Source: EURLEX
Language: en
Format: md

# Phare

### Phare 1994 Annual Report

from the European Commission

Brussels 20.7.1995 Com (95) 366 final

##### **What is Phare?**

The Phare Programme is a European Community initiative
which supports the development of a larger democratic
family of nations within a prosperous and stable Europe.
Its aim is to help the countries of central and eastern

Europe repin the mainstream ot huropei
through future membership of the European

Phare does this by providing grant finance to support its
partner countries through the process of economic transformation and strengthening of democracy to the stage
where thev are reach' to assume the obligations of

In its first five years of operation to 1994. Phare has made
available ECU 4.24N.5 million to 1 1 partner countries,
making Phare the largest assistance programme of its

kind.

Phare works in close cooperation with its partner countries
to decide how funds are to be spent, within a framework
agreed with the European Community. This ensures that
Phare funding is relevant to each eovernment's own

retorm policies and priorities

know-how from a wide ranee of non

commercial, public and private organisations to its partner
countries. It acts as a multiplier by stimulating investment
and responding to needs that cannot be met by others.
Phare acts as a powerful catalyst by unlocking funds foiimportant projects from other donors through studies,
capital grants, guarantee schemes and credit lines. It also
invests direct]} in infrastructure, which will account for

more Phare funds as the integration process progresses.

The main priorities for Phare funding are common to all
countries, although every one is at a different stage of

transformation. The kev areas include restructurine of

state enterprises including agriculture, private sector
development, reform of institutions, legislation and public
administration, reform of social services, employment
education and health, development of energy, transpoi

and nuclear safety.

For countries which have signed Europe Agreements.
Phare funding is also focused on meeting the conditions

or membership or the

European Union's internal market and development of
infrastructure, especially in border regions.

###### Contents

Commissioners' statement 2

Phare 1994 financial overview 3

1994 - a turning point for Phare 6
Political developments in 1994 6
Supporting a process of change 8
Consolidation and integration - a new role for Phare 10
Management of the Phare Programme 14
Albania 17

Bulgaria 18
The Czech Republic 19
Estonia 21

Hungary 22
Latvia 23

Lithuania 24

Poland 25

Romania 27

Slovakia 28

Slovenia 29

Phare funding by country 30
Phare funding by sector 38
Phare financial performance 44
Major projects launched in 1994 47
Multi-country programmes operational in 1994 50

### Commissioners' statement

The Phare Programme was set up as a response of the
European Union to the challenges that the countries of
central and eastern Europe faced breaking free from totalitarianism and 40 years of central economic planning.

At the time, no one could foresee exactly what this would
involve and how quickly each country would progress.
Consequently, the Phare Programme was structured to
work within the political and economic policies of the
governments of the countries concerned, responding to
their own requirements. In this respect, Phare is unique
among the initiatives launched by the global community
to support the changes taking place in central and eastern
Europe.

In the early years of Phare, when the framework for political cooperation was still unclear, the focus was on the
immediate and obvious objectives of economic transformation. However, now that this process is underway, and
in some instances almost nearing completion, the question
of Phare's role in the wider political framework becomes
more important. In this respect, 1994 was a highly significant year, culminating in the adoption by the European
Council at Essen of a strategy for accession of the central
and eastern European countries to the European Union.

The Phare Programme is one of the cornerstones of the
accession strategy and important steps have been taken in
1994 to allow the Programme to focus on integration. In
particular this has concerned the development of infrastructure, investment support and closer cross-border
cooperation, both between the European Union and the
countries of central and eastern Europe and between the
countries themselves.

The Phare Programme has also made some important
improvements in its own internal management processes.
These have made the delivery of Phare funding more efficient and, in 1994, the Programme increased the amounts
of funds it contracted by 15 per cent on the previous year
as well as increasing actual payments by 38 per cent on
the previous year. This means that of the funds that Phare
has contracted, over 95 per cent has now been paid.

The existence of Phare remains an important acknowledgement that striving for membership of the European
Union is not a task that should be borne only by those
countries seeking to join. The European Union itself has a
responsibility to prepare the path to membership, both
through the support it makes available through the Phare
Programme and in making changes to it own structures to
accommodate the countries of central and eastern Europe
who wish to join.

The future for Phare and relations between the European
Union and the countries of central and eastern Europe is
an exciting one which holds both many challenges and
many rewards. As the European Commissioners responsible for the Programme in 1994 and who will take the
programme forward in 1995, we jointly commend this
Annual Report to you.

Hans van den Broek

Member of

the European
Commission

Sir Leon Brittan

Vice-President

of the European
Commission

### Phare 1994 financial overview

In 1994 the Phare Programme committed a total of ECU
963.3 million to its partner countries. This brings the total
of commitments over the life of the Programme to ECU
4,248.5 million.

During 1994 Phare contracted funds worth ECU 659.8
million - an increase of 15 per cent on the previous year.
The Programme paid out ECU 721 million - an increase of
38 per cent from the previous year.

This means that of the total Phare commitments, 52.4 per
cent has now been contracted and of the amount

contracted, 95.8 per cent has been paid. This is an above
average rate of disbursement for a programme of this type
made up of a large number of small-scale know-how
transfer projects as distinct from a limited number of
major investment or loan operations.

The breakdown of the 1994 commitment of funds by
country and by sector are shown below.

**Phare funds committed from 1990-1994**

**ECU 4,248.5 million**

```
                1,012.6 1,003.6

         773.7

 495.2

 1990 1991 1992 1993 1994

```

1990-1994 funds committed by country (in ECU million)

Albania

Bulgaria

Czech
Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

```
1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

```

_**^^^^^^m^M^^mm^m**_

197

200

Romania `1990`

```
         1991

         1992

```

1994

Slovakia

Slovenia

Former
Yugoslavia

Multi-country
programmes

```
1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

```

1990-1994 funds committed by sector (in ECU million)

Agricultural
restructuring

Education,
health, training

and research

Environment and
nuclear safety

Humanitarian
and food aid

Infrastructure
(energy, transport
and telecommunications)

Private sector
development and
enterprise support

Public institution
and administrative

reform

Social
development
and employment

Other sectors

```
1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

1990

1991

1992

1993

1994

```

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```
                      102.5

                     100

26.5

25.2

```

#### **_/h_**

### 1994 - a turning point for Phare

This is the fifth annual report of the Phare Programme the European Community initiative which supports the
development of a larger democratic family of nations
within a prosperous and stable Europe.

The year 1994 was perhaps the most significant year for
Phare since the Programme's conception in 1989. It was
the year in which a clear framework for the future development of Phare emerged, based on the development of a
common political and economic agenda for relations
between Phare and its partner countries in central and
eastern Europe.

The Phare Programme developed initially as an immediate
response to challenges facing the countries of central and
eastern Europe as they sought to resume their central place
in Europe's culture and civilisation and rejoin the
economies and societies of Europe. A turning point came
in June 1993 with the conclusion of the European Council
at Copenhagen that the associated countries of central and
eastern Europe that so desire shall become members of the
European Union when they are able to assume the obliga

tions of membership by satisfying the economic and
political conditions required. This set a goal for the European Union, Phare and its partners. The challenge during
1994 has been to set up a system to ensure that Phare can
support its partners at every step necessary to achieve this
goal.

What has emerged is that Phare is not a static instrument,
designed exclusively to help in the transformation from
centrally planned to market economies. It is now a flexible
programme designed to support its partner countries
through the process of economic transformation and
strengthening of democracy to the stage where they are
ready to assume the obligations of membership of the
European Union.

Confirmation of Phare's central role in this process
occurred at the end of the year, with the adoption by the
European Council at Essen of a strategy for accession.
The implementation of this strategy will involve some
significant changes to the focus of the Phare Programme.

### Political developments in 1994

The development of Phare is now intimately linked to the
overall development of political and economic relations
between the European Union and the Phare partner countries. This relationship has been cemented by Phare's role
as the financing instrument of the Europe Agreements and
its central position in the strategy for accession adopted at
the Essen Council.

In this section the background to political and economic
relations is outlined, together with the developments
which took place in 1994 and an assessment of the conclusions of the Essen Council and its impact on Phare.

**Background**

Phare has always worked in tandem with the other European Community initiatives which cover economic and
political relations with the countries of central and eastern
Europe. These initiatives initially covered establishing
trade relations and developing market access and extending
loan facilities. More recently they have developed a greater
element of political, social and cultural cooperation.

The process started in 1988 when Trade and Economic
Cooperation Agreements were signed which established

favourable trade relations and aimed at significantly
increasing trade between the European Community and
these countries.

In 1990 the European Community developed a new form of
agreement which went beyond just trade issues. These new
agreements, known as Europe Agreements, established a
framework whereby these countries can become more
closely integrated with western Europe. They therefore
covered political, economic and cultural cooperation in addition to trade relations. The Agreements are based on shared
understanding and values and set the path for integration.

The European Community and its Member States have
concluded Europe Agreements with six countries;
Bulgaria, the Czech Republic, Hungary, Poland, Romania
and Slovakia.

The Europe Agreements acquired greater political significance following the European Council in Copenhagen in
June 1993. At this Summit meeting the Council offered
the prospect of membership of the European Union to
those countries with Europe Agreements, subject to their
being able to assume the accompanying economic and
political obligations.

Thus the Europe Agreements became, in effect, a basic
framework within which countries could work towards

membership of the European Union. Phare is identified in
these agreements as the financing instrument available to
help countries meet the objectives set out within them.

**Developments in 1994**

In February 1994 the Europe Agreements entered into
force with Poland and Hungary. These Agreements had
been signed in December 1991 but were awaiting ratification by the parliaments of the individual Member States.
While awaiting ratification Interim Agreements were in
force which covered the basic trade-related aspects of the
Agreements, thus ensuring that there was no delay in
implementing this aspect. The Agreements with Bulgaria,
the Czech Republic, Romania and Slovakia will come into
force in February 1995.

Poland and Hungary also formally lodged an application
for membership of the European Union.

In 1994 the Community also signed new Trade and
Economic Cooperation Agreements with Estonia, Latvia
and Lithuania. These agreements establish free trade with
these countries. Negotiations for Europe Agreements with
each of the Baltic states have started and similar negotiations with Slovenia are expected.

In 1994 a major step was taken which gave the process of
cooperation, established by the Europe Agreements, a
much clearer focus on the objective of achieving membership of the European Union. This was the adoption by the
European Council at its Essen Summit meeting in December of a strategy for accession prepared by the European
Commission.

This strategy set out a route plan for the associated countries as they prepare for accession. It encompasses the
progressive preparation for integration into the internal
market of the European Community, supported by implementation of policies to promote

- integration through the development of infrastructure,
including extension of trans-European transport
networks

- intra-regional cooperation between the countries of
central and eastern Europe

- environmental cooperation

- cooperation in the area of the common foreign and
security policy

- cooperation in the areas of judicial and home affairs,
culture, education and training.

**The Essen strategy for accession and its impli-**
**cations for Phare**

The Essen strategy states that "This integration will be
supported by the European Union's Phare Programme
which will develop on an indicative basis into a mediumterm financial instrument with improved possibilities to
promote infrastructure development and intra-regional
cooperation".

In practical terms, Phare will devote a greater proportion
of its funds to the co-financing of infrastructure development projects, with the limit on its annual budget for this
type of spending being lifted from 15 per cent to 25 per
cent. Infrastructure will also receive significant funding
through the cross-border programme and through transport and environment projects. Phare will also introduce
measures to promote cooperation between its partner
countries and give a greater focus on investment support.
It will also focus on supporting the partner countries in
their steps to harmonise legislation, standards and practices with the European Community in preparation for
participation in the internal market. This will involve
significant support to the system of public administration
to ensure that the necessary legislation adopted can be
implemented effectively.

The European Council agreed that the 1995 budget estimate for the Phare Programme will serve as a minimum
level for the years up to 1999, in total ECU 5.5 billion.
This will allow Phare to develop a comprehensive multiannual programming framework for its operation throughout this period.

Further increases may result from budget adjustments
following the enlargement of the European Union and
further discussions on budget allocations within the
overall financial perspective of the European Community.

### Supporting a process of change

The Essen strategy now presents Phare with the challenge
of covering a very broad range of activities if it is to be
flexible enough to meet the needs of all its partner countries.

Phare has developed a range of approaches, many of them
in close coordination with other sectoral European
Commission programmes, which match the various stages
a country will pass through on the road to eventual
membership.

Phare's approach in the first stage covers support for basic
macro-economic stabilisation, humanitarian assistance and
the supply of basic imports necessary to sustain industry
and agriculture.

The second stage covers broad-based sectoral assistance,
largely in the form of know-how, designed to put in place
the necessary structures for a market economy.

The third stage concerns consolidation where the supply
of know-how becomes more tightly focused, in particular
on areas of public administration and the mechanics of
government. Investment support and infrastructure development also feature more prominently.

The fourth stage involves substantial support for the
preparation for accession. It involves the development of
infrastructure, physical integration in border regions with
the European Union and the development and implementation of the legislation necessary to participate in the
internal market.

Support for stages one and two is well established within
the Phare Programme. During 1994 Phare support in a
number of countries became more focused on the third

stage of assistance and the Essen decisions have provided
the framework in which Phare can progress to the fourth
stage.

### - a new Consolidation and integration role for Phare

The past year has been an important one for Phare in
terms of developing its capabilities in those areas which
are linked to the consolidation of the reform process and
closer integration with the European Union. These two
areas will become increasingly significant for Phare and
its partners as the move towards membership of the European Union gathers pace and becomes a greater priority
for each partner country.

**Consolidation**

The consolidation of reform has two basic focal areas. The

first concerns developing the capability within government at all levels to manage and regulate a marketoriented system. One of the most profound changes which
has occurred in the countries of central and eastern Europe
has been the switch from a command system of government to a system based on regulation. This has also
involved changes in the social security system which was
previously linked to virtual full employment in stateowned enterprises. As many of these industries have now
been restructured or transferred to private ownership
establishing social security systems adapted to the needs
of a market economy is an urgent priority.

Phare support is therefore focused on both the development of new institutions within government and also nongovernmental organisations which have a role to play in
the operation and regulation of a democratic, marketoriented system. Support is also important in developing
and implementing new legislation and other standards and
practices.

The transfer of know-how remains an important element
of Phare support because continued progress in this area
depends on each partner country building a resource base
of skills and experience - both inside and outside government and public administration.

The second area linked to the consolidation of reform is

investment support. Now that many countries are completing the basics of the transformation process in terms of
restructuring state enterprises and establishing the conditions for the development of private enterprise there is an
increasing need to provide or attract investment in order to
maintain the momentum of economic development. Phare
support in this area is therefore focused on creating the
conditions to attract investment and also on providing
capital in those areas which cannot attract capital, usually
due to market failure, from any other source. This direct
investment is largely in the small business sector.

**Integration**

Phare support for integration is covered under four broad
areas of activity:

. co-financing investment in infrastructure

- elimination of border-crossing bottlenecks and establishing customs corridors

- the cross border cooperation programme

- multi-country and intra-regional cooperation.

Most of these areas focus on the development of transport
infrastructure and contain a significant element of direct
investment. However, the provision of know-how remains
an important element, especially within some of the multicountry programmes and to support and complement
investment projects.

**Activities linked to consolidation and integration**

A particular feature of Phare's work in 1994 has been the
development of capabilities in areas which are of relevance to those partner countries which are entering the
third or fourth stages of development on the road to eventual membership of the European Union. These stages are
the consolidation of reform and integration both with the
European Union and with other central and eastern European countries.

These capabilities are examined in more detail below.

**Legislative and public administration reform**
The development of legal frameworks and the harmonisation of laws with those of the European Community has
always been an important element of Phare support. Phare
already provides support in the following areas:

intellectual property
consumer protection
harmonisation of standards and technical regulations
customs and statistics

environment

public procurement
competition and state aid, transport, post and telecommunications

- banking sector, tax legislation and accounting.

However, this area has become especially important in the
light of the Essen strategy which stresses the importance of
preparing countries to adopt the European Community's
internal market. This process essentially involves the adoption and implementation of a body of legislation, standards
and practices known as the 'acquis communautaire'.

The European Commission is currently preparing a White
Paper which will provide detailed guidance on the adoption of the 'acquis communautaire' in the internal market
area to be published before June 1995. This will build on
the work on the harmonisation of legislation already
accomplished by Phare in previous years.

However, in 1994, Phare took an important step in the
development of a framework within which individual
countries can develop their own programmes of legislative
alignment. This was the launch, in June, of a framework
contract to facilitate the approximation of laws in the
Czech Republic. A consortium of three law firms and two
training institutions is helping to draft and revise legislation and regulations, providing training, hardware, software, books and documentation as well as translating
large sections of legal documentation. A similar approach
is being discussed with Hungary and Slovakia and has
been proposed to Bulgaria, Romania and Poland.

In addition a framework programme of support to develop
and approximate legislation has been set up for Latvia,
Lithuania, Estonia, Slovenia and Albania.

Linked to the development of new legislation is the reform
of the public administration system. This is because an
effective public administration together with the appropriate administrative structures, staff and equipment is essential to the actual implementation of any legislation that is
developed.

Phare is supporting the necessary reform in the public
administrations of central and eastern European countries
by providing know-how to strengthen their administrative
capacity. In 1994 Phare supported governments in their
efforts to reform their public administration by providing
support in the following areas:

- support for improvement in governance and management (known as SIGMA), a programme established in
association with the Organisation for Economic Cooperation and Development (OECD)

- reform of legal systems: drafting civil and penal codes
and procedures, training of judges, reform of the
Ministries of Justice and prosecution systems, training
of the police

- institution-building: developing strategies, civil service
policy and training, restructuring and upgrading of
central administration, decentralisation policy and
strengthening of local governments

- development of information technology.

**10**

**Social restructuring**
Phare support for the social sector is becoming increasingly important for those countries which are in the
consolidation phase of reform. This is because establishing a system of social protection adapted to the needs of a
market economy is a major undertaking which requires
long-term action. Further progress in economic reform
will also be hampered unless corresponding steps in social
restructuring can be made.

Reflecting this need Phare support is now moving towards
supporting long-term restructuring following up its initial
focus on the immediate needs resulting from the first steps
of reform. Phare is focusing on the following areas:

- reform of the system for pension provision

- social security systems, to develop a new approach to
social protection based on the experience gained in
western Europe

- employment policies, to counteract the job losses
resulting from the privatisation and restructuring of
state-owned enterprises

- health care, in particular disease prevention, health
services reorganisation and financing, training of health
personnel and pharmaceutical policy.

**Increasing investment support**
Once the basic elements of economic transformation have

been put in place the key to maintaining the momentum of
economic development lies in achieving sustained high
rates of investment.

The Phare Programme has always recognised the importance of supporting investment and has therefore included
initiatives to develop investment across the range of its
programmes from the start of the Programme. However,
in view of the increasing importance of attracting investment as part of the integration process highlighted in the
Essen strategy, Phare has focused on developing its
investment support activities in a number of key areas:

- improving the legal and regulatory frameworks.

- continuing support to the investment promotion agencies already set up under the Phare Programme. Such
agencies have been set up in

The Czech Republic - Czechinvest
Estonia - Estonian Foreign Investment Agency
Hungary - Investment and Trade Development Agency
Latvia - Latvian Development Agency
Lithuania - Lithuanian Investment Promotion Agency
Poland - State Foreign Investment Agency
Romania - Romanian Development Agency
Slovakia - Slovak National Agency for Foreign Investment and Development.

. providing finance across a wide spectrum of small
businesses through established intermediaries. This is
important both because it allows this important sector
to have access to funding which it would otherwise be
denied and because it serves as a model which the

banking system can use to develop for its own lending
to this sector.

- banking reform. The banking system is not yet structured to efficiently channel savings into investment,
neither is the provision of venture capital highly developed. Phare will therefore intensify its efforts to
support the reform of the banking sector and promote
the provision of equity, including venture capital.

- management training. A number of pilot operations
were started in 1994 and in the future the programme
could support a large-scale industrial training attachment programme.

**Infrastructure investment**

The decision of the Essen Council to raise the limit of the

Phare budget that could be used to co-finance infrastructure investment reflects the importance of improving
infrastructure as a major element in preparation for accession. This is because of the need to improve the physical
links between the partner countries and the European
Community and also because investment in infrastructure
has a multiplier effect on economic growth.

While Phare may only finance a small percentage of a
project's final costs its role can be crucial either to bridge
the gap between the amount that international financing
institutions can lend and the contribution required from
government or because its status as provider of grant,
rather than loan finance, improves the quality of the mix
of a financial package.

This type of financing is provided by Phare in those cases
where it mobilises more substantial loans from interna
tional financing institutions or other investors or for
projects supporting important integration objectives which
would not otherwise go ahead.

Most of the projects co-financed to date have been within
the transport sector. While Phare can finance any infrastructure project within the terms of the Copenhagen
Council decision, so far the projects have either been
linked to the seven major projects in central and eastern
Europe which have been identified as priorities under the
development of trans-European networks or are linked to
eliminating bottlenecks at key border crossings.

In 1994 ECU 100 million has been committed for the co
financing of infrastructure investment in five countries
(Poland, Hungary, Romania, Bulgaria and Albania). This
covered eight projects (six transport, one gas pipeline
project and a telecommunications project).

**Cross-border programme**
The cross-border programme is another important initiative
linked to integration with a significant bias, at least in the
initial stages, towards the development of infrastructure.

The programme was first launched in 1994 on the initiative of the European Parliament. It complements, and is
closely linked to, the European Community's successful
Interreg initiative. While Interreg is a programme aimed at
cooperative development between regions on internal and
external borders of the European Community, the Phare
cross-border cooperation programme has the objective of
developing networks and other forms of cooperation
between border regions in partner countries with neighbouring Interreg regions of the European Community. The
principal fields of activity are transport, utilities, environment, economic development and human resources.

Initially, in 1993, ECU 15 million from the Phare budget
was set aside for interregional infrastructure cooperation.
In 1994 this was extended to ECU 150 million. The coun
tries eligible in 1994 were Albania, Bulgaria, the Baltic
Republics, the Czech Republic, Poland and Slovenia. This
will be extended to Hungary and Slovakia in 1995 as a
result of the enlargement of the European Union to
include Austria, Sweden and Finland.

During 1994 Phare worked closely with the Directorate
General for Regional Policies which manages Interreg, to
make sure that both address cross-border cooperation in a
consistent way. In line with these efforts, and the Essen
European Council conclusions, Phare is aiming to give a
multi-annual perspective to the Cross-border cooperation
programmes so that they correspond to the Operational
Programmes for the Interreg II programme which are
decided on a multi-annual basis from 1995 to 1999. It is

planned to prepare Multi-annual Indicative Programmes
that mirror Interreg Operational Programmes and provide
a framework for annual financing decisions.

One of the striking differences between Phare cooperation
and Interreg is the emphasis that the Phare countries place
on infrastructure measures (the largest categories are
transport and environment) while the Member States of

the European Community concentrate on regional development. To address these differences, Cooperation Agreements between the neighbouring countries involved will
be prepared. These will provide a framework including the
setting-up of joint programming and monitoring committees to agree objectives, implementation and monitoring.
The first Cooperation Agreement was signed between
Poland and Germany in December 1994.

Major projects launched under the 1994 Cross-border
programme have concentrated on the following sectors:

transport
environment

energy
education

communications

agriculture.

Phare funding was also made available for a smaller interregional cooperation effort in the framework of the
ECOS/Ouverture Programme, which supports cooperation
on selected topics between cities and regions of the European Community and those of partner countries. Phare
support enabled cities and regions of central and eastern
Europe to take an active part in this programme.

**Eliminating border-crossing bottlenecks**
The third element of the Phare Programme which is
concerned with integration are projects within the transport sector developed either as part of partner countries'
national programmes or under the transport multi-country

programme.

Phare attention in this area has largely been focused on
improving border crossings to eliminate bottlenecks.
Following the collapse of the previous regimes and the
opening of borders traffic across borders has increased
well beyond the point with which border crossing facilities were designed to cope. As a result delays, especially
for freight traffic, can exceed 40 hours at some crossing
points.

The problems that many of the partner countries have
faced have stemmed from

. poor infrastructure and customs facilities at, or close to,
the border-crossings themselves

- outdated and inappropriate customs clearance and
control procedures

- lack of coordination between the authorities on both

sides of the border.

**12**

Phare support has therefore focused both on improving
practices through the transfer of know-how and also on
direct investments to improve the infrastructure. The focus
of Phare activity in previous years had been on the transfer
of know-how - providing advice on setting up the necessary procedures and training customs staff. Now that most
of the partner countries have put this in place, Phare
support is placing greater emphasis on investment to
improve the crossing points themselves. This can involve
upgrading the roads and vehicle-holding areas so that they
can cope with the increased volume of traffic as well as
restructuring or rebuilding the customs points themselves.

Phare has provided more than ECU 100 million for this
area so far and by the end of 1995 more than 50 individual
border-crossing modernisation projects will have been
implemented. Around ECU 80 million has been provided
for the harmonisation and standardisation of documents

and procedures as well as the computerisation of customs
administrations.

An important new initiative in 1994 has been the development of the customs corridor concept. This was first
proposed in relation to establishing a corridor which could
improve transport in the Balkans, disrupted by the conflict
in the former Yugoslavia. Most of the planning for the
Balkans customs corridor has now been completed, an
exercise involving cooperation between five countries,
coordinated by Phare with the support of the European
Commission's Directorates General VII and XXI.

In March 1994 European transport ministers met in Crete
for a pan-European transport conference which identified
nine priority transport corridors. Phare is financing most
of the pre-investment feasibility studies as the first step
towards developing these corridors. Phare has also started
work on the development of a customs corridor in the
Baltics.

**Promoting multi-country and intra-regional cooperation**
The development of cooperation between the Phare
partner countries has been recognised as an important
element of reform, not only in terms of developing closer
economic links, but also in promoting political stability.
The Essen strategy for accession also emphasises the
importance of developing cooperation between the Phare
partner countries and the promotion of 'bon voisinage'.

In this context Phare is actively supporting the Pact on
Stability in Europe which aims to promote good relations
between countries in central and eastern Europe and is one
of the first joint actions of the Common Foreign and Security Policy.

Phare funds totalling ECU 200 million are being used to
fund projects submitted by the central and eastern European countries in the six main areas identified in the Pact
as being the key themes for cooperation:

regional trans-border cooperation
questions relating to minorities
cultural cooperation, including language training
regional economic cooperation
legal cooperation and administrative training
environmental problems.

A continuing emphasis was also placed on the development of cooperation between the partner countries through
Phare's multi-country programmes (previously called
regional programmes) which were first set up in 1991. In
1994 multi-country programmes received an allocation of
ECU 86 million and covered the following key areas:

- energy, with specific emphasis on a clean coal strategy,
twinning and network programmes and the harmonisation of energy policies

- transport, with a continuing focus on the elimination of
border-crossing bottlenecks

- statistics, in order to develop information systems to
support and monitor economic reforms

- education and research, with the Commission's ACE
and COSINE programmes which both received additional support

- public administration, with the SIGMA programme
which received additional support and was extended to
Albania, the Baltic States and Slovenia.

Preparatory work was also carried out in the areas of
distance education and telecommunications.

Representatives in the group, which meets twice a year,
are the National Aid Coordinators of the Phare partner
countries. The group has a rolling presidency following
the alphabetical order of country names. In 1994 Hungary
had the presidency which was then passed to Poland at the
end of the year.

An orientations paper for multi-country programmes was
prepared and agreed for the first time in 1994, setting the
priorities for multi-country funding during the course of
the year.

A continuing effort was made in 1994 to decentralise
programme management and to strengthen the technical
support for the sector coordinators who are nominated by
the coordination group. As a result Programme Coordination Units (PCU) now exist for the transport, telecommunications, energy, customs and anti-drugs programmes.

**13**

### Management of the Phare Programme

1994 was a significant turning point in the management of
the Phare Programme. The new political and economic
environment relating to accession and the experience
gained over four years of programme implementation
demanded a re-think of many aspects of the Programme's
operation.

As a result, the Commission made some fundamental
improvements to the way the Programme is structured,
implemented and managed, as well as developing a new
approach to the future management of the Programme.

One of the most important areas of development
concerned the strategy for accession adopted at the Essen
Council. This involved preparing detailed working papers
on how the Phare Programme could respond to the challenges of supporting the countries of central and eastern
Europe in their preparation for membership.

The production of these papers involved substantial development of policy and management covering both the
nature of support provided and the way it could be delivered. The areas which were developed, also covered in the
previous section of this report, were infrastructure investment, all forms of multi-country and cross-border cooperation, development of the internal market and the promotion of investment.

Linked to the Essen strategy are the developments in
programming, in particular the agreement at Essen of
multi-annual financial support up until 1999.

The issue of decentralisation, which has been acknowledged as an important step in the development of Phare,
became more significant in the light of the Essen decisions
and Phare has made substantial progress in the decentralisation of financial management as well as in determining
how best to develop decentralisation of programme planning and implementation.

Phare also launched an important initiative in financial
management by establishing a common financial management system across all Programme Management Units
which included systematic forms of monitoring and evaluation.

Finally, in recognition of the growing level of demand
from many groups for information on the Programme,
senior management seriously addressed the issue of
communications for the first time.

**14**

**Decentralisation**

There is agreement between the Commission, the Parliament and the Court of Auditors that Phare must continue

its move towards greater decentralisation.

In the past, this had been viewed primarily from the point
of view of technical and financial management and was
related to establishing a system to allow Programme
Management Units in the partner countries to have
responsibility for the implementation and management of
projects. However, the new focus on Phare as an instrument for accession has opened up a much broader
perspective on what Phare should be seeking to achieve in
terms of decentralisation. It has become clear that there is

a need for partner countries to take the steps necessary to
define and manage their own programmes to a greater
extent, provided this is linked to specific conditions established by Phare, as well as to the more general objectives
set out in the Europe Agreements.

This will have an impact on the structure of Phare. Many
of the functions of task managers, currently being carried
out in Brussels headquarters will be transferred to the
partner countries, and activity in Brussels would focus
more on strategic policy development and guidance.
However, before this can be accomplished on a general
basis, each partner country will have to have certain
elements in place, such as rules for public procurement, a
legal basis for tendering and an effective system of public
administration and financial reporting. Hence the importance of directing current Phare support to these areas.

**Programming**

Phare introduced multi-annual programming in the 1994
to 1996 Indicative Programmes which were negotiated in
1994 following adoption in the previous year of the 1993
to 1997 Phare Guidelines where the concept of multiannual programming was first presented. This initiative is
designed to ensure that Phare support more closely
reflects each country's medium-term reform priorities,
rather than being viewed as a series of one-off annual
initiatives. At the time of its introduction the first concept
of multi-annual programming was not supported by any
multi-annual financial commitment, which hindered its
implementation. Individual countries would indeed be
reluctant to plan for Phare support in future years if there
was no form of guarantee that funds would be available.

The lack of a multi-annual financial commitment also

slows project implementation because it is based on an
annual budget which must be committed each year. This
means going through the full programming cycle each year
and the actual commitment of funds is condensed into the

end of the year. It also means that management must
devote a disproportionate amount of effort to the commitment procedure, to the detriment of project management,
implementation and monitoring and evaluation.

At the end of 1994, at the European Council meeting in
Essen, the Council made a commitment to provide a
minimum level of financial support for the period to 1999.
The financial continuity necessary to construct mediumterm programmes for the use of Phare funds was thus
provided. As a result future Indicative Programmes for
the Czech Republic, Hungary, Poland and Slovakia will
now be developed to cover the period from 1995 to 1999
and Indicative Programmes will cover the period 1996 to
1999 for the other partner countries.

Phare management in Brussels headquarters has also
started to develop a new system of guidelines on
programme management which reflect the new multiannual perspective and build in a greater element of monitoring and evaluation. These guidelines provide a more
effective structure for planning a longer-term approach to
the deployment of Phare funds.

It is anticipated that these guidelines will come into effect
to cover a substantial part of 1995 programming.

**Implementation**

In 1994 Phare also launched an important initiative
concerning the actual implementation of Phare
programmes. This initiative was the introduction of a
manual of procedures for the Decentralised Implementation System (DIS).

The DIS is a system which provides a single, consistent
framework within which to manage projects. Its main
component is an overall strategic plan, individual work
plans and a system for reporting on monitoring and evaluation over the life of a programme.

The advantage of this system is that, for the first time, one
system of project management applies for all of the
project implementers (the Programme Management Units)
in the partner countries.

The key element of this system is the logical framework
matrix - a system for establishing and measuring the
objectives underlying any individual project.

As part of the Decentralised Implementation System the
financial accounting system which had been operating in
Brussels headquarters for two years was adapted for, and
extended to, the Programme Management Units.

The Decentralised Implementation System manual and a
further manual on contract and procurement rules were
presented to all Programme Management Units during the
year, in association with a training programme.

These new manuals represent a major step forward in
streamlining the technical and financial aspects of project
management. The manuals have been designed as flexible
systems which can be updated. Feedback received from
the partner countries is being used to improve the system
further.

**Monitoring and evaluation**

Phare has introduced some important initiatives in monitoring and evaluation in 1994. These cover both financial
procedures as well as an assessment of how effective the
programme has been in meeting its objectives.

During 1994 Phare signed framework contracts with a
number of independent auditing firms. Their brief is to
conduct a detailed financial audit of selected projects. The
Phare units in the Commission's delegations in the partner
countries have supplied lists of immediate auditing priorities, but the ultimate aim of this auditing process is to
ensure that every Phare programme is audited at least
twice during its life - which is usually two to three years.

The audit plan is given to the Court of Auditors and Directorate General XX (Financial Control) and the reports of
the audit teams are also made available to these two

bodies.

The results of these audits are already proving valuable in
planning how to establish an effective audit process in a
future, more decentralised, operation.

During 1994 a number of independent reports were also
commissioned to assess the impact of the Phare
Programme. Hungary was selected as the country for
investigation and so were individual sectors within a
number of countries.

**15**

The results of these studies have confirmed that the basic

principles of Phare management are sound in that
programme objectives match the partner countries' needs
and results are meeting the objectives. However, the
reports have highlighted areas where changes must be
introduced to achieve more effective management. In
particular these concern changes to financial and administrative procedures to allow project implementers greater
time to focus on the management of actual projects, rather
than financial reporting.

The Decentralised Implementation System itself also
introduces a more controlled approach to both technical
and financial evaluation through the regular monitoring
and evaluation reports which result from the operation of
the logical framework matrix.

The next step in the area of evaluation is to establish a
more systematic approach to the independent evaluation
of programmes, in a similar way to that followed in 1994
with the financial audits.

**Communications**

The Phare Programme is almost unique among European
Commission initiatives in the degree of legitimate interest
that many groups, both in the Member States and the
eleven partner countries, have in the Programme.

**16**

During 1993 it became clear that the resources devoted to
satisfying the needs of these groups were not sufficient
and that a more systematic approach was required. As a
result, Phare management decided that a comprehensive
communications strategy should be developed and
resources devoted to communications should be increased.

The strategy is based on a comprehensive research
programme which identifies the information and communication needs of key decision-makers and of those
working for the Programme, both inside and outside the
Commission.

The programme was launched from Brussels headquarters
in mid-1994. The feedback has been sufficiently encouraging to step up the level of activity in 1995. Programmes
have included: a major rethink on written and visual corporate identity; a substantial publications programme in 22
languages, including timely release of contract information;
and development of a communications database, which
currently holds more than 40,000 names. The programme is
now fully operational in Brussels, Warsaw, Prague and
Budapest and during 1995 it will be extended to at least
three and possibly five more partner countries. Other
partner countries are involved on a more ad-hoc basis.

### Albania

1994 was an important year for Albania and the Phare
Programme. The emphasis of Phare support continued to
move away from emergency assistance towards providing
the know-how necessary to put in place the structure of a
market economy and democratic society.

This move reflects the steady improvement in the overall
economic situation following the severe economic crisis
which occurred in the wake of the collapse of the previous
regime. Gross domestic product (GDP) grew by 6 per cent
and the industrial output, which fell by 30 per cent in
1991, increased by 12 per cent in 1994.

This trend has enabled the government to put in place a
longer term strategy for economic restructuring. Its
medium term economic strategy for 1993 to 1996 and its
public investment programme for 1994 to 1996 provide
the basis for Phare's Indicative Programme which covers
the period 1994 to 96.

Cooperation between Phare and the government has
revealed a shared understanding of the main priorities for
reform. As a result, the development of effective
programmes which can be implemented efficiently has
been possible.

The Indicative Programme for 1994 was signed in May
and ECU 29 million was committed for five key areas:

- sectoral restructuring (agriculture, health, SME development)

- infrastructure development

- human resources development

- institutional development
. humanitarian aid.

In addition, ECU 20 million was allocated for crossborder cooperation with the neighbouring countries of
Greece and Italy. The focus is on the transport sector and,
in particular, the improvement of road infrastructure and
border crossings in the key east-west and north-south
corridors.

At the end of the year a package of balance of payments
support for ECU 35 million was also agreed. ECU 15
million of this will come under the 1994 budget with the
remaining ECU 20 million provided in 1995.

Agriculture continued to be a key priority for Phare
support in 1994. The process of land reform is well
advanced with 98 per cent of arable land now in private
hands, although most of this is taken up by small subsistence farms. In order to develop agriculture as a viable
sector for private entrepreneurship, Phare activities
include the promotion of an operational agricultural credit
system, the development of agricultural extension services
for private farming and support for land mapping. Phare
provided training and equipment for three map production
institutions responsible for the survey, mapping and registration of over 1.8 million parcels of land.

There is an increasing and urgent need to address the
severe deficiencies in Albania's infrastructure, a fact
recognised by the government and included in its public
investment programme. Phare is therefore focusing on
improving infrastructure, in particular roads and port
development. Phare is also co-financing the modernisation
of the Diirres ferry terminal. The existing infrastructure
has to be substantially improved to be able to respond to
increased traffic in the last two years.

Albania is performing well in terms of programme implementation. At the end of 1994 70 per cent of total funds
committed for the country were actually contracted - a
figure far above the average of 52 per cent for all Phare
partner countries. Disbursement rates are also satisfying
with 66 per cent of funds contracted actually paid.

**17**

**Funds committed by sector 1994**
**ECU 49 million**

Public institution

and administrative

reform 4.6

Infrastructure 23

Education, health,
training and research 9.4

Humanitarian

and food aid 7

### Bulgaria

The foundations of a market economy and democratic
society have been established in Bulgaria. However, the
pace of economic reform and development in Bulgaria has
slowed over the last two years due to the particularly difficult economic conditions, the embargo against Serbia and
Montenegro and political changes. The country still faces
high inflation and unemployment and a major budget
deficit.

However, 1994 was a year when some positive signs
emerged. The government put in place an ambitious
economic plan and progress was made in several areas
including the passage of the bankruptcy law and the introduction of VAT which took effect from 1 April 1994.
Trade with western markets has also increased significantly in recent years.

Phare has played a significant role in the transformation of
the Bulgarian economy. Phare funds have gone to the core
areas of transformation, including privatisation and
restructuring of state enterprises, private sector development, modernisation of bank and financing services,
labour market and social sector reform.

In addition, Phare has provided humanitarian aid and a
specific supplementary budget for nuclear safety.

However, Phare has faced increasing difficulties in implementing its programmes, in particular because the nature
of support is shifting away from supply programmes and
the provision of first-stage know-how towards more
specialised support. This shift requires a greater level of
cooperation with the government and progress on establishing legal and institutional restructuring in certain key
areas. Such progress has been difficult due to several
changes of government.

However, in 1994, the government introduced an ambitious reform programme. Phare activities were adjusted to
support this and at the same time became more focused on
those areas where past experience has shown positive
results:

. private sector development
. human resources development and institutional reform

- investment support.

In total ECU 85 million was committed to Bulgaria under
the 1994 programme.

Of the overall amount of funds committed in Bulgaria
since the beginning of the Programme in 1990, the
percentage of contracted funds is slightly below the
average (48 per cent against 52 for the whole Programme).

**Funds committed by sector 1994**
**ECU 85 million**

Public institution

and administrative

reform

Infrastructure 62.6

Others 1.2 Private sector development
and enterprise support 3

Education, health,
training and research 12

Environment and

nuclear safety 5

Disbursement rates over the period are about average for
the Programme as a whole (with 51 per cent of funds
contracted actually paid against 50 per cent for the
average).

Some particular highlights of Phare's activities in 1994
included support to the energy sector, both to improve
safety at nuclear facilities and to remove the reliance on
nuclear power by upgrading coal-powered stations. In
particular, Phare will participate in the financing of the
installation of an emissions reduction system at the
Maritsa East power station. This will enable the environmental standards to be met which are necessary to unlock
financing for plant modernisation from the European
Investment Bank and the European Bank for Reconstruction and Development.

Phare is also participating in the financing of some important infrastructure projects including the development of
the E79 north-south highway.

With the support of Phare work is also progressing on
streamlining the Bulgarian telecommunications sector,
both through training and the development of human
resource policies and modernisation of the facilities of
Bulgarian Post.

Under the cross-border cooperation programme with
Greece, Phare also finances the reconstruction of several
sections of the Dupnitza-Kulata railway line including
electrification of railway over 114 km in one direction.
Another project is helping to install a new telecommunication link from Kavala to Haskovo including the laying of a
120 km fibre optic cable and installing a digital transmission system in Sofia.

### Czech Republic

1994 was a turning point for Phare in the Czech Republic.
In the context of preparing the 1994 to 1996 multi-annual
Indicative Programmes, a review of Phare activities was
carried out. New orientations were established on the basis

of which Phare was able to secure much greater support
from the government based on a shared recognition of the
importance of Phare in helping the Czech Republic move
towards its desired membership of the European Union.
The review also took account of the desire of the Czech

government to shift the focus of Phare support from
private sector development to support for public services,
including infrastructure investment. The government also
asked for less selective support for enterprise restructuring
and for efforts in the private sector to be focused over the
medium term on support for generalised services and business development programmes.

The Programme review showed that delays in implementing the 1991 to 1993 programmes caused by the split of
the Czech Republic and Slovakia, combined with the
rapid transformation of the Czech economy from a
centrally-planned to a market economy, meant that funding was going to areas which were no longer necessarily
priorities. Over 90 per cent of former state assets are now
in private ownership, inflation is under control and unemployment is low. The decline in economic growth seems
to have been reversed, with forecasts now predicting
growth of around four per cent. The state budget is
balanced and the country has a surplus on its current

account.

Government priorities shifted to the consolidation of
economic reform and the development of integration with
the European Union. As a result Phare activity will
become increasingly focused on legislative integration and
the implementation of the Europe Agreement, as well as
on developing infrastructure.

This new approach will be further developed in the 19951999 Indicative Programme.

ECU 60 million was allocated to the Czech Republic in
1994, of which ECU 25 million was allocated to projects
under the new cross-border cooperation programme.

Some of the important initiatives of 1994 included the
development of the Regional Investment Company in
Ostrava and the National Training Fund. These initiatives
represent an important development in decentralisation
and greater involvement of Czech organisations in deciding where Phare funds are used. Two interesting new
initiatives, the Energy Conservation Fund and an Environment Revolving Fund, are under preparation and are
expected to be implemented during 1995 in cooperation
with the EBRD.

The Regional Investment Company is an ECU 8 million
fund for the development of high growth companies
mainly in the Ostrava region. Phare has provided the
capital and a chief executive who has been seconded from
an investment company in the European Union. Financing
decisions are approved by a board of local business
people. Since the fund officially started operations in June
1994 it has invested ECU 1.1 million in four projects. A
further investment of ECU 2.7 million has been approved
by the Board and is being implemented.

The National Training Fund provides funding for 13 pilot
project local management training institutions to provide
intensive high-level modular courses for the middle
management of Czech private and public institutions.

**19**

**Funds committed by sector 1994**
ECU **60 million**

Public institution and

administrative reform 11

Education, health,
training and research 5.5

Infrastructure 25

The concept of establishing sectoral funds has been incorporated in the new approach to Phare which will be
launched in the 1995 to 1999 Indicative Programme.

Within the framework of the programme for small and
medium-sized enterprises support was given to more than
5,000 entrepreneurs by providing advisory services
through a network of 20 regional centres and Business
Information Centres.

The cross-border cooperation programme was the main
innovation in 1994. Despite some initial reservations the
programme is proving to be a popular and much-appreciated initiative. Six projects have been agreed concerning
the improvement of transport infrastructure, the purification of water supplies, a steam pipeline for the improvement of heat distribution and the reduction of toxic emis
sions in the Czech - German border region.

In the area of foreign investment the Phare-supported
investment promotion agency, Czechinvest, successfully
developed its activities including the establishment of a
local representatives network in Czech regions as well as a

**20**

foreign representation in London (France and Germany
are at the stage of preparation). Czechinvest also directly
secured six investments in 1994 amounting to the value of
US$ 48 million, generating 1,250 new jobs.

Contracting and disbursement rates of the Czech Republic
are far below the average of the Programme as a whole
with only 13 per cent of funds committed actually
disbursed and 21 per cent of funds contracted actually
paid since the Programme started to support the country.
This performance has not yet had serious consequences on
project implementation as it only accounts for the Czech
performance since 1993 when it became independent.

Phare also took some important steps in the development
of a proactive approach to communications. Research was
carried out in the second half of the year to identify how
best to improve communications with the Programme's
key target audiences. The results of this research have
been used to design a communications programme for
1995 which supports the overall communications strategy
developed for Phare by the European Commission.

### Estonia

Phare funds for Estonia in 1994 almost doubled from the

1993 level, increasing from ECU 12 million to ECU 22.5
million. The increase is based on the good performance of
the Phare Programme and the firm commitment of the
government to the reform process.

Cooperation between the Estonian government and Phare
has resulted in effective project implementation and a
correspondingly high contracting rate (55.5 per cent of
total funds committed). Disbursements at the end of 1994
stood at 25 per cent of funds contracted. The ability of the
government and of institutions to identify and implement
programmes has thus improved, helped by the Phare Aid
Coordination Unit established within the Ministry of
Finance. With assistance from this unit, the different
government and non-governmental organisations are now
able to manage the majority of the programmes themselves instead of relying on direct programme implementation by the Phare services in Brussels.

The government has been successful in establishing a
framework for an independent economy following the
extreme economic disruption resulting from Estonia's
independence from the Soviet Union. Trade has been
focused towards the west. An important initiative in this
respect was the signing of a free trade agreement with the
European Community and the start of negotiations for a
Europe Agreement.

Phare funding in 1994 has become more focused on key
areas of reform such as privatisation and structural reform.
The areas for Phare support, as outlined in the Indicative
Programme signed in May, are economic reform, infrastructure development and institutional and human
resources development.

The programme also maintains a General Technical Assistance Facility which will concentrate on the implementation of the new free trade agreement and support to
prepare a public investment programme.

Estonia had privatised almost half of its large state companies by the end of August 1994 with 157 deals signed for
a total sale value of approximately ECU 60 million. Phare
supported this through the creation of the Estonian Privatisation Agency, the drafting of relevant legislation, the
preparation of pre-privatisation studies on key industries
and training for board members and managers of privatised companies.

Phare also targeted the environment through the development of a national environment strategy and an allocation
of ECU 4 million devoted to solving the problems of environmental hot spots.

**21**

**Funds committed by sector 1994**
ECU **22.5 million**

Infrastructure 6

Environment and
nuclear safety 2.5

Private sector
development and
enterprise support !

Education, health,
training and research 4.5

### Hungary

Hungary is well advanced in its economic transformation
process and has put in place most of the basic elements of
a market economy and democratic society.

It has therefore reached the stage in its relationship with
Phare where support is becoming more focused on consolidation of reform and integration with the European Union.

This is an important but difficult stage because it
frequently involves tackling politically sensitive areas and
making tough decisions. In Hungary some severe macroeconomic problems, such as the high level of consumption, foreign debt and a current account deficit of around
nine per cent of GDP, had not been tackled and threatened
the momentum of reform.

Phare established some basic objectives with the new
government elected in May 1994. These are

. to foster the conditions favourable for a resumption of
economic growth consistent with maintaining external
and internal balances

- to deepen and extend the reforms

- to address pressing social issues.

In total ECU 85 million was allocated to Hungary in 1994
and the areas selected for Phare support were private
sector development, infrastructure development and
human resources development.

The rate at which Phare projects were implemented in
Hungary is slightly above the average for Phare countries.
At the end of 1994 55 per cent of the total committed to
Hungary over the life of the Programme had been
contracted. This compares to a figure of 52 per cent for the
Programme as a whole. The disbursement rate stands at
62.5 per cent of funds contracted.

There is nevertheless a need to improve coordination
between the Hungarian National Coordinators office and
the Commission in order to identify projects which are
relevant to the government's reform priorities and which
can be implemented rapidly and effectively.

Nonetheless, there have been some very positive developments during the year. The programme of support for
small and medium-sized enterprises has been one of the
most successful of any run in the Phare partner countries.

**22**

**Funds committed by sector 1994**
**ECU 85 million**

Infrastructure 29

Environment and

nuclear safety 15.5

Private sector
development and
enterprise support 16.5

Education, health,
training and research 24

Phare has also contributed to some major developments in
the banking and finance sector - in particular the completion of a second-round bank re-capitalisation scheme.

1994 was also the first year that Phare made significant
investment in infrastructure. Phare concentrated on the

sectors of transport, environment, energy and on the
modernisation of border crossings. In particular the Phare
Management Committee approved in 1994 the co-financing of two road rehabilitation projects (the E77 link to
Slovakia and the M5 link with Romania) while five priority border crossings have been selected for improvement three with Romania and one each with Slovakia and the

Ukraine. These improvements are an urgent priority due to
the increase in traffic caused by the Balkan conflict.
Implementation of these projects should start in early
1995.

The Trans-European Mobility Programme for University
Studies (Tempus) for the exchange of academic staff and
students in higher education with institutions in the European Union was also very successful and received a
further ECU 16 million in 1994.

The year also saw a significant increase in the number of
Hungarian organisations under contract to implement
Phare projects. Hungarian organisations represent 80 per
cent of the total number of contracts awarded between

1990 and 1994 by Phare.

### Latvia

Phare substantially increased its funding for Latvia in
1994. From ECU 18 million in the previous year funding
was raised to 29.5 million in 1994. This was due to

Latvia's demonstration of its ability to implement projects
effectively and therefore absorb a greater level of funding.

This is also demonstrated by the Programme's financial
performance. At the end of 1994 49 per cent of funds
committed since Phare started to support Latvia were
already contracted. Disbursement for the same period of
time (1992-1994) is 25 per cent of funds contracted.

The government is increasingly aware of the role that the
Phare Programme can play in the development of the
economy and in reaping the benefits of increased integration and trade with the European Community.

After a severe economic recession in the early 1990s,

1994 was a positive year for economic development in
Latvia. There was a substantial improvement in the
balance of payments, unemployment remained stable at
6.1 per cent and inflation decreased. The exchange rate for
the new Latvian currency, the Lats, has remained stable
against major currencies in the first quarter of 1994 and
shows a persistent tendency to strengthen against the US
dollar.

In the latter half of 1994 the government produced a
National Indicative Programme to cover the period from

1995 to 1997 with the following priorities:

- economic stabilisation and development with particular
emphasis on the banking and financial sector
. legal reform, including land reform, property registration and other issues necessary to facilitate privatisation

- public administration reform, including development of
institutions and human resources development.

This will provide a useful guide for the development of
the Phare Indicative Programme for 1995 to 1999.

The financial support from the Phare Programme for
Latvia in 1994 concentrated on economic reform, institutional and human resources development and infrastructure development.

Some of the major programme developments in 1994
included establishing a training programme for 10,000
central government civil servants. This programme will be
expanded in 1995 to train 17,000 local government and
police staff.

Phare has also been involved in the reform of the national

education system in 1994. A supplementary allocation of
ECU 3 million was made available in the third quarter of
the year to support vocational training and educational
reforms.

In support of the government's ambitious programme in
the public administration sector Phare developed
programmes for the customs, statistics and quality control
services.

**23**

**Funds committed by sector 1994**
**ECU 29.5 million**

Education, health,
training and research 5

Private sector
development and
enterprise support 14.5

### Lithuania

Phare funds committed to Lithuania increased by ECU 25
million to ECU 39 million in 1994. This is as a result of

the proven ability of the country to absorb funds and
implement projects as a result of effective coordination
between the government and Phare.

At the end of 1994 49 per cent of total funds committed
since the start of the Programme in 1992 had been
contracted. Disbursements stand at 24 per cent of funds
contracted.

The government has continued its programmes of structural reforms, macroeconomic stabilisation, fiscal restraint
and private sector promotion. However, political pressure
has delayed the finalisation of the privatisation
programme as well as the adoption and enforcement of
key economic legislation.

As with Estonia and Latvia Phare support up until 1993
was based on General Technical Assistance Facilities

giving support across a wide range of sectors. This
provided the basis to identify more specific sectoral strategies which are reflected in the 1994 Indicative
Programme.

This Indicative Programme committed ECU 39 million in
the following areas: infrastructure development, economic
development and human resources development.

An important development in 1994 was Phare's work with
the government in preparing the first draft of the public
investment programme. The programme is currently being
implemented by the Lithuanian Government in close
cooperation with Phare and the World Bank. Phare's role
in the programme is to advise the Government on defining
the sectors of strategic importance in which it should
invest. It also involves the creation of training courses on
project planning and analysis for the staff of Lithuanian
ministries and other Government agencies. This will
provide for some focus on Phare support in the infrastructure sector which is currently intended to address transport, energy and environment projects.

**24**

**Funds committed by sector 1994**
**ECU 39 million**

Infrastructure 16.5

Environment and

nuclear safety I

Private sector

development and
enterprise support 14.5

Education, health,
training and research 6

A key feature of the transformation of Lithuania's
economy has been the speed at which the economy has
been privatised. Within three years 80 per cent of the
eligible enterprises in the key areas have been privatised.
To support further the process of enterprise restructuring
additional funds were allocated in 1994. A credit line for

small businesses, channelled through commercial banks,
has also been expanded and Phare will continue to support
the operations of the Investment Promotion Agency established by the Programme at the end of 1993.

Other significant projects implemented during the year
included the development of a 'roll-on-roll-off terminal at
the Klaipeda port financed under the Cross-border
cooperation programme and the upgrading of equipment at
the central office of the Lithuanian Statistics Department.

In the area of labour market reform Phare has been preparing a large programme for the development of vocational
training schools at secondary and post-secondary level.

### Poland

Poland has, in many ways, advanced economic reform
faster and further than in neighbouring countries.
However, the reform process in Poland slowed somewhat
in 1994. The difficulties of tackling some of the key areas
of reform that remain have been acute. In addition the new

coalition government had difficulty in taking decisive
action given the need to balance a range of views on
reform.

As a result it took the government a considerable time to
determine the priorities for Phare funding. The eventual
allocation also represented a broad range of activities and
was not as tightly focused on reform consolidation and
integration as might be expected of a country at Poland's
advanced stage in the economic transition process.

The Indicative Programme, which was eventually signed
in November 1994, commits ECU 208.8 million across
nine specific areas:

- financial sector development

- investment in transport infrastructure

- cross-border cooperation

- development of higher education through the Tempus

programme

- supporting democratic institutions and development of
civic society in local communities

- worker protection

- forestry protection
. industrial restructuring, privatisation and investment in

energy

- Fiesta III - a multi-sectoral facility.

The current slowing of reform has not yet had an impact
on economic development. The economy showed strong
growth recording a 5 per cent rise in GDP and an increase
of 8 per cent in total. Privatisation and the development of
the private sector have resulted in the private sector
contributing 56 per cent to total GDP. However, Phare's
privatisation programme has been held up pending
government decisions on the pace of continued privatisation while Phare's programme for regional development
also proved to be more complex than initially envisaged.

Of the overall amount of funds committed over the life of

the Programme in Poland only 39 per cent were actually
contracted by the end of 1994. This compares with an
average of 52 per cent for the Programme as a whole. This
represents a significant amount of uncontracted funds
given the size of budget allocations to Poland. This is
largely due to the need to respond to political pressures to
spread funding broadly rather than to focus on specific
areas where Phare can be most effective.

Disbursement rates in Poland have also been slower than

average with 46 per cent of funds contracted actually paid.

Despite some of the difficulties some positive initiatives
were taken in 1994. Significant Phare funding was
devoted to encourage the restructuring of the Polish
banking sector - a continuing priority for Phare support.
This funding, provided to finance the provision of knowhow, involved such tasks as the evaluation of bad debt
positions. Finance is also made available to support the
recapitalisation of banks with historically unsound loan
policies and an imprudent risk exposure to debt, notably
rural and provincial cooperative banks.

**25**

**Funds committed by sector 1994**
**ECU 208.8 million**

Public institution and

administrative reform 21.5

Social development

and employment

Infrastructure 93.8

Private sector
development and
rprise support 31

  - K Education, health,
I H I training and research :

Agricultural restructuring 2.5

Environment and nuclear safety 12

ECU 35 million was allocated in 1994 to transportation
infrastructure schemes especially those that help
modernise motorway and railway system connections
with European Union Member States - projects envisaged
as forming part of the trans-European networks. Significant investment in infrastructure is also taking place under
the Cross-border programme for which ECU 58.75
million was allocated. This funding was largely devoted to
schemes devised to remove bottlenecks at frontier cross
ings. Work on these projects included the construction of
modern customs terminals and the building of new access
roads to ease the flow of cross-border transportation.

1994 was also the first year that the Phare-funded Polish
Agency for Regional Development started financing operations through investment grants.

**26**

The Phare Programme is supporting the Polish Government in its attempt to reform its public administration.
Reform in this area remains difficult to accomplish but it
is becoming increasingly important if Poland is to implement the initiatives required to meet the objectives set out
for integration with the European Union. The initiatives in
this area support the Agency for Municipal Development
and the National Labour Inspectorate.

Phare also achieved high-profile success in the environment sector through participation in a programme which
used environmentally-friendly chemicals to rid over
800,000 hectares of forest of an infestation of parasitic nun
moths responsible for killing off large tracts of woodland.

### Romania

Romania's road to reform is among the most difficult of
Europe's post-communist countries due to the tremendous
task the country has to undertake to undo the effects of an
isolationist culture and a very unbalanced economic structure. In 1994 the government continued to implement a
major macro-economic stabilisation programme launched
in 1993. This brought about a marked fall in inflation,
liberalised the foreign exchange market and included
curbs on implicit subsidies through the banking system.

These measures allowed agreement on an International
Monetary Fund standby facility and thus helped improve
Romania's standing with the international investment
community.

However, at the microeconomic level, progress in crucial
areas of reform and restructuring was slow in 1994.
Important pieces of legislation, notably on bankruptcy and
competition, were stalled in parliament. The draft law on
mass privatisations tabled in mid-1994 was also strongly
contested.

This has had an impact on Phare activities blocking
progress in the privatisation programme and other initiatives linked to economic restructuring. However, in
general terms the management of the Programme and
coordination with the government is good. This is
reflected in the financial performance with 50 per cent of
funds committed already contracted and 47 per cent of
funds contracted paid at the end of 1994.

The 1994 programme was allocated ECU 100 million.
The four broad areas of funding, agreed for the period
1994-1996, include economic and private sector development, human resources, employment and social policy
development, institutional reform and public finance
management, regional development and European integration.

A significant development in 1994 has been the number of
programmes designed to support decentralised initiatives
at local level. These include support for small and

medium-sized enterprises, regional economic development, tourism and civil society development. The
management of these programmes will be less dependent
on the central administration.

1994 also saw the approval of a major infrastructure cofinancing project - the first major project carried out under
the scheme agreed at the Copenhagen Council of June
1993. This covers a substantial road upgrading project and
is co-financed with the European Bank for Reconstruction
and Development and the European Investment Bank.

This project also marked the start of a greater focus on
investment and initiatives linked to integration.

The year also saw the first discontinuation (in the form of
non-extension) of a Phare programme. This concerned a
programme carried out with the Ministry of Health which
had been consistently delayed due to disagreements on
certain areas of policy established in the original Financial
Memorandum signed between Phare and the government.
This example is by no means typical of Phare's relationship with the Romanian government but is important in
that it is the first tangible example of Phare's commitment
to move funds out of non-performing programmes.

**27**

**Funds committed by sector 1994**
**ECU 100 million**

Public institution

and administrative

reform _9.(_

Private sector
development and
enterprise support 23.4

Education, health,
training and research 37

### Slovakia

Slovakia faces more serious economic problems than its
former partner, the Czech Republic, because of a greater
dependence on a relatively limited number of large stateowned mono-industries (for example, armaments) which
have presented particular restructuring difficulties. There
has also been a greater level of political instability which
has affected the pace of reform.

However, 1994 was a positive year. After four years of
economic decline signs of a recovery in economic activity
began to emerge. Real GDP is estimated to have recorded
year-on-year growth of 4.4 per cent, inflation slowed and
the current account balance began to improve.

The coalition government formed in March put in place a
new economic policy aimed at revitalising the reform
process. While its subsequent defeat has cast some doubt
over the future pace of reform Phare was able to use this
economic plan as the basis for establishing more clearly
defined priorities.

The multi-annual Indicative Programme, which was
signed in 1994, identifies five areas for support:

- development of the private sector

- human resources development, including science and
technology reform

- strengthening the social protection system

- promoting infrastructure development
. modernising the structures of state and society.

In total ECU 40 million was committed to Slovakia for

1994.

Phare and the Slovak Government took some important
steps in 1994 which have improved the performance of
many of the programmes. This has largely been achieved
through the resolution of some of the difficulties caused
by the split of the former Czechoslovakia.

The Phare Programme in Slovakia had been hit more
severely by this split than in the Czech Republic. This was
because of a greater need to establish ministries and the
mechanics of government and a subsequent delay in
setting up Phare Programme Management Units within
the new ministries. However, this work has now been
completed and by the end of the year the Programme in
Slovakia had contracted 57.2 per cent of funds available to
the end of 1993. This figure is slightly better than the
average for Phare partner countries. The disbursement rate
of the country over the same period was 37.5 per cent of
funds contracted.

**28**

**Funds committed by sector 1994**
**ECU 40 million**

Others 5

Public institution

and administrative

reform 4

Social
development
and employment
5.5

Infrastructure 6.5

Private sector
development and
enterprise support 5

Education, health,
training and research 9

Some of the significant initiatives which Phare implemented in 1994 included a major effort to mobilise funds
committed in previous years to support a second wave of
privatisation. Phare has also earmarked funds to cofinance a post-privatisation fund with the European Bank
for Reconstruction and Development. Once launched it
will offer equity funding for newly privatised companies
which need restructuring.

Phare also provided some valuable support for the
banking sector in the areas of banking supervision and
training - both for the Slovak National Bank and the
Ministry of Finance. This has included the development of
a strategy for handling bad loan portfolios and for establishing work-out units.

Phare has, in addition, established a loan fund for small
and medium-sized enterprises in association with three
Slovak banks and the Government. This fund will fit into

the overall initiatives for small and medium-sized enter
prises which include a development agency and a network
of 14 regional advisory and information centres and one
business innovation centre.

In 1994 an effective structure was also set up with the
government to monitor and coordinate the implementation
of the Europe Agreement signed in 1993.

Plans were also finalised in 1994 to open a European
Commission Delegation in Bratislava. This will allow
further improvements in the coordination of the
Programme with the Slovak Government and the implementation of a communications programme.

### Slovenia

Slovenia has been one of the most successful of the Phare

partner countries in transforming its economy and promoting economic growth, achieving 5.5 per cent of GDP
growth in 1994. With public debt at around three per cent
and a balanced budget it already fulfils two of the three
European Union's single currency 'convergence' criteria.

Slovenia's economic progress towards integration is
somewhat in advance of political links with the European
Union. A Trade and Economic Cooperation Agreement
has been in force since 1993 pending the conclusion of a
Europe Agreement.

Following the Essen Council the focus of Phare in the
future will be on facilitating the preparation for eventual
accession and on implementation of the future Europe
Agreement while continuing support for key sectors for
the medium-term restructuring of the economy aimed at
improving economic efficiency and competitiveness.

Slovenia received ECU 24 million for 1994 and focused

on five priority areas:

- private sector development

- the harmonisation of legislation to accepted European
standards

- public infrastructure

- science and technology

- human resources development.

In 1994 Slovenia also received ECU 4 million under the

Cross-border cooperation programme. This is being used
to fund ten initiatives in the Italian border region in three
core areas: transport and border-crossing infrastructure,
environment and agriculture.

Phare has also provided the necessary feasibility studies to
support the east-west transport corridor financed by the
European Bank for Reconstruction and Development.

Phare launched a programme for energy and environment
in 1994. It finances the preparation and implementation of
energy-saving activities such as the creation of an energysaving fund, the development of a clean coal programme
and advisory support.

Phare is also providing funds under a General Technical
Assistance Facility which funds small-scale initiatives for
a range of different sectors. Support provided includes
policy advice on the development of the telecommunications and transport sectors, support for the promotion of
private sector involvement in research, the analysis of the
marketing, technological and economic factors leading to
the preparation of a strategy for the chemical and paper
industries, support for the Bank of Slovenia in carrying
out on-site inspections of banks due to join the Bank
Rehabilitation Agency and the development of a comprehensive training programme on economic legislation.

Of the overall amount of funds committed by Phare to
Slovenia 57.5 per cent have been contracted. This is a
good performance especially since the Programme has
only been operational since 1992. The disbursement rate is
also encouraging with 43 per cent of funds contracted
actually paid at the end of 1994.

**29**

**Funds committed by sector 1994**
**ECU 24 million**

Infrastructure 6

Education,
health, training
and research 5.5

Private sector

development and
enterprise support 12.5

### Phare funding by country

This section contains a detailed breakdown of how Phare

funds allocated to each country have been committed to

sectors.

For each country the following information is given:

. an overview of total funds committed by year since the

beginning of the Phare Programme

- an overview of how total funds committed have been

allocated by sector from 1990 to 1994

The same information is also given for funds committed
under multi-country programmes.

For some countries the figures will not show a complete
picture of the sectoral distribution of funds because a large
proportion of the funds allocated are in the form of a
General Technical Assistance Facility (GTAF). This is
classified under the category 'other' but frequently
finances a range of different initiatives across a variety of

sectors.

###### Albania

**Funds allocated by sector each year** **1990** **1991** **1992** **1993** **1994** **Total**

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

**0**

**0**

**10**

**0**

**0**

**0**

**0**

**0**

**0**

35

1.2

50

15

0

4.4

0

0

4.4

42

8.5

10

10

3.3

0

0

1.2

0

0

9.4

7

5

0

23

0

4.6

0

77

19.1

77

30

3.3

27.4

0

5.8

4.4

Total **10** **110** **75** **49** **244**

Note: Albania entered the Phare Programme in 1991

**30**

###### Bulgaria

Funds allocated by sector each year 1990 1991 1992 1993 1994 Total

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

0

0

5

16

3.5

0

0

0

0

3

12

0

0

5

62.6

0

1.2

1.2

11

28

0

0

10.8

13.9

4

16

1.5

30

5

20

25

26.5

13

2.5

0

0

22.5

23

0

10

8.3

13

0

0

0

66.5

68

25

51

54.1

102.5

6.5

17.2

2.7

Total **24.5** 122 **76.8** **85.2** **85** **393.5**

###### Czech Republic

Funds allocated by sector each year 1990 1991 1992 1993 1994 Total

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

27

13.5

0

4.5

0

34

22

11

27

8

0

0

0

9

8

0

8

0

5.5

0

4.5

0

25

14

11

0

Total 60 60 120

Note: prior to 1993 Phare funds were provided to Czechoslovakia

**31**

###### Estonia

Funds allocated by sector each year 1990 1991 1992 1993 1994 Total

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

0

1.5

0

0

0

0

0

0

10.5

4.5

0

0

2.5

6

0

0

1.5

**7**

**0**

**0**

**2.5**

**6**

**0**

**0**

**21**

Total 10 12 22.5 44.5

Note: Estonia entered the Phare Programme in 1992

###### Hungary

Funds allocated by sector each year

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

**Total**

**32**

```
1990 1991 1992 1993 1994 Total

```

**85** **490.8**

149

105.5

0

68.5

62.5

37.3

29

24

15

31

7.5

0

20

27

1.3

3

0

0

**89.8**

59.5

22

0

**13**

10

7

0

119.5

11

16

0

5

10

0

26

14.5

15

**97.5**

**31**

36

0

30.5

0

0

0

1.5

0

**99**

16.5

24

0

0

15.5

29

0

0

0

###### Latvia

**Funds allocated by sector each year** **1990** **1991** **1992** **1993** **1994** **Total**

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

0

1.5

0

0

0

0

0

0

13.5

14.5

8.5

0

0

5.5

0

0

0

34

0

2

0

0

0

0

0

0

16

14.5

5

0

0

5.5

0

0

0

4.5

Total **15** **18** **29.5** **62.5**

Note: Latvia entered the Phare Programme in 1992
###### Lithuania

**Funds allocated by sector each year** **1990** **1991** **1992** **1993** **1994** **Total**

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

14.5

**6**

**0**

**0**

**1**

16.5

**0**

**0**

**1**

9.5

1.5

0

0

0

0

0

0

9

0

2.5

0

0

0

0

0

0

22.5

24

10

0

0

1

16.5

0

0

32.5

**Total** 20 **25** **39** **84**

Note: Lithuania entered the Phare Programme in 1992

33

###### Poland

Funds allocated by sector each year 1990 1991 1992 1993 1994 Total

Private sector development
and enterprise support

Education, health, training
and research

40 72 79.2 27 31 249.2

2.8 34.5 42 45 39 163.3

Humanitarian and food aid 0 0 0 0 0 0

Agricultural restructuring 100 17 18 30 2.5 167.5

Environment and nuclear safety 22 35 18 0 12 87

Infrastructure (energy, transport _,_ i n _0AA_ _„_ _Q_ _[~]_ _s_ 1 Q Q 0
andtelecommimcations) 6 1 0 _26A_ 6 3 9 3 8 _1992_

Social development and employment 0 18 7.2 0 9 34.2

Public institution and
10 7.5 9.1 27 21.5 75.2
administrative reform

Others 0 3 0 33 0 36

Total 180.8 197 200 225 208.8 1,011.6

###### Romania

Funds allocated by sector each year 1990 1991 1992 1993 1994 Total

Private sector development Q Q 45 7Q 234 138 4
and enterprise support

Education, health, training Q 35 13 jg 3-7 JQ3
and research

Humanitarian and food aid 15.5 34.3 22 9.9 0 81.7

Agricultural restructuring 0 34 32 5 0 71

Environment and nuclear safety 0 0 5 0 0 5

Infrastructure (energy, transport 0 9 0 0 25 34
and telecommunications)

Social development and employment 0 0 15 0 0 15

Public institution and 0 0 0 10 9.6 19.6
administrative reform

Others 0 26 16 27 5 74

**Total** **15.5** **138.3** **148** **139.9** **100** **541.7**

**34**

###### Slovakia

**Funds allocated by sector each year** **1990** **1991** **1992** **1993** **1994** **Total**

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restracturing

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

19

5

0

3

0

5

3

0

5

24

14

0

8

0

11.5

8.5

4

10

5

9

0

5

0

6.5

5.5

4

5

**Total** **40** **40** **80**

Note: prior to 1993 Phare funds were provided to Czechoslovakia
###### Slovenia

**Funds allocated by sector each year** **1990** **1991** **1992** **1993** **1994** **Total**

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

12.5

11.3

0

0

0

6

0

0

14.2

0

2.3

0

0

0

0

0

0

6.7

0

3.5

0

0

0

0

0

0

7.5

12.5

5.5

0

0

0

6

0

0

0

**Total** **11** **24** **44**

Note: Slovenia entered the Phare Programme in 1992

35

###### Czechoslovakia

Funds allocated by sector each year 1990 1991 1992 1993 1994 Total

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

**0**

**4**

**0**

**0**

**30**

**0**

**0**

**0**

**0**

39

9

0

0

5

11

15

0

20

31

25

0

0

0

10

0

0

34

70

38

0

0

35

21

15

0

54

###### GDR

36

Total 34 99 100 233

Note: from 1993 Phare funding was provided separately to the Czech Republic and Slovakia

Funds allocated by sector each year `1990` `1991` `1992` `1993` `1994` `Total`

Private sector development
and enterprise support

Education, health, training
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

Infrastructure (energy, transport
and telecommunications)

Social development and employment

Public institution and
administrative reform

Others

0

1

0

0

20

0

0

0

14

0

1

0

0

20

0

0

0

**14**

Total 35 35

Note: Aid to GDR ceased after German unification

###### Former Yugoslavia

**Funds allocated by sector each year** **1990** **1991** **1992** **1993** **1994** **Total**

Private sector development
**0** **0** **0** **0** **0** **0**
and enterprise support

Education, health, training

and research 0 6 0 0 0 6

Humanitarian and food aid 30.2 7.1 47.8 25 23 133.1

Agricultural restructuring 0 0 0 0 0 0

Environment and nuclear safety 0 0 0 0 0 0

Infrastructure (energy, transport ft 0 0 0 0 0
and telecommunications)

Social development and employment 0 0 0 0 0 0

Public institution and
0 0 0 0 2 2
administrative reform

Others 0 0 0 0 0 0

**Total** **30.2** **13.1** **47.8** **25** **25** **141.1**

###### Multi-country programmes

**Funds allocated by sector each year** **1990** **1991** **1992** **1993** **1994** **Total**

Private sector development Q 20 3 27.5 21 71.5
and enterprise support

Education, health, training 2 [1.5] 28.5 24 30.6 26 130.6
and research

Humanitarian and food aid

Agricultural restructuring

Environment and nuclear safety

51 0 0 0 0 51

0 0 0 0 0 0

0 23.5 46 20 36 125.5

Infrastructure (energy, transport **o** 0 35 24 33 92
and telecommunications)

Social development and employment **0** **0** **0** **0** **0** **0**

Public institution and 0 11 1.5 10 28 50.5

administrative reform

Others 13.4 15.8 50.3 70.6 51.5 201.6

**Total** **85.9** **98.8** **159.8** **182.7** **195.5** **722.7**

**37**

### Phare funding by sector

During 1994 there were some significant shifts in the allocation of Phare funds between sectors. These shifts reflect

the fact that Phare is adapting to reflect the changing
needs of its partner countries.

In particular there was a significant increase in funding
allocated to infrastructure (transport, energy and telecommunications). Funds allocated to this sector increased
from ECU 114.9 million in 1993 to ECU 326.4 million in

1994 - an increase of 184 per cent. This reflects the fact
that improving the infrastructure of the partner countries,
in particular the physical links between these countries
and the European Union, is becoming an important objective linked to integration with, and eventual membership
of, the European Union.

Funds allocated to the environment also increased significantly. The Phare budget for this sector increased from
ECU 34.1 million in 1993 to 77.5 million in 1994. This

increase has gone hand-in-hand with a shift in Phare's
focus from funding urgent actions and establishing the
basic policy and institutional foundations to a more longterm strategic approach. In particular this involves raising
public awareness and strengthening environmental nongovernmental organisations as well as providing capital
investment which is essential to stimulating the estimated
ECU 300 billion needed over the next 15 years to substantially raise the quality of the environment in central and
eastern Europe.

Funding for social development and employment also
increased from ECU 15 million to ECU 28.5 million. This

is due to the fact that coming to terms with increasing
unemployment caused by the restructuring of industry and
establishing new systems of social protection is an
increasing priority for the Phare partner countries.

Public administration and institutional reform received a

25 per cent increase in funds allocated to it. This increase
reflects the fact that governments in the partner countries
still face many challenges in delivering the services of
government at both central and local level adapted to the
needs of a market oriented system. In particular those

**38**

countries which are developing a greater focus on integration with the European Union need support in this area to
establish the legal and regulatory changes necessary to
adopt the European Union's 'acquis communautaire'.

Funding devoted to private sector development and enterprise support decreased by ECU 105.1 million to ECU
149.4 million. This is due to the fact that much of the

initial work in privatisation and restructuring has been
accomplished, particularly in terms of establishing the
necessary legal and regulatory frameworks, the area where
Phare know-how transfer plays an important role.

Phare funding for the agriculture sector also decreased
largely as a result of the fact that there is now much less
emphasis on agricultural supply programmes which were
a feature of Phare support to a number of countries in the
early stages of transition. Phare support in this sector is
now more focused on providing the know-how necessary
to improve the performance of the sector as well as developing government policies which are in line with European Union laws and regulations.

Likewise funding for humanitarian aid has decreased as
this type of emergency assistance is usually only required
to help countries overcome the initial shocks associated
with the early stages of transition to market economies.

The following information in this section contains a
detailed breakdown of how Phare funds allocated to each

sector have been committed to each country.

For each sector the following information is given:

- an overview of total funds committed by year since the
beginning of the Programme

- an overview of how total funds committed have been

allocated by country from 1990 to 1994

###### Private sector development and enterprise support

Funds committed by country each year 1990 1991 1992 1993 1994 Total

Poland 40 72 79.2 27 31 249.2

Hungary 31 59.5 11 31 16.5 149

Romania 0 0 45 70 23.4 138.4

Bulgaria 0 30 22.5 11 3 66.5

Czech Republic 0 0 0 27 0 27

Slovakia 0 0 0 19 5 24

Czechoslovakia 0 39 31 0 0 70

Albania 0 0 35 42 0 77

Lithuania 0 0 9.5 0 14.5 24

Former Yugoslavia 0 0 0 0 0 0

GDR 0 0 0 0 0 0

Latvia 0 0 0 0 14.5 14.5

Estonia 0 0 0 0 8 8

Slovenia 0 0 0 0 12.5 12.5

Multi-country programmes 0 20 3 27.5 21 71.5

Total **71** **220.5** **236.2** **254.5** **149.4** **931.6**

###### Education, health, training and research

Funds committed by country each year **1990** **1991** **1992** **1993** **1994** Total

Poland 2.8 34.5 42 45 39 163.3

Hungary 7.5 22 16 36 24 105.5

Romania 0 35 13 18 37 103

Bulgaria 0 5 23 28 12 68

Czech Republic 0 0 0 8 5.5 13.5

Slovakia 0 0 0 5 9 14

Czechoslovakia 4 9 25 0 0 38

Albania 0 0 1.2 8.5 9.4 19.1

Lithuania 0 0 1.5 2.5 6 10

Former Yugoslavia 0 6 0 0 0 6

GDR 1 0 0 0 0 1

Latvia 0 0 1.5 2 5 8.5

Estonia 0 0 1 1.5 4.5 7

Slovenia 0 0 2.3 3.5 5.5 11.3

Multi-country programmes 21.5 28.5 24 30.6 26 130.6

**Total** **36.8** **140** **150.5** **188.6** **182.9** **698.8**

**39**

###### Infrastructure

**Funds committed by country each year** **1990** **1991** **1992** **1993** **1994** **Total**

Poland 6 10 26.4 63 93.8 199.2

Hungary 1.3 7 0 0 29 37.3

Romania 0 9 0 0 25 34

Bulgaria 0 13 13 13.9 62.6 102.5

Czech Republic 0 0 0 9 25 34

Slovakia 0 0 0 5 6.5 11.5

Czechoslovakia 0 11 10 0 0 21

Albania 0 0 4.4 0 23 27.4

Lithuania 0 0 0 0 16.5 16.5

Former Yugoslavia 0 0 0 0 0 0

GDR 0 0 0 0 0 0

Latvia 0 0 0 0 0 0

Estonia 0 0 0 0 6 6

Slovenia 0 0 0 0 6 6

Multi-country programmes 0 0 35 24 33 92

**Total** **7.3** **50** **88.9** **114.9** **326.4** **587.5**

###### Environment and nuclear safety

**Funds committed by country each year** **1990** **1991** **1992** **1993** **1994** **Total**

Poland 22 35 18 0 12 87

Hungary 27 10 10 0 15.5 62.5

Romania 0 0 5 0 0 5

Bulgaria 3.5 26.5 8.3 10.8 5 54.1

Czech Republic 0 0 0 0 0 0

Slovakia 0 0 0 0 0 0

Czechoslovakia 30 5 0 0 0 35

Albania 0 0 0 3.3 0 3.3

Lithuania 0 0 0 0 1 1

Former Yugoslavia 0 0 0 0 0 0

GDR 20 0 0 0 0 20

Latvia 0 0 0 0 5.5 5.5

Estonia 0 0 0 0 2.5 2.5

Slovenia 0 0 0 0 0 0

Multi-country programmes 0 23.5 46 20 36 125.5

**Total** **102.5** **100** **87.3** **34.1** **77.5** **401.4**

**40**

###### Agricultural restructuring

**Funds committed by country each year** **1990** **1991** **1992** **1993** **1994** **Total**

Poland 100 17 18 30 2.5 167.5

Hungary 20 13 5 30.5 0 68.5

Romania 0 34 32 5 0 71

Bulgaria 16 25 10 0 0 51

Czech Republic 0 0 0 0 4.5 4.5

Slovakia 0 0 0 3 5 8

Czechoslovakia 0 0 0 0 0 0

Albania 0 0 15 10 5 30

Lithuania 0 0 0 0 0 0

Former Yugoslavia 0 0 0 0 0 0

GDR 0 0 0 0 0 0

Latvia 0 0 0 0 0 0

Estonia 0 0 0 0 0 0

Slovenia 0 0 0 0 0 0

Multi-country programmes 0 0 0 0 0 0

Total **136** **89** **80** **78.5** **17** **400.5**

###### Humanitarian and food aid

**Funds committed by country each year** **1990** **1991** **1992** **1993** **1994** Total

Poland 0 0 0 0 0 0

Hungary 0 0 0 0 0 0

Romania 15.5 34.3 22 9.9 0 81.7

Bulgaria 5 20 0 0 0 25

Czech Republic 0 0 0 0 0 0

Slovakia 0 0 0 0 0 0

Czechoslovakia 0 0 0 0 0 0

Albania 0 10 50 10 7 77

Lithuania 0 0 0 0 0 0

Former Yugoslavia 30.2 7.1 47.8 25 23 133.1

GDR 0 0 0 0 0 0

Latvia 0 0 0 0 0 0

Estonia 0 0 0 0 0 0

Slovenia 0 0 0 0 0 0

Multi-country programmes 51 0 0 0 0 51

Humanitarian aid 0 0 0 0 0 0

**Total** **101.7** **71.4** **119.8** **44.9** 30 **367.8**

**41**

###### Public institution and administrative reform

Funds committed by country each year 1990 1991 1992 1993 1994 Total

9.1

14.5

0

0

0

0

0

0

0

0

0

0

0

0

1.5

75.1

24

19.6

17.2

11

4

0

5.8

0

2

0

0

0

0

50.5

27

1.5

10

16

0

0

0

**1.2**

**0**

**0**

**0**

**0**

**0**

**0**

10

21.5

0

9.6

1.2

11

4

0

4.6

0

2

0

0

0

0

28

7.5

8

0

0

0

0

0

0

0

0

0

0

0

0

11

Poland

Hungary

Romania

Bulgaria

Czech Republic

Slovakia

Czechoslovakia

Albania

Lithuania

Former Yugoslavia

GDR

Latvia

Estonia

Slovenia

Multi-country programmes

10

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Total 10 26.5 25.2 65.7 81.9 209.3

###### Social development and employment

Funds committed by country each year 1990 1991 1992 1993 1994 Total

7.2

26

15

0

0

0

0

0

0

0

0

0

0

0

0

**48.2**

0

0

0

4

8

3

0

0

0

0

0

0

0

0

0

15

9

0

0

0

14

5.5

0

0

0

0

0

0

0

0

0

**28.5**

34.2

29

15

6.5

22

8.5

15

0

0

0

0

0

0

0

0

130.2

Poland

Hungary

Romania

Bulgaria

Czech Republic

Slovakia

Czechoslovakia

Albania

Lithuania

Former Yugoslavia

GDR

Latvia

Estonia

Slovenia

Multi-country programmes

**Total**

18

0

0

2.5

0

0

15

0

0

0

0

0

0

0

0

35.5

**42**

###### Other sectors

Funds committed by country each year X990 1991 1992 1993 1994 Total

Poland 0 3 0 33 0 36

Hungary 0 0 15 0 0 15

Romania 0 26 16 27 5 74

Bulgaria 0 0 0 1.5 1.2 2.7

Czech Republic 0 0 0 8 0 8

Slovakia 0 0 0 5 5 10

Czechoslovakia 0 20 34 0 0 54

Albania 0 0 4.4 0 0 4.4

Lithuania 0 0 9 22.5 1 32.5

Former Yugoslavia 0 0 0 0 0 0

GDR 14 0 0 0 0 14

Latvia 0 0 13.5 16 4.5 34

Estonia 0 0 9 10.5 1.5 21

Slovenia 0 0 6.7 7.5 0 14.2

Multi-country programmes 13.4 15.8 50.3 70.5 51.5 201.5

Total 27.4 64.8 157.9 201.5 69.7 521.3

**43**

## Phare financial performance

The financial performance of the Phare Programme can be
measured using the following indicators:

 - the level of commitments compared with the annual
budget

 - the amount contracted

 - the level of payments compared with the budget for
payments established at the start of the year

 - the amount paid

 - cumulative contracts and payments as a percentage of
cumulative commitments.

**Commitment of** **the** **Phare budget**
Since the beginning of the Programme, the percentage of
the Phare budget actually committed has always been
close to the maximum figure of 100 per cent and reached
99.9 per cent of the 1994 budget.

**Amount contracted**

Phare has made a dramatic increase in the level of

contracting since the Programme began. In 1990, only
ECU 155 million was contracted. This increased to ECU

297 million in 1991, ECU 542 million in 1992, ECU 572
million in 1993 and reached ECU 660 million in 1994 (see
fig. 1).

Figure 2 gives the cumulative figures of funds contracted
at the end of each budget year. It shows that the level of
contracting greatly increased in 1994 where it reached
fourteen times the level of contracting in 1990.

**44**

**Fig. 1** - **Funds committed, contracted and paid 1990-**
**1994 (ECU 4,248.5 million)**
**(in ECU million)**

```
  1990 1991 1992 1993 1994

```

- commitments • contracts payments

**Fig. 2** - **Cumulative funds committed, contracted and**
**paid 1990-1994 (in ECU million)**

**1990** **1991** **1992** **1993**

commitments • contracts payments

**1994**

The budget year to which the contracts signed in each
calendar year refer can be seen in figure 3.

**Payments compared with the budget**
The Phare Programme establishes at the beginning of each
year a budget for funds to be disbursed during the course
of the year. In 1994, more than 99 per cent of the
budgeted amount was actually paid.

**Funding procedure**

Each stage of the programme cycle, starting with the
production of Operational Programmes, is matched by
an equivalent stage in the delivery of funds.

**Commitment**  - The design of Operational Programmes
and their associated financing proposals corresponds to
what is referred to as the commitment of funds. Once a

financing proposal has been approved by the Phare
Management Committee and decided by the Commission, the relevant funds associated with that proposal
are said to have been committed. Phare must commit

its entire annual budget within the year to which that
budget applies, or else the uncommitted money will be
returned to European Union funds.

**Contracting**  - The tendering procedure precedes the
next funding step known as contracting. As soon as a
tender has been successfully completed and a contract
signed, the relevant funds are said to have been
contracted.

**Fig. 3** - **Contracts concluded by calendar year (in ECU**
**million)**

```
                 '•012.6 1,003.6

                                  963.3

 1990 budget 1991 budget 1992 budget 1993 budget 1994 budget

```

92.4% 76.9% 59.4% 38.6% 19.1%

% contracted as of 31.12.94

contracted in 1990 contracted in 1991

- contracted in 1992 • contracted in 1993

- contracted in 1994 • not yet contracted

**Payment** - Payment is the final step in the funding
process. This will take place over the length of the
project, which can be up to two or three years.

Contracting is the most important measure of the
implementation of the Programme. This is because it is
mis that unlocks Phare funds and marks the start of real

implementation on the ground.

**45**

**Amount paid**
The increase in the contracting level previously mentioned
is naturally followed by an increase in payments, but with
a certain time lag as payment is spread out over the period
of the contract. Payments may in some years exceed the
corresponding amount contracted. This is due to advance
payments made by the Commission to the Programme
Management Units in partner countries to enable them to
meet their contractual and payment obligations.

The level of payments, however, notably improved in
1994 where ECU 721 million was disbursed (see fig. 1).
This is an increase of 38 per cent from the previous year
and four times the amount paid in 1990.

The budget years to which payments in each year relate
can be seen in figure 4.

**Cumulative contracts and payments as percentage of**
**cumulative commitments**

Both ratios have significantly improved over the life of the
Phare Programme (see fig. 5). In 1990, only 31 per cent of
funds committed were contracted and 35 per cent were
paid. By the end of 1994, both figures had increased to 52
and 50 per cent of funds committed respectively.

46

**Fig. 4** - **Payments in each budget year**
**(in ECU million)**

```
                1,012.6 1,003.6

                                963.3

 1990 budget 1991 budget 1992 budget 1993 budget 1994 budget

```

95.9% 81.4% 62.1% 32.4% 7.7%

% paid as of 31.12.94

paid in 1990 paid in 1991  - paid in 1992

- paid in 1993 • paid in 1994 • not yet paid

**Fig. 5** - **Cumulative contracts and payments 1990-1994**

1990 1991 1992 1993 1994

Cumulative contracts

as percentage of 31% 36% 44% 48% 52%

cumulative commitments

Cumulative payments as

percentage of 35% 36% 39% 43% 50%

cumulative contracts

### 1994 [l ] Major projects launched in

**Agriculture**

Agriculture and land registration programme
Czech Republic ECU 4.5 million

Agriculture and land registration programme
Slovakia ECU 5 million

Programme for credit, land market extension
and agro-processing restructuring
Albania ECU 5 million

Reallocation of funds from the 1993 programme
for the agricultural and rural sectors
Poland ECU 2.5 million

**Education and health**

Regional cooperation on distance education
All ECU

Regional industrial property programme
All ECU

Research and development networking
All ECU

Programme for vocational education
and training reform
Slovakia ECU

Programme for the reform of vocational
education and training
Romania ECU

Programme to restructure the health sector
Albania ECU

Programme for the national training fund
Czech Republic ECU

3 million

0.8 million

4 million

4 million

25 million

5 million

2 million

Programme for vocational education
and training education
Lithuania ECU 4 million

Programme for labour market development
Slovakia ECU 3.5 million

Programme for vocational education
and training reform
Slovenia ECU 3 million

**Environment**

Programme for environmental protection
Lithuania ECU 1 million

Programme for pollution monitoring
and environment legislation
Estonia ECU 2.5 million

Programme for rural water development
Latvia ECU 2.5 million

Programme for forestry protection
Poland ECU 12 million

**Energy**

Harmonisation of European energy
policies and strategies, interconnection
of energy networks
All ECU 13 million

Reduction of sulphur dioxide
emissions

Bulgaria

Energy and environmental

programme
Hungary

ECU 15 million

ECU 15.5 million

Programme for vocational education
and training reform
Estonia

Programme to strengthen links
between education and the economy
Hungary

Programme for vocational education
and training reform
Latvia

ECU 3 million

ECU 8 million

ECU 3 million

Energy programme (efficiency policy)
Slovakia ECU 4 million

Programme for the energy sector
Estonia ECU 3 million

Programme for the energy sector
Lithuania ECU 6.9 million

Programme for energy and
the environment

Slovenia ECU 2 million

**47**

1 The following list gives the names of all major projects launched
in 1994 in each sector as well as the country concerned and the
corresponding budget. Contracts under ECU 500,000 are not listed.

**Infrastructure**

Transport infrastructure programme
Romania

Transport infrastructure development

programme
Bulgaria

Transport infrastructure development

programme
Lithuania

Infrastructure programme
(transport, energy, environment)
Slovakia

Programme for transport
Albania

General infrastructure programme
Bulgaria

Programme for transport
infrastructure development
Hungary

ECU 25 million

ECU 12 million

ECU 4.6 million

ECU

ECU

ECU

6.5 million

3 million

10.6 million

ECU 18 million

Programme for transport,
communications and water management
Hungary ECU

Programme for transport
infrastructure development
Poland ECU

Border crossing modernisation programme
Hungary ECU

3 million

35 million

8 million

Cross-border cooperation programme
with Denmark

Estonia ECU 3 million

Cross-border cooperation programme
with Denmark

Latvia ECU 3 million

Cross-border cooperation programme
with Denmark

Lithuania ECU 5 million

Cross-border cooperation programme
with Denmark

Poland ECU 3.8 million

Cross-border cooperation programme
for the environment

All ECU 3 million

**Private sector development and enterprise**
**restructuring**

Economic development programme
(privatisation and enterprise restructuring,
banking, public finance and accounting)
Estonia ECU 8 million

Private sector development programme
Hungary ECU 16.5 million

Programme for private sector development
Latvia ECU 10.5 million

Programme for economic development
Lithuania ECU 12.5 million

Programme for private sector development
Slovakia ECU 5 million

Programme for the development of SMEs
All ECU 10 million

Programme for financial sector development
Poland ECU 20 million

Programme for mass privatisation
Bulgaria ECU 3 million

Programme for enterprise restructuring,
privatisation and energy
Poland ECU 11 million

Programme for SMEs and regional
development
Romania ECU 18.4 million

Cross-border cooperation programme
with Greece and Italy
Albania

Cross-border cooperation programme
with Greece

Bulgaria

Cross-border cooperation programme
with Germany
Czech republic

Cross-border cooperation programme
with Germany
Poland

Cross-border cooperation programme
with Italy
Slovenia

**48**

ECU 20 million

ECU 25 million

ECU 25 million

ECU 55 million

ECU 4 million

**Public institution and**
**administrative reform**

Regional consumer protection
Ail ECU

Regional programme on copyright protection
Ail ECU

Civic society development programme
Czech Republic ECU

Programme to upgrade
the Statistical Information System
Romania ECU

Customs transformation programme
Latvia ECU

Programme to modernise
the Latvian State Statistics Committee

Latvia ECU

Programme to modernise
the Lithuanian Statistics Department
Lithuania ECU

Customs transformation programme
Lithuania ECU

Programme for public
administration reform

Romania ECU

Programme for civil society development
Bulgaria ECU

Programme for worker protection
Poland ECU

Programme of support
for decentralised activities

Poland ECU

Programme for tourism development
Romania ECU

Programme for civil society development
Romania ECU

Programme to support public administration
Slovakia ECU

**Social development**

2 million

2 million

2 million

4.6 million

2.5 million

1.5 million

1 million

1 million

5 million

1.2 million

5 million

10 million

5 million

5 million

4 million

Programme for social insurance reform
Slovakia ECU 2 million

Labour market development programme
Czech Republic ECU 6 million

**Multi-country programmes**

Link Inter European NGOs (LIEN) ECU 5 million

Telecommunications and post services ECU 1 million

Transport programme ECU 30 million

Complementary programme for
multi-country statistical cooperation ECU 17 million

Programme for competition protection ECU 2 million

Programme to improve veterinary
disease, diagnostics and controls ECU 6 million

Programme to support the Commission
of the European Communities to implement
Tempus and for staff development in
vocational training sector ECU 2.6 million

**Others**

General Technical Assistance Facility (GTAF)
Slovenia ECU 12.5 million

General Technical Assistance Facility (GTAF)
Albania ECU 4.6 million

General Technical Assistance Facility (GTAF)
Estonia ECU 1.5 million

General technical support and know-how
Czech Republic ECU 9 million

General Technical Assistance Facility (GTAF)
Estonia ECU 1.5 million

General Technical Assistance Facility (GTAF)
Lithuania ECU 1 million

General technical know-how and support
Slovakia ECU 5 million

Europe Agreement information programme
Bulgaria ECU 1.2 million

Programme providing a flexible service for technical
assistance (Fiesta III)
Poland ECU 22 million

**49**

Programme for social protection reform
Czech Republic ECU 6 million

### Multi-country programmes operational in 1994

Multi-country programming in 1994 supported the following key sectors:

Infrastructure

Environment and nuclear safety
Education, health, training and research
Public institution and administrative reform

Private sector development and enterprise support.

**Infrastructure**

**Transport - launched 1992**
Budget ECU 75 million

Objectives:

- To reconstruct and upgrade transport infrastructure

- To promote ongoing integration of western and eastern
Europe
. To assist coordination of various technical assistance

and training activities.

Projects:

Infrastructure/border-crossings component
Training for air traffic services (ATS)
Trans-European motorways and Trans-European railways (EMP/PER)
Sector studies component
Development of an integrated transportation information system (ITS)
Border-crossing bottlenecks elimination programme
Pre-investment activities

Regional studies/seminars.

**Telecommunications** - **launched 1992**

Budget ECU 8 million

Objectives:

- To complement those which are taking place
. To support the identification and preparation of investment-related projects

- To train staff in regulatory and operation areas.

Projects:
. Training modules

Regulating the telecommunications sector
Managing a telecommunications company
Human resource management
Marketing and selling telecommunications,
products and services
Introducing new technology
Managing computer systems in telecommunications.

**50**

**Energy** - **launched 1992 (projected end 1994)**
Budget ECU 25 million

Objectives:

- Increase east-west cooperation
. Improve energy policy-making, supply and demand
problems, efficiency and conservation measures, environmental and other safety measures.

Projects:
. Natural gas interconnection study
. Clean coal study

- Coordination of natural gas strategies in the Baltic

states

. Twinning/training activities
. Harmonisation of energy policies.

**Customs** - **launched 1994**

Budget ECU 2 million

Objectives:

- To introduce a new customs code in Phare countries

- To continue the fight against illegal transportation of
nuclear waste.

Projects:

- Upgrading customs laboratories

- Technical assistance and training for national customs
administrators and officials.

**Environment and nuclear safety**

**Environment** - **launched 1991**

Budget ECU 46 million

Objective:

- To encourage the development of capital investments
in the field of the environment by providing project and
implementation assistance to Project Preparation
Committees (PPC), donors, banks and Phare partner
countries.

Projects:

Danube integrated environment programme
Regional environmental programme for the Black
Triangle
Corine/remote sensing programme
Research programme on air pollution and health
State of the environment report
Regional environmental centre for central and eastern
Europe
Black Sea regional environment programme
Regional programme for the Baltic Sea.

**Education, health, training and research**

**ACE (Action for Cooperation in the field of Economics)**

**- launched 1991**

Budget ECU 22.5 million

Objectives:

- To enhance the intellectual process reform and liberalisation

- To increase the exchange of scientific and management
knowledge between professionals and academic scientists.

Projects:

- Scholarships

- Conferences

- Research.

**COSINE (Cooperation for Open Systems International**
**Networking in Europe) - launched 1991**
Budget ECU 6.5 million

Objective:

- To provide the CEECs' research and development
community with pan-European network services.

**Distance learning - launched 1994**
Budget: ECU 3 million

Objectives:

- To pilot a programme for distance education

- To help the education system overcome the problems
which it faces and adapt to the needs of rapidly changing
economies.

Projects:

General measures and pilot courses for staff training
Basic infrastructure

Regional coordination unit
Implementation
Procurement of equipment.

**Fight against drugs - launched 1992**
Budget ECU 12 million

Objective:

- To take measures and provide know-how to control the
illegal circulation of drugs.

Projects:

- Measures against the diversion of precursors.

- Measures for money laundering.

- Development of a drug information system

- Support for demand-reduction programmes

- The development of a multi-disciplinary training
programme on the drug phenomenon and its conse
quences

- Control of illegal production and trafficking

- Measures to control the production of and trade in
psychotrophic substances and related chemical and
pharmaceutical products.

**Public administration**

**SIGMA (Support for Improvement in Governance**
**and Management in central and eastern European**
**countries) - launched 1992**
Budget ECU 11 million

Objectives:

- To provide short and long-term support to develop
coherent reform strategies

- To help authorities of partner countries cope with the
changes resulting from institutional reform and move
away from centralisation

- To support the development of efficient and effective
public institutions which can sustain market economies,
provide a base for democratic pluralist systems of
governance and implement public policies.

Areas of support:

- Management of policy-making (for example, organisation and procedures supporting the Council of Ministers)

- Budgeting and financial management (for example,
budget and audit systems)
. Management of public service(for example, civil
service law, pay systems)

- Control over administration (for example, appeals
mechanisms, and as a support to reformers)

- Management of change (for example, building homegrown consulting capacities).

**Statistics** - **launched 1991**
Budget ECU 22.5 million

Objective:

- To develop statistics information systems to support
and monitor economic reforms.

**51**

ISSN 0254-1475 . Com (95) 366 final. DOCUMENTS . EN . Catalogue number: CB-CO-95-392-EN-C
ISBN 92-77-92087-4. Office for Official Publications of the European Communities L-2985 Luxembourg

European Commission - Phare Information Office - Directorate General External Relations:
Europe and the New Independent States, Common Foreign and Security Policy and External Missions (DG IA)
**Office Address** Aarlenstraat 88 1/26 Rue d'Arlon B-1040 Brussels **Tel** (+32-2) 299 14 00 / 299 13 56 / 299 16 00 English
**Mailing Address** AN 88 1/26 Wetstraat 200 Rue de la Loi B-1049 Brussels **Fax** (+32-2) 299 17 77 P/EN/08.95/01/02/11/B