CELEX: 52011PC0839
Language: en
Date: 2011-12-07
Title: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a European Neighbourhood Instrument

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		52011PC0839
		
			Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a European Neighbourhood Instrument /* COM/2011/0839 final - 2011/0405 (COD) */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
General context
Article 8 of the Treaty on European Union
(TEU) provides for the European Union (EU) to develop a
special relationship with neighbouring countries, with the aim of establishing
an area of prosperity and good neighbourliness at the EU’s borders. The European
Neighbourhood Policy (ENP) was developed in 2004 and covers 16 partners to the
East and South of the EU’s borders, namely Algeria, Armenia, Azerbaijan,
Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, the Republic of Moldova,
Morocco, the occupied Palestinian territory, Syria, Tunisia and Ukraine. Under
the ENP the EU offers its neighbours a privileged relationship, building upon a
mutual commitment to values and principles such as democracy and human rights,
the rule of law, good governance, market economy principles and sustainable
development, including climate action. The policy also provides for political
association and deeper economic integration, increased mobility and enhanced
people-to-people contacts. The ENP is funded by a dedicated Instrument, the
European Neighbourhood and Partnership Instrument (ENPI), which covers the 16
above-mentioned partner countries and Russia.
Reasons for and objectives of the
proposal
A number of major developments have taken
place since the launch of the ENP and the ENPI. 
Changes to the EU’s relationship with its
neighbours and developments since the ENP was set up have been analysed and
assessed as part of the ENP Strategic Review. As a result, a new ENP vision has
been developed as outlined in the Joint Communication of the High
Representative of the EU for Foreign Affairs and Security Policy and the
European Commission ’A new response to a changing Neighbourhood’, adopted on 25
May 2011 and the Council conclusions
adopted on 20 June 2011. The new approach calls notably for greater support to
partners committed to building democratic societies and undertaking reforms, in
line with the “more for more” and "mutual accountability" principles,
and provides the strategic policy framework for the EU relations with the
neighbours.
Although the ENPI has been widely
recognized as a successful Instrument to accompany the EU’s policy towards its
neighbours, the ENP policy review and other assessments, lessons learned and
public consultations have all identified a number of issues to tackle in the
future by adapting the Instrument to make the EU’s response even more
effective, in particular:
·                        
Application of the “more for more” principle:
This principle is the key aspect of the renewed
Neighbourhood Policy. It provides for a much higher level of differentiation
among partners, in line with their commitment to the jointly agreed values and
objectives, and notably to the partnership with EU focussed on democracy and
shared prosperity. Financial incentives for the most ambitious reformers are an
important aspect of the new approach. As a policy-driven
Instrument, the future European Neighbourhood Instrument (ENI) should reflect this key principle, especially for
programming and allocating support to the partners. 
·                        
Complexity and length of the programming
process: The current programming process includes a
number of broad consultations and many other procedural steps, and takes on
average 18 months. The length of the programming process undermines the
relevance of assistance. The scope of the programming documents (Country
Strategy Papers) under the ENPI follows the format used for development
cooperation, which means making an extensive analysis of the situation in a
given country and increasing the length of the process. For Neighbourhood
countries, however, the reality is different and the country analysis for most
partners (countries that have concluded an Action Plan or an equivalent set of
joint objectives with the EU) is described annually in dedicated Progress
Reports, which make the general part of the Country Strategy Paper redundant.
There is therefore both the need and the scope to streamline, shorten and
better focus the programming process.
·                        
Scope of the Instrument: The scope of the ENPI as defined currently refers to the
implementation of partnership and cooperation agreements, association
agreements or other relevant agreements, promotion of good governance and
equitable social and economic development. It also includes a very broad list
of 29 thematic areas of cooperation referred to in a detailed manner and on an
equal footing, which makes it very hard to ascertain the core objectives and
the focus of the ENP. The programming reflects this broad-based approach and in
a number of cases coherence between the policy and cooperation has been a
challenge. The future legislative proposal for the ENI will help to better
streamline the scope of the Instrument and strengthen links with relevant
internal policies, while maintaining its current flexibility.
·                        
Partly outdated implementation provisions and
lack of coherence between the external instruments:
The implementation section of the current ENPI Regulation is outdated in some
parts and therefore no longer adequately reflects the way assistance in the
Neighbourhood is implemented. There is also a lack of coherence between the
implementation provisions of the ENPI and other external action instruments. Flexibility
mechanisms can be improved to match the new policy context. In order to address
these points and to achieve further harmonization and simplification, a
separate horizontal framework regulation comprising all general and recurring
provisions has been developed. This new horizontal regulation also covers the
ENI implementation specificities. This will allow for updating the
implementation provisions and address the lack of coherence between the
external instruments. Moreover, the new horizontal regulation will contribute
to an increased clarity of rules, efficiency and coherence of the Union action. 
·                        
Cross-Border Cooperation (CBC) provisions: The Cross-Border Cooperation has been a distinct feature of the
relationship between the EU, ENP partners and Russia leading to implementation
of joint initiatives with a common set of rules on both sides of the EU’s
borders. The system is functioning relatively well, but consultations with
stakeholders identified the need for some changes having an impact on the
Regulation. These include extending geographical eligibility to encompass the
important economic, social and cultural centres relevant to the proper
functioning of the programmes; full application of ‘shared management’,
involving Member States as signatories of Financing Agreements; specific rules
for co-financing by partner countries and the specific status of Russia. Far-reaching
changes will need to be made to the Commission Regulation laying down the CBC
Implementing Rules, mainly with regard to management methods.
·                        
Linkages with internal instruments/policies: The ENP provides for a gradual political association and
progressive economic integration of the partners with the EU. EU internal
policies and market economy principles are key references in this process. For
Neighbourhood countries, a number of initiatives have a transboundary aspect
which so far has been addressed only to a very limited extent. The notable
exception is the Cross-Border Cooperation that allows for addressing common
challenges and objectives through a single set of rules and through pooling
resources from both the internal and external funding sources of the EU budget.
In other areas, such as infrastructure, energy[1], transport[2],
SME[3]
development and industrial cooperation including tourism, ICT[4],
employment and social policy[5], migration and security,
judiciary, fight against drugs, higher education, culture, research and
innovation[6], environment, climate
action[7], disaster resilience and
cooperation on maritime affairs, there is scope to strengthen the links between
internal policies and instruments and the ENP and the European Neighbourhood
Instrument. In this respect, the ENI Regulation will promote complementarity,
coherence and mainstreaming of EU priority policy areas, in accordance with the
Europe 2020 Strategy, while remaining focussed on the main ENP objectives. The
ENP gives partners the option to participate in EU agencies and programmes. The
issue of long-term financing of ENP partners’ participation in EU agencies and
programmes needs to be adequately addressed through, in relevant cases, a
financial contribution from the ENI, including the establishment of
appropriate, sustainable delivery mechanisms.
·                        
Evolving relationship with Russia: Russia is the only beneficiary of the ENPI that is not covered by
the ENP. As all other countries, Russia is entitled to benefit from both the
bilateral, multi-country and cross-border ENPI funding. However, given the
significant improvements in Russia’s fiscal position, there is less need for
large volumes of financial assistance. Russia aspires to a relation
of equals and has become a donor itself. As a result, in the period
2007-2013 the country received only marginal allocations under the bilateral
envelope of the ENPI. Cooperation within the framework of multi-country
programmes continues and follows the principle of co-financing by the EU and
Russia. Most notably, Russia is co-financing CBC programmes. This reflects the
changing position of Russia as a strategic partner where co-financed projects
should be in both sides’ interest. 
The future European Neighbourhood Instrument
should be aligned to the new ENP vision and address the specific challenges and
issues as identified above. 
2.           RESULTS OF CONSULTATIONS WITH INTERESTED
PARTIES AND IMPACT ASSESSMENTS
Consultations with interested parties 
The legislative proposal on the European
Neighbourhood Instrument is based on a broad consultation process. The process involved
a public consultation on external funding carried out for all EU external
action instruments and specific consultations held as part of the Strategic Review
of the European Neighbourhood Policy and on the Cross-Border Cooperation.
Consultations were also held on the future of EU development policy.
Public
Consultation on funding for EU external action
The Commission
held a public consultation on future funding for EU external action between 26
November 2010 and 31 January 2011. This process was based on an online
questionnaire accompanied by a background paper entitled ‘What funding for EU
external action after 2013?’ prepared by the Commission and the European
External Action Service (EEAS). The 220 contributions received in
response to this public consultation reflect a broad and diverse spectrum
representing the multitude of structures, views and traditions found in the
external action community. 
Most respondents confirmed that EU
financial support provides substantial added value in the main policy areas funded
by EU financial instruments for external action[8]. The criterion
of EU added value was given by many respondents as the main driver for the
future: the EU should leverage its comparative advantage linked to its global
field presence, its wide-ranging expertise, its supranational nature, its role
as facilitator of coordination and the economies of scale. 
Nearly all respondents supported a more
differentiated approach tailored to the situation of the beneficiaries and
based on sound criteria to increase the impact of EU financial instruments. There
was also wide support for conditionality based on the respect for human rights,
minorities, good governance and diversity of cultural expressions, or on the
quality of beneficiaries’ policies and their ability and willingness to
implement them.
Consultations in the context of ENP
Strategic Review
The European External Action Service held
specific consultations with representatives of EU Member States and ENP partner
countries as part of the Strategic Review of the policy, launched in July 2010.
The consultations tackled financing of the ENP, notably under the European
Neighbourhood and Partnership Instrument, and issues of the long-term ENP
vision and medium-term policy objectives. 
The consultations revealed that the ENPI
was seen as a step change in the way EU assistance was delivered. However, they
also identified the need for further refinement. Many Member States underlined
the importance of improved coherence between the policy and financial
assistance provided by the Instrument. Several respondents highlighted that
allocations should be based on performance. Many stressed the importance of
making financial support faster, more efficient and more flexible in responding
to emerging needs. 
Partner countries underlined the need to
accompany economic integration, market opening and regulatory convergence with
appropriate financial support. They also emphasised the importance of promoting
foreign investment. 
Stakeholder consultations on
Cross-Border Cooperation 
Specific consultations on CBC were
organised with all stakeholders. The process was launched during a CBC
Conference in Brussels in February 2011, and stakeholders were consulted on the
future regulatory framework (including on the CBC Implementing Rules) on the basis of a questionnaire circulated in
May/June 2011. The results reflect the need to adapt some provisions to improve
the efficiency of the CBC. The aim of the suggested changes is to better
reflect integration between EU foreign policy priorities with the EU Cohesion
Policy, especially by further aligning the CBC on external EU borders to the
European Territorial Cooperation (ETC) rules. Further consultative meetings
took place on 20 September 2011 with Member States in Brussels and with all
stakeholders in Budapest on 18-19 October 2011. 
Public consultations on “EU development
policy”
In addition, the Commission published a Green
Paper entitled ‘EU development policy in support of inclusive growth and
sustainable development’ and held a public consultation from 15 November 2010
to 17 January 2011. Many respondents underlined that ODA[9]
constitutes only a fraction of funding for development, to be seen as a
complement to domestically mobilised resources, foreign investments, trade and
remittances. A request was made for greater coherence in EU development policy,
especially with regards to middle-income countries. While joint programming of
assistance was endorsed in principle, it should be introduced gradually
starting with countries where it would yield demonstrable added value. 
The proposal on the European Neighbourhood
Instrument is based to a large extent on the results of these consultations.
The main aspects that have been integrated in the revised instrument include
differentiation and performance-based allocations, new approach related to
programming and improving the coherence of the policy with assistance, amending
Cross-Border Cooperation rules and provisions to improve the efficiency and
flexibility of support.
Impact assessment
A specific impact assessment for the future
ENI was prepared jointly by the European External Action Service and the
European Commission.
The impact assessment reviewed the
following four options: 
·                        
Option 0: ‘No
EU action’. The EU stops providing financial
support through a dedicated Instrument for Neighbourhood countries;
·                        
Option 1: ‘No
change’. Cooperation with the countries concerned remains strictly in the
framework of the existing ENPI Regulation;
·                        
Option 2: ‘Adapting
the current set-up’. The future legislative proposal should be based on the
current ENPI Regulation with a number of substantial amendments, responding to
the new policy context and specific objectives. Under this Option there are a
number of sub-options referring to: the differentiation principle; the
programming process; scope of the Instrument and coherence between policy and
assistance; Cross-Border Cooperation rules; implementation provision, notably
to allow for greater flexibility; linkages with internal policies and
instruments and geographic scope of the ENI.
·                        
Option 3: ‘Tabling
a completely new Instrument’ with a different
geographic scope and focussing on objectives broader than or different from
those of the ENP. 
In terms of the likely economic, social, environmental
and other impacts of each of the options, the following has been acknowledged:
·                        
Discontinuing EU action (Option 0) would
substantially reduce and undermine the sustainability of impacts achieved so
far. It would also negatively affect overall EU relations with ENP partners.
·                        
No change of the current Instrument (Option 1)
would lead to a number of positive economic, social and environmental impacts
in partner countries;
·                        
Amending the Instrument (Option 2) would enhance
the positive economic, social and environmental impacts achieved under the
current set-up and should yield an even more positive impact on governance,
notably by applying the “more for more” principle. 
·                        
Tabling a completely new Instrument (Option 3)
would have negative impacts notably on the coherence of EU action with the ENP
objectives, and would undermine the EU’s credibility in the region.
Based on the analysis and weighting of the
different impacts (global, economic, social, environmental), Options 0 and
Option 3 were rejected as non-viable options that would yield positive impacts
and help meet ENP objectives. Option 2 would have the highest potential to
yield a positive impact and to adapt the current cooperation framework to the new
policy context, ENP objectives and challenges identified through evaluations
and lessons learned. Option 1 would be the second-best option to maintain
current positive impacts, without however providing for meeting the objectives
of the new ENP nor address the challenges and specific problems identified
under the current set-up. 
The preferred option is therefore Option 2.
3.           LEGAL ASPECTS OF THE PROPOSAL
Article 8 of the TEU provides the general
thrust and the basis for the ENP. The legal base for the financing Instrument
to support the ENP, the future European Neighbourhood Instrument, is Article
209(1) TFEU[10] and Article
212(2) TFEU.
Subsidiarity
In terms of subsidiarity, action at EU
level brings essential added value, linked to a number of factors:
·                        
In Neighbourhood countries where alignment to EU
rules and standards, guidelines and measures is one of the key policy
objectives, the EU is best placed to provide assistance. Certain specific
support can only be provided at EU level, such as promoting economic
integration with the EU internal market, access to the Schengen space or
participation in EU programmes. Thus the EU is the leading cooperation partner
in most ENP countries, a role widely recognised by Member States, international
financial institutions and other donors. Helping EU neighbours to align with EU
policies, rules and standards is a key driver for reforms in the ENP partner
countries. 
·                        
With 27 Member States acting within common
policies and strategies, the EU alone has the critical weight to respond to
global challenges. Action at national level can be limited and fragmented, as
projects are often too small to make a sustainable difference. Streamlining the
work of Member States through the EU improves the coordination and effectiveness
of EU action. 
·                        
At a time of budgetary restrictions, when
several Member States have chosen to exit entire sectors of cooperation and withdraw
their support from certain countries, the EU is able to play an active role in
promoting democracy, peace, stability, prosperity and poverty reduction in its
Neighbourhood. In this context, it makes more sense than ever from a purely
economic perspective to channel aid at EU level where a real difference can be
made. Working with the EU is also cheaper. Administrative costs are lower than
the average administrative costs of the principal donors for bilateral aid.
4.           BUDGETARY IMPLICATIONS
The level of funding from the EU budget for
the new ENI should reflect adequately the ambitions of the revised European Neighbourhood
Policy. 
Thus, the European Commission in its Communication
of 29 June 2011 entitled “A Budget for Europe 2020” proposed allocating to the
ENI € 18 182 300 000 (current prices) for the period 2014-2020.

To ensure its predictability, funding for
higher education activities in third countries in the context of "Erasmus
for All" programme will be made available, in line with EU external action
objectives, through 2 multi annual allocations only covering the first 4 years
and the remaining 3 years respectively. This funding will be reflected in the
multiannual indicative programming of the ENI, in line with the identified
needs and priorities of the countries concerned. The allocations can be revised
in case of major unforeseen circumstances or important political changes in
line with the EU external priorities. The provisions of the "Erasmus for
All" Regulation (EU) No [--] of the European Parliament and of the Council
establishing "Erasmus for All"[11] will apply to
the use of those funds.
A detailed estimated financial impact of
the proposal is set out in the separate ENI Legislative Financial Statement.
5.           MAIN ELEMENTS
Detailed explanation of specific
provisions of the proposal
The key elements of the proposal (as
compared to the current set-up) and their rationale are the following:
·                        
Apply the principle of “more for more” and
mutual accountability in line with the new vision of the ENP, notably through specific provisions on differentiation for
financial allocations and for the programming process, as required;
·                        
Address the complexity and length of the programming
process in order to streamline, shorten and better
focus the process, especially for ENP partners that have jointly agreed with
the EU strategic priorities in Action Plans or equivalent documents;
·                        
Streamline the scope of the Instrument, striking a balance between flexibility of the Instrument and focus
on the policy objectives and key areas of cooperation;
·                        
Adapt the implementation provisions and improve coherence between the external instruments;
·                        
Improve the provisions on the Cross-Border
Cooperation to facilitate effective and fast
implementation of the programmes;
·                        
Promote closer links with EU internal
instruments and policies, including by stepping up
cooperation with the Commission at the programming stage and, where relevant,
promote mechanisms to pool funds from internal and external headings of the EU
budget; 
·                        
Respond to the evolving relationship with
Russia by amending provisions on Russia’s
eligibility for ENI funding to reflect the specific status of Russia as an EU
neighbour and strategic partner.
Simplification
The proposal for the ENI includes
provisions to simplify the instrument in a number of aspects. The scope of the
Instrument has been streamlined by bringing down the 29 thematic areas
that feature in the current ENPI Regulation to six specific objectives. A new,
simplified programming tool for most of the neighbouring countries (Single
Support Framework) has been introduced. This new programming document will be
shorter than the Strategy Papers and Multiannual Indicative Programmes, will prevent
duplication of information contained in the legal/political documents that underpin
EU relations with its neighbours, and should help shorten the
programming process, therefore reducing administrative costs. The new
article that allows funds from the ENI and the relevant internal Heading of the
EU budget to be pooled with a single set of rules for measures addressing
notably cross-border challenges will substantially improve efficiency and reduce
the administrative costs of implementing such measures.
A priority for the Commission in this new
Regulation, as it is for other programmes in the context of the Multiannual
Financial Framework (MFF), is to simplify the regulatory environment and
improve access of EU assistance to partner countries and regions, civil society
organisations, SMEs, etc., provided that they pursue the objectives of the
Regulation.
To implement the new ENI Regulation,
simplified and flexible procedures should lead to swifter adoption of
implementing measures and swifter delivery of EU assistance, in particular in
situations of crises or threats to democracy, the rule of law, human rights and
fundamental freedoms, or natural or man-made disasters. Revision of the
Financial Regulation, which has particularly substantial provisions on external
action, will also help facilitate the participation of civil society
organisations and small businesses in funding programmes, for example by
simplifying rules, reducing the costs of participation and accelerating award
procedures. The Commission intends to implement this Regulation using the new flexible
procedures provided for in the new Financial Regulation.
Furthermore additional simplification will
also be achieved through the development of one horizontal framework regulation
comprising all general and recurring provisions, providing for increased
coherence between the external actions instruments.
2011/0405 (COD)
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
establishing a European Neighbourhood
Instrument
THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning
of the European Union, and in particular Article 209 (1) and 212 (2) thereof, 
Having regard to the proposal from the
Commission, 
After transmission of the draft legislative
act to the national Parliaments,
Having regard to the opinion of the
European Economic and Social Committee[12], 
Having regard to the opinion of the Committee
of the Regions[13], 
Acting in accordance with the ordinary
legislative procedure,
Whereas:
(1)              
This Regulation constitutes one of the
instruments providing direct support for the European Union’s external policies.
It will replace the Regulation of the European Parliament and of the Council No
1638/2006 of 24 October 2006 laying down general provisions establishing a
European Neighbourhood and Partnership Instrument[14]
which expires on 31 December 2013.
(2)              
Article 8 of the Treaty on European Union
provides for the development of a special relationship with neighbouring
countries, with the aim of establishing an area of prosperity and good
neighbourliness, founded on the values of the Union and characterised by close
and peaceful relations based on cooperation.
(3)              
The Union seeks to promote, develop and
consolidate the values of liberty, democracy, respect for human rights and
fundamental freedoms, principles of equality and the rule of law on which it is
founded through dialogue and cooperation with third countries.
(4)              
Since it was launched, the European
Neighbourhood Policy has significantly strengthened relations with partner
countries and brought tangible benefits to both the Union and its partners.
(5)              
Under the European Neighbourhood Policy, the
Union offers Neighbourhood countries a privileged relationship, building upon a
mutual commitment to and promotion of the values of democracy and human rights,
the rule of law, good governance and the principles of market economy and
sustainable development.
(6)              
Two main political initiatives have shaped the
regional cooperation in the European Union’s Neighbourhood: the Eastern
Partnership between the Union and its Eastern neighbours, and the Union for the
Mediterranean between the Union and its Southern Mediterranean neighbours. These
initiatives are meaningful political frameworks for deepening relations with
and among partner countries, based on principles of shared ownership and
responsibility.
(7)              
A number of major developments have taken place
since the European Neighbourhood Policy was launched and the European
Neighbourhood and Partnership Instrument was set up. These include a deepening
of the relationship with the partners, the launch of regional initiatives and
democratic transition processes in the region. This triggered a new European
Neighbourhood Policy vision set out in 2011 as a result of a comprehensive
Strategic Review of the Policy. It outlines key objectives for Union
cooperation with Neighbourhood countries and provides for greater support to
partners committed to building democratic societies and undertaking reforms, in
line with the ‘more for more’ and ‘mutual accountability’ principles. 
(8)              
Support under this Instrument and the European
Regional Development Fund should be provided for the Cross-Border Cooperation
programmes along the external borders of the European Union between partner
countries and Member States to promote integrated and sustainable regional
development between neighbouring border regions and harmonious territorial
integration across the Union and with neighbouring countries.
(9)              
Furthermore, it is important to foster and
facilitate cooperation for the common benefit of Union and its partners,
notably through pooling of contributions from internal and external instruments
of the Union budget, in particular for Cross-Border Cooperation, infrastructure
projects of Union interest that will pass through Neighbourhood countries and
other areas of cooperation.
(10)          
Border regions that belong to countries of the
European Economic Area (EEA) and the regions of the Russian Federation that are
currently taking part in Cross-Border Cooperation programmes should be able to
continue to do so. It is also important that the relevant regions in countries
covered by the Instrument for Pre-accession Assistance are able to participate
in CBC. Participation of the European Economic Area countries in the CBC
programmes should continue to be based on their own resources. 
(11)          
It is expected that the EU Member States and
Partner countries taking part in Cross Border Co-operation will provide
national co-financing. This will strengthen country ownership, increase the
financial resources at the disposal of the programmes and facilitate the
participation of local actors. 
(12)          
Cross-Border Co-operation will contribute as
appropriate to the implementation of existing and future macro-regional
strategies.
(13)          
Support to be provided to neighbouring
developing countries within the framework established by the European
Neighbourhood Policy should be coherent with the objectives and principles of
the Union’s external policies and in particular its development policy,
including the ‘Joint Statement on a European Development Policy: the European
Consensus’, adopted by the Council and the representatives of the governments
of the Member States meeting within the Council, the European Parliament and
the Commission, on 22 December 2005.
(14)          
The Joint EU – Africa Strategy is of
relevance for relations with the Mediterranean neighbours from North Africa.
(15)          
The Union and its Member States should improve
the coherence and the complementarity of their respective policies on
cooperation with neighbouring countries. To ensure that the Union's cooperation
and that of the Member States complement and reinforce each other, it is
appropriate to provide for joint programming which should be implemented
whenever possible and relevant.
(16)          
Union support under this Regulation should in
principle be aligned to corresponding national, regional or local strategies
and measures of partner countries. 
(17)          
In Neighbourhood countries where alignment to
Union rules and standards is one of the key policy objectives, the Union is
best placed to deliver this support. Certain specific support can only be
provided at Union level. 
(18)          
Furthermore, since the objectives of this
Regulation, namely to promote enhanced political cooperation and progressive
economic integration between the European Union and neighbouring countries,
cannot be sufficiently achieved by the Member States and can, by reason of the
scale of the action, be better achieved at Union level, the Union may adopt
measures, in accordance with the principle of subsidiarity as set out in
Article 5 of the Treaty. In accordance with the principle of proportionality,
as set out in that Article, this Regulation does not go beyond what is
necessary in order to achieve those objectives.
(19)          
European Union external support has increasing
financing needs but the economic and budgetary situation of the Union limits
the resources available for such support. The Commission must therefore seek
the most efficient use of available resources by using financial instruments
with leverage effect. Such effect could be increased by enabling the use and
re-use of funds invested and generated by financial instruments.
(20)          
Fighting climate change is one of the great
challenges which the Union faces and urgent international action is needed. In
accordance with the intent stated in the Commission June 2011 MFF Communication
of increasing the climate related proportion of the Union budget to at least
20%, this Regulation should contribute to that goal.
(21)          
Gender equality and anti-discrimination should
be a cross-cutting objective in all actions undertaken under this Regulation. 
(22)          
The Union is committed to promote in relations
with its partners worldwide decent work as well as ratification and effective
implementation of the internationally recognised labour standards and
multilateral environment agreements, in relations with its partners worldwide.
(23)          
The financial interests of the European Union
should be protected through proportionate measures throughout the expenditure
cycle, including the prevention, detection and investigation of irregularities,
the recovery of funds lost, wrongly paid or incorrectly used and, where
appropriate, penalties. These measures will be carried out in accordance with
the applicable agreements concluded with international organisations and third
countries.
(24)          
For the purpose of harmonising the terminology
with the European Territorial Co-operation, the implementation documents for
the Cross-Border Cooperation programmes should be called joint operational
programmes. 
(25)          
In order for this Regulation to be able to
reflect swiftly the results of political decisions made by the Council, the
power to adopt acts in accordance with Article 290 of the Treaty on the
Functioning of the European Union should be delegated to the Commission for
updating the list of beneficiary countries in the Annex to this Regulation.
(26)          
While Regulation (EU) No …/… of the European
Parliament and of the Council of ….[15] (hereinafter "the
Common Implementing Regulation") establishes common rules and procedures
for the implementation of the Union's instruments for external action,
delegated powers to adopt acts in accordance with Article 290 of the Treaty of
the Functioning of the European Union should be conferred to the Commission for
adopting the specific implementing measures required for the Cross-Border Cooperation
mechanisms established in Title III of this Regulation. It is of particular
importance that the Commission should carry out appropriate consultations
during its preparatory work, including at expert level. The Commission, when
preparing and drawing-up delegated acts, should further ensure a simultaneous,
timely and appropriate transmission of relevant documents to the European
Parliament and Council.
(27)          
In order to ensure uniform conditions for the
implementation of this Regulation, implementing powers should be conferred on
the Commission.
(28)          
The implementing powers relating to Article 7(1)
, (2), and (3) and to Article 9(1) should be exercised in accordance with
Regulation (EU) No 182/2011 of the European Parliament and of the Council
of 16 February 2011 laying down the rules and general principles concerning
mechanisms for control by Member States of the Commission's exercise of
implementing powers[16]. Taking into account the
nature of those implementing acts, in particular their policy orientation
nature or their financial implications, the examination procedure should in
principle be used for their adoption, except for measures of a small financial
scale.
(29)          
The organisation and functioning of the European
External Action Service are described in Council Decision 2010/427/EU.
HAVE ADOPTED THIS REGULATION:
Title I. OBJECTIVES AND PRINCIPLES
Article 1
Overall objective and scope
1.                      
The Union aims to establish an area of
prosperity and good neighbourliness involving the European Union and the
countries and territories listed in the Annex to this Regulation (hereinafter ‘the
partner countries’) by developing a special relationship.
2.                      
Union support under this Regulation shall be
used for the benefit of partner countries and can also be used for the common
benefit of EU and partner countries.
3.                      
Union funding may also be used for the purpose
of enabling the Russian Federation to participate in Cross-Border Cooperation and
in relevant multi-country programmes, to reflect the specific status of the
Russian Federation as both a Union neighbour and a strategic partner in the
region.
Article 2
Specific objectives of Union’s support
1.                      
Support under this Regulation shall promote enhanced
political cooperation and progressive economic integration between the Union
and the partner countries and, in particular, the implementation of partnership
and cooperation agreements, association agreements or other existing and future
agreements, and jointly agreed action plans.
2.                      
Union support should target in particular:
(a)         
promoting human rights and fundamental freedoms,
the rule of law, principles of equality, establishing deep and sustainable
democracy, promoting good governance and developing a thriving civil society
including social partners; 
(b)         
achieving progressive integration into the Union
internal market and enhanced sector and cross-sectoral co-operation including
through legislative approximation and regulatory convergence towards Union and
other relevant international standards, related institution building and
investments, notably in interconnections;
(c)         
creating conditions for well managed mobility of
people and promotion of people-to-people contacts;
(d)         
sustainable and inclusive development in all
aspects, poverty reduction, including through private-sector development;
promotion of internal economic, social and territorial cohesion, rural
development, climate action and disaster resilience;
(e)         
promoting confidence building and other measures
contributing to security and the prevention and settlement of conflicts;
(f)           
enhancing sub-regional, regional and Neighbourhood
wide collaboration as well as Cross-Border Cooperation.
3.                      
The achievement of these objectives shall be measured using notably the relevant EU
periodic reports on the implementation of the policy, and for paragraphs 2(a), (d) and (e), the relevant
indicators established by international organisations and other relevant
bodies; for paragraphs 2(b), (c) and (d) the uptake of the EU regulatory framework
by the partner countries as relevant; for paragraphs 2(c) and (f), the number
of relevant agreements and cooperation actions. The indicators will include,
among others, adequately monitored democratic elections, level of corruption,
trade flows, indicators enabling measuring internal economic disparities,
including employment levels.
4.                      
Union support may also be used in other areas
when this is consistent with the overall objectives of the European
Neighbourhood Policy.
Article 3
Policy framework
1.                      
The partnership and cooperation agreements, the
association agreements and other existing or future agreements that establish a
relationship with partner countries, corresponding Communications, Council
conclusions and European Parliament Resolutions as well as relevant conclusions of ministerial
meetings with the partner countries shall constitute the overall policy
framework for programming and implementing Union support under this Regulation.
2.                      
Jointly
agreed action plans or other equivalent documents between the partner countries
and the Union shall provide the key point of reference for setting the
priorities for Union support.
3.                      
Where
no agreements, as mentioned in paragraph 1, between the Union and partner countries
exist, Union support may be provided when it proves useful to pursue Union
policy objectives, and shall be programmed on the basis of such objectives
taking into account the needs of the country concerned.
Article 4
Differentiation, partnership and co-financing
1.                      
Union support provided under this Regulation to
each partner country shall be differentiated in form and amounts according to the
partner country’s commitment to reforms and its progress in implementing these
reforms. Such differentiation shall reflect the level of ambition of the
country’s partnership with the Union, its progress in building deep and
sustainable democracy, its progress in implementing agreed reform objectives, the
country’s needs and capacities, and the potential impact of Union support.
2.                      
Union
support under this Regulation shall, in principle, be established in
partnership with the beneficiaries. The partnership shall involve as
appropriate, national, regional and local authorities, other stakeholders,
civil society, social partners and other non-state actors in preparing, implementing
and monitoring Union support.
3.                      
Union
support under this Regulation shall in principle be co-financed by the partner
countries through public funds, contributions from the beneficiaries or other
sources. The same principle shall be applicable to the cooperation with the
Russian Federation, particularly with regard to programmes referred to in
Article 6(1) (c). Co-financing requirements may be waived in duly justified
cases and when this is necessary to support the development of civil society
and non-state actors, without prejudice to compliance with the other conditions
set out in the Financial Regulation.
Article 5
Coherence and Donor Coordination
1.                      
In implementing this Regulation, coherence
shall be ensured with other areas of the Union external action as well as other
relevant Union policies. To this end, measures financed under this Regulation,
including those managed by the European Investment Bank (EIB), shall be based
on the cooperation policy documents described in Article 3(1) and (2) as well
as on the Union’s specific interests, policy priorities and strategies. Such measures shall respect the commitments under multilateral agreements and international
conventions to which the Union and partner countries are parties.
2.                      
The
Commission, the Member States and the European Investment Bank (EIB) shall
ensure coherence between support provided under this Regulation and other support
provided by the Union, the Member States and the European Investment Bank.
3.                      
The
Union and the Member States shall coordinate their respective support
programmes with the aim of increasing effectiveness and efficiency in the
delivery of support and policy dialogue in line with the established principles
for strengthening operational coordination in the field of external support,
and for harmonising policies and procedures. Coordination shall involve regular
consultations and frequent exchanges of relevant information during the
different phases of the support cycle, in particular at field level, and may
lead to joint programming, delegated co-operation and/or transfer arrangements.

4.                      
The Union shall, in liaison with the Member
States, take the necessary steps to ensure proper coordination and cooperation
with multilateral and regional organisations and entities, including European
financial institutions, international financial institutions, United Nations
agencies, funds and programmes, private and political foundations and
non-European Union donors.       

Title II. INDICATIVE PROGRAMMING AND
ALLOCATION OF FUNDS
Article 6
Type of programmes
1.                      
Union support under this Regulation shall be
programmed through:
(a)     bilateral programmes covering support
to one partner country;
(b)     multi-country programmes which address
challenges common to all or a number of partner countries, and regional and
sub-regional cooperation between two or more partner countries, and which may
include cooperation with the Russian Federation;
(c)     Cross-Border Cooperation programmes
addressing cooperation between one or more Member States on the one hand and
one or more partner countries and/or the Russian Federation on the other hand
taking place along their shared part of the external border of the EU.
2.                      
Union support under this Regulation shall be
implemented in accordance with the Common Implementing Regulation. 
Article 7
Programming and indicative allocation of funds for country and multi country indicative
programmes
1.                      
For countries where the documents referred to in Article 3(2) exist, a comprehensive multi-annual
Single Support Framework shall be adopted in accordance with the examination
procedure referred to in Article 15(3) of the Common
Implementing Regulation. The Single Support Framework shall review the
progress made in relation to the policy framework and shall list priorities for
Union support, mainly selected from those included in the documents referred to
in Article 3(2) and in partner countries’ strategies or plans, and for which
the Union’s regular assessment has shown the need for support. It shall also
set out their indicative level of funding. The duration of the Single Support
Framework shall correspond to the duration of the relevant document referred to
in Article 3(2).
2.                      
For countries where the
documents referred to in Article 3(2) do not exist, a comprehensive programming document including a Strategy and a
Multi-annual indicative programme shall be adopted in accordance with the
examination procedure referred to in Article 15(3) of the Common Implementing
Regulation. It shall define a Union response strategy on the basis of an
analysis of situation of the country concerned, and of its relations with the
Union, the partner countries’ strategies or plans, the priorities for Union support and the indicative level
of funding broken down by priority. It shall have an appropriate multi-annual
duration.
3.                      
For multi-country programmes, a comprehensive programming document including a Strategy and a
Multi-annual indicative programme shall be adopted in accordance with the
examination procedure referred to in Article 15(3) of the Common Implementing
Regulation. It shall define the priorities for Union support towards the region
or the sub-region and the indicative level of funding broken down by priority.
It shall have an appropriate multi-annual duration.
4.                      
The Single Support Framework documents referred to in paragraph 1 shall be
reviewed when necessary and may be revised in accordance with the examination procedure
referred to in Article 15(3) of the Common Implementing Regulation. The
programming documents referred to in paragraphs 2 and 3 shall be reviewed at their
mid-term or whenever necessary and may be revised in accordance with the same procedure.
5.                      
Financial allocations for country and
multi-country programmes shall be determined using transparent and objective
criteria reflecting the differentiation principle referred to in Article 4(1). 
6.                      
When it is necessary to implement more
effectively measures for the common benefit of the Union and partner countries,
in areas such as transnational co-operation and inter-connections, funding
under this Regulation can be pooled together with funding covered by other
relevant Union Regulations establishing financial instruments. In this case,
the Commission shall decide which single set of rules should apply to
implementation.
7.                      
Member States and other donors that have committed to jointly
programme their support with the EU shall be involved in the programming
process. The programming documents may also cover their contribution as
appropriate. 
8.                      
When Member States and other donors have committed to jointly programme
their support, a joint multi-annual programming document may replace the Single
Support Framework referred to in paragraph (1) and the programming documents
referred to in paragraphs (2) and (3), on condition that it meets the
requirements set out in these provisions.
9.                      
In the event of crises or threats to democracy, the rule of law, human
rights and fundamental freedoms, or of natural or man-made disasters, an ad hoc
review of the programming documents may be conducted. Such emergency review
shall ensure that coherence between Union support provided under this
Regulation and support provided under other Union financial instruments is
maintained. An emergency review may lead to the adoption of revised programming
documents. Where this is the case, the Commission shall send the revised
programming documents to the European Parliament and to the Council for
information within one month of their adoption.

Title III. CROSS-BORDER COOPERATION
Article 8
Geographical eligibility
1.                      
The Cross-Border Cooperation programmes referred
to in Article 6(1)(c) can be established:
(a)         
for land borders, covering the territorial units
corresponding to NUTS level 3 or equivalent along the land borders between
Member States and partner countries, and/or the Russian Federation;
(b)         
for maritime borders, covering the territorial
units corresponding to NUTS level 3 or equivalent along maritime borders
between Member States and partner countries and/or the Russian Federation, separated
by a maximum of 150 km, without prejudice to potential adjustments needed to
ensure the coherence and continuity of cooperation action;
(c)         
around a sea basin, covering the coastal
territorial units corresponding to NUTS level 2 or equivalent facing a sea
basin common to Member States and partner countries and/or the Russian Federation.
2.                      
In order to ensure the
continuation of existing cooperation schemes and in other justified cases,
territorial units adjoining to those referred to in paragraph 1 may be allowed
to participate in Cross­-Border Cooperation.
3.                      
In duly justified cases, major social, economic
or cultural centres that are not adjoining to eligible territorial units may be
included on condition that such participation contributes to the objectives laid
down in the programming document.
4.                      
When programmes are established pursuant to
paragraph 1(b), the European Commission may, in agreement with the partners,
propose that the geographical eligibility be extended to the whole NUTS level 2 territorial unit in whose area
the NUTS level 3 territorial unit is located.
Article 9
Programming and allocation of funds for Cross-Border Cooperation 
1.                      
A programming document shall be prepared for the
purpose of defining the:
(a)      strategic objectives to be pursued by
Cross-Border Cooperation;
(b)     list of the joint operational
programmes to be established;
(c)      indicative breakdown of resources
between land and maritime border programmes referred to in Article 8 (1) (a)
and (b) and sea basin programmes referred to in Article 8(1)(c);
(d)     indicative multi-annual allocations to
each joint operational programme;
(e)      territorial units eligible to
participate in each joint operational programme, and the regions and centres
indicated in Article 8(2), 8(3) and 8(4);
(f)      indicative
allocation to support, as appropriate, horizontal capacity building actions,
networking and exchange of experiences among programmes; 
(g)      contributions to the transnational
programmes established under Regulation (EU) No […] of the European Parliament
and the Council of [….] on specific provisions for the support from the European
Regional Development Fund to the European Territorial Co-operation goal[17],
to which partner countries and/or the Russian Federation participate.
The programming document shall cover a period
of seven years and shall be adopted by the Commission in accordance with the examination
procedure referred to in Article 15(3) of the Common Implementing Regulation.
It shall be reviewed at mid-term or whenever necessary and may be revised in
accordance with the same procedure referred to in that Article.
2.                      
The joint operational programmes shall be
co-financed by the European Regional Development Fund. The overall amount of
the contribution from the European Regional Development Fund shall be
determined pursuant to Article 4(4) of Regulation (EU) No [… of the European Parliament
and the Council of [….]on specific provisions for the support from the European
Regional Development Fund to the European Territorial Co-operation goal[18]].
The provisions of this Regulation shall apply to the use of this contribution. 
3.                      
The Instrument for Pre-Accession may co-finance joint
operational programmes to which countries eligible under such Instrument
participate. The provisions of this Regulation shall apply to the use of this
co-financing. 
4.                      
The indicative allocations of funds to the joint
operational programmes shall be based primarily on the population of the
eligible areas. When determining the indicative allocations, adjustments may be
made to reflect the need for a balance between the contributions from the
European Regional Development Fund and the contributions provided under the
budget of this Instrument as well as other factors affecting the intensity of
cooperation, such as the specific characteristics of border areas and their
capacity to manage and absorb Union support.
Article 10
Joint operational programmes 
1.                      
Cross-Border Cooperation shall be implemented
through multi-annual joint operational programmes covering cooperation for a
border or a group of borders and comprising multi-annual measures that pursue a
consistent set of priorities and that may be implemented with Union support. Joint
operational programmes shall be based on the programming document referred to
in Article 9. They shall include a summary description of the management and
control systems covering the elements referred to in Articles 11(2) and 12 (2).

2.                      
Joint operational programmes for land and maritime
borders shall be established for each border at the appropriate territorial
level and shall include eligible territorial units belonging to one or more
Member States and one or more partner countries and/or the Russian Federation.
3.                      
Joint operational programmes for sea basins
shall be multilateral, established at the appropriate territorial level and
include eligible territorial units facing a common sea basin belonging to
several participating countries, including at least one Member State and one
partner country and/or the Russian Federation. They may include bilateral
activities supporting cooperation between one Member State and one partner
country and/or the Russian Federation.
4.                      
Within one year of approval of the programming
document referred to in Article 9, the participating countries shall jointly
submit proposals for joint operational programmes to the Commission. The
Commission shall adopt each joint operational programme after assessing its
consistency with this regulation, the programming document and the implementing
rules.
5.                      
Regions in countries other than partner
countries, the Russian Federation or Member States, which are adjoining to
eligible regions as defined in Article 8(1) (a) and (b) or face a common sea
basin where a joint operational programme is being established may be covered
by a joint operational programme and benefit from Union support under the
conditions set out in the programming document referred to in Article 9.
6.                      
The Commission and the participating countries shall
take the appropriate measures to ensure that sea basin programmes established
under this Regulation and transnational co-operation programmes established
under the Regulation (EU) No [….] and that have
a partially overlapping geographical coverage will be fully complementary and
mutually re-enforcing. 
7.                      
Joint operational
programmes may be revised at the initiative of the participating countries or
the Commission for reasons such as:
-        changes in cooperation priorities,
socio-economic developments, 
-        results of implementing the measures
concerned and those produced by the monitoring and evaluation process, 
-        the need to adjust the amounts of
available funds and reallocate resources.
8.                      
Following
adoption of the joint operational programmes, the Commission shall conclude a
financing agreement with the partner countries and/or the Russian Federation.
The financing agreement shall include the legal provisions necessary to
implement the joint operational programme and may also be signed by the other
participating countries and by the Managing Authority referred to in Article 12(2)(c).

Where necessary, a memorandum of understanding shall
be concluded between the participating countries and the Managing Authority to set
out the countries' specific financial responsibilities.
9.                      
A joint operational programme involving more
than one partner country is established if at least one partner country signs
the financing agreement. Other partner countries covered by an established
programme can join the programme at any time by signing the financing agreement.

10.                  
If a participating
country undertakes to jointly co-finance a programme, the joint operational
programme shall clarify the arrangements for providing, using and monitoring
the co-financing. The related financing agreement shall be signed by all
participating countries. 
11.                  
Joint operational programmes may also provide for a financial contribution from and
to instruments with which grants could be combined, subject to the rules of
these instruments, provided that this contributes to achieving the programmes’
priorities.
12.                  
Following the principle of partnership, participating
countries shall jointly select actions for Union support that are consistent
with the priorities and measures of the joint operational programme.
13.                  
In
specific and duly justified cases, where:
(a) a joint operational programme cannot be submitted
owing to problems arising in relations between participating countries or
between the European Union and a partner country,
or
(b) by 30 June 2017, at the latest, the
participating countries have not yet submitted to the Commission a joint
operational programme,
or
(c) none of the partner countries covered by
the programme have signed the relevant financing agreement by the end of the
year following the adoption of the programme, 
the Commission, following consultations with
the Member State(s) concerned, shall take the necessary steps to allow the
Member State(s) concerned to use the contribution from the European Regional
Development Fund to the joint operational programme pursuant to Article 4(7)
and (8) of Regulation (EU) No [...] .
14.                  
Budget commitments for CBC actions or programmes
extending over more than one financial year may be broken down over several
years into annual instalments.
Article 11
Management of joint operational programmes
1.                      
Joint operational programmes shall, in principle, be implemented in
shared management with Member States. Participating countries may also propose
implementation in indirect management, by an entity listed in the Financial
Regulation and in accordance with the Implementing Rules referred to in Article
12(2).
2.                      
The Commission shall satisfy itself on the basis
of available information that the Member State in case of shared management, or
the partner country or the international organisation in case of indirect
management, have set up and operate management and control systems that comply
with the Financial Regulation, this Regulation, and its implementing rules referred
to in Article 12(2).
Member States, partner countries and
international organisations concerned shall ensure the effective functioning of
their management and control system, the legality and regularity of the
underlying transactions and the respect of the principle of sound financial
management. They shall be responsible for the management and control of the
programmes.
The Commission may require the Member State or
the partner country or the international organisation concerned to examine a
complaint submitted to the Commission concerning the selection or
implementation of operations supported under this Title or the functioning of
the management and control system.
3.                      
In
order to allow the joint operational programmes to prepare adequately for
implementation, expenditure incurred after the
submission of the joint operational programmes to the Commission shall be
eligible at the earliest from 1 January 2014.
4.                      
Where eligibility is restricted in accordance
with Article 8(7) of the Common Implementing Regulation, the entity referred to
in paragraph 1, which may launch calls for proposals and tenders, is entitled in
such case to accept as eligible tenderers, applicants and candidates from non
eligible countries, or goods from non eligible origin, in accordance with Article
9(3) of the Common Implementing Regulation.
Article 12
Implementing rules for Cross Border Cooperation
1.                      
Implementing rules laying down specific
provisions for the implementation of this Title shall be adopted through a
delegated act in accordance with Article 14. 
2.                      
Matters
covered by the Implementing Rules shall include provisions on:
(a)         
the rate and methods of co-financing; 
(b)         
the preparation, modification and closure of
joint operational programmes;
(c)         
the role and function of the programme structures:
Joint Monitoring Committee, Managing Authority and its Joint Technical
Secretariat, Joint Selection committees, including their standing, effective
identification, accountability and responsibility, description of Management
and Control Systems, and conditions on the technical and financial management
of Union support, including eligibility of expenditure;
(d)         
recovery procedures; the monitoring and
evaluation; 
(e)         
the visibility and information activities
(f)           
shared and indirect management as referred to in
Article 6(2) of the Common Implementing Regulation.  

Title IV. FINAL PROVISIONS
Article 13
Updating of the Annex
The list of beneficiary countries in the
Annex to this Regulation may be updated following political decisions made by
the Council on the scope of the Neighbourhood policy. A modification of the
Annex shall be adopted through a delegated act in accordance with Article 14.
Article 14
Exercise of the delegation
1.                      
The delegation of powers referred to in Article 12
and 13 shall be conferred for the period of validity of this Regulation.
2.                      
The delegation of powers may be revoked at any
time by the European Parliament or by the Council. A decision of revocation
shall put an end to the delegation of power specified in that decision. It
shall take effect the day following the publication of the decision in the
Official Journal of the European Union or at a later date specified therein. It
shall not affect the validity of any delegated acts already in force.
3.                      
As soon as it adopts a delegated act, the
Commission shall notify it simultaneously to the European Parliament and the
Council.
4.                      
A delegated act adopted shall enter into force
only if no objection has been expressed either by the European Parliament or
the Council within a period of 2 months of notification of the act to the
European Parliament and the Council or if, before the expiry of that period,
the European Parliament and the Council have both informed the Commission that
they will not object. That period shall be extended by 2 months at the
initiative of the European Parliament or the Council. 
Article 15
Committee
The Commission shall be assisted by the European Neighbourhood Instrument Committee.
That committee shall be a committee within the meaning of Regulation (EU) No
182/2011.
Article 16 
Participation by a third country not listed in the Annex
1.                      
In duly justified circumstances and to ensure
the coherence and effectiveness of Union financing or to foster regional or
trans-regional cooperation, the Commission may decide to extend the eligibility
of actions to countries, territories and regions which otherwise would not be
eligible for financing. Notwithstanding the provisions of Article 8(1) of the
Common Implementing Regulation, natural and legal persons from countries,
territories and regions concerned may participate in the procedures
implementing such actions. 
2.                      
Provision may be made for this possibility in
the programming documents referred to in Article 7.
Article 17
Suspension of Union support
Without prejudice to the provisions on the
suspension of aid in partnership and cooperation agreements and association
agreements with partner countries and regions, where a partner country fails to
observe the principles of democracy, the rule of law and respect for human
rights and fundamental freedoms, the Union shall invite the country concerned
to hold consultations in view of finding a solution acceptable to both parties,
except in cases of special urgency. Where consultation with the country
concerned does not lead to a solution acceptable to both parties, or if
consultations are refused or in case of special urgency, the Council may take
appropriate measures in accordance with Article 215(1) of the Treaty on the
Functioning of the European Union, which may include full or partial suspension
of Union support.
Article 18
Financial reference amount
1.                      
The financial envelope available for implementing
this Regulation over the period 2014 to 2020 shall be EUR 18 182 300 000
(current prices). Up to 5% of the financial envelope shall be allocated to the Cross-Border
Cooperation programmes referred to in Article 6(1) (c).
2.                      
Annual appropriations shall be authorized by the
budgetary authority within the limits of the financial framework.
3.                      
As referred to in Article 13, paragraph 2 of the
"Erasmus for All" Regulation, in order to promote the international
dimension of higher education, an indicative amount of
EUR 1 812 100 000 from the different external instruments
(Development Cooperation Instrument, European Neighbourhood Instrument,
Instrument for Pre-accession Assistance, Partnership Instrument and the
European Development Fund), will be allocated to actions of learning mobility
to or from non EU countries and to cooperation and policy dialogue with
authorities/institutions/organisations from these countries. The provisions of
the "Erasmus for All" Regulation will apply to the use of those
funds.
The funding will be made available through 2
multiannual allocations only covering the first 4 years and the remaining 3
years respectively. This funding will be reflected in the multiannual
indicative programming of these instruments, in line with the identified needs
and priorities of the countries concerned. The allocations can be revised in
case of major unforeseen circumstances or important political changes in line
with the EU external priorities.
Article 19 
European External Action Service
The application of this Regulation shall be
in accordance with Council Decision (EU) No 2010/427/EU, establishing the
organisation and functioning of the European External Action Service.
Article 20 
Entry into force
This Regulation shall enter into force on
the third day following that of its publication in the Official Journal of the
European Union. It shall apply from 1 January 2014.
This Regulation shall be binding
in its entirety and directly applicable in all Member States.
Done at Brussels,
For the European Parliament                       For
the Council
The President                                                 The
President
ANNEX
Partner countries referred to in Article
1
Algeria
Armenia
Azerbaijan
Belarus
Egypt
Georgia
Israel
Jordan
Lebanon
Libya
The Republic of Moldova
Morocco
occupied Palestinian territory (oPt) 
Syria
Tunisia
Ukraine
LEGISLATIVE FINANCIAL STATEMENT
FOR
THE EUROPEAN NEIGHBOURHOOD INSTRUMENT
1.           FRAMEWORK OF THE PROPOSAL/INITIATIVE 
              1.1.    Title of the proposal/initiative 
              1.2.    Policy
area(s) concerned in the ABM/ABB structure
              1.3.    Nature
of the proposal/initiative 
              1.4.    Objective(s)

              1.5.    Grounds
for the proposal/initiative 
              1.6.    Duration
and financial impact 
              1.7.    Management
method(s) envisaged 
2.           MANAGEMENT MEASURES 
              2.1.    Monitoring
and reporting rules 
              2.2.    Management
and control system 
              2.3.    Measures
to prevent fraud and irregularities 
              2.4.    Estimate
of the costs and benefits of the controls
3.           ESTIMATED FINANCIAL IMPACT OF THE
PROPOSAL/INITIATIVE 
              3.1.    Heading(s)
of the multiannual financial framework and expenditure budget line(s) affected 
              3.2.    Estimated
impact on expenditure 
              3.2.1. Summary of estimated impact on expenditure 
              3.2.2. Estimated
impact on operational appropriations 
              3.2.3. Estimated
impact on appropriations of an administrative nature
              3.2.4. Compatibility
with the current multiannual financial framework
3.2.5. Third-party participation in financing 
              3.3.    Estimated
impact on revenue
LEGISLATIVE FINANCIAL STATEMENT FOR
PROPOSALS
1.           FRAMEWORK OF THE PROPOSAL/INITIATIVE
1.1         Title of the
proposal/initiative
 Proposal for a Regulation of the European Parliament and of the Council (EC) N° XXX establishing an European Neighbourhood Instrument (ENI); 
1.2.        Policy area(s) concerned
in the ABM/ABB structure[19] 
Title 19: External
Relations
Activity 19 08 :
European Neighbourhood Policy Instrument and relations with Russia
The title of this budget chapter 19 08
corresponds to the current structure of the financial instruments 2007-2013. It
is proposed to keep the same activity 19 08 but to modify the title of this
chapter for the period 2014-2020 as follows:
19 08 : European
Neighbourhood Instrument 
1.3.        Nature of the
proposal/initiative 
X The proposal/initiative relates to a new action 
¨ The proposal/initiative
relates to a new action following a pilot project/preparatory action[20]

¨The proposal/initiative relates to the extension of an existing
action 
¨ The
proposal/initiative relates to an action redirected towards a new action 
1.4.        Objectives
1.4.1.     The Commission's
multiannual strategic objective(s) targeted by the proposal/initiative
Europe in the World: pulling our weight on the
global stage
1.4.2.     Specific objective(s) and
ABM/ABB activity(ies) concerned
The
European Neighbourhood Policy aims at establishing an area of prosperity and
good neighbourliness at the EU’s borders, notably through an enhanced political
association, economic integration and close cooperation in a number of sectors.
In the period 2014-2020 these objectives will continue to be supported by the
EU through a dedicated financial tool, the European Neighbourhood Instrument
(ENI) that will replace the European Neighbourhood and Partnership Instrument
established in 2006. The ENI will provide the bulk of funding from the EU budget
to the partners. 
Community
Support under this Regulation shall promote enhanced stronger political
cooperation and progressive economic integration between the European Union and
the partner countries and, in particular, the implementation of partnership and
cooperation agreements, association agreements or other existing and future
agreements, as well as joint agreed Action Plans.
Union
support should target in particular:
a)
promotion of human rights and fundamental freedoms, the rule of law, principles
of equality, establish deep and sustainable democracy, promote good governance
and developing a thriving civil society including social partners; 
b) achieving
progressive integration into Union the EU internal market and enhanced sector
and cross-sectoral co-operation, including through legislative approximation
and regulatory convergence towards Union and other relevant international standards,
related institution building and investments, notably in interconnections;
c) creating
the conditions for well managed mobility of people and for multi-level people-to-people
contacts;
d)
sustainable and inclusive development in all aspects, poverty reduction,
job-creation, including through private-sector development; promotion of
internal economic, social and territorial cohesion ,rural development, climate
action and disaster resilience;
e)
confidence building and other measures contributing to security and the
prevention and settlement of conflicts;
f)
sub-regional, regional and Neighbourhood wide collaboration as well as
Cross-Border-Cooperation. 
Union support may also be
used in other areas when this is consistent with the overall objectives of the
European Neighbourhood Policy.
ABM/ABB
activity (ies) concerned
Activity
19.08 to be re-titled as follows: European Neighbourhood Instrument 
1.4.3.     Expected result(s) and
impact
Specify
the effects which the proposal/initiative should have on the
beneficiaries/groups targeted.
Background
Article 8
of the Treaty of the European Union and the new ENP vision of a closer, democratic, prosperous and stable Neighbourhood, with each
partner country reaping the benefits of a tailored and differentiated approach, call for adapting the future financial Instrument for the
Neighbourhood to the increased level of ambition of the renewed ENP. The more so as implementing such a vision is not without challenges
for the partners that have to undertake difficult and costly reforms before the
benefits become fully visible. 
The future
ENI should notably target reaching the main objectives of the new ENP vision
and addressing the specific problems and challenges identified in the past. 
The
Communication “A new response to a changing Neighbourhood” fleshes out the
approaches towards Eastern Europe and the Southern Caucasus through the continued
implementation of the Eastern Partnership and towards the Southern
Mediterranean, in the context of the new “ Partnership for Democracy and shared
Prosperity”. 
With the
offer of a “Partnership for Democracy and shared Prosperity”, in particular, the
EU seeks to support the democratic transformation initiated in Egypt and
Tunisia, and that may extend to other countries of the Southern Mediterranean.
The Strategic
Review of the European Neighbourhood Policy (ENP) that was undertaken last year
identified areas where the policy can be considerably strengthened. The transition
processes in the Southern Mediterranean and the strong aspirations that the
people of these countries have expressed for political and economic change make
the EU’s support even more crucial than in the past, and point to areas where
EU and partner countries can and should do better. Equally, the EU remains
committed to durably supporting the democratisation and reform processes in the
entire Neighbourhood, East and South.
1.4.4.   Indicators
of results and impact
Specify
the indicators for monitoring implementation of the proposal/initiative.
This
Regulation establishes the essential elements and the basis for EU
intervention. The exact actions are defined through multiannual programming and
annual action programmes detailing the activities to be carried out by the EU,
including the expected results and impact pursued by the actions in
question. Detailed indicators for monitoring the implementation will
be fixed at that moment, to accurately measure progress towards
policy objectives, having in mind the particularities of the action in
question. They will draw on the Annual Progress Report on the implementation of
ENP Action Plans, on statistical data, and/or evaluation by independent bodies
whenever available, as follows: 
a.         Increased
compliance with Human Rights and Democratic Standards
will be measured using data and statistics provided by NGOs, UN and regional
bodies on: freedom of association, expression and assembly, free press and
media; adequately monitored democratic and credible elections; level of
corruption; more independent and efficient judiciary; better democratic
oversight on security sector. It is recalled that no official indicators are
available concerning Human Right issues. However, “rankings” produced by a host
of organisation contribute to provide a useful assessment of the situation,
with higher rankings (year on year) usually associated to progress in a
specific field;
b.         Increased integration in the EU internal market will be measured,
among others, by the variation of trade flows in relation to baseline data in
year n=0 (Eurostat figures); by progress in regulatory approximation to EU
norms and standards as measured in relation to available baseline data in year
“n=0” and, in a very global fashion, by the number of countries having
established a DCFTA;
c          Enhanced
mobility linked to better border and migration management, progress towards
establishing Mobility Partnerships, visa facilitation and visa liberalisation
agreements will be measured using available statistics (Eurostat and/or other
reliable institutions), gauging tourism flows, migration flows,
academic/student flows in year “n” and comparing these to baseline data in year
“n=0”;
d.         Reduction of internal economic disparities; Increased employment; Development
of SMEs: policies, legislation; Enhanced vocational education and training;
Level of wealth of farming communities and Increased food security will be
measured using data coming from Eurostat, OECD, WB, UNDP and official
statistics. They will include periodically updated employment data (numbers,
sectors, age, gender), SME numbers (creation/closure of SME’s), education
numbers, wealth distribution and compare these to baseline data in year “n=0”.
Particular attention will be given, in this context, to the measurement of the
GINI coefficient (to evaluate the reduction or increase of income disparities);

e.         Growing
confidence building in conflict area; progress in the settlement of existing
conflicts will be evaluated through elements provided in the Progress Reports;
f.          Increased
co-operation among partner countries along border regions, enhanced regional
dialogue, number of cooperative responses to regional challenges in different
areas, number of common positions and joint activities; social and economic
development of border areas.
1.5.        Grounds for the
proposal/initiative
1.5.1.     Requirement(s) to be met in
the short or long term 
Policy
Vision and Medium term goals
The
long-term vision underpinning the ENP is a Neighbourhood in which each
partner country develops its links with the EU as far as its own aspirations,
needs and capacities allow. Politically this includes an offer for closer
co-operation with the EU, including more joint initiatives in international
fora on global issues of common interest. Economically, the EU is also open to
closer economic integration, leading to progressive economic integration in the
EU internal market. It also supports the acceleration of inclusive, sustainable
growth of our neighbours, which should help them to become more competitive, more
energy efficient, create decent jobs and to reach the Millennium Development Goals
and to implement a low carbon development strategy in order to contribute their
share in fighting climate change . The EU should mobilise the full range of its
policies according to mutual needs and interests and to each country’s reform
and democratisation commitments. 
The goal
is increased mutual commitment to the political and economic well-being of our
citizens —both Europe’s and neighbouring countries’— as the best guarantee for
our common stability and prosperity. Such a vision is not without challenges.
For partner countries the necessary reforms involve substantial costs and
efforts before the benefits can be reaped. On the EU side, it is important not
to jeopardise the smooth running of the internal market and ensure that
mobility takes place in a secure environment. 
In the coming
years partner countries taking decisive steps towards political and economic
reforms can expect to conclude an Association Agreement under the Eastern
Partnership (East) or enter in a Partnership for Democracy and Shared
Prosperity (South). This will be accompanied by enhanced mobility and
people to people contacts (e.g. including through the possible establishment of
mobility partnerships), economic integration through industrial cooperation,
SME development, Foreign Direct Investment and increased trade relations with
the EU (e.g. through the establishment of Deep and Comprehensive Free Trade
Areas and the conclusions of other agreements, e.g. in agriculture, services
and establishment or Agreements on Conformity Assessment and Acceptance of
Industrial products for priority sectors), deeper sector integration (e.g. through
the integration in a pan-European energy market participation in international
carbon markets including preparatory steps to link with the EU Emission Trading
system, and the participation in EU programmes and agencies in accordance with
the opening possibilities granted in each programmes and with the general
guidelines regarding the participation in EU Agencies). 
With the
offer of Partnership for Democracy and shared Prosperity[21],
in particular, the EU seeks to support the democratic transformation initiated
in Egypt and Tunisia, and that may extend to other countries. To pursue with
determination the process of democratic transformation these countries need
support to reform their institutions and restart economic growth. Their
population also needs to see that the EU is ready to help in this challenging
but difficult period of transformation.
The ENI should
be increasingly policy-driven and provide for increased differentiation, more
flexibility, stricter conditionality and incentives for best performers,
reflecting the ambition of each partnership (e.g. DCFTA negotiations). EU
assistance could also be increasingly implemented by devolving it to partner
countries provided that the financial rules of the Union are respected and EU
financial interests protected.
Funding
The level
of funding of the new ENI Instrument reflects the ambitions of the revised ENP.
Thus, it is proposed that an amount of EUR 18 182 300 000, at current prices,
is allocated to the ENI from 2014 to 2020. 
Differentiation
The level
of EU support will depend on progress in building and consolidating democracy
and respect for the rule of law as well as the pace of reforms. The more and
the faster a country progresses in its internal reforms, the more support it
will receive from the EU. This enhanced support should come in various forms,
including increased funding for social and economic development, larger
programmes for institution-building, greater market access, increased EIB
financing in support of investments; and greater facilitation of mobility.
These preferential commitments will be tailored to the needs of each country
and to the regional context. They will recognise that meaningful reform comes
with significant upfront costs. For countries where reform has not taken place,
the EU will reconsider or even reduce funding.
1.5.2.     Added value of EU
involvement
The
proposal should be seen in the overall context of a renewed European
Neighbourhood Policy offering to partner countries closer political
co-operation and deeper economic integration in line with Art.8 of the Lisbon
treaty. It rests on sharing with our neighbours the experiences of European
integration and progressively involving them into EU policies. 
In Neighbourhood
countries, where alignment to EU rules and standards is one of the key policy
objectives, the EU is best placed to deliver this assistance. Some specific
support can only be provided at EU level, for example to promote progressive
economic integration in the EU internal market, access to the Schengen space or
participation in EU programmes. Thus the EU is the leading cooperation partner
in most of these countries, a role widely recognised by Member States, IFIs and
other donors. Helping the EU neighbours to align with EU policies, rules and
standards is a key driver for reforms in the ENP partner countries. 
1.5.3.     Lessons learned from
similar experiences in the past
A number of
issues have emerged since the launch of the ENPI, related directly or
indirectly to the design of the Instrument. A long programming process and
incomplete alignment of the financial assistance with the policy and priorities
specified in the ENP Action Plans and other relevant documents have often been
pointed at as major challenges to be addressed in the future. Coordination and
coherence with interventions under other instruments are important issues.
Provisions allowing for joint activities with partners/regions outside the
geographical scope of the ENPI have been instrumental to implement a number of
activities and should be maintained.
ENPI
assistance has been used to leverage loans from financial institutions to
finance infrastructure investment projects and to support the private sector
through loans and risk capital operations. This is done with the European
Investment Bank in the context of the FEMIP and with the EIB, the European Bank
for Reconstruction and Development (EBRD) and other European financial
institutions in the context of the NIF. The cooperation with IFIs should be
further enhanced through the use of innovative tools, notably in the field of
guarantees. The use of revolving funds could help strengthen the impact of this
cooperation.
Horizontal
issues that are of much relevance to the ENPI include flexibility and ability
to react to crisis and unforeseen situations. In the Neighbourhood, addressing
protracted crisis remains one of the key challenges. Any solution within the
ENPI will need to be coherent with the political choices on the future
Instrument for Stability (notably its scope and size) and its relationship with
geographic instruments. The current mechanisms for rapid interventions in case
of crises have functioned well and should be further strengthened.
Consideration
needs to be given to how
monitoring can be enhanced, including with regard to strengthening the link
between policy dialogues and assistance programmes (including technical
assistance). It is furthermore important that the
ambition of the policy is matched with adequate tools to implement it.
Consideration should also be given to how the technical assistance/TAIEX can be
developed, possibly through extending the scope of the mechanism to include
elements such as training and case studies. Furthermore, cooperation in the
field of statistics should be enhanced. 
Along with
other policy objectives such as a well-functioning public administration and an
independent judiciary safeguarding the enforceability of contracts, an
effective competition policy creates a business environment facilitating
economic growth. 
Globally, regional
cooperation has proved its added value notably in fostering regional synergies
and networks in crucial areas of common concern such as environment, climate
change, energy, sustainable development, Small and Medium Enterprise
development, media and freedom of expression, research, ICT and youth mobility.
Regional cooperation has also proved very effective when being conducted at
intraregional level (South and East): a number of programmes are “twins” (civil
protection, private investments promotion) with a Southern and an Eastern
focus. The CBC has also played an important role, and the mechanism of split
commitments used with CBC programmes has proved useful.
1.5.4.     Coherence and possible
synergy with other relevant instruments
External
policies/instruments
The Lisbon
Treaty defines a new institutional framework for the Union’s external action.
This is intended to promote the coherence of EU stance and enhance the EU
standing on the international scene. The EU needs to
equip itself with a long-term political strategy for external action and an
appropriate toolbox that should pursue the following strategic objectives:
Promoting
and defending EU values abroad. Through the
European Neighbourhood Instrument the EU will promote transitional and
democratic processes and strengthening of civil society around its borders; 
Projecting
EU policies in support of the EU 2020 agenda for smart, sustainable and
inclusive low carbon growth. With the ENI, the EU
will support addressing major global challenges and assist relevant reforms
benefitting both the EU and the partner countries; 
Increasing
the impact of EU development cooperation, with the
primary aim of eradicating poverty. Through the ENI, the EU will assist partner
countries in meeting development challenges – e.g. climate change - according
to their needs, capacities, interests and commitments and the potential for
impact. The ENI will also help improve EU coordination and Policy Coherence for
Development; 
Investing
in the long-term prosperity, stability and democracy in the EU Neighbourhood. The aim of establishing an area of stability, prosperity and
democracy is the primary objective of the ENI and the renewed Neighbourhood
policy. Priority will be given to support EU regional and bilateral policies,
including thematic ones, in the wider Neighbourhood. The democratic transition
processes in the Southern Mediterranean and their possible effects in the wider
region make it necessary to better support the aspirations of these societies
for democratic values and principles and for a more equitable distribution of
the benefits of growth, whilst pursuing the goals of greater political
cooperation and integration with the neighbours, both in the South and in the East. This includes an increased
focus on engagement with civil society actors and social partners.
Improving
crisis prevention and resolution. The ENI should
allow for an enhanced and more flexible support to crisis prevention and
resolution in the Neighbourhood.
Support to
the EU neighbours through a dedicated, targeted and policy-driven Instrument
endowed with financial resources corresponding to the ambitions of the renewed
ENP is clearly in line with the major priorities of the EU external action.
ENP
countries will continue to benefit from other financial instruments addressing
specific policy issues (global challenges, Human Rights, Nuclear safety) or
crisis situations (macro-financial assistance, Instrument for stability,
humanitarian assistance Instruments). 
Internal
policies
Given the
objective of the ENP to foster closer integration between the EU and the
partner countries, provisions for a better coordination of EU internal and
external policies in the Neighbourhood should be strengthened, including
through closer cooperation with relevant Commission services at the programming
stage and, where relevant, use of mechanisms allowing for pooling of funds from
internal and external headings of the EU budget. 
This could
notably apply to areas of cooperation such as infrastructure with cross-border
dimensions, in particular transport and energy networks, the ICT sector[22]
and other networked industries, as well as higher education and the environment
area given their strong cross-border component. Increased ENI support on
building capacities in research and innovation would help in underpinning all
of the above areas of cooperation and assist all partner countries in alignment
with EU policies and objectives in order to address global and regional
challenges.
Increased synergies with the EU internal policies and
the related use of innovative financial instruments should be
sought, on the basis of a
coordinated approach to engaging EU budget in such instruments. This
could facilitate pooling of resources from different headings of the
Multiannual Financial Framework. 
1.6.        Duration and financial
impact
¨ Proposal/initiative of limited
duration 
–              
x           Proposal/initiative in effect from …to
…. 
–              
x           Financial impact from … to …. 
–              
X Proposal/initiative
of unlimited duration
–              
Implementation with a start-up period from 2014
to 2020,
–              
followed by full-scale operation.
1.7.        Management mode(s)
envisaged[23] 
x Centralised direct management
by the Commission 
x Centralised indirect management
with the delegation of implementation tasks to:
–              
x           executive agencies 
–              
¨ bodies set up by the Communities[24] 
–              
x           national public-sector bodies/bodies
with public-service mission 
–              
¨         persons entrusted with the implementation of specific
actions pursuant to Title V of the Treaty on European Union and identified in
the relevant basic act within the meaning of Article 49 of the Financial
Regulation 
X Shared
management with the Member States 
X Decentralised management with third countries 
X Joint management with international organisations (to be specified)
The objectives will be pursued through a
combination of measures implemented through different management modes. 
2.           MANAGEMENT MEASURES 
2.1.        Monitoring and reporting
rules
Specify
frequency and conditions.
The
Commission's Monitoring and Evaluation systems are increasingly focussed on
results. They involve internal staff as well as external expertise.
Task
Managers in Delegations and Headquarters continuously monitor the
implementation of projects and programmes in various ways, including wherever
possible through field visits. Monitoring provides valuable information on progress;
it helps managers to identify actual and potential bottlenecks, and to take
corrective action.
External,
independent experts are contracted to assess the performance of EU external
actions through three different systems. These assessments contribute to
accountability, and to the improvement of ongoing interventions; they also draw
lessons from past experience to inform future policies and actions. The tools
all use the internationally-recognised OECD-DAC evaluation criteria including
(potential) impact.
Firstly, at
the project level, the Headquarters-managed Results Oriented Monitoring (ROM)
system provides a brief, focused snapshot of the quality of a sample of
interventions. Using a highly structured, standardised methodology, independent
ROM experts attribute grades which highlight the strengths and weaknesses of
the project and give recommendations on how to improve effectiveness. 
Project-level
evaluations, which are managed by the EU Delegation in charge of the project,
deliver a more detailed, in depth analysis and help project managers to improve
ongoing interventions and prepare future ones. External, independent experts
with thematic and geographic expertise are hired to conduct the analysis and
gather feedback and evidence from all stakeholders, not least the final
beneficiaries.
The
Commission also conducts strategic evaluations of its policies, from
programming and strategy to the implementation of interventions in a specific
sector (such as health, education etc), in a country or region, or of a
specific Instrument. These evaluations are an important input to the
formulation of policies and the design of instruments and projects. These
evaluations are all published on the Commission's website and a summary of the
findings is included in the Annual Report to the Council and the European
Parliament.
2.2.        Management and control
system 
2.2.1.     Risk(s) identified 
Risk
environment
The
operational environment of ENI aid is characterised by the following risks of
not achieving the Instrument's objectives, suboptimal financial management
and/or of not complying with the applicable rules (legality and regularity
errors):
- economic/political instability and or natural disasters
in partner countries may lead to difficulties and delays in the design and implementation
of interventions; 
- a lack of
institutional and administrative capacity in partner countries may lead to
difficulties and delays in the design and implementation of interventions; 
-
geographically dispersed projects and programmes (covering approximately many
states/territories/regions) may pose logistical/resource challenges to
monitoring - particularly any 'on-the-spot' follow-up of activities;
- diversity
of potential partners / beneficiaries with their diverse internal control
structures and capacities can fragment and therefore reduce the effectiveness
and efficiency of the Commission's available resources to support and monitor
implementation;
- poor
quality and quantity of available data on the outcomes and impact of external
aid / national development plan implementation in partner countries may hinder
the Commission's ability to report on and be accountable for results.
Expected
level of risk of non-compliance with applicable rules
The
compliance objective for the Instrument is to maintain the historic level of
risk of non-compliance (error rate) for EuropeAid portfolio which is a residual
'net' level of error (on a multi-annual basis after all planned controls and
corrections have been executed on closed contracts) of less than 2%. This has
traditionally implied an estimated error range of 2-5% in terms of an annual
randomised sample of transactions undertaken by the European Court of Auditors
for the purposes of the annual Statement of Assurance (DAS). EuropeAid
considers this to be the lowest risk of non compliance achievable in relation
to its high risk environment and taking into account the administrative burden
and necessary cost effectiveness of compliance controls. 
2.2.2.     Control method(s) envisaged

EuropeAid
Internal Control architecture
EuropeAid's
internal control / management process is designed to provide reasonable
assurance regarding the achievement of objectives in the effectiveness and
efficiency of its operations, the reliability of its financial reporting and
compliance with the relevant legislative and procedural framework.
Effectiveness
and efficiency
To ensure
the effectiveness and efficiency of its operations (and to mitigate the high
level of risk in its external aid environment), in addition to all the elements
of the Commission wide Strategic Policy and Planning process, internal audit
environment and other requirements of the Commission's Internal Control
Standards, EuropeAid will continue to have a tailored aid management framework
in operation under all its instruments which will include:
- A
devolved management of the majority of external aid by EU delegations in the
field;
- Clear and
formalised lines of financial accountability (from the Delegated Authorising
officer (Director General)) by means of a subdelegation from the Subdelegated
Authorising Officer (Director) at HQ to the Head of Delegation;
- Regular
reporting from EU Delegations to HQ (External Assistance Management Reports)
including an annual Statement of Assurance by the Head of Delegation;
- Provision
of a substantial programme of training for staff both at HQ and in delegation,
-
Significant HQ/Delegation support and guidance (including via internet);
- Regular
'verification' visits to 'devolved' delegations every 3 to 6 years;
- A project
and programme cycle management methodology including: 
- Quality
support tools for the design of the intervention, its delivery method,
financing mechanism, management system, assessment and selection of any
implementing partners, etc.
- Programme
and project management, monitoring and reporting tools for effective
implementation including regular external on-the-spot monitoring of projects.
-
Significant evaluation and audit components.
Financial
Reporting and Accounting
EuropeAid
will continue to pursue the highest standards of accounting and financial
reporting using the Commission's accruals based accounting system (ABAC) as
well as external aid specific tools such as the Common Relex Information System
(CRIS). 
In relation
to compliance with the relevant legislative and procedural framework,
compliance control methods are set out in section 2.3 (measures to prevent
fraud and irregularities)
Role of
Committees and sub-committees.
It is
expected that subcommittees will play an increasingly active role in the control
of the implementation of programmes.
2.3.        Measures to prevent fraud
and irregularities 
Specify
existing or envisaged prevention and protection measures.
Given the
high risk environment in which EuropeAid operates, its systems need to
anticipate a significant occurrence of potential compliance errors
(irregularities) in transactions and build in a high level of prevention,
detection and correction controls as early as possible in the payment process.
This means in practice that EuropeAid’s compliance controls will place most
reliance on significant ex-ante checks by both external auditors and Commission
staff in the field before final project payments (while still executing some
ex-post audits and checks), going well beyond the financial safeguards required
by the Financial Regulation. EuropeAid's compliance framework is made up inter
alia of the following significant components:
Preventative
measures
Compulsory
core training covering fraud issues for aid management staff and auditors;
Provision
of guidance (including via internet) including the Practical Guide to
Contracts, the EuropeAid Companion and the Financial Management Toolkit (for
implementing partners);
Ex-ante
assessment to ensure that appropriate anti-fraud measures to prevent and detect
fraud in the management of EU funds are in place in the authorities managing
the relevant funds under joint, decentralised and shared management);
Ex-ante screening
of the anti-fraud mechanisms available in the partner country as part of the
assessment of the eligibility criterion of public finance management for
receiving budget support (i.e. active commitment to fight fraud and corruption,
adequate inspection authorities, sufficient judicial capacity and efficient
response and sanction mechanisms);
The Commission
signed the International Aid Transparency Initiative (IATI) in Accra in 2008,
agreeing on a standard for aid transparency which ensures more timely, detailed
and regular data on aid flows and documents;
The
Commission implements since 14 October 2011 the first phase of the IATI standard
for publishing aid information transparency before the next High Level Forum on
aid effectiveness in Busan in November 2011. In addition, the Commission will
work in cooperation with the EU Member States on a joint web-based IT
application called TR-AID which transforms the EU aid data provided through the
IATI and other sources into user-friendly aid information.
Detective
and corrective measures
External
audits and verifications (both mandatory and risk based) including the European
Court of Auditors;
Retrospective
checks (on a risk basis) and recoveries;
Suspension
of EU funding where there is a serious fraud case, including large scale
corruption, until the authorities have taken appropriate action with a view to
correcting and preventing such fraud in the future.
EuropeAid
will further devise its anti-fraud strategy in line with the Commission's new
anti-fraud strategy (CAFS) adopted on 24 June 2011 in order to ensure inter
alia that:
EuropeAid's
internal anti-fraud related controls are fully aligned with the CAFS;
EuropeAid's
fraud risk management approach is geared to identify fraud risk areas and
adequate responses;
The systems
used for spending EU funds in third countries enable relevant data to be
retrieved with a view to feeding this data into fraud risk management (e.g.
double funding);
Where
necessary, networking groups and adequate IT tools dedicated to analysing fraud
cases related to the external aid sector will be set up.
2.4         Estimate of the costs and
benefits of the controls
For the EuropeAid
portfolio as a whole, internal control / management costs total an estimated annual
average of EUR 658 million in commitments in the 2014-2020 budget planning.
This figure includes the management of the EDF which operates in an integrated
way within the management structure of EuropeAid. These non-operational costs
represent approximately 6,4% of the estimated annual average of EUR 10,2
billion planned for the overall (operational + administrative) commitments by EuropeAid
on its expenditure portfolio financed by the General Budget of the EU and the
European Development Fund for 2012. 
These
management costs take into account all EuropeAid staff at HQ and in
Delegations, infrastructure, travel, training, monitoring, evaluation and audit
contracts (including those launched by beneficiaries).
EuropeAid plans
to reduce the management/operational activities ratio over time under the
improved and simplified arrangements of the new instruments, building on
changes likely to come in under the revised Financial Regulation. The key
benefits of these management costs are realised in terms of meeting policy
objectives, efficient and effective use of resources and the exercise of robust
cost-effective preventative measures and other checks to ensure the legal and
regular use of funds.
Improvements
in the nature and scope of management activities and compliance checks will
continue to be pursued. However, these activities will continue to be represent
a necessary cost to be incurred, to effectively and efficiently achieve the
objectives of the instruments at a minimal risk of non compliance (below 2%
residual error). These costs are evaluated to be significantly less than the
potential losses involved by removing or scaling back internal controls in this
high risk area.
3.           ESTIMATED FINANCIAL IMPACT OF THE
PROPOSAL/INITIATIVE 
3.1.        Heading(s) of the
multiannual financial framework and expenditure budget line(s) affected 
In order of
multiannual financial framework headings and budget lines.
 Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution 
 Number 19.08 [Description… ENI-European Neighbourhood Instrument ] || DA/NDA ([25]) || from EFTA[26] countries || from candidate countries[27] || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation 
 4 || ENI Instrument || NDA || NO || NO || NO || NP 
 5 ||   ENI – Administrative Expenditures   || DA || NO || NO || YES || NP 
·                        
New budget lines requested NONE
In order of
multiannual financial framework headings and budget lines.
 Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution 
 Number [Heading……………………………………..] || Diff./non-diff. || from EFTA countries || from candidate countries || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation 
   || [XX.YY.YY.YY]   ||   || YES/NO || YES/NO || YES/NO || YES/NO 
3.2         Estimated impact on expenditures

3.2.1      Summary of estimated impact
on expenditures
EUR million (to 3 decimal places)
 Heading of multiannual financial framework: || 4 || External Relations 
 DG: <…….> ||   ||   || Year N[28] 2014 || Year N+1 2015 || Year N+2 2016 || Year N+3 2017 || Year N+4 2018 || Year N+5 2019 || Year N+6 2020 || TOTAL || 
  Operational appropriations ||   ||   ||   ||   ||   ||   ||   ||   || 
 ENI-European Neighbourhood Instrument (19.08) || Commitments || (1) || 2.181,076 || 2.347,302 || 2.408,952 || 2.501,395 || 2.637,736 || 2.806,952 || 2.952,883 || 17.836,296 || 
 Payments || (2) || 1.852,576 || 2.001,902 || 2.051,252 || 2.170,595 || 2.249,836 || 2.349,252 || 2.498,583 || 15.173,996 || 
 Appropriations of an administrative nature financed  from the envelop of specific programs[29] ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Number of budget line 19.01.04.02 ||   || (3) || 47,424 || 48,098 || 48,748 || 49,405 || 50,164 || 50,748 || 51,417 || 346,004 || 
 TOTAL appropriations for DG <…….> || Commitments || =1+1a +3 || 2.228,500 || 2.395,400 || 2.457,700 || 2.550,800 || 2.687,900 || 2.857,700 || 3.004,300 || 18.182,300 || 
 Payments || =2+2a +3 || 1.900,000 || 2.050,000 || 2.100,000 || 2.220,000 || 2.300,000 || 2.400,000 || 2.550,000 || 15.520,000 || 
  TOTAL operational appropriations || Commitments || (4) || 2.181,076 || 2.347,302 || 2.408,952 || 2.501,395 || 2.637,736 || 2.806,952 || 2.952,883 || 17.836,296 
 Payments || (5) || 1.852,576 || 2.001,902 || 2.051,252 || 2.170,595 || 2.249,836 || 2.349,252 || 2.498,583 || 15.173,996 
  TOTAL appropriations of an administrative nature financed from the envelop of specific programs || (6) || 47,424 || 48,098 || 48,748 || 49,405 || 50,164 || 50,748 || 51,417 || 346,004 
 TOTAL appropriations under HEADING <4> of the multiannual financial framework || Commitments || =4+ 6 || 2.228,500 || 2.395,400 || 2.457,700 || 2.550,800 || 2.687,900 || 2.857,700 || 3.004,300 || 18.182,300 
 Payments || =5+ 6 || 1.900,000 || 2.050,000 || 2.100,000 || 2.220,000 || 2.300,000 || 2.400,000 || 2.550,000 || 15.520,000 
 Heading of multiannual financial framework: || 5 || " Administrative expenditure " 
EUR million (to 3 decimal places)
   ||   ||   || Year N 2014 || Year N+1 2015 || Year N+2 2016 || Year N+3 2017 || Year N+4 2018 || Year N+5 2019 || Year N+6 2020 || TOTAL 
 DG: <…….> || 
  Human resources || 37,036 || 36,662 || 36,289 || 35,919 || 35,919 || 35,919 || 35,919 || 253,662 
  Other administrative expenditure || 2,244 || 2,192 || 2,173 || 2,155 || 2,155 || 2,155 || 2,155 || 15,227 
 TOTAL DG <…….> || Appropriations || 39,279 || 38,854 || 38,462 || 38,073 || 38,073 || 38,073 || 38,073 || 268,889 
 TOTAL appropriations under HEADING 5 of the multiannual financial framework || (Total commitments = Total payments) || 39,279 || 38,854 || 38,462 || 38,073 || 38,073 || 38,073 || 38,073 || 268,889 
   ||   ||   ||   ||   ||   ||   ||   ||   ||   
   ||   ||   ||   ||   ||   ||   ||   ||   ||   
EUR million (to 3 decimal places)
   ||   ||   || Year N 2014 || Year N+1 2015 || Year N+2 2016 || Year N+3 2017 || Year N+4 2018 || Year N+5 2019 || Year N+6 2020 || TOTAL 
 TOTAL appropriations under HEADINGS 1 to 5 of the multiannual financial framework || Commitments || 2.267,779 || 2.434,254 || 2.496,162 || 2.588,873 || 2.725,973 || 2.895,773 || 3.042,373 || 18.451,189 
 Payments || 1.939,279 || 2.088,854 || 2.138,462 || 2.258,073 || 2.338,073 || 2.438,073 || 2.588,073 || 15.788,889 
3.2.2      Estimated impact on
operational appropriations 
–              
¨         The proposal/initiative does not require the use of
operational appropriations 
–              
ý         The proposal/initiative requires the use of operational
appropriations, as explained below:
Commitment appropriations in EUR million (to 3 decimal
places)
 Indicate objectives and outputs   ò ||   ||   || Year N || Year N+1 || Year N+2 || Year N+3 || … enter as many years as necessary to show the duration of the impact (see point 1.6) || TOTAL 
 OUTPUTS 
 Type of output[30] || Average cost of the ouput || Cost || Cost || Cost || Cost || Cost || Cost || Cost || Total cost 
 Geographic programmes[31] || 2072,023 || 2229,937 || 2288,504 || 2376,325 || 2505,849 || 2666,605 || 2805,238 || 16944,481 
 Cross-Border Cooperation programmes[32]… || 109,054 || 117,365 || 120,448 || 125,070 || 131,887 || 140,348 || 147,644 || 891,815 
 TOTAL COST || 2181,076 || 2347,302 || 2408,952 || 2501,395 || 2637,736 || 2806,952 || 2952,883 || 17836,296 
3.2.3      Estimated impact on
appropriations of an administrative nature
3.2.3.1 Summary 
–              
¨         The proposal/initiative does not require the use of
administrative appropriations 
–              
X          The proposal/initiative requires the
use of administrative appropriations, as explained below:
EUR million (to 3
decimal places)
   || Year N [33] 2014 || Year N+1 2015 || Year N+2 2016 || Year N+3 2107 || Year N+4 2018 || Year N+5 2019 || Year N+6 2020 || TOTAL 
 HEADING 5 of the multiannual financial framework ||   ||   ||   ||   ||   ||   ||   ||   
 Human resources || 37,036 || 36,662 || 36,289 || 35,919 || 35,919 || 35,919 || 35,919 || 253,662 
 Other administrative expenditure || 2,244 || 2,192 || 2,173 || 2,155 || 2,155 || 2,155 || 2,155 || 15,227 
 Subtotal HEADING 5 of the multiannual financial framework || 39,279 || 38,854 || 38,462 || 38,073 || 38,073 || 38,073 || 38,073 || 268,889 
   ||   ||   ||   ||   ||   ||   ||   ||   
 Outside HEADING 5[34] of the multiannual financial framework ||   ||   ||   ||   ||   ||   ||   ||   
 Human resources || 46,898 || 47,534 || 48,170 || 48,806 || 49,441 || 50,077 || 50,713 || 341,639 
 Other expenditure of an administrative nature || 0,525 || 0,564 || 0,578 || 0,600 || 0,723 || 0,671 || 0,705 || 4,366 
 Subtotal outside HEADING 5 of the multiannual financial framework || 47,424 || 48,098 || 48,748 || 49,405 || 50,164 || 50,748 || 51,417 || 346,004 
 TOTAL || 86,703 || 86,952 || 87,211 || 87,479 || 88,238 || 88,821 || 89,491 || 614,894 
3.2.3.2   Estimated requirements of
human resources 
–              
¨         The proposal/initiative does not require the use of human
resources 
–              
X          The proposal/initiative requires the
use of human resources, as explained below:
Estimate to be expressed in full amounts
(or at most to one decimal place)
 ||   || Year N || Year N+1 || Year N+2 || Year N+3 || Year N+4 2018 || Year N+5 2019 || Year N+6 2020 
  Establishment plan posts (officials and temporary agents) || 
 || XX 01 01 01 (Headquarters and Commission’s Representation Offices) || 137,8 || 136,4 || 135,1 || 133,7 || 133,7 || 133,7 || 133,7 
 || XX 01 01 02 (Delegations) || 78,4 || 77,6 || 76,8 || 76,0 || 76,0 || 76,0 || 76,0 
 || XX 01 05 01 (Indirect research) ||   ||   ||   ||   ||   ||   ||   
 || 10 01 05 01 (Direct research) ||   ||   ||   ||   ||   ||   ||   
 ||  External personnel (in Full Time Equivalent unit: FTE)[35] || 
 || XX 01 02 01 (CA, INT, SNE from the "global envelope") || 9,3 || 9,2 || 9,1 || 9,0 || 9,0 || 9,0 || 9,0 
 || XX 01 02 02 (CA, INT, JED, LA and SNE in the delegations) ||   ||   ||   ||   ||   ||   ||   
 || XX 01 04 yy [36] || - at Headquarters[37] || 93,3 || 91,4 || 89,6 || 87,9 || 86,2 || 84,5 || 82,8 
 || - in delegations || 468,1 || 475,3 || 482,4 || 489,6 || 496,7 || 503,9 || 511,0 
 || XX 01 05 02 (CA, INT, SNE - Indirect research) ||   ||   ||   ||   ||   ||   ||   
 || 10 01 05 02 (CA, INT, SNE - Direct research) ||   ||   ||   ||   ||   ||   ||   
 || Other budget lines (specify) ||   ||   ||   ||   ||   ||   ||   
 || TOTAL || 786,9 || 790,0 || 793,1 || 796,2 || 801,6 || 807,1 || 812,6 
XX is the policy
area or budget title concerned.
The human resources required will be met by
staff from the DG who are already assigned to management of the action and/or
have been redeployed within the DG, together if necessary with any additional
allocation which may be granted to the managing DG under the annual allocation
procedure and in the light of budgetary constraints.
3.2.4      Compatibility with the
multiannual financial framework 2014-2020 
–              
X          Proposal/initiative
is compatible the multiannual financial framework 2014-2020.
–              
¨         Proposal/initiative will entail reprogramming of the
relevant heading in the multiannual financial framework.
Explain what reprogramming is required,
specifying the budget lines concerned and the corresponding amounts.
–              
¨         Proposal/initiative requires application of the flexibility
Instrument or revision of the multiannual financial framework[38].
Explain what is required, specifying the
headings and budget lines concerned and the corresponding amounts.
3.2.5      Third-party contributions 
–              
The proposal/initiative does not provide for
co-financing by third parties 
–              
X The proposal/initiative
provides for the co-financing estimated below:
 Cofinancing is allowed under the initiative but no specific figures are set. 
Appropriations in EUR million (to 3 decimal places)
   || Year N || Year N+1 || Year N+2 || Year N+3 || … enter as many years as necessary to show the duration of the impact (see point 1.6) || Total 
 Specify the co-financing body || N/A ||   ||   ||   ||   ||   ||   || N/A 
 TOTAL appropriations cofinanced || N/A ||   ||   ||   ||   ||   ||   || N/A 
3.3         Estimated impact on
revenue 
 –                        ý      Proposal/initiative has no financial impact on revenue. –                        NOTE: Budget revenues of marginal amount (in relation to the overall size of the Instrument), may be generated as a result of reflows on risk capital operations undertaken in cooperation with IFI’s. 
-        ¨         Proposal/initiative
has the following financial impact:
-           ¨         on own
resources 
-           ¨         on
miscellaneous revenue 
EUR million (to 3 decimal places)
 Budget revenue line: || Appropriations available for the ongoing budget exercise || Impact of the proposal/initiative[39] 
 Year N || Year N+1 || Year N+2 || Year N+3 || … insert as many columns as necessary in order to reflect the duration of the impact (see point 1.6) 
 Article …………. ||   ||   ||   ||   ||   ||   ||   ||   
For miscellaneous
assigned revenue, specify the budget expenditure line(s) affected.
Specify the method for
calculating the impact on revenue.
[1]               On security of energy supply
and international co-operation the Commission presented a Communication:
"The EU Energy Policy: Engaging with Partners beyond our borders", COM(2011)
539 of 7.September 2011
[2]               in the field of transport
cooperation the Commission presented a Communication: "The EU and its
neighbouring regions: A renewed approach to transport cooperation", COM
(2011) 415 of 7 July 2011
[3]               Small and Medium Enterprise
[4]               Information and Communication Technologies
[5]               including promotion of the Decent work agenda
[6]               including development of a Common Knowledge and
Innovation Space
[7]               The EU should promote and support effectively in its
Neighbourhood climate action for a more climate resilient and carbon efficient
development
[8]               i.e. peace and security, poverty reduction,
humanitarian aid, investing in stability and growth in enlargement and
neighbourhood countries, tackling global challenges, promoting EU and international
standards and values, and supporting growth and competitiveness abroad.
[9]               Official Development Aid 
[10]             Treaty on the Functioning of the European Union
[11]             OJ L …
[12]             OJ C , , p. .
[13]             OJ C , , p. .
[14]             OJ L 310, 9.November.2006, p. 1. 
[15]             OJ L
[16]             OJ L 55, 28.2.2011, p.13.
[17]             OJ L
[18]             OJ L
[19]             ABM: Activity-Based Management – ABB: Activity-Based
Budgeting.
[20]             As referred to in Article 49(6)(a) or (b) of the
Financial Regulation.
[21]             COM(2011) 200, 8.3.2011
[22]             Deployment of ICT services and infrastructures, impact of
the Internet on growth, freedom and expression of democratic values can not be
underestimated
[23]             Details of management modes and references to the
Financial Regulation may be found on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html
[24]             As referred to in Article 185 of the Financial
Regulation.
[25]             DA= Differentiated appropriations / DNA=
Non-Differentiated Appropriations
[26]             EFTA: European Free Trade Association. 
[27]             Candidate countries and, where applicable, potential
candidate countries from the Western Balkans.
[28]             Year N is the year in which implementation of the
proposal/initiative starts.
[29]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former "BA" lines), indirect research, direct research.
[30]             Outputs are products and services to be supplied (e.g.:
number of student exchanges financed, number of km of roads built, etc.).
[31]             This split is indicative. Programming and allocation of
funds under this regulation will be guided by the “more for more” principle. 
[32]             Similar amounts will be made available under the ERDF
regulation to support CBC programmes
[33]             Year N is the year in which implementation of the
proposal/initiative starts.
[34]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former "BA" lines), indirect research, direct research.
[35]             CA= Contract Agent; INT= agency staff ("Intérimaire");
JED= "Jeune Expert en Délégation" (Young Experts in
Delegations); LA= Local Agent; SNE= Seconded National Expert; 
[36]             Under
the ceiling for external personnel from operational
appropriations (former "BA" lines).
[37]             Essentially for Structural Funds, European Agricultural
Fund for Rural Development (EAFRD) and European Fisheries Fund (EFF).
[38]             See points 19 and 24 of the Interinstitutional
Agreement.
[39]             As regards traditional own resources (customs duties,
sugar levies), the amounts indicated must be net amounts, i.e. gross amounts
after deduction of 25% for collection costs.