA 2010 || 174,806,679 || 173,874,621 || 111,621,430 || 99.47% || 63.85% 
 IPA 2011 || 178,556,810 || 143,217,163 || 72,353,449 || 80.21% || 40.52% 
 IPA 2012 || 171,600,995 || 40,228,994 || 15,385,659 || 23.44% || 8.97% 
 IPA 2013 || 178,783,533 || 0 || 0 || 0.00% || 0.00% 
 Total || 1,207,777,326 || 851,440,943 || 655,964,421 || 70.50% || 54.31% 
Status
of implementation of financial assistance (IPA Component II - CBC), as at 31
December 2013
 IPA- ELARG- CBC Programmes || Allocated || Contracted || Paid || % Contracted || % Paid 
 Serbia ||   ||   ||   ||   ||   || 
 IPA 2007 || 3,714,228 || 3,516,053 || 3,442,558 || 94.66% || 92.69% || 
 IPA 2008 || 3,588,513 || 3,271,281 || 2,767,872 || 91.16% || 77.13% || 
 IPA 2009 || 3,864,283 || 3,633,826 || 2,628,342 || 94.04% || 68.02% || 
 IPA 2010 || 2,600,000 || 2,524,791 || 1,823,933 || 97.11% || 70.15% || 
 IPA 2011 || 2,600,000 || 694,588 || 529,466 || 26.71% || 20.36% || 
 IPA 2012 || 2,600,000 || 0 || 0 || 0.00% || 0.00% || 
 IPA 2013 || 2,600,000 || 0 || 0 || 0.00% || 0.00% || 
 Total || 21,567,024 || 13,640,539 || 11,192,170 || 63.25% || 51.89% || 
Status of implementation of financial
assistance (IPA Component II – CBC, implemented by Regional Policy DG),
as at 31 December 2013 
 IPA CBC || Committed || Paid until 31 December 2013 || Percentage 
 Hungary – Serbia || 50.112.428   || 34.956.939,11 || 71%   
 Romania- Serbia || 53.116.751 || 25.287.380,29   || 53%   
 Bulgaria - Serbia || 31.369.936   || 12.562.968,39 || 45%   
              THE FORMER YUGOSLAV
  REPUBLIC OF MACEDONIA
1. SUMMARY

In
October 2013, for the fifth year in a row, the Commission recommended the
opening of accession negotiations with the former Yugoslav Republic of Macedonia.
The Council has not yet decided on the Commission's proposal. A High-Level
Accession Dialogue, launched in March 2012, has continued to guide work on key
EU accession related reform priorities, without overriding the standard
pre-accession procedures. 
Regular
political and economic dialogue between the EU and the country has continued
through the Stabilisation and Association Agreement structures. Meetings of the
Stabilisation and Association Committee and the Stabilisation and Association
Council took place in June and July 2013, respectively, as well as of the
Stabilisation and Association sub-Committees and Special Group.
In
line with the 2013-14 Enlargement Strategy, the former Yugoslav Republic of
  Macedonia continues to follow the key policies of the EU accession agenda.
Given the high level of alignment with the acquis, the focus is on implementing
already existing strategies and legislation and on improving related
administrative capacity.
The
management of IPA funds under the Decentralised Implementation System (DIS)
remained challenging for the national authorities throughout 2013. Due to the
intervention of the Commission, the political leadership was mobilised which
helped in preventing greater losses of funds and underscored the country's
interest in IPA assistance. 
Due
to concerted efforts of the national authorities and the Commission, the loss
of funds from Component I was reduced to EUR 3.3 million from a projected loss
of around EUR 15 million. However, procurement delays in all IPA Components
continued to build-up due to understaffing and insufficient managerial
capacities in key institutions. This caused the Commission to announce an
interruption of the payment deadline under Component III in November 2013
(which however was lifted in April 2014). Additional losses of IPA I funds
affected Component IV with around EUR 6 million and Component V with around EUR
12 million.
The
drafting of the IPA II Indicative Strategy Paper 2014-2020 (Strategy Paper)
continued throughout the reporting period, while the formulation of a first IPA
II national programme started to take shape. 
2. STRATEGIC PLANNING AND
PROGRAMMING   
2.1
Multi-annual Indicative Planning Document (MIPD)
The
MIPD 20111-2013 was reviewed for a last time in 2012 and remained the basis for
the implementation of IPA I assistance. The last Multi-annual Indicative
Financial Framework (MIFF) 2013 was adopted on 10 October 2012.
Following
consultations with the Government on IPA II priorities, the Commission
consulted EU Member States, international financial institutions, international
organisations, third countries and non-state actors and developed a
comprehensive draft Strategy Paper. With a view to the needs and capacities of
the country, the following sectors were included into the Strategy Paper:
governance and democracy, rule of law and fundamental rights, environment and
climate action, transport, competitiveness and innovation, education,
employment and social policies, agriculture and rural development and regional
and territorial cooperation. 
In
parallel, the Commission developed an IPA II Multi Country Strategy Paper and
the South East Europe 2020 Strategy, ensuring coordination between the
activities under the future national and regional strategies.
The
design of a first IPA II programme took shape towards the end of 2013. In
consultation with all relevant stakeholders, the Commission and the Government
discussed providing assistance to the sectors of governance and democracy, rule
of law and fundamental rights, environment, transport and competitiveness and
innovation.
Following
the March 2013 local elections, the Deputy Prime Minister for EU Affairs and
National IPA Coordinator (NIPAC), Teuta Arifi, was replaced by Fatmir Besimi.
After a slow-down during the electoral period, the newly appointed Deputy Prime
Minister quickly assumed his new role as NIPAC. 
Although
smaller improvements in the management of the Secretariat for European Affairs
(SEA) were noted during 2013, SEA's capacity to coordinate the programming process
remained weak. In general, the institution's staffing level did not match its
responsibilities with regard to IPA coordination, consultation, programming,
communication, training, monitoring and evaluation. 
The
Commission held regular donor coordination meetings with the World Bank, the
European Investment Bank, the European Bank for Reconstruction and Development
(EBRD), IMF, the German Development Bank (KfW), and the Council of Europe Bank
with regard to current and potential future cooperation. The meetings
underscored the interest of international financial institutions in IPA II.
Regular meetings were also held with Member States’ economic counsellors to
discuss recent macro-economic developments, trade problems, accession
negotiations and other issues regarding the country's European integration
process.
Table 1: MIFF[10]
allocations per component, in EUR million 
 IPA Component || 2011 || 2012 || 2013 || Total 2011-13 
 I (Transition Assistance and Institution Building) ||      29.40 ||       28.66 ||       27.06* ||          85.12* 
 II (Cross Border Cooperation) ||        4.52 ||         3.58 ||         5.09 ||          13.20 
 III (Regional Development) ||      39.30 ||       40.95 ||       50.28 ** ||        130.53 
 IV (Human Resources Development) ||        8.80 ||       10.29 ||       10.64 ||          29.72 
 V (Rural Development) ||      16.00 ||       17.99 ||       20.2̽̽16* ||          54.15* 
 Total ||      98.03 ||     101.47 ||     113.22 ||        312.72 
* An amount of EUR 18
million was subsequently transferred by the Commission in 2013 from IPA Component
V to IPA Component I
**
An amount of EUR 0.5 million out of the 2013 Component III allocation was
dedicated extra-programmatically to JASPERs technical assistance.
2.2
Programming  
2.2.1
Component I 
The
move from a project-based to a sector-based approach in IPA programming proved
to be a challenge for the preparation of the IPA Transition Assistance and
Institution-Building national programme (national programme) 2012-2013. The
national programme was approved by the IPA Committee in 2012, but the Financing
Agreement for national programme 2012 was only signed by the Government on 2
October 2013. The Financing Agreement for national programme 2013 is foreseen
to be signed by the end of 2014. The programming of funds for 2012 and 2013 was
completed in 2012, allowing time for the preparation of the IPA II Strategy
Paper. Table 3 presents the national programme 2012-2013.
Moreover,
at the request of the Government, EUR 18 million of the 2013 allocations under
IPA Component V of DG Agriculture were transferred to Component I of DG
Enlargement. This transfer permitted funds to be made available under a World
Bank municipal development programme and helped to avoid a de-commitment of
this money from Component V, which suffers from a slow pace of implementation.
Table 3: Indicative
financial allocations for the year under the National Programmes, per priority
axis and per project, in EUR million 
 Sector || 2012-2013 Sector and Project Fiches     || Budget (EUR Total IPA +national contribution) 
 Public administration || 10.00 
 Sector fiche || Public administration reform (coordination of horizontal policies, reform of procedures, cooperation with civil society organisations) || 7.24 
 Project fiche || Support for the consolidation of the local self-government system (direct grant to UNDP) || 2.34 
 Justice and home affairs || 17.00 
 Sector fiche || Justice and home affairs and fundamental rights (fight against financial crime and fraudulent use of EU funds, establishment of home affairs data storage and back-up system as basis for future Schengen Information System, protection of personal data, supply of technical equipment and vehicles for law enforcement) || 11.46 
 Project fiche || Strengthening the operational and institutional capacities of the customs administration || 2.00 
 Project fiche || Upgrading the custom clearance facilities of the road border crossing Tabanovce (with Serbia) || 1.88 
 Project fiche || Upgrade of the customs clearance and inspection facilities at the road Border Crossing Kafasan (with Albania) || 1.49 
 Private sector development || 9.37 
 Sector fiche || Private sector development (improvements in business environment, IT equipment for the Ministry of Economy, supply of laboratory equipment for the Bureau of Metrology) || 9.37 
 Environment and climate change || 6.33 
 Sector fiche || Environment and climate change || 6.33 
 Agriculture and rural development || 11 
 Sector fiche || Agriculture and rural development  (land consolidation, farm accountancy data network) || 6.60 
 Project fiche || Further alignment of food safety, veterinary and phyto-sanitary policies with EU requirements (vaccination against rabies) || 3.61 
 Supporting programmes || 14.24 
 Project fiche || Enhanced capacity for effective management and audit of EU funds || 4.0 
 Project fiche || Participation in Union Programmes and Agencies || 10.24 
 Total || 67.94 
2.2.2
Component II
The
programming for the IPA CBC Greece-FYROM and Bulgaria-FYROM 2014-2020 started
in 2013. Ongoing multi-annual bilateral programmes are implemented under
centralised management. Implementation is ongoing and new 2013 Financing
Agreements for the programmes with Kosovo and Greece will be signed in 2014.
The
task force for the future CBC programme between Greece and the former Yugoslav Republic of Macedonia, to be implemented under the shared management, met
for the first time in February 2013. The Joint Working Group for the future CBC
Programme between Bulgaria and the former Yugoslav Republic of Macedonia, also
to be implemented under the shared management, met twice in 2013. 
The
IPA CBC Component II also finances the participation of the country in
transnational cooperation programmes under the Transnational Cooperation
Programme "South East Europe, 2007-2013".
2.2.3
Component III
A
revision of the country's Operational Programme for Regional Development (OPRD)
under Component III did not take place in 2013, since the combined 2012-2013
allocations were added to the OPRD in December 2012.
By
the end of 2013, 37% of overall OPRD allocations under the existing programme
remained to be programmed. The beneficiary institutions capacities to plan and programme
improved only incrementally; especially within the Ministry of Environment, which
made only belated progress towards developing a proper project pipeline and to programme
the remaining funds. 
Insufficient
administrative capacity and lack of ownership or high-level political support
to some of the assistance had a negative effect on IPA programmes under this
Component. This was reflected in delays in programming, procurement and
implementation of the OPRD. The lack of staff in the Ministry of Environment
caused DG Regional and Urban Policy to give advance warning of an interruption
of the payment deadline in November 2013[11].

With
the payments of the invoices under the transport axis linked to Corridor X, the
national authorities were able to avoid de-commitment of funds in 2013, but a
risk of de-commitment of funds from the environmental axis remains.
2.2.4
- Component IV
The
revision of the Operational Programme for Human Resources Development (OPHRD)
was used to add the 2012-2013 financial allocations to the OPHRD, so that 2013
was used to programme these new financial allocations. The programming
exercise, however, was delayed due to a lack of strategic planning capacity in
the line ministries; which had a direct impact on disbursements and de-commitments.
The Commission actively organised greater consultation of different
stakeholders on what type of activities could be programmed under these
operational measures.
Given
the slow implementation of the programme, around EUR 6 million was lost at the
end of 2013 from the programme's financial envelope. By end of 2013 the
contracted amount reached only EUR 15.3 million, i.e. 24% of the whole
financial plan 2007-2013. This contracting rate could lead to further
de-commitments of funds in the years to come.
2.2.5
- Component V 
In
November 2013, the Government submitted a proposal for a fifth modification of
the Instrument for Pre-Accession Assistance in Rural Development (IPARD)
programme. The proposal included an adaptation of the financial tables in order
to take the new 2013 financial allocations and respective de-commitments into
account, as well as a number of technical modifications aimed at facilitating
the implementation of the programme. 
The
modification of the programme also included the transfer of EUR 18 million from
the programme's 2013 financial allocation to IPA Component I of DG Enlargement.
DG Enlargement entrusted the largest share of these funds to the World Bank and
its rural development programme. Having lost around EUR 12 million from the
programme by the end of 2013, this transfer helped to reduce projected losses
of funds from Component V considerably. 
Two
calls for proposals were launched in 2013 for projects linked to the following
measures: 'Investments in agriculture holdings for their restructuring and
upgrading to EU standards' (Measure 101), 'Investments in processing and
marketing of agriculture and fishery products for their restructuring and
upgrading to EU standards' (Measures 103), and 'Diversification and development
of the rural economic activities' (Measure 302). A prior notification for a
January 2014 Call for submission of applications was launched in December 2013.
3. IMPLEMENTATION OF EU FINANCIAL
ASSISTANCE IN 2013
3.1
Success stories
The
following projects contributed to the objectives of the 2011-2013 MIPD:
Project
fiche name: Support for National Police and Criminal Law Reform
Contract
name: Support for National Police and Criminal Law Reform, twinning project
implemented by NI-CO (United Kingdom)
IPA
Programme: IPA TAIB 2009 
Duration:
01 September 2012 – November 2013 
IPA
contribution in EUR:  1,026,000 
The
project was successful in strengthening the field capacities of the Bureau for
Public Security; notably the units on regional and local level, in the area of
criminal investigation, including the cooperation with the public
prosecutor's office. The project helped the Ministry of Interior to improve
its investigative capacity and contributed to the fight against crime.  
Programme
measure: Adult Education 
Contract
name: Strengthening the capacities of the Skopje Centre for Adult Education IPA Programme: IPA
Component IV 
Duration:
October 2011- July 2013
IPA
contribution in EUR: 1,500,000
The
project was successful in improving vocational training in the country;
particularly for people who are socially excluded. Focusing on people who left
school early, as well as on young offenders and on vulnerable groups; the
project strengthened the capacities of the staff at the Centre for Adult
Education to assess training needs, plan curricula and monitor programmes
designed to confer competences. Overall, a quality approach has been brought to
adult education in the country, and the focus on skills certification increased
the self-esteem and employment chances of the target group. 

Programme
measure: Promote and protect the environmental resources of the area
Contract
name: Developing Cross Border Joint Fire Protection Plan
"FIRESHIELD"
IPA
Programme: IPA Component II Cross Border Cooperation with Greece
Duration:
March 2012 – June 2013
IPA
contribution in EUR: 252,039
The
project succeeded in developing a joint cross border fire protection plan; in
reinforcing the capacity of the regional fire departments, increasing
cross-border cooperation and enabling fire departments in both regions to act
more efficiently on two levels: fire protection and fire extinguishing. The
plan focuses on technical requirements and cooperation needed for fire
protection. The target groups involved fire brigades and regional agencies in
both countries across 21 municipalities; benefiting a population of around
300,000 people. As public awareness is crucial for prevention of fires,
FIRESHIELD informed the general public about rules for forest protection and
encouraged fire brigades to work more closely with the public. 
 
3.2
Overview of IPA implementation in 2013 
The Commission's 2013 Progress Report indicated that
the overall administrative capacity needs to be significantly strengthened in
order to push implementation of reforms forward. 
During the reporting period, the contracting efforts
of projects under IPA Component I of national authorities concentrated mostly
on the TAIB Programme 2009, as the programme's contracting deadline expired on
21 December 2013. Following warnings from the EU Delegation in April 2013 on
the risk of high losses of EU funds, particularly from this programme, the
NIPAC (the Deputy-PM in charge of EU Affairs) concentrated his efforts on
minimising potential losses of funds. Despite these efforts, in 2013, de-commitments
of funds affected Component I, as well as Components IV and V in the total
amount of around EUR 21.3 million, which represents around 3.5% of the
country's overall financial envelope for IPA I. 
The delays in the contracting of the assistance
under DIS are rooted in a lack of programming capacities, a lack of staff in
general, a high turnover of staff, insufficient ownership of assistance by the
national authorities, an overly bureaucratic approach by the Operating
Structure in the interpretation of rules and procedures, and insufficient
cooperation between the Central Financing and Contracting Department (CFCD) and
the line Ministries. At the last IPA Monitoring Committee in December 2013 the
Commission underlined the need to address all above-mentioned weaknesses.
Improvements are also needed in the sustainability
of previous IPA assistance and maintenance of IPA funded supplies and
investments, as well as transparency and visibility of EU funded projects. In
order to ensure the sustainability of its assistance, the Commission placed
great emphasis on the meeting of project conditionalities by the beneficiary
institutions. Relevant progress on this will be assessed in the course of 2014.
The SEA has since adopted an action plan to address all shortcomings in a
structured manner.
The Twinning instrument continued to support
different national institutions in their efforts to address the EU acquis
and ensure a closer cooperation with Member States' administrations. In
general, in 2013, the focus was on the preparation and finalisation of twinning
fiches funded under national programme 2010, contracting Twinnings under
national programme 2009 and review Twinning missions funded under national
programme 2008. In 2013, a list of all Twinning projects under all national
programmes was prepared and circulated to Member States in order to plan their
activities and inform them of upcoming projects. 
The
TAIEX instrument is successfully employed by the national authorities as a way
of receiving short-term instituting building assistance. During 2013, 236
applications were processed, 205 of which were approved. The low rejection rate
of 13 % is a result of good cooperation among all relevant stakeholders and
their commitment to ensuring the instrument's successful application.  
3.3
Component I: Transition assistance and institution building (TAIB)
Since
the conferral of management powers to the national authorities in December
2010, starting with the IPA national programme 2009; programmes are contracted
and managed by the national authorities. With the signature of the IPA national
programmes 2009, 2010 and 2011, the national administration has been under
pressure to contract the national programme 2009 on time and clear the backlog
of the 2010 and 2011 programmes. The signature of national programme 2012 in
October 2013 put additional pressure on the "Central Financing and
Contracting Department" (CFCD) and beneficiaries to procure and contract
the necessary funds in good time.
With
substantial guidance and involvement by the Delegation, the CFCD was able to
contract EUR 29.67 million within the deadline (21
December 2013), which represents 89% of the overall allocations (EUR 33
million). A major part of the contracting was only done in the last week before
the deadline expired.
Under national programme 2010, the country has an IPA allocation
of EUR 30.13 million, of which less than 3% was contracted by December 2013. At
that time, the procurement preparation for a number of files in the amount of
approximately EUR 16 million had not begun and there is a considerable risk of
de-commitment of a substantial amount from this programme if corrective
measures are not taken in due course. The deadline for contracting is 1
December 2014.
No single contract has been signed yet under national programme
2011 (EUR 28.90 million – contracting deadline 20 November 2015) and national
programme 2012 (EUR 28.16 million – contracting deadline 2 October 2016) on
which contracting did not take up during 2013.
The EU Delegation remains responsible for centralised
de-concentrated management of IPA national programmes 2007 and 2008 and
Component II programmes, as well as for European Union Programmes and Agencies
2007-2010. National programmes 2007 and 2008 were operationally completed in 2013
and the disbursement rate stood at 86%. 
3.4
Component II: Cross-Border Cooperation (CBC)
In 2013, there were delays in the implementation of IPA Component
II, which led to a transfer of EUR 2.9 million from IPA 2012-2013 CBC
allocations with Serbia and Albania to IPA Component I for those two years. The
national authorities' capacities to manage the CBC programmes remained
insufficient throughout 2013.
In 2013 the 3rd Call for Proposals in the amount to EUR 7.5
million was launched. The JTS is fully operational and, the recruitment for the
Antenna Office in Bitola was finalized in September 2013.
In the cross border programme with Bulgaria, the 3rd Call for
Proposals in the amount to EUR 3.1 million was launched in 2013. The n+3 target
for the year 2013 was achieved. The JTS in Kyustendil is fully operational and
is implementing the programme accordingly.
The first call for proposals for the CBC programme with Kosovo was
launched on 15 November 2013, funded from CBC financial allocations for 2010,
2011 and 2012, in the amount of EUR 3.19 million (EUR 1.62 million for the
former Yugoslav Republic of Macedonia and EUR 1.57 million for Kosovo). The
second technical assistance contract for managing this programme in the amount
of EUR 59,976 was signed with the Ministry of Local Self Government on 8 August
2013.
3.5
Component III: Regional development
Delays in procurement of activities under the OPRD
of Component III continued to put the timely implementation of this programme
at risk. Even though de-commitment of funds from this programme was avoided in
2013, the risk of funds' losses will increase in 2014. By December 2013, only
27.9% of the financial plan 2007-2013 had been contracted. Given that all
projects must be operational by December 2018 at the latest  if the Commission
is not to recover any funds, it is necessary to ensure the timely contracting
and implementation of the programme. 
The physical implementation of infrastructure
projects, which absorb the majority of the funding, is still at an early stage.
During the reporting period, the Delegation had to intervene in the procurement
process for the construction of a waste-water treatment plant in Prilep and
renew the process. In December 2013, with the help of the 'Joint Assistance to
Support Projects in European Regions' (JASPERs), the
Operating Structure applied for EUR 17.6 million to renew and reconstruct the
railway section Bitola-Kremenica along Corridor Xd.
In November 2013, DG Regional and Urban Policy
warned the national authorities of a possible interruption of payments because
of "significant deficiencies in the functioning of the management and
control systems" in the OPRD. This was a consequence of the Audit
Authority's report in June 2013 that "the system for implementation of the
Operational programme for Regional development works but some improvements are
needed".
In December 2013, the national authorities reported
that some of the findings had already been addressed and agreed to implement an
action plan to clear the remaining issues. The national authorities confirmed
that they expected to close all issues by the end of March 2014. 
3.6
Component IV: Human Resource
Development
In
2013, the implementation of the OPHRD of IPA Component IV continued to advance
at a slow pace, adding to a backlog in procurement, which increases
de-commitment risks in the coming years. The total amount contracted by the end
2013 was only EUR 12.9 million, i.e. 23.86% of the financial plan 2007-2013. 
Due
to the late start of the programming of the relevant Operational Identification
Sheets by the Ministry of Labour and Social Policies and the Ministry of
Education, and the late contracting of projects and delays in disbursement of
funds, EUR 6 million were de-committed in 2013. 
Before
the end of 2017, the authorities still need to contract, pay and declare to DG
Employment 76.14% of the funds allocated to IPA Component IV, which constitutes
a major challenge in view of their capacities. The Component stands at risk of
losing additional funds over the coming years.
3.7
Component V: Agriculture and rural development 
In
2013 the Commission, together with the national authorities, continued working
on the accreditation of two additional measures (Rural infrastructure and
Technical assistance) which are expected to contribute to a better absorption
of IPARD funds in the near future.  
By
December 2013, only 8.73% had been contracted out of the 2007-2013 financial
plan and this Component was affected by the highest
de-commitment of funds in 2013 of around EUR 12 million or 96 %
of 2010 IPA allocation. This loss follows a previous de-commitment in 2012 of
EUR 7.2 million which makes the overall situation of the programme very
critical. By 31 December 2013, the overall losses of IPA I funds from this
Component represented 26.6 % of the Component's original IPA allocation.

Efforts
were made on all sides to mitigate the de-commitments in future years. In 2013 EUR 18 million were transferred from Component
V to Component I to this effect. The largest share of the funds is foreseen to
support rural infrastructure through an existing WB programme. Following the
decision of DG Agriculture and Rural development to allow investments in farm
mechanisation, a very large number of applications were received which could
help to improve the absorption of funds. 
The
Commission furthermore intends to support the authorities in addressing key
structural issues in the sector; such as high land fragmentation, lack of
access to credit, and absence of producers groups, which could help in the
implementation of IPARD.  
4. IMPLEMENTATION AND MONITORING
MODALITIES AND STRUCTURES
With
the exception of IPA Component II, all other Components are principally
implemented under DIS. Component I, III and IV are implemented with ex ante
controls, and Component V is implemented with ex post controls. The DIS
structures are responsible for implementing and monitoring the assistance
entrusted to them. 
Generally,
the implementation of IPA I under DIS was negatively affected by insufficient
political commitment and insufficient human and material resources devoted to
EU financial assistance. Major
efforts will also have to be made in 2014 on all sides to ensure timely
contracting, disbursement, quality in monitoring, evaluation and audit, and
sustainability of assistance.
Specific
problems that affect projects under DIS include persistent delays in the
procurement processes which entail risks of de-commitment of funds. The
Commission recommended that the national authorities take the following steps
to address the difficulties: 
a)      Improve
the capacities for strategic planning. 
b)      Improve
the quality of the technical documentation and shorten internal procedures
between CFCD line-Ministries for revision and approval of files. 
c)      Strengthen
the role of the NIPAC and the General Secretariat Unit for Strategic Planning
to ensure proper input from all relevant bodies and synchronise this process
with the budget planning, which should also be medium-term and sector-oriented.
d)     Ensure
a comprehensive stakeholder consultation mechanism, as well as appropriate
structures and mechanisms for Monitoring and Evaluation of the sector
strategies.   
e)      Ensure
adequate staffing of the Operating Structures and better working conditions.
f)       Improve
transparency, visibility, information and communication on EU-funded
assistance.
With respect to DIS managed projects, the EU Delegation remains
responsible for monitoring the Operating
Structures' implementation of programmes and contracts and the functioning of
the DIS system. In the course of 2013, the Commission embarked on a reform of
its ex ante approval system.
Since
the monitoring efforts by the Operating Structure are still limited, despite
the elaboration of a monitoring strategy, the EU Delegation organises regular
on-the-spot checks, partially together with the OS, in order to support their
monitoring and control capacities. 
The
Commission has requested that the monitoring strategy of the DIS structure be
improved and thoroughly implemented. Better use should be made of the
Management Information System (MIS) by the CFCD, to allow the timely update of
procurement plans, financial data, reporting and monitoring. 
The
Sector Monitoring Committees for all five IPA Components and the IPA Joint
Monitoring Committee took place during 2013. The Annual Implementation Report
was submitted on 30 August 2013 and a summary was submitted to the IPA Joint
Monitoring Committee meeting in December 2013.
Results
Oriented Monitoring (ROM)
In 2013, four missions by the ROM Western Balkan team monitored 20
projects (10 ongoing and 10 ex post) with a total value of EUR 19.7
million. Since the government had not yet established its own ROM system, it
was agreed with the NIPAC office to include six DIS managed projects in this
ROM exercise. Ex post monitoring focussed specifically on impact and
sustainability of assistance.
The projects were proposed according to their risk profile and
their size. Contracts with a higher risk profile (grants, services and
supplies) and of a value exceeding EUR 600,000 were given preference. Nine
projects had an IPA allocation greater than EUR 1 million. 
The overall performance of the projects monitored was satisfactory
with some room for improvement in particular with regard to effectiveness and
sustainability. By tailoring the design of the assistance to the beneficiary's
limited capacities, a more effective outcome can be achieved. The beneficiary's
strong commitment to the project will reinforce the effectiveness and
efficiency of the assistance
Another 16 projects (among six under DIS) have already been
identified for ROM in 2014. 
No Interim Evaluations were
launched in 2013 for any of the IPA programmes.
PART
II - FINANCIAL DATA (EUR million and %)
              Status
of implementation of IPA financial assistance (IPA
Component I + IPA Component II), as at 31 December 2013 -  implementation under
decentralised management
Status of implementation of IPA
financial assistance (IPA Component I), as
at 31 December 2013 -  implementation under decentralised management
Status of implementation of IPA
financial assistance (IPA IPA Component II -
CBC), as at 31 December 2013 -  implementation under decentralised management
Status of implementation of IPA
financial assistance (IPA Component II implemented
by Regional Policy DG),
as at 31 December 2013 
 IPA CBC || Committed || Paid until 31 December 2013 || Percentage 
 Bulgaria-  the former Yugoslav Republic of Macedonia || 17.903.682   || 8.461.906,50 || 50%   
 Greece- the former Yugoslav Republic of Macedonia || 15.054.445   || 7.933.210,82   || 53%   
 Status of implementation of IPA financial assistance (Component III) as at 31 December 2013 (in million EUR) and distribution of total committed funds (2007-2013 allocations) by Operational programme 
 Operational programme (OP) || Committed || Paid || % (with advance payment) 
 OP Regional Development || 199.93 || 50.35 || 25% 
Status
of implementation of IPA financial assistance (IPA Component IV, implemented by Employment,
Social Affairs and Inclusion DG), as at 31 December 2013 –
Million EUR
 Country || Allocated || Contracted || Paid || Percentage contracted || Percentage paid 
 the former Yugoslav Republic of Macedonia || 54.42 || 12.87 || 18.08 || 23.65 || 33.2% 
At
31 December 2013 IPA Component V, implemented by Agriculture and Rural
Development DG – million EUR
 Committed || Paid || Percentage paid 
 60.25 || 2.44 || 4% 
              ALBANIA

1. SUMMARY

In
2013 the Commission recommended that candidate status be granted to Albania on the understanding that the country continues to take action in the fight against
organised crime and corruption[12].
The
parliamentary elections in June 2013 were competitive and conducted in an
overall orderly manner with active citizen participation and genuine respect
for fundamental freedoms.
During 2013, EU financial assistance played a
strategic role in Albania, deploying approximately EUR 96 million on IPA
Components I and II, with a view to enhancing administrative capacities of a
number of institutions and fostering social, environmental and economic
development. 
The emphasis of the Enlargement strategy on the
policy areas of judiciary and fundamental rights (chapter 23) and justice,
freedom and security (chapter 24) has made it abundantly clear  to the Albanian
Government that the rule of law in the country must be improved with concrete
achievements. Indeed, the positive implementation of projects in the area of
judiciary and fight against organized crime shows that the country can achieve
results in the improvement of the effectiveness of the justice system and in
the increase of the operational capacity of the law-enforcement agencies, as long
as these endeavours are backed by a clear political intention to move forward
with the reforms agenda.  The overall positive trends, including the electoral
process, led the Commission to request the conferral of candidate status;
something that was finally endorsed by the Council on 24 June 2014.
Infrastructure projects encounter implementation
problems; mainly due to a lack of coordination among line-ministries and
between national and local institutions and lack of national funds for
maintenance and operational costs, with implications for the projects'
long-term sustainability. 
Albania
has finalized the preparation for the decentralised management of IPA funds
under Component I. Therefore, part of the IPA 2013 National Programme will be
implemented under this new management mode for Albania. The Government is
expected to ensure stability as regards the positions of civil servants trained
for the management of IPA funds and should further strengthen their skills.
Otherwise, the implementation of the IPA 2013 projects will suffer from a lack
of expertise on the procurement rules and procedures governing EU funds.

2. STRATEGIC PLANNING AND
PROGRAMMING

2.1
Multi-annual Indicative Planning Document
The
current Multi-annual Indicative Planning Document (MIPD) for Albania was adopted by the Commission on 8 July 2011. The strategic priorities identified
in the 2011-2013 MIPD were:
·        
Strengthening
rule of law, ensuring the independence, efficiency and accountability of
judicial institutions and enhancing the fight against organised crime. 
·        
Supporting
public administration reform, with a view to enhancing professionalism and
de-politicisation of civil servants and to strengthening a transparent and
merit-based approach to appointments and promotions, as well as to fighting
corruption at all levels. 
·        
Reinforcing
the protection of human rights, notably for women, children and the Roma
minority, and effectively implementing anti-discrimination policies. 
·        
Supporting
EU acquis-related issues; in particular administrative capacity,
adoption and enforcement of legislation and related investments in the
transport and social development sectors, as well as in the environment and
agriculture sectors.
The 2011-2013 MIPD has identified six priority
sectors:
1.         Justice and Home Affairs;
2.         Public Administration
Reform;
3.         Transport;
4.         Environment and
Climate Change;
5.         Employment and Social
Inclusion;
6.         Agriculture and Rural
Development.
The
planning of EU financial assistance in 2013 was also strictly driven by the
priorities identified in the Enlargement strategy documents, i.e. the 2011 and
2012 Progress Reports, both listing 12 key priorities, where Albania needs to deliver before any decision on opening accession negotiations may be
considered. The main priorities for IPA planning are public administration
reform, rule of law, anti-corruption, fight against organized crime, property
rights and the protection of human rights and minorities.
Overall,
IPA planning is aligned with national and sector strategies. In Albania, the National Strategy for Development and Integration is the strategic programming
framework for the country; which is accompanied by a number of sector
strategies and action plans. The Commission is working to introduce the sector
approach in IPA programming with the ultimate aim to streamlining EU assistance
with the sector national budget and increasing ownership by the beneficiary
country. However, there are still shortcomings regarding the administrative
capacity in some line Ministries to fully implement sector strategies, for
which proportional financial resources have not been foreseen in the national
budget and for which appropriate progress monitoring mechanisms should be put
in place. 
Table
1: MIFF[13]
allocations per component, in million EUR
 Component || 2011 || 2012 || 2013 || 2011-2013 
 I – Transition Assistance and Institution Building || 84.30 || 85.14 || 84.68 || 254.12 
 II – Cross-border cooperation || 10.13 || 9.43 || 10.67 || 30.23 
 TOTAL || 94.43 || 94.57 || 95.35 || 284.35 
2.2
Programming 
2.2.1
Component I   
In
the IPA 2013 programming exercise the Commission has emphasized the
sector-based logic and has devised two pilot sector programmes, which will
display a set of interrelated operations addressing the same mid/long-term
sector priorities identified in the MIPD 2011-2013.  
The
areas of (a) Justice and Home Affairs and (b) Environment and Climate Change
have been chosen for pilot sector programmes. In the two areas, the new
approach will increase coherence among Governments' policies, IPA assistance
and support from other donors. Albanian Institutions are supposed to exercise
leadership in order to set-up effective donor coordination in the specific
sector and to design functional reporting and monitoring procedures. 
Throughout
2013 the Commission has been working on the definition of the new edition of
the Instrument for Pre-accession Assistance (IPA II) under the 2014-20 Financial
Perspectives. The focus on sector approach and multi-annual sector programming
are two relevant innovations introduced by the new Instrument. Therefore, the
two IPA 2013 pilot sector programmes are supposed to lay the conditions in Albania for a successful application of the new methodology in the planning of
pre-accession assistance for 2014-20.  
The
Commission has planned to support Public Administration Reform (PAR) with
specific ad-hoc projects in the areas of budget planning, customs, statistics
and external audit, which will cover existing weaknesses and shortfalls in the
terms of administrative capacities. 
The
IPA 2013 Programme has also concentrated substantial amounts of funds for rural
development by supporting farmers' small and medium-scale investments,
renovating water supply systems and improving the productivity of the livestock
sector. The low attainment of food-safety standards has also been tackled with
technical assistance for ad hoc laboratories. 
In
the area of employment and social inclusion the Programme includes a number of
operations to reshape the social assistance programmes of the Government;
modernize the vocational education and training system and increase the
competitiveness of small and medium enterprises.   
The
Programme foresees different methods of delivering EU financial assistance. On
the one side, the bulk of the programme will be implemented under centralized
management as in previous years, in cooperation with Member States agencies
under indirect centralized management and with International Organizations
under joint management. On the other side, part of the programme will be
implemented under decentralized management as a pilot exercise for the national
IPA structures. The 2013 programme, amounting to EUR 82,032, 000, is expected
to fund 12 sector programmes/projects under centralized management (EUR
64,232,000) and 7 projects under decentralized management (EUR 17,800,000).
The
IPA 2013 programme has been developed in close cooperation and consultation
with national authorities. The Member States, other donors as well as civil
society have been associated in the process as much as possible. Coordination
meetings with international financial institutions have been organised on a
regular basis. These meetings primarily focused on strategic orientations,
regional dimension and coordination with other donor initiatives.
Table
1: Indicative financial allocations for the year 2013 per component (EUR in
million)
 ALBANIA || 2013 
 I. Transition Assistance and Institution Building || 85.53 
 Of which: ||   
 National Programme || 82.03 
 Tempus Programme* || 2.00 
 Civil Society Facility* || 1.50 
 II. Cross-Border Cooperation || 10.48 
 Of which: ||   
 CBC Montenegro-Albania || 0.85 
 CBC the former Yugoslav republic of Macedonia-Albania || 0.85 
 CBC Kosovo-Albania || 0.60 
 CBC Greece-Albania || 1.66 
 CBC IPA Adriatic** || 6.01 
 Albania's participation in ERDF transnational programmes "South East Europe" and "Mediterranean"** || 0.51 
 TOTAL || 96.01 
* The Tempus Programme and the Civil
Society Facility are coordinated and implemented under the relevant IPA
Multi-beneficiary programme 
** Management of the allocations for
these programmes was cross-delegated to DG Regional Policy (REGIO). 
Table
2: Indicative financial allocations for the year 2013 under the National
Programme, per management mode, sector priority axis and projects (EUR in
million):
 Centralized Management 
 Sectors/Projects || Budget 
 Justice and home affairs || 12.50 
   || Support to the implementation of the  Strategy for Property Rights || 1.00 
   || Pilot Sector Programme on Justice and Home Affairs || 11.50 
 Public Administration Reform || 5.60 
   || Integrated Planning System – phase II || 1.10 
   || Upgrading the Albanian Customs Administration || 4.50 
 Environment || 8.00 
   || Pilot Sector Programme on Environment and Climate Change || 8.00 
 Employment and Social Inclusion || 3.50 
   || Implementation of the EBRD Small Business Support Programme || 2.00 
   || Modernization of social assistance || 1.50 
 Agriculture and Rural Development || 30.40 
   || Support to agriculture and rural development – phase II || 6.40 
   || Improvement of  roads and water supply systems in rural areas || 22.00 
   || Control and eradication of rabies – phase II || 2.00 
 Other horizontal activities ||  4.23 
   || Governance of the natural and cultural heritage of the Lake Ohrid Region || 1.70 
   || Facility for strengthening the EU integration process || 2.53 
 TOTAL || 64.23 
 Decentralized Management 
 Sectors/Projects || Budget 
 Justice and home affairs || 3.50 
   || Construction of the Tirana Court building – phase II || 3.50 
 Public Administration Reform || 3.50 
   || Improvement of the statistical information system || 1.50 
   || Enforcement of auditing capacities || 2.00 
 Transport || 2.00 
   || Increase of road safety standards || 2.00 
 Employment and Social Inclusion ||  3.00 
   || Support to Vocational Education and Training || 3.00 
 Agriculture and Rural Development || 5.80 
   || Improving the productivity of the Livestock Sector || 1.80 
   || Strengthening Food Safety Laboratories || 4.00 
 TOTAL || 17.80 
2.2.3
Components III, IV and V
The preparation for the management of IPA component
III and IV have been put on hold since the new IPA II regulatory framework for
2014-20 does not provide specific rules and procedures for funds in the areas
of regional development (former component III) and employment and human
resources development (former component IV). Under IPA II the funds for these
two policy areas will be managed either under direct or indirect management as
those funds devoted to institutional development and transition assistance
(former component I).
The preparation for IPA Component V decentralised management
is proceeding (setting up of the Paying Agency and Managing Authority as the
Operating Structure within the Ministry of Agriculture). The IPA 2011 project
Support to Agriculture and Rural Development is assisting the Operating
Structure to implement in practice IPA Component V-like measures, i.e. grant
schemes to fund small and medium investments in the agro food sector. The
second call for proposals was launched in April 2013.

3. IMPLEMENTATION OF EU FINANCIAL
ASSISTANCE IN 2013

3.1
Success stories 
Twinning project "Support to
Anti-Money Laundering and Financial Crimes Investigation Structures in Albania" (EUR 1.5 million)
The project
aimed at increasing the capacities of the law enforcement agencies responsible
for prevention, detection, investigation and prosecution of money laundering
and related financial offences. A highly skilled advisory team managed to
increase the coordination and collaboration amongst the concerned institutions,
i.e. General Prosecutor Office, Albanian State Police, Financial Investigation
Units of the Ministry of Finance and the Agency dealing with the management of
seized and confiscated assets (AASCA). The project has also focused on the
relevance of common (joint) activities with the Bank of Albania, the High
Inspectorate for the Declaration and Audit of Assets, the General Directorate
of Taxation and the General Customs Directorate. All recommendations of the
MONEYVAL Committee (Council of Europe Committee of experts on the evaluation of
Money-laundering and Terrorism Financing) have been adequately addressed in
terms of a revised legislative framework and increased operational margin of
manoeuvre. As a result, Albanians' technical abilities in investigating money
laundering crimes have definitely improved. Law enforcement agencies are now more
capable in the tracing and recovery (seizure and confiscation) of criminal
proceeds and illegal assets and AASCA is also launching pilot-initiatives for
the administration and destination of the assets with a profit perspective. The
cooperation and coordination among all institutions involved in the fight
against money laundering has overall increased. Moreover, a technical manual on
money-laundering investigation and financial crimes has been produced, which
takes into account the best European practices but tailored to the Albanian
criminal threat analysis.
EU advisory mission to consolidate the
justice system in Albania - Euralius III (EUR 2.3 million)
The aim of the mission was to facilitate the
development of a more independent, impartial, efficient, professional,
transparent and modern justice system, thus contributing to restoring people’s
confidence in their judiciary institutions and consolidating democracy and rule
of law in the country. The mission, composed of top magistrates coming from
Member States, has considerably contributed to the improvement of the case
management by the justice system, focusing in particular on the organizational,
administrative and technical capacities of the courts. In addition, as a result
of this mission, important pieces of legislation have been put in place: the
reform of the High Court, the set-up of the Administrative Courts, the reform
of the High Council of Justice, the reform Judicial Administration and the
revision of the support in the field of legal aid. The magistrates have also
devised the law lifting the immunities for judges and members of Parliament,
which is a crucial step forward in the improvement of the overall institutional
and operational framework for the fight against corruption in Albania. During the meeting between Commission President Barroso and Albanian President
Nishani (September 2012), the Euralius III mission has been recognised as a key
policy instrument for the development of an independent judicial power in the
country. Therefore, it is envisaged a follow-up fourth edition of the mission
in the framework of the IPA 2013 Programme, which will be deployed in the
course of 2014.
3.2
Overview of the implementation status of the different instruments and
components 
In Albania 208 EU-funded projects are ongoing for an
overall amount of EUR 236.2 million.
During 2013 and considering IPA annual envelopes
from 2007 onwards, the EU Delegation has contracted a total amount of EUR 47.2
million and has disbursed a total amount of EUR 50.6 million. 
3.3
Sector I: Public Administration Reform 
IPA support over the period covered by the 2011-13
MIPD is driven by the following priorities: (i) enhancing professionalism and
de-politicisation of public administration and strengthening a transparent,
merit-based approach to appointments and promotions; (ii) improving
coordination of the economic and fiscal policies to assist in the stabilisation
of the macroeconomic environment; (iii) ensuring the sustainability of public
expenditure, while strengthening the capacity of institutions providing
statistical data. 
Following the advice of the Commission, the Albanian
Parliament has finally approved with a qualified majority, a crucial piece of
legislation for the reform of the public administration, notably the law on the
status of civil servants. The law foresees the application of Member States'
best practices for the management of the civil service. Shortly after the new
Government took office in September 2013, the Ministry of Public Administration
started preparing the secondary legislation. Work on this front progressed very
intensely with support from SIGMA. The twinning project "Support to Civil
Service Reform" (IPA 2012 – EUR 1.8 million) is also going to provide
expertise and support to the Ministry of Public Administration for the proper
implementation of this reform; which can potentially overcome a number of
existing shortfalls in the delivery of administrative services to the citizens.
In 2013 the project "Support to the Ministry
for Innovation and ICT and the National Agency for Information Society"
(IPA 2009 – EUR 3 million) came to a successful conclusion. The intervention
focused on the extension of the interoperable e-government platform (www.e-albania.al) and
assisted in establishing new processes regarding the provision of on-line
e-administration services to citizens, such as the e-Driving Licence, and
prepared a pilot Government's electronic document record management system. The
building of a solid e-government infrastructure is an important tool to reduce
corruption within the administration.
In 2013 SIGMA continued its support to Albania by assisting the Ministry of Justice in revising the new law on general
administrative procedures (Administrative Code) which is soon to be adopted by
the Parliament. SIGMA has also supported the Albanian counterpart in the area
of public procurement and concessions by means of ad hoc advice, trainings and
workshops to the Public Procurement Agency and the Public Procurement
Commission. Finally, the regular SIGMA reports helped the Commission in shaping
and designing upcoming interventions for public administration reform under the
IPA 2013 programme. 
Albania participated in
the following EU programmes in 2013: 7th Research Framework Programme,
Competition and Innovation Framework Programme, Customs, Europe for Citizens,
Culture and Life-long Learning. 
3.4
Sector II: Justice, Home Affairs and Fundamental Rights
The objectives identified in the 2011-13 MIPD for
the sector are: (i) strengthening the independency and efficiency of the
judiciary; including professionalism of judges and prosecutors, (ii) increasing
the level of execution of court decisions, (iii) reinforcing the capacity of
the law-enforcement bodies and coordination between prosecutors and state
police and (iv) improving the infrastructure in the judicial sector, i.e. the
courts, prison and pre-detention systems. 
In 2013 the Commission launched the fourth edition
of the Pameca assistance mission with the aim of improving the organizational,
administrative, technical and resource management capacities of the Albanian
State Police. The mission is built on five components: (i) Police institutional
development (Structure, Organization, Human Resources, logistics and
budgeting); (ii) fight against organised crime, serious crimes and corruption;
(iii) human rights and community policing; (iv) general patrol and traffic
policing; (v) integrated border management. The team of Member States police
officials is very skilled, extremely committed and able to provide strategic
advice and highly-detailed threat assessments to the Albanian State Police, who
are highly appreciative of this mentoring support. 
For the judiciary institutions, the Commission is
working in conjunction with the Council of Europe's European Commission for the
Efficiency of Justice (CEPEJ) to strengthen the efficiency of the courts
administration by enhancing the status, organisation and professionalism of
courts staff. The CEPEJ coaching programme and performance monitoring
methodology will be applied to all instance courts of the country. In addition,
the Commission provided prosecutor offices with a new computer system for the
case management (IPA 2010 – EUR 1.2 million). It is a centralized application
within the General Prosecutor Office with ramifications on peripheral offices,
which will ensure more efficient, coordinated and non-redundant investigations
with better use of human and budgetary resources. 
The Commission has provided a substantial amount of
funds over the various IPA programmes (IPA 2007 – EUR 10 million; IPA 2008 –
EUR 5.5 million; IPA 2010 – EUR 15 million; IPA 2011 – EUR 18 million) to
improve the penitentiary infrastructure of the Albanian justice system in
compliance with EU standards on the treatment of detainees. The new
penitentiary institutions in Berat and Fier are about to be finalized and will
be in operation beginning of 2014. In 2013 the works began on a new pre-trial
detention centre and prison in Shkodra with a capacity of 760 beds.  It is
expected to be completed by mid-2015. These new penitentiary services will
directly impact the detainees' population with improved respect for human
rights, less-crowded facilities and better living conditions. 
3.5
Sector III: Transport 
The Commission is providing appropriate support to
the transport sector in terms of capacity building, policy development,
approximation of legislation with the EU acquis through an ongoing technical
assistance project to the Ministry of Transport and Infrastructure (EUR 1.5
million under IPA 2012). 
In 2013 the twinning project "Support to
Albanian Civil Aviation Safety Management Systems" (EUR 1 million under IPA
2008) was successfully completed. The project supported the Civil Aviation
Authority in undertaking and promoting the legislative and institutional
reforms as regards aviation safety oversight, security and traffic management,
along with training for the staff concerned. This twinning served as a first
substantial step towards the alignment of the Authority to international
standards. A new edition of the twinning is foreseen under the IPA 2012
programme to complement the work so far accomplished.
The ongoing intervention to rehabilitate rural roads
has brought considerable advantages to rural communities, which now benefit
from facilitated access to essential services and city markets. This project is
part of a larger programme developed in coordination with EBRD, EIB and other
IFIs for the renovation of more than 1,500 km across the secondary road network
for which the EU has given a financial support of EUR 51.5 million through the
IPA 2008, 2009, 2010 and 2011 Programmes with the target of re-building about
250 km local roads. In parallel, two EU-funded strategic investments along the
north-south axis (from Shkoder to Tepelene - Gjirokastra), notably the
construction of the Vlora bypass (EUR 19.36 million under IPA 2011) and the
Rrogozhina bypass (EUR 7 million under IPA 2012) are in the process of
implementation.
The Commission has also financed the construction of
a new quay, the operating yard and other facilities of the Port of Shengjin, which is going to become an important trade logistics juncture for the
Northern part of the country.
3.6
Sector IV: Environment and Climate Change 
Albania is confronted
with several and increasing environmental problems, such as deforestation,
coast and land degradation, biodiversity loss and unsustainable exploitation of
natural resources. The side-effects of the recent rapid economic growth;
notably uncontrolled urbanization. are having an increased impact on citizens'
public health, which is challenged by unresolved problems in the area of solid
waste management, waste water treatment and air quality. Environment problems
affect also rural areas; where illegal landfills are proliferating and
protected areas are subject to illegal exploitation. For all these reasons, the
MIDP considers environment as a key sector for channelling IPA financial
assistance.
EU support includes strategic advice to orient the
sector policy priorities, assistance to draft EU acquis-compliant legislation
and capacity-building measures to monitor the implementation of legislation.
The Commission has also mobilized funds for the preparation and construction of
infrastructure investments; particularly in the water sub-sector. 
During 2013, in the area of water quality, some
important policy developments have taken place: the law on integrated water
management has entered into force and a new water supply and sewerage master-plan
has been finalised, which will be the basis for planning future investments.
The Commission is thoroughly monitoring the implementation of a number of
infrastructure projects relating to wastewater treatment plants and sewerage
systems in Golem, Durres, Shkodra (IPA 2007), Velipoje (IPA 2007, 2010 and
2011), Ksamil and Kavaja (IPA 2009), Lezha/Shengjin (IPA 2007, 2009), Korca,
Pogradec, Berat/Kuçove and Saranda (IPA 2010).  Focus was given to the coastal
areas to improve the seawater quality with a view to supporting the development
of tourism. The Commission has also provided specific technical assistance to
improve the overall efficiency of the water sector; with particular reference
to services provided at central and local levels.
Other relevant EU-supported policy developments are
(i) the adoption of the law on strategic environmental assessment aligned with
the strategic environmental assessment Directive; (ii) the upgrade of the
National Environment Agency, including its laboratories and inspectorates,
which have been equipped and trained in the framework of the IPA 2010 project
Strengthening the Enforcement of Environmental Law in Albania; (iii) in the
field of nature protection, the proportion of protected territory has increased
by 0.75% to reach 15.83% of the overall country.
3.7
Sector V: Social Development 
The
2011-13 MIDP has identified a number of priorities to be tackled in the area of
social development: (i) increasing school enrolment rates at secondary level;
(ii) improving the education system in order to increase the offer of required
skills; (iii) establishing a modern vocational training system in line with the
market expectations. 
The
IPA 2010 project "Human Resources Development" (EUR 3 million),
implemented by the International Labour Organization, is assisting the Ministry
of Social Welfare and Youth in implementing labour active market measures. With
its advice three new regulations on health and safety at work came into force;
as well as two ILO international conventions, respectively on safety and health
in construction and on the framework for occupational safety and health. Labour
inspectors have also been trained to enforce this new legislation. New
customer-oriented employment offices have been opened countrywide (Tirana, Durres and Vlora). As a result of this growing labour policy commitment, the state budget
for 2014 shows a significant increase for the employment promotion programs,
despite the existing financial constraints.
The
Ministry of Education is participating in the Union's Life-long Learning
Programme. Albanian stakeholders have taken part in the activities organized by
the Education, Audiovisual and Culture Executive Agency, notably multilateral
projects (e.g. creation of learning, testing and training materials,
pedagogical tools, new curricula, strategy and policy documents) and
multilateral networks (e.g. joint actions to explore digital educational
services, educational support needs), as well as participation in seminars and
publications.
The
Commission has invested a considerable amount of funds in the Vocational
Education and Training (VET) system (EUR 7 million from IPA 2008 and EUR 3
million from IPA 2011) with the construction and rehabilitation of schools.
Overall, seven schools will become  operational within 2014 and four are
already providing services to students and other clients with new equipment for
workshops and laboratories. Courses of training of trainers are also taking
place in order to improve teaching methodology and curricula to meet the
expectations of the labour market. 
3.8
Sector VI: Agriculture and Rural Development 
The
EU assistance in the sector is focused on two main areas; notably rural development
and food safety and veterinary; and is in line with the priorities identified
by the Ministry of Agriculture in the national strategy for the agriculture and
rural development 2014- 2020.
Rural
areas in Albania suffer from inefficient use of resources, poor economic
performance and scarce development opportunities. The ongoing project for rural
development intends to tackle these shortfalls by financing small-medium scale
investments via calls for proposals open to farms. The first call of this type has
financed 19 grant investments for the production, processing and marketing of
agricultural products, which have all started in 2013. In parallel, the EU has
encouraged a more systemic involvement of the Albanian financial institutions
in the improvement of the economic competitiveness through the set-up of a
credit guarantee fund, which will facilitate bank lending to medium and
small-medium enterprises.
As
regards food safety and veterinary, vaccinations have taken place in the
framework of the IPA 2012 project "Improving consumer protection against
zoonotic diseases" (EUR 4.5 million), which has also put in place a
national animal disease reporting and surveillance system within the Ministry
of Agriculture. As a result, the prevalence of animal diseases in humans has
dropped by around 30% and it is expected to be further reduced during 2014. The
construction of physical veterinary infrastructure assets, funded under the IPA
2009 and 2010 programmes, is regularly advancing. The offices and regional
laboratories of the national agency for food safety will be fully functional
during 2014. 
3.9 Cross
cutting sector: support to civil society 
IPA funds from different yearly envelopes have been
focusing on expanding civic initiatives and building civil society organizations'
capacities. The annual national civil society facility for Albania has been designed and implemented in coordination with other IPA initiatives in
this area, i.e. regional civil society facility and cross-border co-operation
programmes, and with the assistance channelled under the European Instrument
for Democracy and Human Rights. 
During 2013 a relevant project in favour of Roma and
Egyptian communities, implemented by the United Nations Development Programme
in collaboration with the Ministry of Welfare and Youth, has improved the
living conditions of these communities through small scale infrastructure
rehabilitations; supported employment-generation initiatives and strengthened
Roma and Egyptian NGOs in three regions of the country (Berat, Korca and
Vlora). 
The evaluation process of the call for proposals
launched under the 2012 funds of the civil society facility has been finalized;
awarding 10 contracts for a global amount of EUR 1,5 million in the following
thematic areas:
- Justice (monitoring
living conditions and support for mental health care in detention systems,
promotion of restorative justice and access to justice for people with
disability); 
- Social and
economic inclusion (Roma communities and specifically unaccompanied children);
- Media freedom (training for
journalist, awareness and training for judges about the new law on defamation
and reporting on environment).
3.10
Cross-border Cooperation
Albania
is participating in three bilateral Cross-border Co-operation (CBC) Programmes
with other candidates and potential candidates (Montenegro and the former Yugoslav Republic of Macedonia since 2007 and Kosovo since 2010) and in one bilateral CBC
Programme with one EU Member State (Greece since 2007). 
The three CBC Programmes with other EU candidates or
potential candidates are mostly focused on specific measures to promote
economic development with an emphasis on tourism, to protect environment and to
enhance social cohesion through "people-to-people" actions. The CBC Programme
with Greece provides measures to promote entrepreneurship, to foster
sustainable tourism, to facilitate border accessibility through small scale
infrastructure, as well as to protect the environmental and cultural heritage
along the border area. 
The four CBC programmes have so far been implemented
via calls for proposals, which helped funding a number of small-scale projects
across the bordering regions of Albania. The projects have been generally
successful, thanks to an increase of contacts and cooperation among local
stakeholders coming from neighbouring countries. However, the impact vis-à-vis
the objectives of economic development, environment protection and tourism
promotion was lower than expected. Therefore, for the last two years of the
programmes' life, i.e. 2012-13, the Commission and the beneficiary countries
have decided to switch the implementation modalities from call for proposals to
joint bigger scale/strategic projects. 
In the frame of the CBC programme between
Albania-Montenegro, the two partner countries have identified a proposal for a
strategic project to further develop the integrated border management system.
The existing infrastructure at the border crossing point of Hani i Hotit –
Bozaj will be upgraded to facilitate the movement of persons, vehicles and
goods and a new joint border crossing point will be opened in the area of
Grabom (AL side) - Cijevna (MNE side). 
In the frame of the CBC programme between
Albania-Kosovo, the two partner countries will work on a strategic project to facilitate
the mobility across the border crossing point of Shishtavec – Krusheve with the
construction of a new road section and a new parking area, as well as the
establishment of touristic signals to promote the bordering area.  
In the frame of the CBC programme between
Albania-former Yugoslav Republic of Macedonia, the 2012 and 2013 allocations
have been moved from IPA component II (cross-border co-operation) to IPA
component I (transition assistance and institution building) for each
beneficiary country. Therefore, Albania has autonomously decided with the
Commission the project to be implemented in the bordering areas. In conjunction
with the UNESCO World Heritage Centre, Albania has devised a relevant
initiative for the protection of the cultural and natural heritage of the Lake Ohrid region. Currently, the side of the Lake in the former Yugoslav Republic of
  Macedonia 's territory is already on the World Heritage list. The project
will inter alia facilitate the extension of this prestigious recognition to the
entire area.     
In
the frame of the CBC programme between Albania-Greece, the partner countries
have launched a call for strategic projects, which has set EUR 2 million as
minimum ceiling. With this higher ceiling, the call will fund bigger scale
projects for an overall amount of EUR 7.9 million. The Joint Programming
Committee for the future Greece-Albania Programme that will be implemented
under the shared management principle met for the first time in July 2013. 
The
Joint Programming Committee for the future Greece-Albania Programme that will
be implemented under the shared
management principle met for the first time in July 2013.
Albania is taking part
in four bilateral cross-border cooperation (CBC) programmes with (i) Montenegro, (ii) Kosovo, (iii) former Yugoslav Republic of Macedonia and (iv) Greece. During 2013 further joint projects have come to a satisfactory conclusion, a number
of new grant contracts have been signed and the Joint Technical Secretariats of
the various Programmes are more involved in monitoring activities. However,
some shortcomings have been identified in the management of the programmes:
delays of the possible interested parties during the identification of
strategic projects to be financed under the programmes Albania-Kosovo and
Albania-Montenegro; slow pace of the evaluation process of calls for proposals,
entailing delays in the subsequent phase of contracting the amounts of the
calls; limited quality of the selected proposals presented by the applicants;
turnover of staff in the Operating Structure within the Ministry of European
Integration following the 2013 general elections in Albania. 
(i)
Albania-Montenegro CBC Programme 
During 2013, all 6 projects funded under the 1st
call for proposals (EUR 768,000 for Albania - 2007 appropriations) came to
their conclusion and submitted the final report. In general, the implementation
of these six projects can be considered satisfactory. 
3 out of 11 projects funded under the 2nd call for
proposals (EUR 1.44 million for Albania - 2008-09 appropriations) came to their
conclusion; one of them with significant shortcomings (a partial recovery of
funds is under consideration). In general, some shortcomings have been
identified in the implementation of the projects funded under this call;
particularly those implemented by local authorities, which have shown limited
capacities.
The Programme Joint Technical Secretariat is
involved in monitoring activities; in close cooperation with the EU
Delegations. During 2013, it has carried out a number of monitoring visits of
the projects signed under the 2nd call.
The evaluation of the 3rd call for proposals (EUR
1.53 million for Albania - 2010-11 appropriations) was also finalised. 7
projects have been selected and 4 have already started their implementation at
the end of 2013.  
Small scale interventions funded under call for
proposals, albeit generally successful, may have relative impact and may not
substantially contribute to the achievement of the overall objective set-out in
the Programme for entire bordering region, i.e. promotion of regional cohesion
and competitiveness through an approach integrating economic, environmental and
social development. Therefore, under the 2012-13 edition of the programme joint
bigger scale/strategic projects will be funded (EUR 1.53 million for each
country). The formulation exercise of concrete project ideas took longer than
expected. Finally, by the end of 2013, a suitable strategic project has been
identified, i.e. the upgrading of the existing
border crossing point of Božaj-Hani i Hotit and the opening of a new one in
Grabon-Cijevna. The implementation of the project is expected to start soon. 
 (ii)
Albania-Kosovo CBC Programme
During 2013, the evaluation of the 78 proposals
received under the 1st call for proposals (EUR 1.08 million for Albania - 2010-11 appropriations) has shown some delays due to the limited engagement of
the two partner country representatives in the Joint Steering Committee. The EU
Delegation to Albania (following consultations with the EU Office in Kosovo)
had also to postpone the endorsement of the evaluation report since further
clarifications on the selected project proposals were needed. The evaluation was
finally endorsed in December 2013. 
Following the same approach adopted for the Programme
with Montenegro, the Commission and the two partner countries decided to use
the Programme appropriations for 2012-13 (EUR 1.08 million for each country) to
shift from small-scale projects funded under call for proposals to joint bigger
scale/strategic projects. Also in this case, the formulation exercise of
concrete project ideas took longer than expected. The identified strategic
project aims at increasing mobility in the cross-border area of Shishtavec –
Krusheve and promoting the area as a touristic pilot model by upgrading the
infrastructure of the cross border area. The implementation of the project is
expected to start in the course of 2014. 
 (iii)
 Albania – former Yugoslav Republic of Macedonia CBC
Programme
During 2013, the 8 projects funded under the 2nd
call for proposals (EUR 675,000 for Albania - 2008 appropriations) concluded
their activities. The Programme Joint Technical Secretariat has actively
monitored these projects in close cooperation with the EU Delegations.
The contracting phase of the 3rd call for proposals
under the programme (EUR 2.30 million in Albania, 2009-10-11 appropriations)
has been finalized. 23 projects have been selected and their implementation
will start soon.  
The funds for the years 2012/13 (EUR 1.7 million for
each country), moved from IPA Component II (cross-border cooperation) to
Component I (transition assistance and institution building), are going to be
used for a strategic project in the bordering areas. As far as Albania is concerned, the IPA 2013 National Programme is going to fund a project for the promotion
of the cultural and natural assets of the Lake Ohrid cross-border region, to be
implemented by the UNESCO World Heritage Centre. The project is supposed to
have a strategic impact for tourism development in the area since its final aim
is to accredit the entire area of Lake Ohrid as UNESCO World Heritage.
 (iv) Greece – Albania CBC Programme
In 2013, 25 projects selected in the framework of
the 1st call for proposals (approx. EUR 3.5 million in Albania, 2007-2008-2009
and part of 2010 appropriations) were in the process of implementation. Under
the 2nd call for proposals 13 projects were approved and a reserve list was
also created by the Joint Monitoring Committee (JMC)
members who met in July 2013.
In 2013 the Greek Managing Authority finalized the
evaluation of the 2nd call for proposals (approx. EUR 2.9 million for Albania - 2010-11 appropriations). 13 projects have been selected for financing. Due to the
poor quality of the project proposals, the contracting phase could not be
finalised by 2013 as expected.
The 1st call for strategic projects with the
remaining Programme's funds (2012 and 2013 appropriations - overall EUR 6
million - approx. EUR 3 million for Albania and EUR 3 million for Greece) was launched and closed within the year. The Greek Managing Authority is now
working on the assessment of the 8 received applications.  The strategic
thematic axes of the call focused on improving infrastructures for cross-border
accessibility (EUR 2 million) and fostering of tourism; preferably with the
synergy of energy efficiency (EUR 4 million).
Unfortunately by the end of 2013, the Joint
Technical Secretariat, which is responsible for project monitoring, again
became understaffed since two Albanian members had terminated their assignment.
The limited capacity of the Joint Technical Secretariat may generate a certain
delay in the joint monitoring of projects, which is going to increase as a
result of the 2nd call and the 1st call for strategic projects. 
(iv) Greece – Albania CBC Programme
The strategic call for proposals, in the amount to
EUR 7.89 million, was open until 21 October 2013. The call supported the
following measures: Infrastructure for Cross-border accessibility and Fostering
of tourism; preferably with the synergy of energy efficiency (EUR 4 million).
The n+3 target for the year 2013 was achieved.
Since
June 2013 the JTS was fully operational: Two project officers from Albania and one project officer from Greece were contracted. However, the contracts of the Albanian
staff were not renewed. The lack of a fully-staffed JTS may create delays in
the monitoring of the ongoing projects. 

4. IMPLEMENTATION AND MONITORING
MODALITIES AND STRUCTURES

The
Commission and the Albanian Authorities have regular meetings to review the
implementation of IPA assistance and, if needed, to take corrective actions for
problematic projects. From a general perspective, projects' implementation has
suffered from problems such as missing or delayed construction permits; missing
or delayed utility connections for big infrastructure projects; delays for the
national co-financing; limited national funds for operating and maintaining
EU-funded investments; lack of coordination among institutions, particularly
between central and local governments; missing or delayed re-imbursement of VAT
to contractors and civil society organisations. These findings are taken into
account before tendering or contracting a new IPA project.
The
monitoring of the assistance is done through risk analysis, visits on site,
results-oriented monitoring (ROM), audit and evaluations.
During
2013, the EU Delegation has monitored 110 ongoing projects out of 208 in total
through 223 on-site visits. Furthermore, through the ROM tool, 29 projects were
monitored. The total financial amount of the projects monitored in 2013 reached
EUR 102.3 million, which represents a considerable increase in comparison to
EUR 64 million in 2012. 
With
regard to external monitoring, the EU Delegation has hired three external
experts under the 2013 ATA (Administrative Technical Appropriations) funds to
assist in the monitoring of grants funded under cross-border cooperation (CBC)
programmes and civil society facilities. Indeed, the implementation of CBC
programmes and Civil Society activities through grant contracts required close
monitoring, as the grant beneficiaries are mostly local government bodies or
small civil society organisations; often with a limited administrative
capacity. Additional information and communication efforts have been undertaken
by the EU Delegation in order to better prepare these organisations for
participation in calls for proposals and future project implementation.
The
EU Delegation launched an ex-post evaluation of IPA/CARDS projects. The evaluation
focused on 16 contracts, out of which 11 grants and service contracts for
technical assistance, 3 supplies and 2 works contract, of an overall amount of
EUR 26.7 million. Sustainability of projects to some degree is spoiled by the
lack of resources for maintenance or lack of political will for the technical
assistance projects. Overall, projects are rated 56% satisfactory (+2), scoring
by the level of satisfaction of 6-point scale (from -3 to +3). 
A
country programme interim evaluation of IPA assistance in Albania was completed in 2013. The evaluation assessed the efficiency, effectiveness,
impact and sustainability of IPA assistance 2007-2009 in two sectors: Public
Finance and Financial Management and Transport, with a total EU financial
contribution of EUR 37.30 million.
The
analysis shows that progress has been made in bringing these sectors closer to
compliance with EU standards. Objectives in the area of management of EU funds
have been largely achieved.
In
terms of performance, IPA projects have been effective. In most cases planned
outputs were delivered, or are likely to be delivered. No significant
deviations in delivery from the outputs foreseen were noted. IPA was also
delivered efficiently. Procedures for programming and supervision are transparent
and promote efficiency, with the exception of transport, where weak planning
capacity in beneficiaries caused the delay of some projects. 
Despite
the good achievements in efficiency and effectiveness, long-term institutional
capacity building impacts may not be fully sustained. The most important hurdle
to sustainability is the uncertainty surrounding staff retention caused by the
lack of merit-based recruitment and promotion in the civil service. The
evaluation also concluded that the IPA assistance in Albania has made a
contribution to the institution building objectives of the Stabilisation and
Association Strategy and therefore delivered the expected impact. 
FINANCIAL DATA (EUR  and %)
Status
of implementation of financial assistance (IPA Component I + Component II), as
at 31 December 2013
 IPA- ELARG || Allocated || Contracted || Paid || % Contracted || % Paid 
 Albania ||   ||   ||   ||   ||   
 IPA 2007 || 51,921,810 || 50,184,091 || 41,285,521 || 96.65% || 79.51% 
 IPA 2008 || 68,096,705 || 63,217,159 || 59,059,782 || 92.83% || 86.73% 
 IPA 2009 || 73,787,170 || 72,366,463 || 49,464,430 || 98.07% || 67.04% 
 IPA 2010 || 87,159,507 || 81,856,579 || 36,961,513 || 93.92% || 42.41% 
 IPA 2011 || 85,992,697 || 68,178,486 || 23,444,988 || 79.28% || 27.26% 
 IPA 2012 || 84,816,551 || 15,426,000 || 5,812,853 || 18.19% || 6.85% 
 IPA 2013 || 85,243,082 || 0 || 0 || 0.00% || 0.00% 
 Total || 537,017,522 || 351,228,779 || 216,029,087 || 65.40% || 40.23% 
Status
of implementation of financial assistance (IPA Component I), as at 31 December
2013
 IPA || Allocated || Contracted || Paid || % Contracted || % Paid 
 Albania ||   ||   ||   ||   ||   
 IPA 2007 || 49,268,790 || 48,306,817 || 39,539,154 || 98.05% || 80.25% 
 IPA 2008 || 64,037,000 || 59,357,115 || 56,297,920 || 92.69% || 87.91% 
 IPA 2009 || 69,860,000 || 69,350,553 || 47,254,396 || 99.27% || 67.64% 
 IPA 2010 || 83,200,000 || 80,248,796 || 36,143,926 || 96.45% || 43.44% 
 IPA 2011 || 82,000,000 || 67,439,971 || 23,140,055 || 82.24% || 28.22% 
 IPA 2012 || 81,640,000 || 15,426,000 || 5,812,853 || 18.90% || 7.12% 
 IPA 2013 || 82,032,000 || 0 || 0 || 0.00% || 0.00% 
 Total || 512,037,790 || 340,129,252 || 208,188,304 || 66.43% || 40.66% 
Status
of implementation of financial assistance (IPA Component II - CBC), as at 31
December 2013
 IPA- ELARG- CBC Programmes || Allocated || Contracted || Paid || % Contracted || % Paid || 
 Albania ||   ||   ||   ||   ||   || 
 IPA 2007 || 2,653,020 || 1,877,274 || 1,746,367 || 70.76% || 65.83% || 
 IPA 2008 || 4,059,705 || 3,860,044 || 2,761,862 || 95.08% || 68.03% || 
 IPA 2009 || 3,927,170 || 3,015,910 || 2,210,034 || 76.80% || 56.28% || 
 IPA 2010 || 3,959,507 || 1,607,783 || 817,587 || 40.61% || 20.65% || 
 IPA 2011 || 3,992,697 || 738,515 || 304,934 || 18.50% || 7.64% || 
 IPA 2012 || 3,176,551 || 0 || 0 || 0.00% || 0.00% || 
 IPA 2013 || 3,211,082 || 0 || 0 || 0.00% || 0.00% || 
 Total || 24,979,732 || 11,099,526 || 7,840,783 || 0 || 44.43% || 31.39% 
Status
of implementation of financial assistance (IPA Component III,  implemented
by Regional Policy DG), as at 31 December 2013
 IPA CBC || Committed || Paid until 31 December 2013 || Percentage 
 Greece-Albania || 11.316.585   || 4.738.738,14 || 56%   
              BOSNIA AND HERZEGOVINA

1.
SUMMARY

Bosnia and Herzegovina (BiH) remained
at a standstill in its European integration process because of the lack of
political will on the part of its leaders and because of the dysfunctional
institutional set-up of the country. Bosnia and
  Herzegovina should guarantee the right to be elected to the collective
presidency and the House of Peoples of the Parliamentary Assembly to all
citizens, regardless of their ethnicity. 
As a
consequence, the Stabilisation and Association Agreement (SAA) did not enter
into force. Furthermore, an efficient and effective coordination mechanism in
order to enable the country to speak with one voice was not established.
In
its 2013 Progress Report, the Commission stated that it is becoming
increasingly difficult to justify the provision of pre-accession funds to a
country whose political representatives are not willing to reach the consensus
necessary to move forward on the pre-accession path.
This
stalemate in the accession process affected the programming and the
implementation of IPA assistance. In particular, in view of the absence of
comprehensive coordination and an increasing politicisation of the IPA
implementation, the Commission decided to suspend several IPA projects in the
course of 2013 and eventually to cancel two projects in the agriculture and
rural development sector, as the efficient use of EU tax payers' money could no
longer be ensured.
Consequently,
the Commission reduced the 2013 IPA national programme in budget (EUR 42
million instead of EUR 87 million, overall yearly allocation EUR 64 million
instead of EUR 109 million) and scope and concentrated its assistance on
projects that directly targeted citizens, in particular in the justice and home
affairs and social sectors.
The
absence of an EU coordination mechanism and of countrywide sector strategies in
most of the sectors relevant for IPA support also affected the preparation of
the new financial instrument, IPA II. The Commission decided to halt the
preparation until effective coordination is assured. The preparations for IPA
II did not restart in 2013.

2. STRATEGIC
PLANNING AND PROGRAMMING

2.1
Multi-annual Indicative Planning Document (MIPD)
The
2011 – 2013 MIPD identified three strategic priorities:
•          Supporting the strengthening of the rule
of law by assisting the country in its reform of the justice sector and the
fight against organised crime and corruption;
•          Improving the capacity and efficiency of
the public administration and setting a professional civil service, so to
support the country's efforts to improve the functioning of the institutions at
all levels of governance.
•          Supporting social and economic
development; in particular by assisting the country in its efforts in
developing the SME sector, in alleviating unemployment, in reforming the
education system and investing in transport and environment infrastructure.
The
priorities were of remarkable significance for the country's progress in the
pre-accession process. The Commission identified the overcoming of the economic
crisis, social inclusion and strengthening the rule of law and public
administration as key challenges in the Enlargement Strategy. To respond to the
challenges, Bosnia and Herzegovina had to step-up its efforts in the reform of
its justice system and its public administration. Despite a moderate economic
recovery, unemployment remained at very high levels and fiscal adjustment
measures, as well as economic reforms had to be pursued with determination to
recover, and, over the long-term, to cope with the competitive pressure and
market forces of the Union.
Bosnia
  and Herzegovina was not ready for EU assistance in
the form of a sector approach. In most sectors, no countrywide strategies
existed, with the exception of the public administration reform strategy, the
justice sector reform strategy, the national war crimes strategy and the Roma
strategy. Where strategies existed, they were not underpinned by corresponding
budgets. 
During
the preparation of the MIPD, a constant dialogue between DG Enlargement and the
other line DGs ensured a joint selection of priority sectors and formulation of
sector objectives. 
Because
of the severe delays in the programming and the implementation of IPA
assistance, the current three-year planning period proved to be unsuitable for
achieving the expected results. The over-politicisation of the pre-accession
instrument; the lack of sustainable sector strategies at State and entity
level, and the absence of a comprehensive EU coordination mechanism affected
the IPA programming and implementation and extended the lead time for
interventions. 
For
the preparation of the 2011 - 2013 MIPD, the Commission applied a comprehensive
approach to increase beneficiaries' ownership and to programme in a strategic
way. The Commission, the Directorate for European Integration and the Donor
Coordination Unit in the BiH Ministry of Finance and Treasury organised a
series of consultation workshops in June 2010, to which representatives from
line ministries and other relevant institutions, donors and civil society
organisations were invited. Workshops covered the areas of social inclusion,
small and medium-sized enterprises (SME), education and employment, civil
society, judiciary, law enforcement, public administration reform, environment,
transport and energy. The objectives of the workshops were to identify strategic
objectives, results, benchmarks and indicators for financial assistance in the
period 2011-2013, and to identify areas where IPA and other donors' support
could be better aligned with existing strategies and action plans and could
gradually move towards a sector approach. 
Despite
the thorough preparation, the implementation of assistance became even more
difficult than in previous years and suffered; specifically from the absence of
a coordination mechanism and of well-planned sector strategies. The Commission
suspended several IPA projects in the course of 2013 and eventually cancelled
two projects in the agriculture and rural development sector.
The
increasing problems in the programming and implementation of assistance, the
political stalemate in the accession process, combined with the missing EU
coordination mechanism and the absence of countrywide sector strategies in most
of the sectors relevant for IPA support also affected the preparation of the
new financial instrument, the IPA II. The Commission decided to halt the
preparation until effective coordination would be assumed. The preparations for
IPA II did not restart in 2013.
Table
1: MIFF[14]
allocations per component, in million EUR
 Component || 2011 || 2012 || 2013 || 2011-2013 
 I – Transition Assistance and Institution Building || 102.68 || 102.67 || 103.49* || 308.84 
 II – Cross-border cooperation || 4.75 || 5.20 || 5.34 || 15.27 
 TOTAL || 107.43 || 107.87 || 108.83* || 324.13* 
*
the amount was subsequently reduced by the Commission to EUR 58.3 million for
2013, bringing the total actual allocation for that year to EUR 63.7 million
and the total over the three years to EUR 279 million, as explained above in
the text.
2.2
Programming
2.2.1
Component I
The
programming exercise for IPA 2013 started with a High Level IPA coordination meeting
on 14 November 2011 and a programming kick-off meeting on 17 November 2011;
simultaneous with the preparations for the IPA 2012 programme. The High Level
Meeting was organised in response to the difficulties the Commission
experienced in precedent IPA programmes; in particular in 2011, where the
programming almost failed because the internal coordination process did not
work. 
In
the High Level Meeting, the Commission formulated recommendations for Bosnia and Herzegovina on how to improve the EU coordination process; and in particular the
IPA coordination process. On IPA, the Commission proposed examining the
feasibility to accelerate the adoption procedure for Financing Agreements with
the Commission, the creation of working groups for the drafting of sector and project
fiches, and an improved coordination with the Bosnia and Herzegovina IPA
Coordination Board.
In
the kick-off meeting of 17 November 2011, the Commission defined the priorities
for the IPA programming for the years 2012 and 2013 and asked Bosnia and Herzegovina to prepare corresponding sector and project fiches.
Despite
the Commission's thorough preparatory work, the coordination problems of 2011
and 2012 recurred. The programming process of IPA 2013 witnessed significant
delays due to political difficulties on reaching agreement on the
identification and formulation of projects. Eventually, Bosnia and Herzegovina managed to draft project fiches. 
However,
there was no progress in the implementation of the Seidić-Finci judgement
of the European Court of Human Rights, which is essential for Bosnia and Herzegovina to advance on the European integration path. This lack of consensus
among the political leaders on important issues on the EU agenda led to the
decision to reduce the actual allocation, as mentioned above. While reducing
significantly the programme, it was important to continue the support of citizens,
significantly vulnerable groups, and also for Bosnia and Herzegovina's
socio-economic development. This was ensured by investing in the rule of law
sector with the objective of supporting the justice sector reform and the fight
against money laundering. Further support was devoted to the competiveness and
the innovation sector; in particular to assist SMEs, and to the social sector
and the education reform by addressing social inclusion by providing
sustainable housing to refugees and internally displaced persons, and by
supporting the implementation of the Bosnia and Herzegovina Roma action plan.
The
programme was consistent with EU internal policies in the same area; in
particular with the EU 2020 strategy and the flagship initiatives of the EU to
boost growth and jobs.
For
the first time under IPA, and due to the exceptional circumstances with regard
to the backlog of war crimes cases in Bosnia and Herzegovina 17 years after the
end of the war, the IPA 2012 and 2013 programmes included focused sector budget
support for the judiciary aiming to achieve significant progress in the
reduction of the backlog. This type of assistance was selected to ensure
maximum impact and national ownership while respecting the independence of the
judiciary. It was closely accompanied by the EU's ongoing political dialogue
(Structured Dialogue on Justice and Sub-Committees).  
With
regard to the general criteria for budget support, clearly the macro-economic
situation remained far from perfect; the public financial management required
further reforms and the justice sector needed to speed up the deliveries on its
reform commitments. Yet in each of the areas there were positive trends.
Concrete progress could be identified, and a strong risk-mitigating framework
was put in place. Payments were conditional to the specific conditions
regarding the backlog reduction and the renewal of the Justice Sector Reform
Strategy.
Table
2: Indicative financial allocations for the year 2013 per component, in EUR
million
 COUNTRY/MULTI-BENEFICIARY || 2013 
 I. Transition Assistance and Institution Building || 58.32 
 Of which: ||   
                                                                                   National Programme  || 41.92 
 Tempus Programme* || 2.40 
 Regional Housing Programme* || 12.00 
 Civil Society Facility** || 2.00 
 II. Cross-Border Cooperation || 5.34 
 Of which:                    ||   
                                                            CBC Bosnia and Herzegovina - Montenegro || 0.6 
                                                                  CBC Croatia – Bosnia and Herzegovina || 1.0 
                                                                    CBC Serbia – Bosnia and Herzegovina || 1.0 
 CBC IPA Adriatic || 2.74 
 Bosnia and Herzegovina's participation in ERDF transnational programmes "South East Europe" and "Mediterranean" || This is paid directly from the Multi-beneficiary budget for the entire region without a split per country 
 TOTAL || 63.66 
* The Tempus Programme and the Regional
Housing Programme are coordinated and implemented under the Multi-beneficiary
IPA programme. 
**
The Civil Society Facility is coordinated under the Multi-beneficiary IPA
programme.
Table
3: Indicative financial allocations for the year 2013 under the National
Programme, per priority axis and per project, in million EUR
 Priority Axis || Projects || Budget 
 Political Criteria || 33.75 
   || IPA 2013/023-590/1 Sub-sector fiche Justice || 18.25 
   || IPA 2013/023-590/2 Fight Against Money Laundering || 2.5 
   || IPA 2013/023-590/4 Social inclusion in education || 3.5 
   || IPA 2013/023-590/5 Support to durable solutions of Revised Annex VII Dayton Peace Agreement Strategy (Refugees and Internally Displaced Persons) || 7.0 
   || IPA 2013/023-590/6  Support to implementation of Roma Action Plans || 2.5 
 Economic Criteria || 2.00 
   || IPA 2013/023-590/3 Support to SME competitiveness || 2.00 
 Supporting programmes || 6.16 
   || IPA 2013/023-590/7 Support to Mine Action || 2.95 
   || IPA 2013/023-590/8 European Integration Facility || 3.21 
 TOTAL || 41.91 
2.2.2
Component II
The
programming of IPA 2014-2020 bilateral CBC programmes was launched in the
spring of 2013 at the Regional meeting in Brussels; continued by a regional
session in June 2013 in Montenegro and meetings of Task Forces on the programme
level and public consultations in the Autumn 2013.  The technical assistance
project CBIB+ supported the process.
The
Joint Programming Committees for the transnational programmes were established.
They comprised representatives of the participating countries. The committees
undertook activities to collect statistical data; relevant for the territorial
analysis and the subcontracting of technical assistance, for the development of
the programme documents.
After
accession, the new Croatian Managing Authority (Ministry of Regional
Development and EU Funds, of the Republic of Croatia) started its negotiations
with the neighbouring IPA countries on the preparation of the next programming
period 2014-2020. Subsequently, Croatia- Bosnia and Herzegovina and Montenegro will be the new trilateral IPA CBC programme, under the share management
principle. 

3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013
3.1
IPA

3.1.1
Success stories
Through
the project "Reinforcement of Local Democracy" (EUR 5 million since
2009) the EU has funded more than 200 civil society organisations (CSOs). Forty
communities across Bosnia and Herzegovina provided co-financing. The project
improved the transparency in providing public funds to CSOs working for
communities, helping people with disabilities, the elderly, the unemployed, or
dealing with minority rights, gender issues, poverty reduction, social
inclusion, youth or environment. The disbursement of public funds to CSOs was
no longer arbitrary, but CSOs had to compete for local funding through open
calls for proposals. Permanent partnerships were built between CSOs and local
authorities. At the same time, training improved the local communities'
capacities for planning, monitoring and management of CSO funding. 
The
"Support for the Implementation of the National Action plans for Roma
inclusion" project (EUR 0.5 million, since 2008) supported Roma NGOs
through small grants for a broader outreach, information and help on the
problems that the Roma population is facing. Concrete results of the grants
were the improvement of local infrastructure, such as the reconstruction of
local roads, reparation of streetlight systems, and the reconstruction of small
premises for more than twenty families. Other results where the cleaning of
Roma settlements, raising awareness about street begging Roma children, and
water supply for four families. The most important goal of the project was the
inclusion of Roma in decision-making processes. Five Roma coordinators were
employed at the State and at entity levels. They became accepted
representatives of the Roma population, and accepted counterparts for the local
municipalities, international organisations and other institutions and could
successfully defend Roma interests in decision-making processes.
The
IPA 2008 project for supporting trade policy and metrology supported the
accreditation of the Zenica Techno Park laboratory for the certification of
compliance of wood products with EU security standards. The accreditation
provided a great advantage for Bosnia and Herzegovina's wood products
exporters, who had previously used the service of a Croatian laboratory, which
caused financial, technical and logistical obstacles. A measurable result of
the project was a more than 10% increase in the export of wood products in the
year 2013. 
In
2013 the EU continued its support for a more efficient and accessible court
service to BiH citizens. In addition, in order to simplify access to judicial
and prosecutorial careers, certain reforms were undertaken with the help of EU
support: 
Courts
and prosecutor offices could establish websites where a variety of general and
case-related information was made available to both the public and to judicial
office holders. As a result of a public survey financed through IPA, further
improvements were made to court websites; not least the introduction of an
electronic notice board for all courts, including basic case-related
information ( e.g time of hearing). Furthermore, a web calculator of court fees
for civil cases was introduced, and updated information on lawyers and court
experts was made available to citizens. In addition, based on citizens'
feedback, visual improvements were made to the judicial web portal, and
citizens' understanding of court locations was facilitated through google maps
and google earth technologies for each court and prosecutor office in BiH. The
high interest of the public in those websites was reflected in the high number
of hits to the main judicial portal (e.g. similar to 'www.europa.eu' 
webportal), which exceeded 145,000 hits per month.
In
parallel, and considering the EU's ultimate objective of hastening the
processing of all court cases; case quotas were introduced for judges and
courts, and of the 77 courts supported, 30 are up-to-date with case numbers.
This resulted in a considerable reduction of processing time and case numbers.
3.1.2
Overview of IPA implementation in 2013
In
2013, the Commission committed EUR 100 million of IPA funds and disbursed EUR
88.7 million. The disbursement level substantially increased compared to the
previous reporting year, where EUR 61.3 million were disbursed. The commitment
rate remained comparable to the previous year.
In
2013, BiH was again a very active user of the Commission's TAIEX programme. 123
TAIEX applications were submitted, whereof 111 applications were approved. BiH
participated with more than 2,000 participants in 115 single-country TAIEX
events (expert missions, study visits and workshops) and with approximately
1,000 participants in 104 TAIEX multi-country events.
The
number of twinning activities in BiH steadily increased compared to 2012. In
2013, 11 twinning projects, for a total budget of about EUR13 million were
implemented and five more (3 standard, 2 twinning light projects) with a total
budget of EUR 5.5 million were prepared.
3.1.2.2
Component II: Cross-border Cooperation
The
contracting of the Cross-border cooperation (CBC) programmes between Bosnia and Herzegovina, Croatia, Montenegro, and Serbia, which were selected in the 2011 round of
calls for proposals, was completed in the year 2013. Also in 2013, the last
calls for proposals under IPA I were launched for the CBC programmes between Bosnia and Herzegovina and Croatia and Montenegro. 
The
programming of the CBC programmes under IPA II was launched in 2013. 
Bosnia
 and Herzegovina continued participating in the IPA
Adriatic CBC programme and the transnational programmes South East Europe (SEE)
and Mediterranean. In 2013, seven project contracts were signed with Bosnia and Herzegovina beneficiaries of the Mediterranean Programme. In the IPA Adriatic
CBC, the contracting of 11 projects started in 2013. In the SEE programme,
twenty projects and the BiH partner institutions were selected for funding. 

4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES

Bosnia
  and Herzegovina has made no progress towards the
establishment of a decentralised implementation system.
In
mid-May 2012, the BiH Parliament's House of People adopted a conclusion to set
up the functions and structures for DIS. However, since December 2012 there has
been no follow-up to this decision. The Minister of Finance has been appointed
as the Competent Accrediting Officer (CAO). The National IPA Coordinator
(NIPAC) and the National Authorising Officer (NAO) have been nominated. The
Programme Authorising Officer (PAO) has not been appointed and the Audit Authority
is as yet unidentified. 
The
CFCU (Central Finance and Contracting Unit) and the National Fund (NF) have
maintained their staff levels, but – in the absence of progress towards DIS -
without being able to play a role in the implementation of IPA programmes. 
Politically
it does not appear realistic to achieve progress towards DIS prior to the
establishment of a functioning EU coordination mechanism.
Regular project monitoring and
implementation reviews
During the reporting period, regular project
monitoring of ongoing contracts was undertaken by the EU Delegation Programme
Managers in the form of participation in the Steering Committees, specific
project activities and visibility events (conferences, seminars, training
sessions, open days), field visits, including on the spot checks and
verification of progress of construction works and delivery of supplies. 
In 2013, the monitoring visits by the Joint Technical
Secretariats of the IPA CBC Programmes continued for the ongoing projects from
the 1st Call, with a total of four projects monitored (one in Serbia-BiH, one
in Croatia-BiH and two in BiH -Montenegro programme).
Monitoring visits to the ongoing projects from the
2nd Call, with 32 projects monitored out of a total 45 (14 in Serbia-BiH, 8 in
BiH-Montenegro, 10 Croatia –BiH) were organised by the respective Joint
Technical Secretariats.
External monitoring expertise was contracted by the EU
Delegation through ATA 2012 funds and deployed in the second half of 2013. 44
CBC projects from bilateral IPA CBC programmes were monitored between September
and November 2013. The findings did not identify any significant risk
which could jeopardise successful implementation. Financial risks mainly
related to the lack of co-financing. Risks related to secondary procurement
under grants were often identified as medium to high level due to either
frequent appeals in cases where local legislation is applied or lack of readiness
by potential suppliers to respond to low value supplies that also require the
application of EU procedures to full extent, such as the rule of origin, VAT
exemption, etc.
Implementation
reviews
Three Implementation
Review rounds (per each Operations section) involving Operations, Contract and
Finance, the Head and Deputy Head of Delegation as well as relevant other
sections were held in 2013 (April,  July and December). The implementation
reviews allowed for a detailed review of procurement planning and
implementation. The focus was on projects facing difficulties in
implementation. 
IPA
Monitoring Committee
The bi-annual regular monitoring of IPA projects'
implementation together with NIPAC - IPA Monitoring Committee took place on 10
September.
At the meeting the Commission decided to cancel the
two agriculture projects previously suspended due to the failure of the
authorities in BiH to agree on the structures to channel EU agriculture and
rural development assistance (IPARD). The lack of an agreement on the project
implementation not only means a loss of more than 5 million Euro for the two
cancelled projects; but will also prevent the timely set-up of structures to
channel future EU funds to BiH rural areas. 
For further five projects BiH was given until 1
October to come to an agreement with outstanding issues. These were two
projects supporting SME and tourism (EUR 4.5 million) which had been suspended
since 26 July 2013; two planned projects fostering social inclusion (EUR 3 million)
and one ongoing project strengthening the National Planning Process in BiH (EUR
1.5 million). Following the identification of solutions, all projects could in
the meantime, continue implementation.
On the positive side, the Committee welcomed that an
important environment project ("ENVIS") developing a country-wide
strategy and investment pipeline was proceeding well, after it had been
unblocked following the last meeting of the Monitoring Committee meeting in
December. 
With regard to transport, BiH authorities presented their
agreed position on where to use 14 Million Euro of IPA funds planned for
Corridor Vc (design of the highway section Konjic-Mostar) and therefore avoided
the cancellation of the project.
Reinforced monitoring
Reinforced
monitoring measures were applied to the f projects  "Strengthening
institutional capacities to combat corruption" and "Support to the
BiH Government for the European Integration process and Co-ordination of
Community Assistance, Phase III - extension of services", because risks
had been identified in the Early Warning System.
.
Reinforced
monitoring consisted of additional visits and meetings with the project
team and beneficiaries through which both project implementation and
financial documents were examined in specific monitoring reports. Both projects
were successfully finalised in Q3 2013. 
Result-Oriented
Monitoring of BiH Projects
Results-Oriented
Monitoring (ROM) missions were undertaken for 38 projects for a total EU
allocation of approximately EUR 107.1 million. Out of the 38 projects, 35 were
under implementation, while 3 projects had been completed and were monitored
ex-post. 
The average score of the ongoing projects'
performance was 2.63 on a scale from 1 (serious deficiencies) to 4 (very good),
while the average score of the ex-post monitored projects' performance was
2.77. The equivalent figures for the Western Balkan region are an average score
of 2.86 for ongoing projects monitored and an average score of 2.75 for the
projects monitored ex- post. 
The 2013 ROM reports indicate that the projects
monitored had good relevance (project design) and strong impact potential,
which is a continuing trend from 2012. The projects are implemented in a
difficult environment which is reflected in low scores compared to the region
as a whole, for efficiency, effectiveness and sustainability. It is illustrated
in the graph below through ROM five performance criteria against scores
(A,B,C,D), applied in monitoring of 35 ongoing projects in 2013:
Evaluation
A country programme interim evaluation of IPA
assistance in Bosnia and Herzegovina was completed in 2013. The evaluation
assessed the efficiency, effectiveness, impact and sustainability of IPA
assistance 2007-2009 in two sectors Quality Infrastructure & Statistics and
Social Development, with a total spending of EUR 32.07 million.
The analysis revealed that the complicated and
politically influenced environment, together  with the constraints on the
national budget, increasingly limited the development  of these sectors.
Although some investments in quality infrastructure and capacity building have
been made,  the development of legislation and the policy reform process
remained stalled due to the lack agreement on the respective competences of
entities and state levels. In the social sector, the legal framework for
education is largely in place. However, the institutional structures are
complicated and capacities are limited.
With regard to the performance, IPA projects have
been effective and efficient, although there have been problems in
implementation due to contractor performance, slow procurement procedures,
meeting conditionalities or finding consensus between all stakeholders.
Sustainability is broadly positive as much of the assistance is linked to technical
components of the acquis and thus will be part of the longer-term political
agenda of the country. Observed impact can be substantially attributed to IPA,
but it is constrained by systemic issues of insufficient national resources to
further elaborate structures and finance operation of systems and tools.
FINANCIAL DATA (EUR and %)
Status of implementation of IPA
financial assistance (IPA
Component I + IPA Component II), as at 31 December 2013 
 IPA- ELARG || Allocated || Contracted || Paid || % Contracted || % Paid 
 Bosnia and Herzegovina ||   ||   ||   ||   
 IPA 2007 || 57,802,436 || 54,630,441 || 54,419,470 || 94.51% || 94.15% 
 IPA 2008 || 75,457,435 || 70,629,808 || 62,009,133 || 93.60% || 82.18% 
 IPA 2009 || 89,187,738 || 87,694,076 || 66,574,875 || 98.33% || 74.65% 
 IPA 2010 || 107,455,724 || 103,004,082 || 59,833,457 || 95.86% || 55.68% 
 IPA 2011 || 99,975,106 || 50,214,018 || 21,841,584 || 50.23% || 21.85% 
 IPA 2012 || 91,632,101 || 16,097,555 || 9,604,049 || 17.57% || 10.48% 
 IPA 2013 || 48,263,427 || 3,747,025 || 2,997,620 || 7.76% || 6.21% 
 Total || 569,773,967 || 386,017,006 || 277,280,188 || 67.75% || 48.66% 
Status of implementation
of IPA financial assistance (IPA Component I), as at 31 December 2013 
 IPA || Allocated || Contracted || Paid || % Contracted || % Paid 
 Bosnia and Herzegovina ||   ||   ||   ||   
 IPA 2007 || 49,736,394 || 46,734,388 || 46,631,229 || 93.96% || 93.76% 
 IPA 2008 || 66,754,783 || 62,380,057 || 53,922,196 || 93.45% || 80.78% 
 IPA 2009 || 80,500,000 || 79,900,826 || 59,514,167 || 99.26% || 73.93% 
 IPA 2010 || 99,954,423 || 95,768,251 || 53,487,105 || 95.81% || 53.51% 
 IPA 2011 || 92,885,119 || 43,843,988 || 16,645,322 || 47.20% || 17.92% 
 IPA 2012 || 84,770,995 || 11,836,450 || 5,729,749 || 13.96% || 6.76% 
 IPA 2013 || 41,916,402 || 0 || 0 || 0.00% || 0.00% 
 Total || 516,518,116 || 340,463,959 || 235,929,768 || 65.92% || 45.68% 
Status of
implementation of IPA financial assistance ( IPA Component II) - CBC, as at
31 December
2013 
 IPA- ELARG- CBC Programmes || Allocated || Contracted || Paid || % Contracted || % Paid 
 Bosnia and Herzegovina || 24,979,732 || 11,099,526 || 7,840,783 || 44.43% || 31.39% 
 IPA 2007 || 2,653,020 || 2,483,031 || 2,375,219 || 93.59% || 89.53% 
 IPA 2008 || 2,706,080 || 2,553,008 || 2,390,193 || 94.34% || 88.33% 
 IPA 2009 || 2,760,202 || 2,162,091 || 1,429,548 || 78.33% || 51.79% 
 IPA 2010 || 2,200,000 || 2,199,596 || 1,310,116 || 99.98% || 59.55% 
 IPA 2011 || 2,200,000 || 1,480,044 || 795,274 || 67.27% || 36.15% 
 IPA 2012 || 2,600,000 || 0 || 0 || 0.00% || 0.00% 
 IPA 2013 || 2,600,000 || 0 || 0 || 0.00% || 0.00% 
 Total || 17,719,302 || 10,877,769 || 8,300,350 || 61.39% || 46.84% 
              KOSOVO

1.
SUMMARY

In
June 2013, in parallel with the decision to open accession negotiations with
Serbia, the Council authorised the opening of negotiations for a Stabilisation
and Association Agreement (SAA) with Kosovo, which were officially launched in
October 2013. Kosovo's progress has been underpinned by its continued
commitment to normalisation of relations with Serbia.
The
implementation of EU assistance to Kosovo exceeded its financial targets;
both in terms of contracts and payments
in 2013.  The 2013 Annual Programme was adopted
in January 2013, with an allocation of EUR
65.86 million. Following the first agreement on normalisation of the
relations between Serbia and Kosovo on 19 April
2013, an additional allocation was secured for Kosovo
with resources originally allocated to other countries and a specific
programme, for an amount of  EUR
38.5 million,
was prepared
and approved in
December 2013.
Kosovo's
participation in Component II
(Cross-Border
Cooperation (CBC))
programme progressed
well in 2013. The
Financing Agreements for 2012 were signed for all three CBC programmes (with
Albania, the former Yugoslav Republic of Macedonia, and Montenegro
respectively). The first call for proposals with the
former Yugoslav Republic of Macedonia was launched.

During
2013, the Indicative
Strategy Paper 2014-2020 was prepared. As
part of an inclusive process, the Kosovo
authorities, civil society and members of the international community active in
Kosovo were
consulted on and contributed to the
draft
text. In
May, July and November 2013, the government
and EU Office organised
meetings with civil society representatives to consult them on IPA
support
to
civil society over the period 2014-2020. The meetings
allowed for
a broad
discussion
on the objectives and actions to be included in the Strategy Paper. The
country contributed at the same time to finalisation of the South East Europe
2020 Strategy Paper and the Multi Country Strategy Paper for IPA II.

2. STRATEGIC
PLANNING AND PROGRAMMING

2.1 Multi-annual
Indicative Planning Document 
The
overall objective of EU financial assistance to Kosovo is to support the
implementation of its EU-reform agenda and help it complying with EU standards.
The purpose of the Multi-annual Indicative Planning Document (MIPD) was to set
out the EU's priorities for assistance to Kosovo for the programming period
2011-2013. 
The
MIPD focused on the needs identified in the Commission's Progress Report for
Kosovo as well as Kosovo's own strategies and action plans. The Kosovo
government, local stakeholders, EU Member States and other donors were all
consulted on the MIPD. 
To
achieve the priorities selected for support in the programming period
2011-2013, IPA assistance was focussed primarily on the following sectors: 
•           Justice
and home affairs (focus on visa liberalisation and the judiciary)
•           Private
sector development (focus on trade and business environment)
•           Public administration
reform
(focus on the functional review)
2.2
Preparation of the Indicative Strategy Paper for
Kosovo 2014-2020
In
2013,
the Indicative
Strategy Paper for Kosovo 2014-2020 was prepared. The Indicative
Strategy Paper for Kosovo was developed with the view to
the programming and implementation of the new IPA instrument for the period
2014-2020. The paper aims to reflect a strategic and result-oriented
approach in delivering IPA assistance. A select number of sectors were
identified in close cooperation with the Kosovo authorities and the donor
community, and in consultation with stakeholders;
including civil society organisations. The sectors
selected are: democracy and governance, rule of law and fundamental rights;
energy; competitiveness and innovation; employment, education and social
policies; agriculture and rural development. 
Table
1: MIFF[15]
allocations per component, in EUR million 
 IPA Component || 2011 || 2012 || 2013 || Total 
 I (Transition Assistance and Institution Building) ||      66.90 ||       67.00 || 68.47 * ||        202.37 
 II (Cross Border Cooperation) ||        1.80 ||         1.80 ||         2.99 ||            6.59 
 Total ||      68.70 ||       68.80 ||       71.46 ||        208.96 
* this amount
has been increased by the Commission, following the agreement
on normalisation of relations between Serbia and Kosovo on 19 April 2013, to
EUR 105.86 million, bringing the total allocation for 2013 to EUR 108.85 and
the total amount for the three years to EUR 246.35 million.
2.3 Programming 
The
EU Office has continued the good practice of hosting co-ordination meetings
with Member States. The Member States +
group meets every two months and brings together Member States, the US, Norway,
Switzerland, Turkey, Japan, the World Bank, the OSCE, EULEX, the IMF and UN
representatives. 
The
Ministry of European Integration (MEI) is
increasingly taking the lead in the coordination of EU assistance among the
government institutions and different donors. The donor co-ordination structure
with sector working groups and sub-sector working groups in which donors and
the representatives of the Kosovo government participate,
started in 2012 and continued
to work well. During February/March 2013, the first round of meetings was
called by the MEI. A second series of meetings took place in June.
Towards
the end of the year, several government-led meetings were initiated to
coordinate donor efforts in the northern part of Kosovo (particularly north
Mitrovica).
Cooperation
with EULEX has continued during the identification and articulation of Indicative
Strategy Paper priorities as well as in the
intensification of project implementation. The EU Office continues to
participate in the weekly EULEX monitoring meetings.
2.3.1
Component I   
During
the reporting period there has been no programming as regards IPA Component 1.
Discussions and consultations focused on IPA II and future assistance to Kosovo
instead.
Towards
the end of the reporting period, preparations for the programming of the IPA
Annual Programme for Kosovo for 2014 were initiated by the Ministry of European
Integration (MEI).
An initial list of project ideas was submitted early in January 2014.
At
the end of the reporting period the Commission Decision for the programme in
support of the first agreement on normalisation of relations between Serbia and
Kosovo was adopted.
The programme focuses on the needs of Serb majority municipalities throughout
Kosovo, in particular in the north. Funding is to support the upgrading of
municipal infrastructure, strengthening public administration, rural and
regional development, employment, education and environmental protection.
The
EU Office continues to support adequate involvement and ownership of the
government/MEI and relevant stakeholders in programming. It also monitors and
supports the government's efforts to ensure adequate quality control during
project preparation.  Special attention is being paid to relevance and
sequencing in the definition of projects that are to support priorities
identified in the Indicative
Strategy Paper. 
Table 2:
Indicative financial allocations for the year 2013 under the Annual Programme,
per priority measure identified in the MIPD 2011-2013, in EUR million 
 Priority Measures || Projects || Budget 
 Public Administration Reform ||   
   || 01-2013/1: Support to Public Administration Reform || 3.5 
 Justice and Home Affairs ||   
   || 02-2013/2: Support to the Rule of Law || 7.15 
   || 03-2012/2: Return and Reintegraiton of Minority Communities || 3.33 
   || 04-2013/2: Support to Dialogue and EU approximation || 5.6 
   ||   ||   
 Private Sector Development ||   
   || 05-2013/3: Trade and Private Sector Development || 6.5 
   || 06-2013/3: Balanced Regional Development || 11.5 
   || 07-2013/3: Education and Emplyment || 7.8 
   || 08-2013/3: Agriculture and Food Safety || 12.1 
   || 09-2013/3: Waste Management || 3.0 
   || 10-2013/3: Radiation Protection and Nuclear Safety || 0.7 
 Support and Other Activities ||   
   || 11-2013/4: Culture for All || 1.0 
   || 12-2013/4: EU Programmes || 0.5 
   || 13-2013/4: General technical assistance facility || 3.18 
 TOTAL || 65.86 
Table 3: Indicative
financial allocations for the year 2013 part II, under the Annual Programme,
per priority measure identified in the MIPD 2011-2013, in EUR million
 Priority Measures ||   || Budget 
 Public Administration Reform || 2.5 
 Justice and Home Affairs || 5.0 
 Private Sector Development || 31.00 
 TOTAL || 38.50 
2.3.2 Component II
The
Financing Agreement between Kosovo and Montenegro for the 2012 CBC programme
was signed in April 2013. The Financing Agreement for the IPA 2013 programme
was signed in July 2013;
the programme will be implemented either through a grant scheme or regular
procurement;
still to be determined. The Financing Agreement for the programme with Albania
for 2012 needs to be signed in 2014.
During
the reporting period the implementation of the Kosovo-former Yugoslav Republic
of Macedonia programme 2010-2012 started through a first Call for Proposals.

3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013

3.1
Success stories 
IPA
2008 - Development of vocational and in-company training schemes and
development of entrepreneurship skills (EU KOSVET VI) –
(EUR 3,796,000 million)
The
project has implemented two main “Active Labour Market Measures”. Firstly,
“on-the job training” was offered to registered unemployed people as a means of
helping them into employment. Secondly, “entrepreneurship training” was
provided for young job seekers to provide the knowledge and skills for them to
establish and manage their own businesses.
As
part of the “on-the job training” around 3,500
unemployed people benefitted from the 3 and 6 month training periods. 60% of
trainees were women and 46% gained immediate employment as a result. Over 2,800
businesses and other organisations in Kosovo participated. People from various
disadvantaged groups were targeted, including ethnic minority groups, people
with disabilities and people living in isolated rural areas. These have made-up
around 25% of trainees.
As
part of the “entrepreneurship training”, over 800 trainees successfully
completed the training programme and presented a business plan. This led to
around 300 new businesses being registered. Around 60% of trainees are using
their newly-acquired
business skills in their own business, in a family business or working with
friends. Tailor-made workshops have been provided
for members of ethnic minority groups and other disadvantaged groups.  The
project has played an active role in establishing the “Kosovo Association of
Young Entrepreneurs”; designed as a basis for networking and information regarding
support for young business start-ups. 
IPA
2009 - Beautiful Kosovo (EUR 5.336,882 million)
The
Beautiful Kosovo Programme has been a success. All Kosovo municipalities were
given the opportunity to submit projects targeting environmental re-generation
and social infrastructure, with a focus on beautification and urban
regeneration. A total of 46 projects were successfully awarded and implemented
in 24 municipalities across Kosovo. During the
implementation, 1,905
jobs were created, with 1,391
jobs going to persons registered as long-term unemployed. More than half (56%)
of those taken from the long-term
unemployed were from vulnerable groups. 
3.2
Overview of the implementation status of the different instruments and
components 
During
the reporting period the EU Office signed 145 contracts for a total of EUR 69.3
million and disbursed EUR 81.7 million.
As
regards Component 1, contracting advanced substantially compared to the
previous reporting year. All funds available under the 2010 IPA Annual Programmes,
which closed for contracting in January 2014;
were contracted. During 2013, the main challenges concerned infrastructure
projects. A key risk related to essential preconditions not being met at the
start of project implementation (example: permits and licenses in works
contracts). This is mitigated by: (1) being diligent in selecting projects, and
(2) maintaining close cooperation with project beneficiaries (MEI, line
ministries, etc.) (to solve remaining problems during implementation). A second
key risk related to effective procurement and the ability to select capable and
willing contractors.
For
Component II, preparation for the implementation of CBC programmes progressed.
For the CBC Programme for Kosovo-Albania evaluations of a first open Call for
Proposals combining allocations of 2010 and 2011 were completed in November.
IPA
Components 3, 4 and 5 are not applicable to
Kosovo, which has no candidate status.
3.3
Sector I: Justice and Home Affairs (focus on visa liberalisation and the
judiciary)
During
the reporting period Kosovo and the EU progressed considerably in the framework
of the Structured Dialogue on the Rule of Law. The Structured Dialogue on the
Rule of Law is a key instrument to help Kosovo strengthen its judiciary and
support its efforts in fighting corruption and organised crime. Project
implementation in the area of judiciary and home affairs continued to
strengthen the rule of law institutions in Kosovo, with the aim of contributing
to a transparent, independent judiciary system, with due respect to human
rights. 
During
2013, the construction of the Civil and Vehicle Registration buildings was
completed in three municipalities Peja/ Peć,
Rahovec/ Orahovac and Novo Bërdë/ Novobrdo. The buildings are to become
´one-stop-shop´ service locations providing efficient and effective services to
citizens. 
In
2013,
the EU funded project "Support
to the Civil Registration Agency and Unified Address System"
entered its final phase. The Kosovo Cadastral Agency received support to set up
the Address Register Information System (ARIS), which will function as the
Kosovo-wide electronic address register including digital address maps. It was
preceded by field work in the municipalities to
gather the necessary data on roads, street names, buildings and entrances
located therein. Municipalities are the competent entities to maintain and
update the address data in ARIS while the Cadastral Agency supervises and
maintains the system at the central level. The address system will benefit
everyone in Kosovo; public institutions as well as courts, utility companies,
private businesses and households. With the unified address system the quality
of a wide range of services can improve; from having your mail delivered to
faster emergency services. The address register will be linked to the civil
status register so that every citizen will be registered under an official
address. Under the project, the municipalities and relevant institutions were
provided with training, documentation and address support staff to establish
ARIS. 
IPA
supported part of the population census via a trust fund and the remaining
funds from the Population and Housing Census have been transferred to support
the agriculture census for Kosovo.
3.4
Sector II: Private Sector Development (focus on trade and business environment)
The
EU rural grant scheme supports the development and modernization of the three
sub-sectors of agriculture, namely dairy, meat, fruits and vegetables
processing.
The
program supports the improvement of by-products' utilization, the introduction
of higher value-added
products,
the creation of cold storage facilities, the introduction of HACCP food
safety management systems, improved marketing and labelling of processed food
products, upgrading production lines and facilities to meet EU standards;
including quality control equipment modernization.
Specifically,
agro-businesses are targeted. The first Call for Proposals (IPA 2009, EUR 5
million) supported 13 agro-foods processing companies by
improving their operations and competitiveness. It also aided rural employment,
as 240 workers found seasonal employment and 64 long-term
jobs were created. The awarded companies concluded contracts with 400 farmers
to supply them with raw material (milk, meat, fruits, vegetables). 
One
good example is a fruit processing company (MOEA) specialising
in pure natural juice (no water, sugars or any other
additives added): a unique product for Kosovo and the wider region;
which received a grant of approx. EUR 0.5
million to improve their value chain. 
With
the grant, investments were made in the processing equipment, effective
doubling the processing capacities (from 300 litres/h to up to 600 litres/h,
depending on the type of fruit). In addition, the grant facilitated investments
in storage facilities;
which allowed the company to store more fruits as fresh for a longer period of
time. Now the company could comply with quality standards (certification for
HACCP and ISO 9001 achieved). In addition, the increased processing and storage
capacity has strongly increased the demand for the raw product:
nowadays, the company has more than 200 local suppliers of fruits; therefore
contributing largely to direct employment creation and job strengthening.
Furthermore, on the basis of market research, the company planned its marketing
and expanded. Currently their juices are being served in more than 400
supermarkets and 200 cafeterias all over Kosovo. Lastly, the
project has also given-back by organising a series of trainings on good
agriculture practices; organising farmer-to-farmer visits and facilitating the
sharing of experience between farmers.
Similarly,
the EURED grant scheme supports the (regional) economic development.
Through
one grant the development of the (South) Mitrovica Business Park (the first and
only business park to be fully licensed) was funded (EUR 0.3 million, IPA
2010). The project was implemented by the Municipality
of Mitrovica. The business park provides building plots and infrastructure for
tenants. In addition, the Office for the Management of the Business Park was
constructed. This facility provides: office, training, conference and promotion
rooms, as well as a B2B and matchmaking area. In
addition, trainings on Financial Management, Management and Development of the
Human Resources, Customer Care, and other related trainings were provided to
more than 50 businesses (even beyond the business park).  
An
important and complementary project activity was the Small Business sub-grant
scheme. This scheme (total budget: EUR 50,000) intended to encourage the
regional business capacities towards becoming part of the Business Park
development;
explore the joint actions and partnerships, link the Business Park to regional
economic development and promote the private sector competitiveness. Twelve
companies (from different sectors like: construction, wood processing, fluid
detergent, textile, food, printing, etc.) were awarded with sub-grants up to
EUR 5,000, and are among the current 22 occupants of the business park.
3.5
Sector III: Public Administration Reform 
In
2013, IPA assistance in this priority area mainly focused on the development of
the administrative capacity
of Kosovo’s civil service, local government and the wider decentralisation
process, public finance management, public procurement, statistics and design
of a trade policy. In addition, IPA-funded SIGMA provided continued support in
the area of public administration reform. 
The
EU Office continued to use the twinning instrument as implementing modality for
capacity building projects. The project entitled "Support to Kosovo
Assembly" and implemented by the Hungarian National Assembly was completed
in 2013. The project covered a large part of the areas of activity of the
Assembly and examined over seventy different activities in nine components. It
not only covered legislation;
including the role of committees, the Presidency and the EU law approximation
process, but also international relations, involvement of civil society in
parliamentary work, research and library activities,
human resources management, financial management, as well as e-parliament
development. The project is considered to have made a very positive
contribution; with the Kosovo Assembly already taking steps to follow-up on
recommendations from the project. 
As
Kosovo has entered an important phase in its relations with the EU, the
negotiation of a Stabilisation and Association Agreement (SAA), the twinning
light project conducted the first overall capacity assessment of the two main
departments within all Line Ministries in charge of coordinating the SAA,
namely: Legal Departments (LD) and Departments for European Integration and
Policy Coordination (DEIPC).
The
project assessed whether these structures have the capacities to: (1)
effectively implement the process of transposition of the EU acquis into the
Kosovo national legislation, and (2) efficiently lead on policy coordination.
On the basis of the identified gaps, training and recruitment plans are
formulated. Even though the final results are only expected in early 2014, this
is a first example of a systematic assessment of needed versus available
capacities in view of European Integration and developing follow-up actions
accordingly. The project should be considered a foundation for future
PAR-interventions. 
Three
twinning projects started during the reporting period: "Support
Implementation of the Kosovo Education sector strategic plan 2011-2016";
"Support to Kosovo
Customs";
and "Fight
against Homophobia and Transphobia".
3.6
Cross-border cooperation
IPA
continued to support Kosovo's operating structure for cross-border cooperation
- the Ministry of Local Government Administration – with technical assistance
to help it implement the three cross-border programmes with Albania, the former
Yugoslav Republic of Macedonia and Montenegro. During the reporting period the
three programmes made progress. 
The
CBC Programme between Kosovo and Albania saw the finalisation of the selection
process of the successful projects of the Call for Proposals combining the
allocations of 2010 and 2011. The operating structures from Albania and Kosovo
also submitted their joint proposal for a strategic infrastructure project idea
for the 2012- 2013 allocations.  
In
the CBC programme Kosovo-Montenegro, joint structures were set up and the first
Call for Proposals for the allocation of 2011, 2012 and 2013 was launched
during the last quarter of 2013. 
After
slow progress in the implementation of CBC programme Kosovo-former Yugoslav
Republic of Macedonia in the previous years, 2013 was quite promising. The
joint structures reached their full capacity and the first Call for Proposals
with the allocations of 2010, 2011 and 2012 was launched in the last quarter.
Progress was made in implementation,
and a bilateral agreement between the two countries was signed to open a
border-crossing point. 

4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES

Monitoring
Kosovo
is included in the target area of the Results
Oriented Monitoring (ROM) project managed by DG Enlargement's Regional and Horizontal
Programmes unit. Accordingly, all ongoing contracts with a value of more than
EUR 1 million are subject to ROM;
allowing the EU Office the possibility of an
independent opinion on the effectiveness,
efficiency and the impact of its project implementation. In addition, projects
can be assessed ex-post via ROM.
During
the reporting period four ROM missions took place in Kosovo in 2013. The
missions produced 40 ROM reports, which monitored EUR 95.1 million of IPA
National expenditure.  The ROM reports are divided between 31 ROM ongoing
reports and 9 ROM ex post reports. The EU office is keeping track of monitoring
recommendations and aims to ensure they are being implemented by the relevant
stakeholders.
Towards
the end of the reporting period, the ROM plan for 2014 was agreed with 42
projects to be monitored.
Evaluation
During
the first part of 2013 two evaluations were carried out.
The
first evaluation focused on the sustainability of works and supplies contracts
financed from IPA and CARDS. These have come as a follow-up to the
recommendations made by the European Court of Auditors in 2011.
The
main finding was that CARDS and IPA projects have been successful in reaching
their objectives and the funds were invested properly. Some of the main findings/recommendations
are summarised as follows: involvement of the beneficiary is critical for the
success of EU-funded projects in Kosovo; government involvement in maintenance
of the equipment financed under a project needs to improve; wherever maintenance
cannot be guaranteed, a Memorandum of Understanding (MoU) should be signed
between the EU, the end-user of the facilities/equipment and the beneficiary
(local municipality) to ensure the availability of resources for maintenance.
The
second evaluation assessed the impact of the municipal infrastructure-scheme
(currently in round VII), and showed that:
·       At
programme level: projects implemented under Municipal Infrastructure facilities
I-IV, despite their diversity and considering their overall results and impact
as a common achievement, have contributed to a great extent to the development
of the social and economic infrastructure at municipal level. 
·       At
project level: all evaluated projects have reached their objective and provided
functional and sustainable infrastructure at municipal level to assist the
municipalities in Kosovo in developing their socio-economic strengths and improving
their services. 
Finally,
a Twinning Review Mission was conducted for the IPA 2008 Rule of Law project
supporting legal education reform. This is a twinning-specific tool to evaluate
the results of recently closed twinning projects and their sustainability.
For
2014, evaluations are foreseen for the Regional Economic Development Programme
(the whole structure: Grant Schemes, ARDA and RDAs), and EU support to the
education and energy sector under IPA I (incl. mapping of needs).
A
country programme interim evaluation of IPA assistance in Kosovo was also
completed in 2013. The evaluation assessed the efficiency, effectiveness, impact
and sustainability of IPA assistance 2007-2009 in three sectors: Public Finance
and Financial Management, Socio-Economic Development and Human Rights;
with a total spending of EUR 101 million.
The
sector analysis shows that some progress has been made in bringing these
sectors closer to compliance with European standards;
but significant tasks remain. The reform has mainly concentrated on the
development of legal and regulatory frameworks and establishment of national
institutions. The real challenge for the Kosovo government and public
authorities is to develop further competence and implement strategies and
legislation in practice.
In
terms of capacity strengthening of the beneficiary institutions, the IPA
assistance was effective. Systems delivered are of good quality, compliant with
European standards and therefore useful for both national development and the
accession effort. Efficiency has generally been good. Deficiencies in project
performance were found only in the Socio-Economic Development sector, which
also had the most cases of contract extensions. Long-term institutional
capacity building results may not be sustainable in some government
institutions; mainly because of high staff turnover. The assistance was
assessed as contributory to the objectives of the Stabilisation and Association
Strategy and therefore delivering the expected impact.
FINANCIAL DATA (EUR and %)
Status of implementation of IPA
financial assistance (IPA
Component I + IPA Component II), as at 31 December 2013 
 IPA- ELARG || Allocated || Contracted || Paid || % Contracted || % Paid 
 Kosovo ||   ||   ||   ||   ||   
 IPA 2007 || 82,704,005 || 82,275,420 || 79,396,726 || 99.48% || 96.00% 
 IPA 2008 || 183,318,922 || 182,420,434 || 152,867,691 || 99.51% || 83.39% 
 IPA 2009 || 103,600,000 || 103,203,103 || 77,175,149 || 99.62% || 74.49% 
 IPA 2010 || 72,100,000 || 70,975,953 || 47,871,775 || 98.44% || 66.40% 
 IPA 2011 || 68,900,000 || 49,236,003 || 27,350,395 || 71.46% || 39.70% 
 IPA 2012 || 67,500,000 || 18,328,413 || 9,800,297 || 27.15% || 14.52% 
 IPA 2013 || 107,660,000 || 16,649,000 || 4,551,514 || 15.46% || 4.23% 
 Total || 685,782,927 || 523,088,327 || 399,013,546 || 76.28% || 58.18% 
Status
of implementation of IPA financial assistance (IPA Component I), as at 31 December
2013 
 IPA || Allocated || Contracted || Paid || % Contracted || % Paid 
 Kosovo ||   ||   ||   ||   ||   
 IPA 2007 || 62,000,000 || 61,571,415 || 58,692,721 || 99.31% || 94.67% 
 IPA 2008 || 182,700,000 || 182,097,214 || 152,544,471 || 99.67% || 83.49% 
 IPA 2009 || 103,600,000 || 103,203,103 || 77,175,149 || 99.62% || 74.49% 
 IPA 2010 || 63,900,000 || 63,809,278 || 40,753,770 || 99.86% || 63.78% 
 IPA 2011 || 62,900,000 || 44,976,003 || 23,300,395 || 71.50% || 37.04% 
 IPA 2012 || 63,200,000 || 15,893,413 || 7,425,297 || 25.15% || 11.75% 
 IPA 2013 || 105,860,000 || 16,589,000 || 4,534,786 || 15.67% || 4.28% 
 Total || 644,160,000 || 488,139,427 || 364,426,588 || 75.78% || 56.57% 
Status
of implementation of IPA financial assistance (IPA Component II - CBC), as at 31
December
2013 
 IPA- ELARG- CBC Programmes || Allocated || Contracted || Paid || % Contracted || % Paid 
 Kosovo ||   ||   ||   ||   ||   
 IPA 2007 || 0 || 0 || 0 ||   ||   
 IPA 2008 || 0 || 0 || 0 ||   ||   
 IPA 2009 ||   ||   ||   ||   ||   
 IPA 2010 || 1,200,000 || 166,675 || 118,005 || 13.89% || 9.83% 
 IPA 2011 || 1,800,000 || 60,000 || 60,000 || 3.33% || 3.33% 
 IPA 2012 || 1,800,000 || 60,000 || 0 || 3.33% || 0.00% 
 IPA 2013 || 1,800,000 || 60,000 || 16,728 || 3.33% || 0.93% 
 Total || 6,600,000 || 346,675 || 194,733 || 5.25% || 2.95% 
              TURKEY

1.
SUMMARY

The Positive Agenda already brought
fresh dynamism to EU-Turkey relations and delivered positive results. This
agenda focused on efforts related to common interests, such as: trade
agreements and the Customs Union, on which a specific evaluation to assess its
overall impact was performed by the World Bank; visas, mobility and migration;
alignment with the acquis; energy cooperation; foreign policy, including
political reforms and counter terrorism actions; and increase in the
participation in Union programmes. In November 2013, the accession negotiations
regained new momentum with the opening of the Chapter 22 - Regional policy
& coordination of structural instruments. In December, the Readmission
Agreement was signed, enabling the start of the EU-Turkey visa liberalisation
dialogue.
Political
developments in the last months of 2013 featured a number of investigations on
alleged corruption of high-level politicians and officials. The radical
reshuffling of ministerial posts and the widespread sackings in the
administration, in particular judiciary and in the police force, presented the
EU with new counterparts in important areas for financial cooperation.
Despite
the political turmoil, the impact on the programming process could be minimised
and work on the new Indicative Strategy Paper for the full duration of the
multiannual financial framework (2014-2020) started as foreseen, in close
cooperation with the Ministry of European Affairs and the Ministry of
Development. 
Regarding
the management of the ongoing (IPA) financial assistance by the Turkish
national authorities under decentralised management mode, conferral of
management for IPA Component V (agriculture and rural development) was granted
to a further 22 provinces throughout Turkey. 
However,
as far as the implementation of IPA programmes is concerned, delays have been
registered; also due to the insufficient capacities of some operating structures
and end beneficiaries. 

2. STRATEGIC
PLANNING AND PROGRAMMING

2.1 Multi-annual
Indicative Planning Document
In
line with the MIPD 2011-2013, sectors and priorities were identified for the
2013 IPA annual programme; mainly supporting projects in the sectors of
justice, home affairs and fundamental rights, energy, social development and
agriculture and rural development.
In
March 2013 the Commission initiated a challenging exercise to ensure timely
preparation of the Indicative Strategy Paper 2014-2020 for Turkey, as well as the
identification of the main sectors for intervention under IPA II, through an
inclusive approach that associated all the ministries, Member States, IFIs as
well as representatives of the civil society. Main issues on the table were: 
overall budget for Turkey; sequencing of actions over the years 2014-2020;
modalities of programming (annual versus multi-annual); support to big
infrastructure projects; Turkey's interest in sector budget support and the
possibility of a Turkey Investment Facility.
The
Ministry of European Affairs (MEUA) actively steered the process, taking the
leading role in coordinating Turkey's inputs to the first draft Indicative Strategy
Paper, which was ready in October 2013. 
Table 1: MIFF[16]
allocations per component, in EUR million
 Component || 2011 || 2012 || 2013 || 2011-2013 
 I – Transition Assistance and Institution Building || 231.27 || 227.50 || 238.50 || 697.27 
 II – Cross-border cooperation || 5.13 || 2.17 || 2.22 || 9.52 
 III – Regional Development || 293.40 || 356.07 || 366.88 || 1,016.35 
 IV – Human Resources Development || 77.60 || 83.19 || 91.17 || 251.96 
 V – Rural Development || 172.50 || 187.39 || 204.18 || 564.07 
 TOTAL || 779.90 || 856.32 || 902.95 || 2,539.17 
When
it comes to donor coordination, regular meetings were held with the EIB Group
(the European Investment Bank and the European Investment Fund), the European
Bank for Reconstruction and Development (EBRD), IMF and the German Development
Bank (KfW) representatives, who already manage a number of EU-funded financial
instrument projects (venture capital, credit guarantee, and loan programmes) in
Turkey. The Commission hold several meetings with the World Bank; particularly
within the framework of the Commission-funded evaluation on the Customs Union.
Cooperation with the World Bank in the area of energy continued; further
intensified through preparatory works in two IPA projects. 
All
this confirmed the strong interest on the side of IFIs for joint work under IPA
II.
Regular
meetings with Member States’ economic counsellors were also organised in Ankara
on a monthly basis, to exchange information on recent macro-economic
developments, trade problems, accession negotiations and other issues of common
interest. 
2.2 Programming
2.2.1 Component I  
The
National Programme 2013 was adopted in November 2013 for a total budget of EUR
236.75 million. In view of the next Multi-annual Financial Framework
(2014-2020), the programme was designed in a way that will advance the move
towards a more integrated sector approach for programming of IPA financial
assistance. Substantial parts of the IPA 2013 envelope were planned through
sector interventions. Only few stand-alone projects were included in areas
where an integrated approach was not yet possible. Therefore, in coherence with
the priorities identified in the MIPD 2011-2013; after analysis of the Turkish
authorities and extensive consultations with the Commission, the programme
included the following priority sectors: Judiciary and Fundamental Rights,
Migration and Border Management, Energy, Environment and Agriculture and Rural
Development. 
Several
amendments to previous programmes were necessary in 2013. Due to savings or
failed tenders under the National Programme 2010 it became necessary to
reallocate EUR 28.3 million to new projects. In that context, almost EUR 10
million were booked for the provision of basic services to the "out-the-camp"
Syrians in Turkey, together with UNHCR. In addition, the budget for ''Support
Activities to Strengthen the European Integration Process'' was increased by
EUR 7.6 million, where programming of stand-alone technical assistance projects
– including Twinning – for up to EUR 3 million will be possible. The programme
amendment was ratified on 12 November 2013.
Furthermore,
based on a request from the Turkish authorities, a 12 month extension of the
contracting deadline for the National Programme 2011 Part 1 was agreed.
Table 2:
Indicative financial allocations for the year per component, in million EUR 
 COUNTRY/MULTI-BENEFICIARY || 2013        
 I. Transition Assistance and Institutional Building ||   
 Of which: ||   
 National Programme || 236.75 
 Tempus Programme || na 
 Nuclear Safety Programme || na 
 National programme Part II (Lifelong Learning & Youth in Action) (1) || 0.00 
 II. Cross Border Cooperation || 2.20 
 CBC Bulgaria – Turkey || 1.20 
 Participation in ENPI Black Sea basin programme " || 1.00 
 III. Regional Development || 378.00 
 Of which: ||   
 Transport || 128.40 
 Environment || 146.75 
 Regional Competitiveness || 91.72 
 IV. Human Resources Development || 96.00 
 V. Rural Development || 204.18 
 TOTAL || 935.50 
 (1)
Management of the allocations for these two programmes was cross delegated to
DG Education and Culture (EAC)
Table 3: Indicative financial
allocations for the year 2013 under the National Programme, per priority axis
and per project, in million EUR.
 Priority Axis || Projects || Budget 
 Justice and Home Affairs || 69.29 
   || Judiciary and Fundamental Rights (incl. three Twining arrangements  for reform of law enforcement institutions) || 22.60 
   || Migration and Border Management || 9 
 Energy || 39.04 
   || Energy Efficiency - with WB and EBRD || 14.75 
   || Renewable Energy - with EBRD || 14.44 
   || Electricity and Gas Market Development and Energy Electronic Data Centre - with WB || 7.00 
   || Improvement of Nuclear Safety Regulatory Infrastructure || 1.80 
   || Creation of Awareness in Industry, Private Sector, SMEs, EU and Turkish Public General || 1.045 
 Environment and Climate Change || 20.14 
   || Capacity Building in the Field of Climate Change || 13.99 
   || European Pollutant Release and Transfer Register (E-PRTR || 2.10 
   || Economic Analyses within River Basin Management Plans and Water Efficiency Aspects in 4 Pilot River Basins in Turkey || 4.05 . 
 Social Development || 74.35 
   || Improving Social Dialogue in Working Life || 3.15 
   || Participation in Union Programmes and Agencies || 71.20 
 Agricultural and Rural Development || 12.53 
 Supporting programmes || 21.40 
   || Enhanced Support Activities to Strengthen the European Integration Process (ESEI) ||   
 TOTAL || 236.75 
Justice, Home Affairs and Fundamental
Rights 
One
of the objectives set out in the MIPD 2011-2013 under Justice, Home Affairs and
Fundamental Rights sector is to implement the necessary reforms to build an
independent, impartial and efficient judiciary. The second objective is to
foster effective law enforcement; the successful fight against crime and
corruption as well as improved integrated border management and prevention of
illegal migration. The third objective is to achieve measurable progress
towards the full enjoyment of all fundamental rights and freedoms by all
individuals without discrimination. Last but not least, support for strong democratic
institutions and civil society promoting pluralism and the values of European
integration is also addressed. 
Several
actions contributing to those MIPD specific objectives were included in the
National Programme 2013. As an example, a Performance Assessment of the
Judiciary system was agreed with the World Bank and a project with the Council
of Europe for capacity building of judges, prosecutors and lawyers in Turkey on
the individual application mechanism was prepared.
The
Commission priority for the 2013 Sector Fiche on border management was to
address capacity building to ensure that Turkey moves towards a quality and
integrated border management system in order to better prevent irregular border
crossings. Another important issue was to involve the customs enforcement in
the sector for the integrity of the border management concept. It was also
crucial to guarantee that no duplications would take place given the already
ongoing national investments to secure the borders. To this end, measures addressing
border checks (training for local governors that are heads of the border
crossing points), border surveillance (electronic border surveillance at the
borders with Greece and a measure on Customs maritime surveillance) and a regional
border cooperation project among Turkey, Greece and Bulgaria were agreed.
As
concerns the areas of migration management, including asylum and trafficking in
human beings, the main objective was – and continues to be - to support the
comprehensive reform process that is currently ongoing. During the programming
exercise, the draft Law on Foreigners and International Protection was pending
approval. There were regular exchanges with Members States and International Organisations,
such as the International Organization for Migration (IOM) and the United
Nations High Commissioner for Refugees (UNHCR).
The
main interlocutor in the process has been the Bureau for Regular Migration.
Once the Law was adopted on 11 April 2013, it immediately entered into effect
with respect to its articles that established the General Directorate for
Migration Management which is basically the core of the Bureau for Migration
Management. This legislative process had a decisive impact on the programming
of the operations and the Bureau, later on to be replaced by the General
Directorate for Migration Management, has been the driving force behind the
operations listed in the Sector Fiche 2013.
Energy
In
2013, a Sector Fiche was prepared with the aim of achieving a secure and
transparent Turkish energy market in line with the EU acquis and Europe 2020
energy sustainability targets. The selected measures are key priorities for
Turkey; derived from the National Programme for Adoption of Acquis (NPAA) and
the relevant laws concerning energy efficiency and the electricity market:
Measure 1: Energy Efficiency – joint management,
with World Bank (WB) and European Bank for Reconstruction and Development
(EBRD).
Measure 2: Renewable Energy – joint management, with
EBRD.
Measure 3: Electricity and Gas Market Development –
joint management, with WB.
Measure 4. Long-term energy scenarios, capacity
building and establishment of an Energy Electronic Data Centre – joint
management, with WB.
Measure 5. Improvement of Nuclear Safety Regulatory
Infrastructure –Twinning.
Measure
6: Creation of Awareness in Industry, Private Sector, SMEs, EU and Turkish
Public General and All Relevant Stakeholders – with EBRD.
It
was decided to set up two Trust Funds based on one Administration Agreement
with WB and on one Contribution Agreement with EBRD. The respective amounts are
EUR 14,37 million and EUR 22.85 million. 
2.2.2 Component II
Turkey
has two ongoing programmes under this component, which are presented in
paragraph 3.1.2.2 below; namely the European Neighbourhood and Partnership
Instrument Black Sea Basin Cooperation Programme 2007-2013 and the bilateral
programme with Bulgaria. It should be noted that Turkey has opted out from
European Regional Development Fund (ERDF) transnational cooperation programmes
(the "South East Europe" programme and the "Mediterranean Sea
Basin programme") although Turkish actors from eligible regions can still
participate as "associated partners".
There
was hardly any programming activity on the side of DG ELARG under IPA component
II in 2013; except for the preparations for the new Black Sea Basin programme for
the new financial period 2014-2020 started in 2013
under the responsibility of DG DEVCO. Concerning
the modalities on Turkey's participation in the future ENI Black Sea programme,
IPA funding will be transferred to DG DEVCO, and the programme will be
implemented under the ENI legal base by the programme Managing Authority. 
Regarding IPA II (2014-2020) CBC Bulgaria – Turkey, the first
programming task force meeting took place in December 2013. A first draft of
the programme was expected in summer 2014. 
In
the recent past Turkey sent a message that it was open to starting a
Cross-border programme with Greece; and the possibility will be taken into
account for the 2014-2020 period. 
Equally,
Turkish authorities expressed their interest in launching discussions to
present a new Cross-border programme with Georgia. The European Union External
Action Service gave its positive opinion on this potential programme, and now
the two countries are starting discussions to investigate the potential sectors
of intervention. 
2.2.3 Component III
                                                 
Component
III programmes were originally adopted in 2007 with the budget for three years.
The programmes were amended twice in 2010 and 2012 to budget for an additional
4 years in order to cover the programming period 2007-2013. The IPA
contribution for the whole period amounts to approximately EUR 682 million for
the Environment Operational Programme (OP), EUR 585 million for the Transport
OP and EUR 468 for the Regional Competitiveness OP. Following the N+3 automatic
decommittment rule applied for 2010 annual allocations, those amounts were
reduced for the Environment and Regional Competitiveness OP in 2014.
A
weak programming exercise and a slow tendering process kept slowing down the
pace of the implementation; namely for the Environment and Regional
Competitiveness programmes. The Operating Structures appeared not to have taken
full advantage of the technical assistance resources available to them within
the Operational Programmes; be it for operational reasons or because of weak political support. The establishment of a
mature project pipeline is still a weak part of the process and a difficult
task for the Operating Structures in charge of the Transport and Regional
Competitiveness programmes
On the contrary, the Operational Structure (Ministry of
Environment and Forestry) under the Environment OP put in place a very
substantial project pipeline. Out of it, the Commission adopted 3 major
projects and signed 6 Bilateral Project Agreements in 2013. Cumulatively, 18
investment projects were under implementation for a total of 22 major projects,
corresponding to an EU contribution of more than EUR 500 million. Two projects'
appraisals were conducted in 2013 for Mardin and Kütahya Wastewater projects.
All this ensured payment requests exceeding EUR 64 million in 2013.
Unfortunately, it was not enough to cover the N+3 target of 2010 which was set
at EUR 95.24 million. The difference was automatically de-committed in 2014. In
parallel, work continued on the preparation of 5 IPA major projects to cover
the remaining budget of the programme.
Intensive informal exchanges between the Operating Structure of
the Transport OP and the Commission's services took place in 2013 in order to
optimize the project pipeline with a view to fully absorbing the available
budget. As a result of such exchanges, one more major project in the railway
sector (Samsun-Kalın) was added to the pipeline. The collaboration between
Commission services and the Operating Structure also elaborated the design of
technical assistance projects aiming at capacity building of the Operating
Structure.
The Regional Competitiveness OP kept facing significant problems
in absorbing the available funding largely due to insufficient capacities at
the level of the Operating Structure (Ministry of Science, Industry and
Technology) and end recipients. In 2013, there was a revision of its financial
tables and monitoring indicators in order to reflect the automatic
de-commitment of funds (EUR 11.62 million). The amending programme decision was
adopted in December 2013, also allowing the implementation of the financial
engineering instruments via a direct contract award to EIF or EIB. One
important large infrastructure project application – Samsun  Logistics Center –
was submitted to the Commission and should be adopted in 2014. Negotiations for
two very important projects (Innofood and Technology Transfer Accelerator -
TTA) continued in 2013: the negotiations for TTA
successfully resumed in 2014, whereas by the decision of the Operating
Structure, the Innofood project is
about to be deferred to the IPA II programme support. Following some progress achieved in the implementation, an
additional pre-financing of approximately EUR 16 million was paid for the
Regional Competitiveness OP. 
2.2.4 Component IV
The discussions on social issues were reinforced in 2013 with the
introduction of the High Level Working Group for chapter 19, and the
commencement of the Employment Social Reform Programme process following the
visit of Commissioner Andor to Turkey in May 2013. Efforts were made on the IPA
programming side as well; where a pipeline of projects was established as a
result of a Call for Operations involving stakeholders active at local and
regional level. Out of 136 applications received 37 were pre-selected;
including proposals by regional development agencies, universities,
non-governmental organisations, municipalities, organised industrial zones,
employees' and employers' organisations corresponding to employment, education,
lifelong learning and social inclusion priority axes. The total value of the
pre-selected operations exceeds the allocation for the call, which was EUR 144
million, demonstrating the high interest for the programme.
The challenge now lies with the prioritisation of the operations
taking into account the institutional capacities and the quick preparation and
publication of tenders and calls for proposals. So far, the total amount of
programmed operations increased to EUR 344 million,
corresponding to 61.7 % of the overall amount available for the 2007 – 2013
period.  However, the delays in the identification of
new operations, insufficient political commitment, and slow implementation of
procurement procedures have been the main reasons for the absorption problems
under this Component.
In
order to understand the impact of the OP actions and help design new actions
for the period 2014-2020; the need for intensifying evaluation activities was
repeatedly highlighted by the EU services. The OS conducted the evaluation of
the Employment priority axis from May-October 2013. In a nutshell, the
evaluation found that the OP measures in the field of employment (youth, women's
employment, undeclared work and public employment services) were relevant to
the needs and constraints of the Turkish labour market. The approach to
elimination of regional disparities was also considered relevant. Further capacity
building efforts are needed in regions where no project applications were
received or where all the applications were unsuccessful. Grant schemes and
institutional capacity building actions should be synchronised in the future.
2.2.5 Component V
The sixth modification of the IPA rural development
programme (IPARD) was adopted by the Commission on 11 December 2013. The
programme amendments mainly concerned the fine-tuning of the definition of
eligibility conditions and financial matters. On the other hand, the IPARD
Agency successfully completed four calls for proposals in 2013.

3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013

3.1 - IPA
3.1.1 Success stories
IPA Component III - European Turkish Business
Centres Network Project (ABIGEM Project); Total cost in EUR 40.5 million (EU
Contribution EUR 32 million for ABIGEM II and EUR 8.5 million for ABIGEM III).
Results: 16 business advisory centres across the country providing consultancy
to smaller firms.
Increasing regional competitiveness is at the heart
of the Chambers of Commerce and Industry, which are the hosts of the ABIGEM
centers. New economic opportunities - in the European Union and in the
enlargement countries - can be created by encouraging small businesses and
entrepreneurs. The EU is expanding a network of business centres in Turkey that
helps start-ups and smaller firms there, to become more competitive.
These business advisory services, known by their
Turkish title as ABIGEMs, provide professional training and consultancy to
smaller firms. In 2013 alone, these ABIGEMs helped
more than 2,800 small and medium enterprises in 19 provinces with business
consultancy; and offered more than 600 training programmes to some 24,000
participants. They also run programmes specifically for entrepreneurs who were
considering or have just launched a start-up, and some 3,500 participants
benefited from nearly 150 such programmes.
The
EU gave funding for the first three ABIGEMs a decade ago in Gaziantep, Kocaeli
and İzmir. Each of these centers is hosted by a local Chamber of Commerce.
In view of the success of these centres - which have since become
self-supporting, the EU funded a further 12 centres. These are located in
Adana, Afyon, Çorum, Denizli, Erzurum, Eskişehir, Kayseri, Konya, Malatya,
Tekirdağ, Trabzon and Uşak. And in the latest expansion, the EU has
invested in further centres in Sivas, Hatay, Batman and Van - providing
coverage right across the country. ABIGEMs are staffed by business service
managers with hands-on professional experience in the private sector and the
particular issues that smaller firms must deal with. An evaluation of the
initial project found that for every EUR 1 invested in the project, EUR 3.5 was
generated in the regions. 
The
cosmetics producer Verdaa in Hatay is just one example of many businesses which
have benefitted from EU Turkish Business Centres. According to Ms. Gülay Gül,
the company's CEO, working with ABİGEM experts "has improved our
company’s competitiveness, marketing skills and strategies; as well as
increasing our brand awareness. They helped analyse our current products’ sales
performance and revenue and the effectiveness and performance of our points of
sale, and to build new business development strategies. We added new products
to our range, and took steps to sell our products in Germany, Saudi Arabia,
Libya and the United States, obtaining the FDA certificate of product quality that
is crucial for admission to the US market. Our company has also won the Special
Jury Award of the Anatolian Brands Competition. Our cooperation with
ABİGEM has been going on for two years now, and it will continue,
too".
With
an EU contribution of EUR 43.5 million, the Greater Anatolia Guarantee Facility
(GAGF) a financial instrument designed and implemented by the European
Investment Bank Group since 2010 has already provided 4,300 entrepreneurs with
the credit they need to develop their businesses. The grant scheme leverages an
overall lending volume of EUR 900 million to support smaller companies in developing
regions of Turkey. The European Investment Bank has provided half the funding
for these loans, with Turkish banks providing the rest.
The
GAGF is channelling credit to Turkish provinces, where income per capita tends
to be 75% lower than the national average. From Kastamonu in the North to Van
in the East, the regions covered by the GAGF are home to a quarter of the
country’s smaller firms. Firms in these regions receive only 10% of total
lending in Turkey. The guarantees provided by GAGF funds make it possible for
commercial lenders to finance smaller companies under conditions that really
help growth.
One
of the beneficiaries was the Vocational Training Centre for Women in
Antakya, Hatay, which has used GAGF-guaranteed funds to launch a training course
for unemployed women. Students were generally over the age of 25 and eager to
begin a professional life. “Most of them have experience raising children and
keeping a household, but few have ever had a career” explains Okan
Özüdoğru, who teaches at the centre. With EU funds, the Vocational
Training Centre for Women provides introductory classes in information
technology, management, and practical skills for local industries. It offers
women a chance to get out of the house and take part in the economy.
The
initiative is bearing fruit. Tülay G., the 43-year old mother of two children
in Hatay, says that the course has transformed her life. When she started her
studies at the Vocational Training Centre for Women, her family had no social
security and her husband was unemployed. But on graduating, she secured a job
in the textile industry and rose to become a craftworker in silk embroidery. “I
now work as both a craftsman and a sales assistant,” she says. “My salary is
putting our daughter through university.” 
The
Vocational Training Centre for Women also encourages its students to start
their own business with evening courses in company administration and finance.
Its staff believes that economic independence is essential for both women and
men to gain control over their circumstances and overcome the developmental
challenges facing the province of Hatay. These goals reflect the spirit of the
GAGF, and some of the centre's students have also obtained direct access to
GAGF-guaranteed credit. On completing her course, Gülhan Y. worked in several
firms until she decided to start her own. With the help of the guarantee
scheme, she will be opening it this month.
Smaller
firms generate the largest proportion of employment in Europe, and are key to a
healthy and inclusive job market. By providing them with better access to
financing, the GAGF is boosting innovation, regional development, growth and
employment in some of the poorest regions in Turkey, and the results are
helping to bridge the development gap across the country.
IPA
Component I  - Twinning Project "Improving the skills of forensic
experts" (IPA 2008, EUR 2 million) ended in
2013 after a very successful implementation. The project aimed to raise the
skills of the experts of the Council of Forensic Medicine, the Police and the
Gendarmerie in terms of investigations and evidence preservation. One of the
most important outcomes was a common best practice manual for all the
institutions involved, and the construction of four forensic laboratories in
Istanbul, Adana, Izmir and Diyarbakir under the related project
"Strengthening the Forensic Capacity" (IPA 2008, EUR 12.75 million).

3.1.2 Overview of IPA implementation in
2013 
3.1.2.1 Component I: Transition
Assistance and Institution Building 
Programmes
under Component I are contracted and managed by the national authorities since
the conferral of management powers to the national authorities in October 2008.
The National Programme 2009 was fully contracted in 2013, however, contracting
rates under IPA 2010/2011/2012 National Programmes remained very low due to
unforeseen events (savings and cancellations of tenders) as well as systemic
weaknesses in DIS management and control system in Turkey.
More
concretely, the National Programme 2010 (EUR 138 million under DIS) reached a
contracting rate of only 33% by December 2013; more than 2 years after the
ratification of the Financing Agreement; mostly due to cancellation of the EUR
27 million under the ''Foot and Mouth Disease'' project. Subsequently, in July
2013, the Commission adopted a Decision amending the programme in order to
reallocate EUR 28 million and extend the contracting deadline by an additional
12 months. This allowed the financing of some new projects (including one
related to Syrian nationals seeking protection in Turkey).
As
regards the areas of migration management, asylum and trafficking in human
beings, a number of operations were developed to support the comprehensive
reform process that is currently ongoing where the main counterpart is the
General Directorate for Migration Management under the Ministry of Interior.
Key international partners in these operations were the UNHCR, IOM and ICMPD.
Collaboration
with international organisations intensified in 2013; mainly in the area of
Justice, democracy and rule of law. An important partner was the Council of
Europe, which implemented three projects:  "Consolidating Ethics in the
Public Sector" (IPA 2009, EUR 1.500.000), "Strengthening the
coordination of anti-corruption policies and practices" (IPA 2009, EUR
1.60 million), and “Improved Efficiency of Turkish Criminal Justice System (IPA
2009, EUR 3.012 million). 
Additionally,
the project "Justice for Children" (IPA 2010, EUR 3.15 million) was
implemented via a direct grant agreement with the United Nations Children Fund
(UNICEF), contributing towards humanisation of the juvenile justice system in
Turkey through the introduction of child and youth-friendly methods of dealing
with offences against the law. Pilot child-friendly interview rooms have been designed
and will be equipped in 2014 through a supply component under IPA 2010 (EUR
510,000). 
Another
important initiative in 2013 in the field of fundamental rights was the
signature of the Twinning project on "Support to Establishment of
Ombudsman Institution in Turkey" (IPA 2011, EUR 2 million) since it is
supporting Turkey during the inception phase of an entirely new institution. It
is therefore important to underline that the EU supports Turkey in the
establishment of an institution that not only corresponds to the requirements
of the political criteria for EU accession, but also aims at introducing new
forms of conflict resolution and dispute settlement and thus ultimately make a
contribution to a new culture of compromise. 
During
the reporting period, OECD - SIGMA activities focused in the areas of external audit,
financial control,
public expenditure management,
parliamentary oversight and public procurement.
The bi-annual Public Internal Financial Control (PIFC) Regional Conference
organized by SIGMA in collaboration with the host country took place in Ankara
in June 2013.
The peer review for the Turkish Parliament started
in 2012 and was completed in 2013. 
3.1.2.2 Component II: Cross-border
Cooperation
Turkey
has two ongoing programmes under IPA component II Cross Border Cooperation
(CBC): the “European Neighbourhood and Partnership Instrument Black Sea Basin
Cooperation Programme 2007-2013” (ENPI BSB CBC) and the "Cross-border
Programme between the Republic of Bulgaria and the Republic of Turkey”.
Under the ENPI
Black Sea basin Cooperation Programme, the major events in 2013 were:

 In 2013 the
     Joint Managing Authority finalized the contracting phase of the projects
     selected under the 2nd call for proposals. The Black Sea Basin
     Joint Operational Programme 2007-2013 has: 62 projects contracted
     (selected under the two calls for proposals) 9 projects with a finalized
     implementation period, 5 projects closed, and 48 projects under
     implementation; most of them finalizing in 2014 and 2015.


 2013 Annual
     conference of the Black Sea Basin Joint Operational Programme 2007-2013
     was held in İstanbul, on the 5th of December 2013. 

Under the CBC
Programme Bulgaria and Turkey, the major events in 2013 were:

 45 projects
     were selected under the 2nd call for proposals. 24 were already
     contracted in 2012 and the remaining 21 contracts were signed in 2013. The
     projects aim at boosting sustainable economic and social development. They
     build on comparative advantages to improve social development, promote
     social cohesion among people and communities, and to improve quality of
     life through the efficient use of shared natural resources, as well as the
     protection of natural, cultural and historical heritage sites.


 The third
     call was launched and the project proposals were received from 11 February
     2013 to 29 April 2013. The assessment process of the project proposals
     under the 3rd Call for Proposals was finalized in the Joint
     Monitoring Committee (JMC) on 23 October for an amount of
     EUR 4.7 million. The selected projects aim at boosting sustainable
     economic development and at improving the quality of life in the cross
     border region. Contracting shall be completed in 2014.

3.1.2.3 Component III
After
the achievement in 2012 of the accreditation process of the new Operating
Structures (OS) of the three Operational Programmes, in 2013 tendering and
contracting activities represented a challenge; especially in the Ministry of
Sciences and Industry (MoSIT) and the Ministry of Environment and Urbanization
(MoE), which were suffering from a high staff turn-over and weak political
support. These two OSs appeared not to have fully exploited the resources
available under ongoing technical assistance contracts to improve their
capacities for IPA implementation. Starting implementation of projects was
often difficult and slow; generating less expenditure than planned during the
reporting period. 
Cumulatively, 18 investment projects were under implementation in
2013 for a total of 22 major projects corresponding to an EU contribution of
more than EUR 500 million. All this ensured payment requests exceeding EUR 64
million. Unfortunately, it was not enough to cover the N+3 target for
disbursements which was set at EUR 95.24 million. The difference will be
automatically de-committed in 2014.
The
technical assistance component of the Transport Operational Programme has
strengthened the capacities of the Operating Structure and end recipients; with
a focus on managing ongoing railway contracts and on supporting the project
pipeline preparation. As a consequence, the programme achieved a good
absorption rate in 2013 with 56% of the forecasted amount actually contracted. 
The
absorption rate within the Regional Competitiveness Operational Programme
was however, not as high as expected, because of the problems mentioned above
(weak middle-management, high staff turn-over, ineffective use of technical
assistance). Actual payments amounted only to EUR 18.7 million in 2013, or
17.7% of the forecasted amount.
3.1.2.4 Component IV
Limited
progress could be achieved in the implementation of the Human Resources
Development Operational Programme under IPA Component IV in 2013. The
absorption of available funds continued to be a major issue. The contracting
rate and the disbursement rate remained at a low level; reaching 35.2% and
28.3% respectively by the end of the year. The delays in the identification of
new operations and the slow implementation of procurement procedures were the
main reasons for the absorption problems. As a consequence, an amount of EUR
12.23 million was subject to automatic de-commitment by the end of 2013.
On
the positive side, the total amount of contracts signed was EUR 51.2 million,
significantly higher than in previous years (EUR 26.6 million in 2012, and
EUR17.8 million in 2011), although the bulk of this amount corresponds to a
single direct agreement with the European Bank for Reconstruction and
Development (EBRD) with a value of EUR 38 million. In addition, the results of
evaluation and monitoring activities carried out in 2013 highlighted positive
developments in the implementation of the programme; such as the reinforced
administrative capacities of all institutions and organisations benefiting from
the operations, as well as inter-institutional relations among relevant line
ministries. 
3.1.2.5 Component V
In
2013 the Programme for Agriculture and Rural development reached its cruising
speed: four calls for proposals were completed
by the IPARD Agency in 2013 (further to the seven done in previous years).
8,348 applications were received; overall requesting EUR 195 million of EU
support. The full allocation of 2010 (EUR 134
million) was paid out to beneficiaries and a high number of relevant project
proposals was regularly submitted to the IPARD Agency. The Programme became
operational in all the selected 42 provinces in Turkey as the remaining
regional offices of the IPARD Agency received a conferral of management. 
The
programme operates on the basis of full decentralisation by the Turkish IPARD
Agency; which learned to work according to the standards of the EU Paying
Agency; demonstrating great professionalism
and dedication. They received positive recognision in
Turkey as an impressive total number of almost 10,000 applicants such as
farmers, food processing companies and rural enterprises; including those in
remote rural areas in Turkey; requested co-funding for their modernisation
projects and/or upgrading of EU standards. For many of these localities the
IPARD set an example of successful projects in line with EU standards. It is
worth mentioning the impressive growth in the number of project proposals from
41 in the first call in 2011 to 5,845 in the last call in 2013. Nevertheless,
the rejection rate of applications still remains high; at more than 50%. 
So
far, IPARD accounts for more than EUR 540 million of public-private investment
in the sector responsible for bringing food production up to EU standards and
for generating alternative sources of income in the rural economy. In
2013, the following projects were already completed: 527 farms upgraded their
standards/restructured, 95 food processing enterprises successfully improved
competitiveness/upgraded standards and 1,695 farms/microenterprises diversified
their activities. This rate of success is due to some major programme
modifications, extension of the programme to all selected provinces, but also
simplifications of procedures to allow for more flexibility, publicity effort
and a positive involvement of the banking sector as well as improved
performance of consultancy services and, finally, to the mobilisation of the
IPARD Agency.

4.
IMPLEMENTATION AND MONITORING MODALITIES AND STRUCTURES

A
positive sign showing the more active involvement of the National Authorising
Officer (NAO) Office in horizontal issues was the Comprehensive Action Plan
prepared in 2013 in order to make real progress in addressing the deep-rooted
systemic weaknesses affecting decentralised management (DIS), and continue
capacity building efforts. Issues like management of irregularities, capacities
of internal audit units, recruiting and training of staff, review of tendering
progress and rejection rate trends with the contracting authorities and
monitoring, were covered in a more systematic manner.
Furthermore,
in line with the findings of a verification mission on the monitoring system
conducted by DG ELARG in 2012, a draft version of a Protocol outlining the
roles and responsibilities among main DIS bodies was submitted to the
Commission in November 2013.  
There
were visible improvements in the NAO supervision capacity, although it has not
evenly contributed to improving the functioning of the DIS system in Turkey.
One of the main reasons for delays and tender dossiers' rejection seemed to be
still related to the capacity of the line Ministries. Rather good progress
could be observed for the authorities in charge of implementing IPA Component
IV, through new recruitments and intensive training activities in 2013, after
the transfer of responsibilities from the central contracting authority (CFCU)
towards them in 2012. 
Regarding
IPARD, Conferral of management of EU funds was granted to a further 22
provincial offices of the IPARD Agency, meaning that 42 out of the 81 provinces
in Turkey are implementing the programme.  The third Commission Decision for
accreditation was issued on 28 June 2013 relating to additional 17 provinces,
including six with provisional status for review in 2014. This was shortly
followed by the fourth Decision, on 25 July, granting accreditation to another
five provinces.  The geographical coverage foreseen in the Programme has been
successfully reached.  In addition, Turkey has submitted an application for
accreditation of a fourth measure, Technical Assistance, for which a Decision
is due to be granted in the second half of 2014, which will serve to strengthen
the administrative capacity of the managing Authority.  Preparations for a
fifth measure, a pilot agri-environment scheme advanced well.  Overall,
staffing levels have remained consistent; approximately 1,950 are employed in
the Agency and 40 in the Managing Authority.
3.1.4  Monitoring
Monitoring
remained an area of concern where NIPAC and NAO were expected to take more
responsibility in their respective roles, and to follow-up in a proper manner to
decisions made by the monitoring committees. This is recognised by the national
authorities and it was one of the main features included in the Protocol
outlining the responsibilities among main DIS bodies (see above).  
So as to facilitate information sharing
and cooperation among relevant DIS authorities in relation to their monitoring
activities, the NAO, MEUA, CFCU and Commission agreed in 2013 to:

 Encourage joint
     missions/coordination of on spot checks via information sharing 
 Sharing of Annual Monitoring
     Plans 
 Sharing of major findings
     identified during the on the spot monitoring by any of the parties during
     the DIS coordination meetings on quarterly basis

Project
level Steering Committees have proven to be functional throughout 2013. The
MEUA facilitated the establishment of these committees in its letter of 6
September 2013 to all beneficiaries. The Steering Committees' meetings play a
crucial role in terms of bridging the communication gaps between project
stakeholders, following up progress under different components of projects and
facilitating effective information flow among parties. Improvement is still needed
in defining responsibilities of the committees; in particular their role in
decision making.
In
line with the decision made during the March IPA Component I -TAIB MC, the
frequency of the Sectorial monitoring committees' meetings was decreased to once
a year for 2013.
There
was an improvement in terms of the focus of the discussions, and participation
of a wider range of stakeholders and civil society representatives.
Nevertheless, problems persist as regards the level of participation,
dissemination of information to participants and stakeholder involvement. In
view of this situation, the Commission reiterated the need to strengthen the
role of these committees.
There
was an increase in the number of joint missions conducted in 2013 compared with
2012. However, the institutions were less successful in sharing information;
especially the CFCU that failed to provide procurement tables to the MEUA on a
regular basis and other documentation required for the monitoring committees
prior to the meetings.  
DIS
coordination meetings became a more relevant and efficient tool for monitoring;
although the system of follow-up to audit recommendations and conclusions needs
to be improved. 
Table 4: Status of implementation of IPA
financial assistance (Component I) as at 31st December 2013 (in EUR
million) per annual programme and distribution of total committed funds (2007 –
2013 allocations)
   || Committed || Contracted* || % Contracted || Paid* || % Paid 
 IPA 2007 || 256.20 || 233.21 || 91.03% || 188.89 || 73.73% 
 IPA 2008 || 256.13 || 246.74 || 96.34% || 213.94 || 83.53% 
 IPA 2009 || 204.55 || 193.42 || 94.56% || 142.51 || 69.67% 
 IPA 2010 || 218.29 || 113.89 || 52.17% || 90.84 || 41.62% 
 IPA 2011 || 229.97 || 81.72 || 35.53% || 76.77 || 33.38% 
 IPA 2012 || 225.75 || 79.63 || 35.28% || 73.73 || 32.66% 
 IPA 2013** || 236,75 || 0 ||   || 0 ||   
 TOTAL || 1,390.88 || 948.60 || 68.20% || 786.68 || 56.56% 
* Including Union Programmes and
programmes' pre-financing to the Turkish National Fund
** FA ratified in May 2014.
Status of
implementation of IPA financial assistance (Component II, implemented by
Regional Policy DG) as at 31 December 2013 -  in million
EUR
 IPA CBC || Committed || Paid until 31 December 2013 || Percentage 
 Bulgaria-Turkey || 27.27   || 11.06 || 45%   
 Status of implementation of IPA financial assistance (Component III) as at 31 December 2013 (in million EUR) and distribution of total committed funds (2007-2013 allocations) Operational programme 
 Country/Operational programme (OP) || Committed || Paid || % (with advance payment) 
 OP Environment || 682.47 || 219.00 || 32% 
 OP Transport || 584.72 || 228.25 || 39% 
 OP Regional Competitiveness || 468.77 || 157.33 || 34% 
 Total Turkey || 1,735.95 || 604.58 || 35% 
Status of implementation of IPA
financial assistance (IPA Component IV, implemented by DG Employment, Social
Affairs and Inclusion), as at 31 December 2013 – in million EUR
 Countries || Allocated || Contracted || Paid || Percentage contracted || Percentage paid 
 Turkey || 473.85 || 168.56 || 157.17 || 35.57 || 33.1 
Status
of implementation of IPA financial assistance (IPA Component V, implemented
by Agriculture and Rural Development DG ), as at 31 December 2013 – in million
EUR
 Committed || Paid || Percentage paid 
 789.63 || 147.03 || 19 
              ICELAND

1. SUMMARY

The
government of Iceland announced its decision to put accession
negotiations on hold on 22 May 2013. By that time substantial
progress had been made in the negotiations: 27 chapters had been opened and 11
were provisionally closed. As a consequence of this decision, the
Commission stopped engaging on new commitments under IPA and started to phase
out ongoing IPA projects. In agreement with the government, all preparatory
work on IPA II was also suspended.
The
implementation of funding to projects both under the 2011 and the 2012
programmes had been ongoing at the time when the decision was taken to
discontinue all IPA funding to Iceland. Although Programming for the National
Programme 2013 had been completed with a unanimous approval by the IPA
Committee in November 2012 and adopted on 2 December 2012, with three projects
envisaged within a total value of EUR 10.8 million, no funds were disbursed
under the 2013 programme.

2. STRATEGIC PLANNING AND PROGRAMMING

2.1
Multi-annual Indicative Planning Document
Prior
to the decision by the Icelandic government to put the accession negotiations
on hold and the subsequent decision by DG ELARG to terminate IPA funding to
Iceland, the global objective of EU financial assistance to Iceland had been to
support its efforts towards compliance with the EU acquis, in order to become
fully prepared to take on the obligations of membership of the European Union.
The
MIPD 2011-2013 had set out two strategic objectives, to be financed under IPA
assistance: 
-
to further enhance Iceland's ability to assume the obligations of membership by
supporting institutional capacity building for acquis transposition and
implementation. 
-
to reinforce Iceland's institutional capacity in its preparations for
participation in and implementation of Structural Funds  and other EU funds.
Table 1: MIFF[17]
allocations per component, in EUR million
 Component || 2011 || 2012 || 2013 || 2011-2013 
 I – Transition Assistance and Institution Building || 12 || 12 || 5.81 || 29.81 
 TOTAL || 12 || 12 || 5.81 || 29.81 
2.2
Programming
2.2.1
Component I
Prior
to the decision by the Icelandic government to put the accession negotiations
on hold, the 2013 National Programme had been presented to the IPA management
committee in November 2012. The 2013 programme, for a total value of EUR 10.8
million had been adopted on 2 December 2012 and the additional national
contribution had amounted to EUR 7.7 million. The 2013 Programme covered
exclusively the first strategic priority of the MIPD (to further enhance
Iceland's ability to assume the obligations of membership by supporting
institutional capacity building for acquis
transposition and implementation). No funds had
been disbursed under the 2013 national programme at the time when the decision
was taken to put the accession negotiations on hold.      
The
programming of National Programmes 2011-2013 had been completed by the end 2012
with all three annual programmes adopted. The national programmes 2011-2013
foresaw in total, 13 projects; including environment, food safety, increasing
employability of low-skilled workers, regional development, financial
supervision, customs upgrading, statistics and translation of the acquis.
Co-financing from the Icelandic side was sizable and stood at 33% overall for
the 2011-2013 National Programmes.

3. IMPLEMENTATION OF EU FINANCIAL
ASSISTANCE IN 2013

Prior to the government's decision to
put the accession negotiations on hold, financial support to Iceland had been
exclusively implemented under IPA Component I "Transition Assistance and
Institution Building", through centralized management by the Commission
headquarters. Grants constituted a substantial part of the pre-accession
assistance in Iceland. 
Implementation
of the national IPA assistance started in 2012. As of 31 December 2013, 75% of
the funds had been contracted and 8% paid. The implementation of the 2013
Programme had not yet started when the decision to terminate IPA funding to
Iceland was taken. 
Whilst
IPA funding was ongoing, good progress was reported and was confirmed by
independent monitoring carried out under the external
monitoring contract 2012/297-352 Generally, the
Icelandic beneficiaries had a good administrative capacity to implement the
projects and there was a high project ownership rate. The first IPA Monitoring
Committee had met in November 2012 and concluded that notwithstanding the early
stage of the IPA implementation in Iceland, the programme was implemented
effectively and there was a sufficient quality and coherence towards meeting
the objectives set out in the multi-annual indicative planning document.
Following the government’s decision to put the accession negotiations on hold,
there were no any other meetings of the IPA Monitoring Committee.
As
regards technical assistance, support had been provided by means of several
consultancy contracts; mainly in the area of regional development. The
administrative capacity of the National IPA Coordinator's office had also been reinforced
through a technical assistance contract, until the decision was taken to
terminate IPA funding to Iceland. TAIEX continued to play a key role in
providing technical assistance to Iceland in 2013; but TAIEX assistance was
suspended, following a request by the Icelandic government in June 2013 to this
effect, in-line with the government’s decision to put the accession
negotiations on hold. 
FINANCIAL DATA (EUR and %)
Status of financial implementation (IPA
Component I), as at 31 December 2013
 IPA- ELARG || Allocated || Contracted || Paid || % Contracted || % Paid 
 Iceland ||   ||   ||   ||   ||   
 IPA 2007 ||   ||   ||   ||   ||   
 IPA 2008 ||   ||   ||   ||   ||   
 IPA 2009 ||   ||   ||   ||   ||   
 IPA 2010 ||   ||   ||   ||   ||   
 IPA 2011 || 12,000,000 || 9,033,958 || 3,246,881 || 75.28% || 27.06% 
 IPA 2012 || 11,997,400 || 1,000,000 || 373,691 || 8.34% || 3.11% 
 IPA 2013 || 10,839,763 || 0 || 0 || 0.00% || 0.00% 
 Total || 34,837,163 || 10,033,958 || 3,620,572 || 28.80% || 10.39% 
              B.      MULTI - BENEFICIARY

1. SUMMARY 

Regional
cooperation has continued within regional fora;
such as the Energy Community, the European Common Aviation Area, the Central
European Free Trade Agreement (CEFTA) and the Regional School of Public Administration
(ReSPA). The Regional Cooperation Council (RCC) has further consolidated its
role as a platform for the promotion of issues of importance to the whole
region and its EU perspective; thus further mainstreaming regional cooperation
in the countries’ political agenda.  Progress on inclusiveness in the
regional cooperation process has been made following Kosovo's admittance as a
full and equal participant in the RCC in February 2013 and in ReSPA in November
2013.  
The adoption of the South East Europe 2020
strategy by the Ministers of Economy of the region in November 2013 set a clear
framework for achieving smart, sustainable and inclusive growth.
 
In accordance with the priorities of the Enlargement
Strategy, Multi-Beneficiary financial assistance throughout 2013 supported
progress in the area of rule of law, regional cooperation in criminal
justice, public administration reform and by building networks of civil
society organisations. 
In the area of regional cooperation and
reconciliation, the renewed commitment to the Sarajevo process was
confirmed through the launch of the Regional Housing Programme (approved
housing projects worth EUR 60 million in 2013, with an EU contribution to the
Fund of EUR 84 million). 
To underpin economic recovery in the Western
Balkans, new investments in infrastructure and support to private sector
development were approved in the framework of the Western Balkans Investment
Framework, as well as projects in the field of competitiveness and human
resource development/training. 

2. STRATEGIC PLANNING AND
PROGRAMMING

2.1
Multi-annual Indicative Planning Document 
The
Multi-Annual Indicative Planning Document (MIPD) 2011-2013 sets the strategic
framework  for Multi-Beneficiary (MB) assistance
programmed during 2013 and provided through component I of IPA.
Whereas
the bulk of IPA support to the beneficiaries was delivered through the national
programmes; around 9 % of available funds were allocated through the MB
programmes to complement national programmes and strengthen multi-lateral
relations in the Western Balkans and Turkey in areas identified as crucial for
European integration and stability in the region. Areas of intervention were
only addressed through MB assistance where there was a clear need for regional
cooperation or horizontal action; for instance through tackling cross-border
problems or in obtaining efficiencies through establishing harmonised
approaches, leveraging established instruments or facilitating networks of
experts. In the period 2011-2013, the indicative allocation available for this
totalled around EUR 526 million for component I. 
A
new draft Multi-country Strategy Paper 2014-2020 was prepared in 2013
which sets out the priorities for EU horizontal and regional financial
assistance for the coming 7-year period. It translates the political priorities
as defined in the Enlargement Strategy and the most recent Annual Progress
Reports, into key areas and sectors where cross-border and multi-country
assistance will be most useful to support the enlargement countries preparing
to meet the accession criteria. It is designed to be consistent with the
national strategies as set out in the Country Strategy Papers and to complement
and enhance them by supporting regional cooperation, facilitating coordination
and effective horizontal implementation mechanisms. 
Table 1: MIFF[18]
allocations per component, in million EUR
 Component || 2011 || 2012 || 2013 || 2011-2013 
 I – Transition Assistance and Institution Building || 187.86 || 207.03 || 171.23 || 566.12 
 II – Cross-border cooperation || 5.29 || 5.67 || 6.06 || 17.02 
 TOTAL || 193.15 || 212.70 || 177.29 || 583.14 
2.2
Programming exercise 
2.2.1
Component I  
The
MB 2013 programmes address all priorities of the MIPD either directly or
indirectly, while particular attention is paid to public administration reform,
the fight against organised crime and corruption and to support recovery from
the recent economic crisis.  
Private
Sector Development, higher education, support to Civil Society and refugee
return also figure high on the agenda. With a view to facilitate programming,
the projects have been consolidated into separate Programmes: 
Multi-Beneficiary
Programme 2013, adopted on 15/02/2013, amended on 13/11/2013;
Tempus
Programme 2013, adopted on 28/02/2013.
In
addition, a number of amendments have been processed; notably to commit
additional funds to the Regional Housing Programme's 2013 allocation (increased
by EUR 28 million).
Table 2: Indicative
financial allocations for the year per component, in EUR million
 MULTI-BENEFICIARY || 2013 
 I. Transition Assistance and Institution Building || 236.51 
 Of which: ||   
 Multi-Beneficiary programme  2013                                                                                   || 120.76 
 Tempus Programme* || 11.70 
   ||   
 Civil Society Facility allocation 2013                                                                                     || 14.80 
 Regional Housing Programme (Sarajevo process) allocation 2013 || 55.50 
 Support to the operation budget of the office of the High Representative (OHR) in Bosnia and Herzegovina || 3.75 
 Sarajevo 2014 || 2.00 
 Contribution to the Energy Community secretariat || 3.16 
 TAIEX || 12.00 
 Information and Communication || 10.00 
 ERDF || 1.34 
   ||   
 Evaluation and audit || 3.50 
 TOTAL || 238.51 
*Management of the allocations for this
programme was cross-delegated to DG Education and Culture (EAC) 
The
selection process of projects that form part of these annual programmes has
been based on sector plans and discussions in sector working groups that were
set up for the purpose of defining the priorities for the MIPD 2011–2013 and
hence in full coordination with the IPA beneficiaries, other donors, the RCC,
civil society and other stakeholders, taking also into account lessons learned
of past and ongoing programmes. 
Only projects
that have achieved sufficient readiness for implementation have been accepted. 
A
regional project for international cooperation in criminal justice with a
budget of EUR 5 million has been approved to enhance the fight against
organised crime and corruption. It aims to improve the capacities of the
beneficiaries for international judicial and police cooperation through the
support for international investigations and prosecutions, the promotion of
secured exchange of information and intelligence, the use of modern
communication technology and data protection mechanisms aligned to EU
standards. In the same sector, a follow-up project to strengthen networks
for regional cooperation of prosecutors has been developed with an
allocated amount of EUR 5 million.
With
a view to maintaining the momentum of Public Administration Reform and
improve public governance, the SIGMA project has been further supported
with an allocation of EUR 10 million to develop roadmaps for comprehensive
reform strategies that are properly prioritised and sequenced and will be
subject to performance-oriented monitoring and assessment.
An
amount of EUR 12 million has been allocated to TAIEX, the Technical
Assistance and Information Exchange Instrument, which delivers tailor-made
assistance to the beneficiaries for the approximation, application and
enforcement of EU legislation as well as alignment with EU best practices. In
total 2,118 events and assignments have been organised across all beneficiaries
- the highest figure ever recorded for the instrument. Under IPA in particular,
TAIEX events (including multi-country events), underwent a significant 15%
increase compared to 2012. Such quantitative achievement was matched by a
strong alignment of TAIEX with the main thrust of the enlargement policy and
assistance priorities. This is evidenced, for example, by the highest ever
number of events for the benefit of Croatia in the run-up to, and just after,
accession (180 events, a 34% increase on 2012); the highest ever number of
events in the Justice and Home Affairs sector (556, a 17% increase on 2012);
and the support to Montenegro's screening process and follow-up.
Following
the launch of Western Balkan Enterprise Development and Innovation Facility
(WB EDIF) on 5 December 2012, a further EUR 34.2 million has been allocated to
WB EDIF. EDIF is embedded in the Western Balkans Investment Framework and is
the first initiative in the Private Sector Development area. Better
coordination with IFIs with the aim of boosting competitiveness provides
incentives for achieving sustainable economic growth and embracing the Europe
2020 strategy. In the sector of Environment and climate change, the regional
project 'Environment and Climate Change Regional Accession Network'
(ECRAN) started  in October. It ensures support to the cooperation of the national
civil protection authorities of the Western Balkans and Turkey with the Union
Civil Protection Mechanism and the further development of their disaster
management capabilities through the Programme on civil protection
cooperation.
In
an effort to help achieve the SEE 2020 Strategy targets and promote the sound
recovery from the economic and financial crisis, support has been provided to
the Regional Entrepreneurial Learning Centre (SEECEL) located in Zagreb,
to the regional competitiveness initiative (OECD) and to
the European Training Foundation (ETF).
With
a view to fostering reforms and regional cooperation in education, the IPA 2013
Multi-beneficiary programme has continued previous practice in supporting scholarships
under the Erasmus Mundus Programme as well as the Youth in Action
programme. Actions are implemented by the Education,
Audiovisual and Culture Executive Agency (EACEA).
Cross-border
cooperation continued to strengthen good
neighbourly relations and contributed to overcoming the legacy of the past, by
assisting the capacity of local, regional and national institutions within the
IPA countries to manage EU programmes and to prepare them for the management of
future Structural Funds. Assistance has been provided to different types of programmes;
notably cross-border cooperation at intra-Western Balkan borders, as well as
bilateral cross-border programmes between IPA countries and Member States and a
multilateral programme called "IPA Adriatic". In addition, the
participation of IPA countries in the transnational cooperation programmes
"South East Europe" and "Mediterranean", managed by DG
Regional Policy, continued to be ensured.
Support to Civil
Society and Refugee Housing was provided by separate multi-annual
programmes.
Coordination
and coherence of assistance and activities is particularly important, given the
large number of players involved in multi-beneficiary IPA assistance
programming. The need for improved coordination and coherence has been
highlighted to the Commission during consultations as a continuing concern by
the authorities in the region. 
Efforts
are being made by the Commission to ensure good coordination in the programming
as well as the implementation process by organising regular meetings throughout
the year with beneficiaries, EU Delegations, EU Member States, IFIs, the RCC
and other stakeholders. This process is geared towards ensuring
complementarities, avoiding overlaps and enhancing, as far as possible, local
ownership of the choices, content and design of the programmes. 
Table 3: Indicative financial
allocations for the year 2013 under the Multi-beneficiary Programme, per sector
and per project, in EUR million
 MIPD sector || Projects || Budget 
 Public Administration Reform || 10.00 
   || SIGMA || 10.00 
 Justice and Home Affairs || 65.50 
   || Int. cooperation in criminal justice || 5.00 
   || Prosecutors' network || 5.00 
   || Refugee Housing Programme allocation 2013 || 55.50 
 Private Sector Development || 42.50 
   || EDIF || 34.20 
   || SEECEL, Regional Competitiveness Initiative ||  8.30 
 Transport and energy infrastructure || 5.60 
   || WBIF – IFI Coordination || 5.60 
 Environment and Climate Change || 7.15 
   || Disaster Risk Reduction || 2.00 
   || ECRAN || 5.00 
   || Sava river || 0.15 
 Social Development || 34.70 
   || Erasmus Mundus Action 1 ||  8.00 
   || Erasmus Mundus Action 2 || 12.00 
   || Youth in Action || 3.00 
   || Tempus || 11.70 
 Other || 22.51 
   || Strengthening European Integration || 11.61 
   || RCC || 10.90 
 Civil Society Support || 14.80 
   || Civil Society Facility allocation 2013 || 14.80 
 Supporting programmes || 33.75 
   || Support to the operation budget of the office of the High Representative (OHR) in Bosnia and Herzegovina || 3.75 
   || Contribution to the Energy Community secretariat || 3.16 
   || TAIEX || 12.00 
   || Information and Communication || 10.00 
   || ERDF || 1.34 
   || Evaluation and audit || 3.50 
 TOTAL || 236.51 

3.
IMPLEMENTATION OF EU FINANCIAL ASSISTANCE IN 2013

3.1
Success stories 
Western Balkan Enterprise
Development and Innovation Facility (IPA 2011, IPA 2012 and IPA 2013) 
Following
the launch in December 2012 of the Western Balkan Enterprise Development and
Innovation Facility (EDIF), its components and governance architecture started
taking shape in the course of 2013. EDIF gradually develops into a regional
Private Sector Development hub bringing together activities of various and
complementary key players in the region. 
The
European Investment Bank (EIB), the European Investment Fund (EIF) and the
European Bank for Reconstruction and Development (EBRD) are all involved in the
financial instruments roll-out with EIF also providing the Secretariat to the
entire initiative; bringing together the beneficiaries, International
(Financial) Institutions, individual donor countries (such as Italy and
Germany) and the Commission. 
Importantly,
2013 saw the first guarantee agreements signed with the banks in Albania,
Bosnia and Herzegovina and Kosovo allowing improved access and lending to SMEs
in these economies. In April 2013, EIF launched a Call for Expression of
Interest to financial intermediaries in the region. Quality banking groups have
expressed interest and EIF approved the first three transactions which should
result in approximately 400 loans disbursed in Albania, 160 in Bosnia and
Herzegovina and 250 in Kosovo of an approximate value of EUR 20 million each.
The next batch of applications came from the former Yugoslav Republic of
Macedonia, Croatia and Serbia and were being examined by EIF. In the future the
funds available could be increased for the region and/or for individual
countries to further the capacity of this regional Facility.
Improving
economic governance in the Western Balkans and Turkey (TAIEX instrument)
To
improve economic governance in the Western Balkans and Turkey, annual TAIEX
multi-country seminars on applied EU Economic Policy related to European
Monetary Union legislation have been organised since 2004 in cooperation with
DG ECFIN. The events have targeted high-level officials from the candidate
countries and potential candidates. 
Around
300 participants from the Ministries of Finance and the Central banks from IPA
countries have been trained on EU economic policies by speakers from DG ECFIN,
the European Central Bank and EU Member States.
The
sessions have been instrumental in raising the participants' awareness and
understanding of the European Monetary Union legislation, including monetary
and exchange rate regimes, fiscal and macroeconomic surveillance with the
macroeconomic imbalance procedure, the economic aspects of EU enlargement, and
the ECB monetary policy and Euro system among others. 
TAIEX: Reinforcing the national
anti-drug policy of the Croatian Office for Combating Drug Abuse 
Through
a series of TAIEX events in 2013, supported by the European Monitoring Centre
for Drugs and Drug Addiction (EMCDDA), the Croatian Office for Combating Drug
Abuse succeeded in reinforcing the national anti-drug policy in several ways.
Specific guidelines were developed for psychosocial treatment of drug users in
the healthcare, the social security and the prison systems. Guidelines are also
being drafted on harm reduction related to drug addiction, which will
contribute to overdose prevention and reduction of health-related risks. In
addition, a study was launched on mapping drug-related costs in order to offer
concrete evidence for further policy development. In the area of the Early
Warning System (EWS) new developments were identified. Awareness was raised
among different stakeholders on the need to cooperate more closely in
monitoring the phenomenon of new psychoactive substances (NPS) with the purpose
of protecting public health and preventing potential fatalities related to NPS
use, for which purpose a new and more effective operational protocol will be
developed. Another result of TAIEX assistance will be a clinical and toxicology
network within the EWS. Overall, with TAIEX support Croatia has strengthened
available treatment and harm-reduction for drug users while heading for a more
targeted policy on reduction of costs and a new coordination system to tackle
the dangers of new drugs.
TAIEX support for Albania Customs
Reform 
The
General Directorate of Albanian Customs personnel benefited from a series of 11
events (3 Multi countries, 1 Workshop, 5 Study Visits and 2 expert missions),
contributing further to the Albanian customs reform. The TAIEX actions allowed
the beneficiary to learn about the technical and practical implementation of
the EU legislation in the field of Customs. TAIEX assistance combined
on-the-spot training in EU Member States with advice from EU experts. The
events aimed at reforming the Albanian Customs Administration by improving
procedures, customs controls systems, communication with the stakeholders and
the implementation of international conventions. 
With
the aim of achieving benchmarks to comply with EU standards in the field of
Customs, Albania has undergone a reform identifying key priorities to be addressed
in order to improve the performance of the Albanian Customs Administration.
Tangible achievements include: the adoption of an internal regulation on
security policy for the customs IT system; the ratification of the Regional
Convention on Pan-Euro-Med preferential rules of origin and the implementation
of the ATA Convention on Temporary Importation. The TAIEX events reached
approximately 152 civil servants.
Systematic Electronic Exchange of
Data (CN 244-972) (EUR 1.3 million)
The
Systematic Electronic Exchange of Data (SEED) project has established IT
connections between all regional customs agencies for the exchange and analysis
of customs data. A specialised IT system is helping catch exporters who
deliberately falsify export data in the Balkans. 
The
region’s first systematic approach has been designed and developed on the basis
of good examples of the EU e-Customs systems (NCTS, ECS, ICS, etc.). The
project generates benefits for the Western Balkans as well as for the EU as it
helps to speed up customs procedures and facilitate legitimate trade, prevent
smuggling and improve the fight against organised crime, increase the
collection of customs duties, prevent corruption and improve the overall
technical capacity of beneficiary administrations. The project also helps to
improve border protection at the external EU borders; thus allowing the
protection of the financial interests of the European Union and its Member
States.             
Police
Cooperation: Fight against organised crime, in particular illicit drug
trafficking, and prevention of terrorism (CN 222-617) (EUR 2.5 million)
International
Law Enforcement Units (ILECUs) have been set up in the countries of the Western
Balkans and cooperate with the main international law enforcement agencies such
as Europol, Interpol and Frontex. They are the national coordination points for
exchanging information in international investigations; especially into drug
trafficking and terrorism as well as other forms of organised crime that
operate across borders in the region.
The coordinated
exchange of information between national and international law enforcement
agencies has led to a significant increase in the number of arrests for
organised crime in the Western Balkans. The project activities have directly
facilitated the establishment of international communication channels, contacts
and the building of trust between police authorities in the region.
Regional
Cooperation in Criminal Justice: Strengthening capacities in the fight against
cybercrime - CyberCrime@IPA (CN 247-988) (EUR 2.5 million)
This regional
project is to enhance the ability of the countries in the Western Balkans and
Turkey to prevent and control cybercrime as well as to strengthen the
capacities of law enforcement authorities to cooperate effectively, Thus, the
project is contributing to an increased number of successful investigations in
the region; including making use of the 24/7 cybercrime points of contact.
 The project
came to an end in June 2013 and now shows its first concrete results: 
-       
After
several attacks on Government computers and Internet sites, between April 2011
and May 2012, the Serbian specialised cybercrime authorities, in close
cooperation with the Ministry of Interior of Croatia, carried out
investigations which resulted in the arrest and prosecution of a Croatian
hackers group.
-       
The
practical cooperation between Serbian and Montenegrin special units on
cyber-crime led to the arrest and prosecution of an organised group specialised
in credit card and on-line account transfer fraud worth millions of Euro.
-       
In
the "Credit Card Skimming" case (June – August 2012) the cooperation
between the Special Prosecutors Office for Cybercrime in Belgrade and the
Organised Crime Prosecution Office in Skopje led to the identification of two
criminals believed to be operating  a system of  credit card skimming and
fraud. In both countries the financial loss caused by their fraud amounted to
hundreds of thousands of Euro.
Regional
cooperation in Criminal Justice: Witness Protection in the Fight against Serious
Crime and Terrorism – WINPRO II (CN 305-554) (EUR 7.0 million)
The project aims
to combat organised crime and corruption by reinforcing the institutional
capacity of the Witness Protection Units to offer protection to witnesses and
collaborators of justice, before, during and after a trial, within and/or
outside their territory.
Work on harmonising witness protection
legislation in the region is ongoing and so far the project has had a
significant impact on the Units across the region in terms of:
-       
Development/strengthening
of international co-operation (protocols and procedures);
-       
Development
of effective lines of communication with regard to international cooperation;
-       
Planning
and preparation of practical cross-border exercises to move witnesses.
FINANCIAL
DATA
On
implementation of assistance at 31 December 2013
IPA Multi-Beneficiary –
EUR million
              C.      Towards
a more efficient and effective delivery of assistance: linking assistance more
closely to the enlargement policy priorities and the sector approach

Evaluation
findings

In
2013, DG Enlargement completed five evaluations; five new evaluations have been
launched and three evaluations were in the process of implementation. Two
reports were postponed to be delivered in the first quarter of 2014 due to
contract extensions. 
A
thematic evaluation on the EU's support to strengthening Governance, Rule of
Law, Judiciary Reform and Fight against Corruption and Organised Crime in the
Western Balkans[19]
was finalised at the beginning of 2013. The evaluation was focused on
evaluating the relevance, efficiency, effectiveness, impact and sustainability
of EU pre-accession financial assistance; most notably IPA funds and
EU-supported reforms and institutional setting in the areas of Rule of Law,
Judicial Reform and Fight against Corruption and Organised Crime. 
The
evaluation confirmed the importance of the rule of law and highlighted
major improvements made by all Western Balkan
countries in the fundamental institutional and organisational frameworks in the
sector due to the EU support. It was acknowledged that legal and institutional
frameworks were put into place as a result of EU assistance. The restructuring
of the broad institutional settings have
been the most important and sustainable results. More, and more appropriate,
laws have been passed, and in some cases the entire legal philosophy underlying
the legal system has changed; being informed by the
principle of separation of powers and the acceptance of the importance of
independence, effectiveness and quality of the judiciary.
The
fact that these processes have largely taken place is a major achievement, and
the EU through the years has clearly been a driving force both at the
political/policy level, and with funding. Moreover, as a consequence of the EU
assistance, important results at output level were produced; e.g. in some
countries, court systems were restructured, modernised; structures in the
justice sector have generally improved; overall organisational development has
taken place.
Despite
the positive changes EU and IPA assistance brought to the countries, the
further effectiveness of the programmes depends on stronger political will;
increase in the ownership of the programmes, and local administrative capacity.
They remain crucial conditions for a sustainable judicial reform. The report
also calls for increase in the EU financing  to the Rule of law sector, as it
found out that at the aggregate financing level, the share of available IPA
funding allocated to addressing the judiciary and fight against corruption and
organised crime is uneven across countries. 
DG
Enlargement shares the vision of attaching importance to the sectors dealt with,
and confirms its strong commitment to maintaining reforms of the judiciary and
the fight against corruption as key priorities of the accession process.
However, judiciary reforms and fight against corruption are sectors which are
addressed only by financial means, programming or IPA-related matters; but
rather with policy dialogue and political will.
The
second interim evaluation of IPA assistance, finalised in September
2013, brought a consolidated analysis and assessment resulting from 7 Country
Programme Interim Evaluations (namely Albania, Bosnia and Herzegovina,
Montenegro, Serbia and Kosovo, Turkey and Croatia) and Multi-beneficiary
programmes under IPA and other thematic contributory evaluations. It provided a
valuable assessment of the efficiency, effectiveness, impact and sustainability
of IPA programmes Component I in 2007-2010. The evaluation provided relevant
lessons learned to the Commission to enhance the programming of IPA II
2014-2020. The evaluation itself is a good example of the new orientation of DG
Enlargement's evaluation policy; emphasizing on strategic and policy-oriented
evaluations which contribute to evidence-based decisions in programming and
implementation of IPA assistance. In addition, it implements effectively the
"evaluate first" principle. 
The
evaluation was conceived as strategic, and as a complementary tool to ensure a
coherent assessment of the EU assistance. It was designed to get evidence from
past and ongoing activities and provide lessons learned that can be used for
both adjusting ongoing operations and modifying the design of future policies
and operational interventions; therefore playing a strategic role. 
The
overall conclusions from the second meta evaluation are that the delivery of
outputs is generally good; especially in those countries operating under
centralised management. However, translating project level outputs into results
and impact has not been as good as it could have been. In addition, the
assistance has been substantially effective and performs best when it has been
driven by acquis as this provides a politically accepted institutional
structure and professional mandate. IPA has been a useful facilitator of change
and it was acknowledged that it must be accompanied by a clear political
process and steady progress in the accession process to generate sustainable
results. Timeliness is a key factor in ensuring ownership; and multi annual
programming can do much to engender this.
With
regard to efficiency, IPA was contracted and implemented mainly in line with
planned expectations and using appropriate mechanisms. According to the
evaluation, project implementation is not sufficiently flexible, and greater
flexibility in project scaling is needed; especially in providing more rapidly
deployed assistance. Beneficiary management capacity takes time to improve
after management power has been conferred to national contracting structures;
meaning that ownership therefore needs to be improved.
Analysis
of sectoral performance to determine the impact of the IPA shows that
substantial progress has been made towards sectoral policy objectives
established at the beginning of programming, although the contribution of
earlier assistance and other actors should not be discounted. Again, impact has
been most positive in areas driven by the acquis harmonization process.
In more horizontal areas of reform that lack these drivers, impact has been
more difficult to achieve. The integrated nature of project design - with a
number of mutually dependent components to achieve an overall objective - has
reduced impact where contributory elements were not successfully achieved on
time. Moreover, in some cases the insufficient national ownership has reduced
the capacity to attain the expected objectives.
Sustainability
is likely to be lower in those areas that had difficulty generating planned
results and impacts. Sustaining the results and impacts achieved by IPA relies
on the national level political priorities remaining in line with programme
objectives and this is not always the case. Although financial commitments for
institution building are usually assured through government budgets; capital
investments for socio economic development frequently face financing issues
that have the potential to affect sustainability.
Overall,
the evaluation added value in providing relevant recommendations and lessons
learned to the Commission to enhance the implementation of IPA II 2014-2020.
Some of the recommendations have already been taken into account in the
programming process; such as ensuring a better link between the political
dialogue and IPA funding; encouraging a strong ownership and commitment from
the beneficiaries while financing their activities; undertaking a rigorous
assessment of the beneficiary capacity when scaling up the assistance. 
An
ex-post evaluation on the CARDS programmes
was completed and the evaluation report was disseminated and presented in
Serbia and Brussels. The purpose of this evaluation was to assess the impact
and sustainability of CARDS (Community Assistance for Reconstruction,
Development and Stabilisation) funded interventions, and provide lessons
learned and recommendations for decision-making on improvements of future
financial assistance where relevant. The evaluation looked at the programming
strategic framework to assess how effectively priorities/needs of the countries
in the region had been translated into programming of assistance; it assessed
the efficiency and effectiveness of the assistance, achieved results and
impact, their sustainability and factors that hampered the impact. Apart from
delivering lessons learned from the implementation of assistance, the
evaluation provides useful recommendations for the further IPA programming.
The
evaluation concluded that the main strengths of the assistance were the
efficiency of the European Agency for Reconstruction in programming and
delivering support; the good quality results of CARDS assistance and the CARDS
contribution to raising awareness among beneficiary officials and policy makers
of new concepts and establishing them in practice. The main weaknesses of CARDS
were the lack of involvement of the beneficiary institutions in the programming;
monitoring and evaluation of the programme; its over-ambitious institution
building interventions and the lack of a co-financing element in institution
building; which represented a missed opportunity to promote “ownership” and
sustainability.
An
ex-post evaluation on the assistance provided by the EU’s Turkish
Pre-accession instrument, 2002-2006 was also completed in the reporting
period. It assessed the impact and sustainability of pre accession funded
interventions in Turkey and provided recommendations on improvements of future
financial assistance. The importance of high level commitment on the use of
results of evaluations; continuing the development of capacities and the
ownership of the beneficiary countries have been confirmed. The evaluation
recommends that the budget allocations for IPA II need to be better aligned
with the IPA objectives; ensuring their achievement. In addition, the
evaluation recalls that the project intervention logic and its design need to
be based on a specific needs assessment.
A
thematic evaluation on assessing of the EC's support to Private Sector
Development in Turkey was finalized in 2013
and presented both in Turkey and in Brussels. Its main conclusion was that
overall the EU-funded projects to private sector development in Turkey have
been successful. However, there is room for improvement in terms of focus in
the next programming cycles, also in reflecting the dynamisms of the Turkish
private sector and evolving needs. The evaluators recommend that the Commission
should put more emphasis on continuous project monitoring and frequent
evaluation for assistance funded by EU and other donors. To enhance aid
effectiveness and added value of EU assistance in the Turkish private sector,
it was proposed that the Commission should better apprehend and assess the
absorption and replication capacity of the beneficiaries in designing EU
interventions and should strengthen donor coordination. The recommendations
were generally approved and a follow-up action plan on DG Enlargement's
response to the recommendations and planned steps is expected to be
disseminated in March 2014.
All
reports of completed evaluations are available on the DG Enlargement web-site:
http://ec.europa.eu/enlargement/news_corner/key-documents/index_en.htm?key_document=08012624887bedda 

Some
other evaluations were launched by DG
Enlargement and were still ongoing at the end of 2013 (Capacity Development
project on Monitoring and Evaluation with the World Bank; Evaluation of the
Customs Union between the EU and Turkey; Thematic evaluation of EU's support to
Refugees; Mapping of sector strategies; Mapping of Donor intervention, Ex-post
evaluation of PHARE programmes; Third Interim Evaluation of IPA assistance;
Meta-evaluation cooperation instruments).
Results
of evaluations were instrumental in reorienting the approach to implementing
the financial cooperation (with result orientation, more strategic sector
approach, multi-year programming, simplification of the ex-ante control system,
strengthening of the monitoring platforms and mechanisms). They also confirmed
the decision of the Commission to put renewed emphasis on the Rule of law
sector; taking on board specific findings and recommendations of the Rule of
law evaluation, as well as those of the European Parliament on this matter. 
Lessons
learned, as well as the recent Commission Communication on evaluation[20], also
led to developing new orientations on the evaluation function in DG Enlargement;
together with the adoption of an indicative multi-annual evaluation plan
2014-2020. The plan is foreseen as a strategic tool to streamline the Smart
Regulation cycle and promote the evaluation culture in DG Enlargement. An
evaluation programme under the IPA -Transition Assistance and Institution
Building Component for the year 2013 was adopted (Financing Decision
2013/23-681). 
              D.      PHARE, CARDS,
TURKEY PRE-ACCESSION AND TRANSITION FACILITY FINANCIAL DATA AT 31ST
DECEMBER 2013 :

1.
EU 12 – PHARE and Transition Facility -
Decentralised Management

PHARE together with the Transition Facility proved
to be a complex and efficient instrument responding to most of the
pre-accession needs and acquis-related post-accession issues.
The project implementation phase was successfully
completed in 2011 for PHARE and the Transition Facility. An ex-post evaluation
has been launched in 2013 to take stock of the PHARE experience with the
support of the accession process 10 years after the big accession of 2014.
Meanwhile, the closure of programmes, with some
marginal decommitments and payments continued. In 2013 the accounts for 62
programmes representing an amount of EUR 1,689 million were closed. In
addition, around EUR 5.1 million were decommitted. By the end of 2013,
95.57 % of all EU-12 programmes were cleared. The remaining 4.43 %,
representing 53 programmes with a total amount of EUR 3,722 million
remains to be cleared until 2015. The table included reflects the updated
situation.

2.
Candidates and Potential Candidates - CARDS (and PHARE for HR) or Turkey
Pre-accession Assistance - FINANCIAL DATA

The
main objectives of the CARDS programmes were: (i) support to good governance,
institution building and the rule of law; (ii) continued support to the
development of a market economy while investing further in vital physical
infrastructure and environmental actions and (iii) support to democratic
stabilisation, social development and strengthening of civil society. These
objectives contributed to the all-encompassing goal of the CARDS annual Action
Programmes, which aimed at helping Candidates and Potential Candidates prepare
for EU accession.. 
In
this regard, an ex-post evaluation of CARDS has been finalised in 2013. The CARDS
evaluation concluded that the main strengths of the assistance were the
efficiency of the European Agency for Reconstruction
in programming and delivering support; the good quality results of CARDS assistance
and the programme contribution to raising awareness among beneficiary officials
and policy makers of new concepts and establishing them in practice. The main
weaknesses of CARDS were, according to the external evaluators, the lack of
involvement of the beneficiary institutions in the programming, monitoring and
evaluation of the programme; its over-ambitious institution building
interventions and the lack of a co-financing element in institution building,
which represented a missed opportunity to promote “ownership” and
sustainability.
Management performance : Status of financial assistance at the end of December 2013
(in million EUR) – CARDS /PHARE annual programmes
The following figures reflect the clearance process of accounts
that has progressively taken place (final payments made, closure of contracts
and decommitments), which explain why both contacting and payment rates
converge towards 100%.
CARDS - Total
commitments, contracts and payments:
[1] Croatia (until June 2013), Iceland, the former Yugoslav Republic of
Macedonia, Montenegro, Serbia, Turkey.
[2] Albania, Bosnia and Herzegovina, Kosovo*
[3] Regulation 1085/2006 establishing an Instrument for Pre-Accession
Assistance (IPA)
[4] By rejection rate it is intended the percentage of procurement
documents (tender notices, tender dossiers, evaluation reports, etc.) submitted
by the national authorities having been entrusted for the management of IPA
funds to the EU Delegation for ex-ante control.
[5]As reflected by the Communication from the Commission to the
European Parliament and the Council Instrument FOR Pre Accession Assistance
(IPA) Revised Multi-Annual Indicative Financial Framework for 2013. COM(2012)
581 of  10 October 2012
[6] Decision of the Council of the European Union of 5 December 2011 on
the admission of the Republic of Croatia to the European Union, L 112 of 24
April 2012, Annex 4 point7
[7] LEADER ("Liaison
Entre Actions de Développement de l'Économie Rurale", meaning 'Links
between the rural economy and development actions') is a local development
method which allows local actors to develop an area by using its endogenous
development potential. The LEADER approach forms one of the four axes of Rural
Development Policy 2007–2013. 
[8]As reflected by the Communication from the Commission to the
European Parliament and the Council Instrument for Pre Accession Assistance
(IPA) Revised Multi-Annual Indicative Financial Framework for 2013. COM(2012)
581 of  10 October 2012
[9] JASPERS (Joint Assistance to Support Projects in European Regions)
is an instrument managed by the European Investment Bank (EIB) and co-sponsored
by the Commission and the European Bank for Reconstruction and Development
(EBRD) that  provides advice during project preparation, to help improve the
quality of the major projects to be submitted for grant financing from EU
funds.
[1]          Communication
from the Commission to the European Parliament and the Council 'Instrument for
Pre-Accession Assistance (IPA) Revised Multi-Annual Indicative Financial
Framework for 2013', COM(2012)
581 of 10.10.2012.
[10]As reflected by the Communication from the Commission to the
European Parliament and the Council Instrument FOR Pre Accession Assistance
(IPA) Revised Multi-Annual Indicative Financial Framework for 2013. COM(2012)
581 of  10 October 2012
[11] The interruption of the payment deadline was lifted by the DG after
the reporting period.
[12] Candidate status was granted in June 2014
[13]   Communication from the Commission to the Council and the European
Parliament 'Instrument for Pre-Accession Assistance (IPA) Multi-Annual
Indicative Financial Framework for 2011-2013', COM(2012) 581 of 10.10.2012.
[14]   Communication from the Commission to the Council and the European
Parliament 'Instrument for Pre-Accession Assistance (IPA) Multi-Annual
Indicative Financial Framework for 2011-2013', COM(2012) 581 of 10.10.2012.
[15]             Communication from the Commission to the Council and
the European Parliament 'Instrument for Pre-Accession Assistance (IPA) Revised
MIFF for 2013, COM(2012)
581 final of 10.10.2012.
[16]             Communication from the Commission to the Council and
the European Parliament 'Instrument for Pre-Accession Assistance (IPA) Revised
MIFF for 2013, COM(2012)
581 final of 10.10.2012.
[17]             Communication from the Commission to the Council and
the European Parliament 'Instrument for Pre-Accession Assistance (IPA) Revised
MIFF for 2013, COM(2012)
581 final of 10.10.2012.
[18]             Communication from the Commission to the Council and
the European Parliament 'Instrument for Pre-Accession Assistance (IPA) Revised
MIFF for 2013, COM(2012)
581 final of 10.10.2012.
[19] [19]http://ec.europa.eu/enlargement/pdf/financial_assistance/phare/evaluation/2013_final_main_report_lot_3.pdf
[20] Communication from
the Commission to the European Parliament, the Council, the European Economic
and Social Committee and the Committee of the Regions Strengthening the
foundations of Smart Regulation – improving evaluation, COM(2013) 686 final,
Brussels, 2.10.2013