REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Annual Report on Financial Assistance for Enlargement in 2014
Date: 2015-10-30
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Albania, Bosnia and Herzegovina, Croatia, EU financing, Iceland, Kosovo, Montenegro, North Macedonia, Serbia, Türkiye, Yugoslavia, pre-accession aid

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 30.10.2015  COM(2015) 548 final   REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Annual Report on Financial Assistance for Enlargement in 2014 {SWD(2015) 201 final}  
 
 
INTRODUCTION 

The  policy  objectives  of  the  Commission  in  the  field  of  enlargement  are  supported  by  the 
Instrument for Pre-Accession Assistance (IPA)1. 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.  Beneficiaries  of  assistance  in 
2014  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.  

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. 

Since IPA II was only recently introduced, implementation of programmes in 2014 still fell 
under its predecessor IPA.  

1 Regulation 1085/2006 establishing an Instrument for Pre-Accession Assistance (IPA) 

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POLICY DEVELOPMENTS 

The EU’s enlargement policy contributes to mutual benefits of peace, security and prosperity 
in  Europe.  It  reinforces  the  EU’s  political  and  economic  strength  and  has  a  powerful 
transformative  effect  on  the  countries  concerned.  For  the  countries  of  the  Western  Balkans, 
the  clear  perspective  of  EU  membership  granted  by  the  EU’s  Member  States  is  a  key 
stabilising  factor.  It  supports  progress  towards  fulfilment  of  the  necessary  conditions, 
including those of the Stabilisation and Association Process. 

The  accession  process  is  rigorous,  built  on  strict  but  fair  conditionality,  established  criteria 
and  the  principle  of  own  merit.  This  is  crucial for  the  credibility  of  enlargement  policy,  for 
providing incentives to enlargement countries to pursue far-reaching reforms and for ensuring 
the support of EU citizens.  

The  Commission  is  increasing  the  focus  in  the  enlargement  process  on  addressing 
"fundamentals first". This approach prioritises reforms related to rule of law and fundamental 
rights,  economic  governance  and  improving  economic  competitiveness,  and  strengthening 
democratic institutions including public administration.  

The rule of law and fundamental rights:  The rule of law is a fundamental value on which the 
EU  is  founded  and  is  at  the  heart  of  the  accession  process.  Countries  aspiring  to  join  the 
Union need to establish and promote from an early stage the proper functioning of the core 
institutions necessary for securing the rule of law. This work is extensive and in addition to 
the necessary national support requires considerable technical and financial support from the 
European Union. The rule of law is crucial for a stable business environment, providing legal 
certainty for economic operators, supporting consumers and stimulating investment, jobs and 
growth.  Three  aspects  of  the  rule  of  Law  are  the  subject  of  particular  attention:    Judicial 
reform,  the  fight  against  corruption  and  the  fight  against  organised  crime.  In  all  three  areas 
work is progressing across the board.  

Concerning  fundamental  rights,  the  Commission  carefully  monitors  the  situation  in  the 
enlargement  countries  as  regards  civil,  political,  social  and  economic  rights,  as  well  as  the 
rights  of  persons  belonging  to  minorities.  Fundamental  rights  are  largely  enshrined  in  law. 
However, more needs to be done to ensure they are fully respected in practice.  

Economic  governance  and  competitiveness:    The  Commission  has  been  strengthening  its 
support  to  improving  economic  governance  and  competitiveness  in  enlargement  countries. 
This  is  key  to  addressing  concerns  of  citizens  in  a  persistently  difficult  economic 
environment,  with  high  unemployment  and  low  investment.  It  is  also  particularly  important 
for  the  Western  Balkan  countries  since  none  of  them  is  yet  considered  to  be  a  functioning 
market economy. Commission support will build on the experience of EU Member States in 
the European Semester with an increased emphasis on structural reforms which are sectoral in 
nature.  

Public  administration  reform:  Together  with  rule  of  law  and  economic  governance,  public 
administration  reform  (PAR)  is  a  pillar  of  the  enlargement  process.  All  three  ‘pillars’  are 
closely  linked,  cross-cutting  issues  of  fundamental  importance  for  success  in  political  and 
economic  reforms  and  building  a  basis  for  implementing  EU  rules  and  standards.  A  well-
functioning  public  administration  is  necessary  for  democratic  governance.  It  also  directly 

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impacts  governments’  ability  to  provide  public  services  and  to  foster  competitiveness  and 
growth.  

The  current  enlargement  agenda  covers  the  countries  of  the  Western  Balkans  and  Turkey2. 
2014 was a significant year for a number of the countries of the Western Balkans: 

Montenegro:  took  further  steps  in  accession  negotiations.  Twelve  chapters  were  opened. 
Implementation of rule of law reforms had started. 

Serbia: The opening of accession negotiations in January was a turning point in the country's 
relations with the EU, with the focus turning to the need to deliver on reform priorities in a 
sustained manner, notably on rule of law and the normalisation process with Kosovo3 

Albania:  was  granted  candidate  status  in  June  as  recognition  for  its  reform  efforts  and 
progress made in meeting the required conditionality.  

Kosovo:  The  initialling  of  a  Stabilisation  and  Association  Agreement  in  July  was  a  major 
milestone in EU-Kosovo relations and sharpened the focus on delivering on key reforms, in 
particular the rule of law. 

As  regards  the  former  Yugoslav  Republic  of  Macedonia,  the  EU  accession  process  is  at  an 
impasse. 2014 saw instances of backsliding, notably as regards freedom of expression and of 
the media and the independence of the judiciary.  

Bosnia  and Herzegovina remained at  a standstill on its European integration path. Elections 
late  in  the  year  offered  the  prospect  of  a  fresh  impetus  to  tackle  urgent  socio-economic 
reforms and to progress on its European agenda. 

Implementation  of  certain  reform  commitments  by  Turkey  continued.  However,  there  have 
also  been  grounds  for  serious  concerns  regarding  the  independence  of  the  judiciary  and  the 
protection of fundamental freedoms.  

Good  neighbourly  relations  and  regional  cooperation  are  essential  elements  of  the 
Stabilisation  and  Association  Process  and  of  enlargement  policy.  In  2014  these  were 
strengthened  through  intensified  cooperation  and  contacts  at  bilateral  level,  including  in 
sensitive  areas  such  as  war  crimes,  refugee  return,  including  through  implementation  of  the 
regional  housing  programme  under  the  Sarajevo  process4,  with  housing  construction  now 
underway, and on organised crime and police cooperation.  Further steps have also been taken 
to  increase  connectivity  and  boost  infrastructure  investments  across  the  region,  including 
through the Western Balkans Investments Framework.  

In  all  the  areas  outlined  above  the  EU  is  supporting  progress  in  the  enlargement  countries 
through  the  provision  of  EU  technical  and  financial  assistance.  This  contributes  to  a  well 
prepared  accession  process,  which  not  only  helps  the  countries  concerned  to  meet  the 

2 Following a decision of Iceland’s government in 2013, accession negotiations continued to remain on hold. 

3 This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ 
Opinion on the Kosovo declaration of independence. 

4 Croatia, Serbia, Bosnia and Herzegovina and Montenegro. 

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necessary  conditions,  but  also  ensures  that  enlargement  is  not  at  the  expense  of  the 
effectiveness of the Union.  

THE  STRATEGIC  FRAMEWORK  FOR  PRE-ACCESSION  ASSISTANCE

The EU closely assists candidate countries and potential candidates with dedicated financial 
programmes. This assistance helps create stable, prosperous and well-functioning democratic 
societies and put them on a steady path towards EU integration.  

The Instrument for Pre-accession Assistance (IPA) 

EU  financial  assistance  is  channelled  mainly  through  the  Instrument  for  Pre-accession 
Assistance  (IPA).  IPA  was  launched  in  2007,  replacing  a  range  of  EU  Programmes  and 
instruments  including  PHARE5,  ISPA6,  SAPARD7,  and  CARDS8.  IPA  became  the  sole 
instrument fully dedicated to assistance to pre-accession countries, simplifying the assistance 
process. 

IPA included five different components: 

1.  Assistance for transition and institution building; 

2.  Cross-border  cooperation  (with  EU  Member  States  and  other  countries  eligible  for 

IPA); 

3.  Regional development (transport, environment, regional and economic development); 

4.  Human  resources  development  (strengthening  human  capital  and  combating 

discrimination); 

5.  Rural development. 

Components I and II were under the responsibility of the Directorate-General for Enlargement 
(DG ELARG), now DG NEAR, 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). 

5 Poland and Hungary: Assistance for Restructuring their Economies 

6 Instrument for Structural Policies for Pre-Accession 

7 Special Accession Programme for Agriculture and Rural Development 

8 Community Assistance for Reconstruction, Development and Stabilisation 

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The IPA beneficiaries were divided into two categories. EU candidate countries at the time - 
Croatia, Turkey and the former Yugoslav Republic of Macedonia  - were eligible for all five 
components.  Potential  candidates  -  Albania  (which  became  a  candidate  country  in  2014), 
Bosnia-Herzegovina, Montenegro (which became a candidate country in 2010), Serbia (which 
became  a  candidate  country  in  2012)  and  Kosovo  -  were  only  eligible  for  the  first  two 
components9. 

IPA intervened both at country level and at a regional level, via national programmes, multi-
beneficiary programmes, and cross-border cooperation. 

From  2011  to  2013,  IPA  also  supported  Iceland,  addressing  mainly  institutional  capacity 
building issues. After the Icelandic government’s decision to suspend accession negotiations 
in May 2013, the Commission decided to end its support for Iceland. 

Policy goals and priorities 

Respect of the rule of law emerged as the top priority early in the implementation period of 
IPA.  In  most  enlargement  countries,  the  Commission  found  combating  organised  crime, 
corruption  and  dysfunctional  justice  systems  were  essential  goals.  Public  administration 
reform also remained a constant area of need in all EU enlargement processes. More recently, 
economic governance emerged as an area that needed improvement - not least because of the 
economic and financial crisis in the EU itself, whose impact was heavily felt in the Western 
Balkans. 

A special effort was made in 2014 to link political priorities with assistance programmes and 
funding,  with  the  aim  of  concentrating  assistance  where  it  was  most  critical  for  the  EU 
integration process.  

Programming documents 

IPA  assistance  was  based  on  the  broad  political  guidelines  set  out  in  the  Commission's 
enlargement  package.  Planning  and  programming  was  based  on  “multi-annual  indicative 
planning  documents”,  or  MIPDs,  which  covered  a  three-year  period  and  were  updated 
annually. 

Annual or multi-annual programmes were then adopted by the Commission and implemented 
in three ways:  

  directly by the Commission, mainly via the EU Delegation on the ground;  
  by  the  beneficiary  countries,  applying  the  so-called  “decentralised  management 

system”;  

  via EU Member States, known as “shared management.” 

Decentralisation of financial management 

9 Candidate countries could implement programmes under Components III to V only after receiving 
accreditation for the Commission to manage assistance themselves. Serbia and Albania have not received 
accreditation yet. Montenegro received accreditation for components III and IV in 2014.  

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Decentralised  management,  now  referred  to  as  “indirect  management,”  was  the  preferred 
method of implementation under IPA. It implied that authorities in the beneficiary countries 
were  responsible  for  managing  IPA  funds.  Beneficiary  countries  were  the  contracting 
authorities, and they were also responsible for managing the tenders and paying contractors. 
This  was  a  way  to  prepare  the  candidate  countries  and  potential  candidates  to  handle  EU 
Structural and Cohesion Funds in the future. Before transferring management responsibilities 
to  beneficiary  countries,  the  Commission  thoroughly  assessed  the  countries'  capacities 
through a number of system audits. Croatia, the former Yugoslav Republic of Macedonia, and 
Turkey  were  the  countries  that  managed  funds  under  the  decentralised  implementation 
system. 

IPA II 

In  2014  IPA  II  was  launched.  It  covers  the  period  2014-2020  and  represents  the  renewed 
commitment  to  enlargement.  IPA  II  focuses  on  democracy  and  rule  of  law,  as  well  as 
competitiveness and growth. IPA II also introduces a sector approach, incentives for delivery 
on  results,  budget  support  and  prioritisation  of  actions.  Coordinated  investments  along  the 
main  infrastructure  corridors  and  cooperation  with  international  financial  institutions  (IFIs) 
are also important parts of IPA II. Assistance under IPA II is implemented by DG NEAR in 
all  sectors  apart  from  Agriculture  and  rural  development  in  candidate  countries,  which  are 
covered by DG AGRI. 

Indicative  Strategy  Papers  all  countries  were  adopted  in  2014.  They  cover  the  entire  period 
2014-2020  although  a  midterm  review  is  foreseen.  The  programming  process  has  been 
rendered more sector focused and sector planning documents form the basis of the process. 

Other forms of EU support 

While  IPA  unified  many  of  the  instruments  for  pre-accession  assistance,  enlargement 
countries  continued  to  benefit  from  other  forms  of  EU  support.  Particularly  noteworthy  are 
instruments  with  worldwide  coverage,  such  as  the  European  Instrument  for  Democracy  and 
Human  Rights,  the  Instrument  for  Stability,  and  the  Common  Foreign  Security  Policy 
missions and operations. The EU also extended the coverage of certain internal instruments to 
the enlargement area: enlargement countries had access to research programmes and selected 
educational programmes, such as Erasmus Mundus. 

The EU also provided assistance to the enlargement countries through bilateral aid from EU 
Member States and investment loans delivered by the European Investment Bank (EIB). EU 
Delegations  worked  to  ensure  coherence  between  IPA  support  and  other  sources  of  EU 
support. 

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ACTIVITIES FINANCED, RESULTS AND IMPACTS 

ALBANIA  

The  granting  of  candidate  status  to  Albania  by  the  European  Council  in  June  2014  was  a 
recognition  of  the  fundamental  reforms  undertaken  by  the  country  to  improve  governance, 
enhance  rule  of  law  and  expand  the  protection  of  human  rights.  IPA  assistance  has  widely 
contributed  to  this  EU  integration  mile-stone  achievement  with  a  number  of  successful 
projects to advice on key reforms (e.g. judiciary) and facilitate their implementation, as well 
as capacity building projects to strengthen public administration and service delivery.  

2014  has  been  a  transitional  year  for  EU  assistance.  The  Commission  has  undertaken  an 
intensive dialogue with the Government to present the new strategic framework of IPA II and 
the  emphasis  on  sector  support  to  facilitate  the  implementation  of  national  strategies, 
maintaining at the same time a strong focus on the country priorities for EU accession. As a 
result, a new IPA II country strategy paper for 2014-20 has been devised and the IPA 2014 
programme  includes  a  first  sector  budget  support  operation,  which  aims  at  supporting  the 
Albanian public finance management reform strategy.  

EU financial assistance continues to play a strategic role for the development process of the 
country, deploying a portfolio of projects amounting to approximately EUR 216 million and 
covering  a  number  of  sectors  (e.g.  transport,  agriculture,  SMEs,  vocational  education)  with 
direct links to competitiveness and economic growth. Cooperation with IFIs continues to be 
productive  with  IPA  operations  able  to  leverage  considerable  amounts  in  loans,  particularly 
for  infrastructure  development.  Consequently,  the  EU  remains  by  far  the  first  donor  in 
Albania. 

Success story - Consolidation of law enforcement capacities in Albania - PAMECA IV 
assistance mission 

The mission has deployed a team of fifteen senior international and national police officials 
and  prosecutors,  who  are  working  with  the  Albanian  State  Police  (ASP)  to  improve  its 
organisational, administrative, technical and resource management capacities and increase the 
coordination  with  the  General  Prosecutor's  Office  and  other  relevant  law  enforcement 
agencies.  

With regard to prosecutions, the mission has identified the main critical areas of concerns and 
has  provided  important  inputs  to  shift  attention  from  low/medium  to  high  profile  cases, 
including  pro-active  high  level  anti-corruption  investigations.  As  a  result  of  training  and 
coaching  activates  on  road  traffic  management,  the  ASP  is  now  strongly  and  consistently 
enforcing  traffic  laws.  In  operational  terms,  the  mission  was  directly  involved  in  the 
preparatory works leading to successful anti-drug operations, such as the intervention in June 
2014  to  dismantle  the  marijuana-producing  centre  in  the  village  of  Lazarat  near  the  Greek 
border.  The  operation  gave  a  clear  signal  to  drugs  smugglers  that  the  time  of  impunity  and 
passivity in countering drugs production has ended.   

The team has also worked on the re-definition of the container handling procedures in the port 
of Durrës, which is a junction point for smuggling activities and where increased controls are 
required to check containers. PAMECA was also involved in the preparation of the agreement 

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on operational and strategic cooperation with Europol (ratified in May 2014), as well as in the 
formulation of the new ASP Law. 

BOSNIA AND HERZEGOVINA 

Programming and implementation of IPA assistance in Bosnia and Herzegovina continued in 
2014  in  a  challenging  political  environment  and  were  heavily  influenced  by  the  disastrous 
floods that hit the country in May 2014.  

The  preparations  for  IPA  II  restarted  after  they  had  been  interrupted  in  2013  and  led  to  the 
adoption  of  the  IPA  II  Indicative  Strategy  Paper  for  Bosnia  and  Herzegovina  in  December 
2014. However, the Paper covers only 2014-2017 and in the absence of a comprehensive EU 
Coordination mechanism, funds will only be allocated in four sectors where agreed strategies 
and sufficient coordinating structures exist.  

Widespread, citizen-led protests in early 2014 underlined the fragility of the socio-economic 
situation.  The  Commission  launched  three  initiatives  to  shift  the  focus  towards  reforms  and 
issues of direct concern to citizens, among them a joint EU- Bosnia and Herzegovina Working 
Group to accelerate the implementation of EU funded projects. The group made only limited 
progress, despite involvement at Prime Ministers’ level. 

Following  the  floods  of  May  2014  the  paramount  challenge  became  to  assist  Bosnia  and 
Herzegovina fast and effectively in addressing the impact of the flooding. The EU reallocated 
immediately EUR 42 million of IPA funds to assist recovery and reconstruction. Further EUR 
41 million was allocated before the end of the year.  

Succes story - Flood Recovery 

The  implementation  of  the  Floods  Recovery  Programme  (EUR  43.52  million  out  of  which 
EUR 42.24 million provided by the EU) launched in July 2014 has produced a whole range of 
tangible  results  in  gradually  restoring  normal  living  conditions  in  local  communities  and 
ensure  the  provision  of  aid  to  the  most  vulnerable  people  affected  by  the  May  floods.  The 
Programme,  implemented  by  the  United  Nations  Development  Programme  (UNDP),  in 
cooperation  with  United  Nations  Children's  Fund  (UNICEF)  and 
the  International 
Organization  for  Migration  (IOM),  focused  on  the  rehabilitation  of  public  services  and 
infrastructure,  housing  units  for  the  most  vulnerable  people  and  for  social  and  economic 
recovery of local communities.  

In  the  first  six  months  of  the  implementation  the  following  results  were  achieved:  671 
dwellings rehabilitated, 337 in progress; 66 public buildings rehabilitated, with additional 31 
in  progress  and  19  in  different  stages  of  procurement  or  project  design;  32  communal 
infrastructure  projects  completed  and  26  ongoing;  surveying  of  additional  municipalities 
completed,  with  new  infrastructure  projects  to  be  selected  to  continue  implementation.  As 
concerns  the  economic  recovery  component,  48  bank  guarantees  were  received  and 
accompanying payments amounting to total of EUR 1.27 million were made.  

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CROATIA 

During  2014  Croatia  continued  actively  to  implement  the  measures  to  further  strengthen  its 
capacity in order to meet the obligations of membership to the EU. Since 1 July 2013, Croatia 
is an EU Member State. 

Under IPA component I and II, an adequate institutional set up for decentralised management 
of  IPA  funds  already  established  in  2013  was  consolidated  over  2014  with  the  further 
development internal rules of procedure, and with functioning implementing and operational 
agreements between the National Authorising Officer 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 IPA management and control 
systems continued to be fully functional.  

Success story - Reorganisation and rationalization of the courts 

One  of  the  most  important  reform  measures  relates  to  the  implementation  of  reorganisation 
and rationalisation of court network, which is currently under way.  As the part of the given 
process and to serve as a ground for reorganisation and rationalisation, in October 2014 the 
new  Law  on  the  areas  and  the  seats  of  the  courts  was  adopted  in  the  Croatian  Parliament, 
which is to be applied as  of 1 April 2015 on municipal and county courts, and as of 1 July 
2015 on misdemeanour courts. According to the Law, Croatian area is divided into 15 judicial 
areas, in a way that establishes 15 district courts, 24 municipal courts and 22 misdemeanour 
courts, which is 43 municipal courts and 39 misdemeanour courts less. This new organisation 
opens  up  the  possibility  of  specialisation,  greater  mobility  and  more  balanced  workload  of 
judges and the harmonisation of the court practice.  

Also,  this  way  the  number  of  judicial  managerial  staff  is  reduced,  which  will  enable  cost 
savings as well as better functioning of the judiciary (i.e. more even workload, shortening the 
duration of the judicial proceeding, backlogs reduction, etc.). However, citizens will continue 
to be provided with access to municipal and misdemeanour courts identical to what they had 
before the new Law. The current municipal and misdemeanour courts that cease operating, as 
well as current services of the municipal and misdemeanour courts, will become a full-time 
offices of new municipal and misdemeanour courts.  

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THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA 2015 

IPA assistance has continued to play an important role in meeting the general objectives set 
in the DG Enlargement Annual Management Plan as regards the former Yugoslav Republic 
of Macedonia.  
With  regard  to  IPA  II,  the  Indicative  Strategy  Paper  for  the  country  was  adopted  on  19 
August  2014.  The  2014  IPA  II  programme  was  adopted  on  17  December  2014.  The 
programme  consists  of  one  annual  action  programme  and  one  multi-annual  action 
programme. 
The  annual  programme  covers  three  sectors:  democracy  and  governance;  rule  of  law  and 
fundamental rights; competitiveness and innovation, for a total amount of EUR 52.7 million. 
The  multi-annual  programme  covers  the  first  three  years  of  the  implementation  of  Sector 
Operational Programmes for environment and climate action and transport for a total amount 
of EUR 81 million.  
The Rural Development Programme under IPA II for the years 2014-2020 was also approved 
in December 2014. The budget for the 7 years is EUR 60 Million with modest allocations for 
the first four years and increasing amounts towards the end of the period. 

As  regards  implementation  of  financial  assistance  under  IPA  I,  de-commitments  of  funds 
and  the  future  risks  of  loss  of  funds  from  programmes  under  the  Decentralised 
Implementation System (DIS) have remained a source of concern. The contracting situation 
has  worsened  in  comparison  to  2013.  In  2014,  EUR  41.6  million  were  lost  under  all  IPA 
Components.  The  Operating  Structures  in  the  country  are  facing  numerous  structural 
problems  which  negatively  impact  on  their  performance  and  ultimately  on  the  timely 
absorption  of  IPA  funds.  The  contracting  of  the  remaining  National  Programmes  for  the 
years 2011, 2012 and 2013 did not start in 2014.  
Success story - Strengthening the Customs Administration 

The  project  Strengthening  the  capacity  of  the  Customs  Administration  consists  of  three 
contracts  (total  EU  contribution  EUR  2,428,301.25).  The  project  encompassed  software 
development,  support  to  the  beneficiary  institution  in  managing  the  software  development 
project  and  establishing  the  required  procedures  and  organisational  set  up  in  the  area  of 
integrated tariff environment, as well as a supply of the necessary hardware to support the use 
of  the  software  application.  The  software  design  had  to  be  readjusted  and  developed  as  a 
unique  solution.  The  system  which  was  developed  will  serve  as  a  tool  both  to  the  Customs 
the  process  of  customs  clearance
Administration  and 

the  economic  operators 

in 

11 

 
 
 
 
KOSOVO  

In 2014 the Commission introduced IPA II and its programming process to the government of 
Kosovo  and  worked  closely  with  all  stakeholders  to  ensure  that  the  new  approach  is  well 
understood. Several meetings  were  organised to present and discuss  the new framework  for 
IPA II as well as the new financial regulation. The 2014 Annual Programme was prepared and 
approved by the IPA Committee in November 2014, and adopted in December 2014, with an 
allocation of EUR 66.05 million.  

In 2014 the implementation of IPA I programmes continued smoothly, including the roll out 
of  the  IPA  2013  programme  in  support  to  the  19  April  2013  dialogue  agreement  between 
Pristina and Belgrade. The Palace of Justice, a major infrastructure project in support to the 
improvement of the rule of law in Kosovo, was completed at the end of 2014.  

With regard to Cross-border Cooperation (CBC) programmes, a number of difficulties were 
encountered during 2014 which resulted in a failure to contract the 2011 allocations reserved 
to  finance  projects  under  the  CBC  programme  Albania-Kosovo  and  the  2010  allocations 
reserved  to  finance  projects  under  the  former  Yugoslav  Republic  of  Macedonia  –  Kosovo 
programme.  Measures  have  been  introduced  to  prevent  and  to  mitigate  the  risks  related  to 
management  of  CBC  programmes.  Nevertheless,  the  other  allocations  for  the  two 
programmes have  been successfully contracted, and the awarded projects will start in 2015. 
The  2014-2020  CBC  Programmes  between  Kosovo  and  the  former  Yugoslav  Republic  of 
Macedonia, Albania and Montenegro were adopted, as well as the respective allocations for 
the year 2014.   

Success story 
IPA 2011: EU-Community Stabilisation Programme Phase II (EU-CSP II)- (EUR 3.0 million) 

The project is towards its final stage of implementation and the specific objective of the action 
was  to  strengthen  the  socio-economic  sustainability  and  integration  of  ethnic  minority 
communities by supporting viable income and employment creation within the wider Kosovo 
economy and society. Under this intervention until now 284 community based projects have 
been  supported,  of  which  220  were  individual  businesses  and  64  community  development 
projects, which resulted in creating/securing almost 800 jobs in community areas.   

12 

 
 
 
 
 
MONTENEGRO  

In 2014 Montenegro made further progress in the accession negotiations. During the year, ten 
additional  chapters  were  open,  bringing  the  total  to  sisxteen  chapters  opened,  out  of  which 
two  chapters  have  been  provisionally  closed.  The  programming  and  implementation  of  EU 
financial  assistance  for  Montenegro  during  2014  took  place  in  the  context  of  on-going 
accession negotiations and transition to the IPA II framework for the financial period 2014-
2020. 

As regards the programming of IPA, efforts during 2014 were focused on the finalisation of 
the Indicative Strategy Paper (ISP) for Montenegro 2014-2020 and on the preparation of the 
2014 Annual Action Programme.  Furthermore, steps were taken towards the implementation 
of the sector approach, with the preparation of planning documents for all IPA sectors, as well 
as with the launch of preparations for future sector budget support interventions.  

The  implementation  of  financial  assistance  under  IPA  I  continued  in  2014.  IPA  2007-2011 
Component I Programmes have been fully contracted and IPA 2012-2013 is well underway. 
IPA Component II also showed a high rate of implementation. At the end of 2014, there were 
212 ongoing IPA contracts for a value EUR 86.5 million.  

In  2014,  Montenegro  has  been  indicatively  allocated  an  amount  of  EUR  39.6  million.  The 
funds allocated to  2014 Action Programme amount to  EUR  35.7  million, while  the rest has 
been assigned to Civil Society Facility and Regional Housing Programme.  

During  2014,  Montenegro  made  good  progress  regarding  preparations  for  decentralised 
management  the  conferral  of  management  for  IPA  Component  III  and  IV  was  finalised  in 
April and July 2014 respectively.  

Success story 

IPA 2008-2009 MARUBI: a cooperative model for tourist promotion (EUR 423,504) 

The  goal  of  MARUBI  project  was  to  enhance  the  economic  development  of  the  Shkodra-
Ulcinj  cross-border  area  by  building  on  its  tourism  potential  and  emphasising  the  common 
cultural  heritage  and  natural  beauty  of  the  area.  The  project  sought  to  screen  and  classify 
famous  photographs  of  the  Marubi  family  and  to  design  a  concrete  route,  which  would 
connect  and  valorise  the  rich  artistic  and  historical  heritage  of  the  region,  to  add  to  the 
attraction and entertainment  for tourists and visitors. The  project has resulted in  the Marubi 
path, and a permanent itinerant exhibition on the Marubi collection. In addition, it enhanced 
competences  of  local  economic  and  tourism  operators,  developed  instruments  for  tourism 
promotion and the Marubi patrimony was inserted within local and European networks. 

The  project  encompasses/contains  all  aspects  of  good  practice  in  cross-border  cooperation 
including partnership, impact, networking, visibility as well as sustainability. It has been seen 
as  particularly  innovative  and  efficient,  with  excellent  dissemination  and  fair  sustainability 
prospects.  As  a  whole,  the  project  has  been  recognised  by  the  cross-border  stakeholders  as 
extremely  important  for  the  economic  prospects  and  cultural  life  of  the  local  communities. 
Moreover,  there  are  indications  that  the  local  tourist  organisations  and  other  relevant 
stakeholders will ensure the sustainability of the results. 

13 

 
 
 
 
SERBIA 
After  being  granted  candidate  country  status  in  2013,  EU  accession  negotiations  have  been 
launched at an Inter Governmental Conference in January 2014. In  August the Commission 
adopted  the  Indicative  Strategy  Paper  for  Serbia  for  the  period  2014-2020.  This  was  the 
results  of  an  important  consultation  process  to  identify  the  key  sectors  of  EU  financial 
assistance  for  the  financial  perspective.  In  parallel  the  IPA  2014  Programme  has  been 
prepared  and  adopted  in  December.  Serbian  authorities  continued  to  move  towards  sectoral 
approach  by  improving  sector  coordination  through  the  sectoral  working  groups  and  the 
improvement of sectoral strategic frameworks. In order to improve selection and preparation 
of  infrastructure  investment,  Serbian  authorities  adopted  a  methodology  for  developing  a 
Single Project Pipeline. 
In  2014,  Serbia  has  been  severely  affected  by  floods  in  May.  Important  funds  have  been 
allocated  for  recovery  and  reconstruction  from  reallocation under  previous  programmes  and 
part of IPA 2014 allocation for Serbia. 
On management of EU funds, Serbia has been granted with conferral of management power 
in March 2014 and the financing agreement has been signed in June for the implementation of 
this  part  of  IPA  2013  under  de-centralised  management.  However,  reshuffling  of  the 
Government in July created delays in implementation. 

Success story - EU flood relief response in Serbia 

In  May  2014,  Serbia  was  hit  by  devastating  floods  which  took  away  at  least  50  lives  and 
caused an estimated damage of EUR 1,7 billion.  The European Union, in an unprecedented 
show  of  solidarity,  provided  immediate  assistance  through  its  EU  Civil  Protection 
Mechanism.  A  total  of  16  EU  Member  States  offered  assistance  such  as  motor  boats, 
helicopters, pumps, humanitarian kits and deployed over 300 relief workers to Serbia. An EU 
Civil  Protection  team  was  sent  to  Serbia  to  help  with  the  coordination  of  relief  efforts  and 
assist rescue operations. The EU also released EUR 1 million in humanitarian aid to help the 
most vulnerable population in Serbia. Among others, the funding was used to deliver food aid, 
provision of clean water, health and sanitation. 
While the EU civil protection teams were on the ground, the European Commission in record 
time  reallocated  EUR  30  million  worth  of  IPA  funds  for  an  EU  flood  relief  assistance 
programme.  The  programme  was  kicked  off  in  July  2014  with  the  aim  to  help  the 
reconstruction of schools, kindergartens, private houses as well as the rehabilitation of public 
buildings  and  roads  in  24  most  affected  municipalities.  Through  the  programme,  the  EU  is 
also providing economic grants to small and  medium sized enterprises as well as seeds and 
livestock to farmers who have suffered from the floods.  
By the end of the year 93 new houses were built, 685 damaged houses repaired, 200 small and 
medium  size  entreprises  supported  to  restore  income  generation  activities,  13  schools 
reconstructed  for  more  than  11,000  children  and  students,  9,600  farming  families  received 
wheat  seeds,  fertilisers,  fruits  seedlings  and  animal  feed;  and,  11,5  km  of  roads  have  been 
reconstructed used by more than 500,000 citizens. 
An additional package of EUR 72 million has been allocated in December to support medium 
term  reconstruction  and  recovery  efforts  and  long  term  capacity  building,  floods  prevention 
and defenses as well as river management. 

14 

 
 
TURKEY  

Building  on  the  new  strategic  and  result-oriented  financial  instrument  for  pre-Accession 
assistance,  the  Indicative  Strategy  Paper  for  Turkey  covering  the  period  2014-2020  was 
adopted in August 2014. It provides a frame for the EU financial assistance to the country in 
line with the political priorities set out in the enlargement policy.   

The first annual Action Programme 2014 and four sectoral multiannual programmes were also 
adopted. With the aim of concentrating IPA II financial assistance on a limited number of key 
priorities, the proposed annual Action Programme 2014 focuses mainly on the enhancement 
of  democracy  and  governance,  rule  of  law  and  fundamental  rights.  The  sectoral  annual 
programmes have been designed to contribute to the socio-economic development of Turkey 
by  supporting  investments  in  the  areas  of  environment  and  climate  change,  transport, 
competitiveness, employment and social inclusion. The Rural Development Programme under 
IPA  II  for  the  years  2014-2020  was  also  adopted  in  December  2014.  The  budget  for  the  7 
years is EUR 801 million.  

The  implementation  of  ongoing  programmes  continued,  contributing  to  the  reform  process 
and  the  promotion  of  fundamental  rights  through  activities  such  as  supporting  the 
improvement  of  the  Turkish  criminal  justice  system  or  accompanying  the  development  of 
adequate schooling conditions for children with special needs. IPA also supported the socio-
economic development of Turkey and helped address regional disparities with a strong focus 
of  assistance  on  the  South-East  of  Turkey.  Equally,  IPA  has  been  instrumental  for 
encouraging  alignment  with  the  acquis,  providing  funding  in  a  wide  range  of  areas  such  as 
energy,  company  law,  enterprise  and  industrial  policy,  agriculture  and  rural  development, 
statistics, science and research. 

IPA is also playing an increasing role in helping Turkey to address the consequences on its 
territory of the crisis in neighbouring Syria and in Iraq. Turkey hosted more than 1.6 million 
Syrians  and  the  EU,  recognising  the  formidable  efforts  of  Turkey,  has  been  exploring  all 
possible  avenues  for  further  assistance.  In  that  context,  at the  end  of  2014  a  new  additional 
IPA measure (EUR 40 million) was programmed in cooperation with the national authorities 
and  UN  agencies  to  support  the  authorities  in  responding  to  an  ever  growing  influx  of 
refugees,  which  seriously  impacts  on  Turkey's  migration  management  and  asylum  system, 
municipal infrastructure and services.  

15 

 
 
 
 
 
Success story - Energy interconnection 

A  project  to  support  "Structure  and  Capacity  Improvement  of  Turkish  Electricity 
Transmission  Corporation  (TEIAS)”  (EU  contribution  EUR  1,8  million)  was  successfully 
completed  in  December  2014.  The  project  was  designed  to  assist  Turkey  in  its  efforts  to 
ensure  full  integration  with  the  EU  electricity  network  and  to  provide  work  safety  and 
performance trainings to managers, operation and maintenance personnel. It created positive 
improvements  allowing  market  participants  on  both  sides  to  have  the  opportunity  for 
continuous and uninterruptable energy exchanges. It is unique in the sense that it contributed 
to  Turkey’s  physical  integration  through  interconnection  with  the  European  Network  of 
Transmission  System  Operators  for  Electricity  (ENTSO-E)  system.    One  of  the  main 
objectives of a Transmission System Operator today, both in Turkish and European electricity 
markets, is to ensure that facilities remain in service each day of the year uninterruptedly.  

MULTI - COUNTRY 
Regional cooperation has continued within regional fora such as the Energy Community, the 
Central  European  Free Trade  Area (CEFTA),  the  South  East  Europe  Transport  Observatory 
(SEETO)  and  the  Regional  School  of  Public  Administration  (ReSPA).  Also,  the  role  of  the 
Regional  Co-operation  Council  (RCC)  as  a  body  fostering  regional  integration  was  further 
strengthened in 2014. The RCC continued the implementation of its Strategy for 2014 - 2016, 
built around the South East Europe 2020 agenda (SEE 2020).   

The "Berlin Process" launched with the Summit in Berlin on 28 August 2014 and the WB-6 
Conference  in  Belgrade  on  23  October  2014  that  led  to  the  adoption  of  a  Joint  Statement 
reflect the political commitment of the Western Balkans and their close neighbours to achieve 
progress on the connectivity agenda and to present more tangible results in the coming years. 

In  accordance  with  the  priorities  of  the  Enlargement  Strategy,  Multi-country  financial 
assistance  throughout  2014  supported  progress  in  the  area  of  rule  of  law,  public 
administration reform and economic governance.  

To underpin economic recovery in the Western Balkans, new projects in infrastructure were 
approved in the framework of the Western Balkans Investment Framework (WBIF), as well 
as  projects  in  the  field  of  competitiveness  mainly  through  the  Western  Balkan  Enterprise 
Development  and  Innovation  Facility  (EDIF)  and  in  the  field  of  human  resource 
development/training.  

Success stories 

Western Balkans Investment Framework 

EU contribution: EUR 250 million 
Start date: 2009 – ongoing 
Results:  Preparation  of  bankable  investment  projects;  Technical  Assistance,  feasibility 
studies, Environmental Impact Assessments 

The  WBIF  supports  socio-economic  development  and  EU  accession  across  the  Western 
Balkans through the provision of financing and technical assistance for strategic investments. 
It  pools  resources  from  the  Instrument  for  Pre-accession  Assistance  (IPA)  with  those  of 
International  Financial  Institutions  (IFIs),  bilateral  donors  and  the  governments  of  the 

16 

 
 
 
 
 
Western Balkans. Since its launch, the WBIF has developed a pipeline of priority investments 
estimated at approximately EUR 13 billion.  

Civil Society Facility  

EU contribution: EUR 11.2 million;  
Start date:  December 2012 –December 2014 
Results: A total of 172 civil society organisations from the Western Balkans and Turkey and 
from Europe are engaged in 18 networks, financially supported by IPA. The ongoing grants 
produced several outputs and some examples are as follows: 

FINANCIAL DATA  

IPA I  

Albania 
Bosnia and Herzegovina 
Croatia 
Kosovo 
The former Yugoslav Republic 
of Macedonia 
Montenegro 
Serbia 
Turkey 
Iceland 
Regional programmes 
Total 

Split per DG 
NEAR 
REGIO 
EMPL 
AGRI 

IPA II 

Allocations 

Disbursements 

537,017,522 
571,773,967 
818,568,685 
685,782,927 

288,139,323 
370,377,054 
460,314,577 
486,699.110 

542,844,358 

273,049,040 

211,489,565 
1,367,009,190 
4,427,864,616 
34,837,163 
1,357,355,546 
10,554,543,540 

143,423,580 
906,220,245 
2,578,261,545 
5,744,810 
1,051,332,151 
6,563,561,434 

6,501,845,269 
2,532,823,587 
572,885,566 
946,989,118 
10,554,543,540 

4,406,417,400 
1,358,299,165 
326,024,002 
472,820,867 
6,563,561,434 

Albania 
Bosnia and Herzegovina 
Bosnia and Herzegovina - OHR 
Kosovo 
The former Yugoslav Republic 
of Macedonia 

Allocations 

66,746,389 
73,581,834 
3,532,478 
66,050,000 

76,717,811 

Disbursements 
0 
0 
3,532,478 
0 

0 

17 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
  
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
Montenegro 
Serbia 
Turkey 
Multi-beneficiary 
Total 
Split per DG 
NEAR 
AGRI 

35,707,300 
187,090,000 
614,600,000 
222,442,000 
1,346,467,812 

1,272,467,812 
74,000,000 

0 
0 
0 
1,098,159 
4,630,637 

4,630,637 
0 

Allocations for IPA I: Amounts of adopted Financing Decisions during 2007–2013 (minus 
unused funds returned to the EU budget). 

Allocations for IPA II: Amounts of adopted Financing Decisions in 2014 

Disbursements: Amounts effectively paid up to 31 December 2014 by the European 
Commission to the contractor (in case of direct management) / beneficiary country or 
international organisation (in case of indirect management). 

In  the  case  of  Croatia,  former  IPA  assistance  covered  by  DG  REGIO  and  DG  EMPL 
(components  III  and  IV,  and  part  of  component  II)  is  now  governed  under  the  Structural 
Funds regulations as provided for in the Treaty of Accession and disbursement figures are up 
to  the  date  when  the  country  became  a  Member  State  (1  July  2013).  Assistance  under  the 
other  components  remains  under  IPA  and  disbursement  figures  are  with  cut-off  date  end  of 
2014. 

18