CELEX: 51992PC0475
Language: en
Date: 1992-11-25
Title: Proposal for a COUNCIL REGULATION (EEC, EURATOM) concerning the provision of technical assistance to economic reform and recovery in the independent States of the former Union of Soviet Socialist Republics and Mongolia

COMMISSION OF THE EUROPEAN CCMVIUNITIES
                                                          C0M(92) 475 final
                                                          Brussels, 25 November 1992
                                           Proposal for a
                                 COUNCIL REGULATION (EEC. EURATOM)
                  concerning the provision of technical assistance to economic
                   reform and recovery in the independent States of the former
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                         Union of Soviet Socialist Republics and Mongolia
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                                   (presented by the Commission)
 ---pagebreak---                                  - 2 -
                         EXPLANATORY MEMORANDUM
The granting of aid under Regulation (EEC. EURATOM) No 2157/91 of
15 July 1991, concerning the provision of technical assistance to
economic reform and recovery in the Union of Soviet Socialist
Republics will come to an end on 31 December 1992. Accordingly, and
bearing In mind subsequent changes In the situation of the former
Soviet Union and of certain neighbouring states, as well as the
Community's experience In providing technical assistance under this
regulation» It Is necessary to propose a new regulation. This will
provide the legal basis for the provision of technical assistance in
the years to come. The Community's experience with technical
assistance in 1991 and 1992 will be the subject of a forthcoming
report to the Parliament. Council and Economic and Social Committee.
The proposed regulation is modelled closely on its predecessor,
mutatis mutandis. In order to ensure the necessary continuity, changes
have been kept to a minimum. However, certain necessary modifications
have been introduced, the most significant of which are as follows:
1. The title and annex listing the beneficiaries are modified to
   reflect the inclusion of the twelve independent states of the
   former Soviet Union and Mongolia.
2. Mongolia is added to the list of beneficiaries as its situation and
   needs for assistance are comparable to those of a number of the
    independent states. This country was formerly dependent,
   politically and economically, upon the Soviet Union although not
   formally part of It. Mongolia has now established a democratic
   political system, hetd free and fair elections and begun the
   transition to a market economy. It has signed a trade and
   cooperation agreement with the Community, Including a commitment to
   protect human rights. It has requested support for post-communist
   economic reconstruction, which goes beyond the scope of cooperation
   assistance presently available. The Commission considers it
   appropriate to respond positively to this request within the
   framework of the present regulation.
3. The priority sectors for technical assistance have been maintained,
   to provide the necessary continuity and to avoid a dispersion of
   effort. The description of these sectors is adapted slightly to
   correspond more exactly with needs.
4. Multiannual indicative programming is provided for as the Community
   will be offering sustained support to programmes and projects which
   span several years. Within this multiannual approach, the principle
   of annuality in budget allocations is respected. This implies the
   need for action programmes specifying the main projects on a yearly
   basis.
   The indicative programmes and the action programmes will be adopted
   through the management committee procedure.
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5. The regulation makes provision for assistance to be offered, under
   the Community's tendering procedures, by entities either in the
   Community, the beneficiary countries, the Phare recipient states or
   adjacent Mediterranean states. The inclusion of this "triangular1"
   element Is designed to encourage the provision, of assistance by
   countries with specific relevant expertise, based on experience in
   transition to a market economy or on close links with the
   beneficiaries.
6. The regulation provides for assistance to be reviewed if the
   political situation in a beneficiary state impedes the effective
   implementation of the programme* This provision is based on recent
   experience and provides a necessary element of flexibility In
   difficult circumstances.
7. in order to prevent unforeseen circumstances from hampering the
   process of recovery in the beneficiary states, the proposed
   regulation provides that up to ten per cent of the total annual
   allocation should be available when necessary for responding to
   humanitarian needs» as with PHARE.
8. The proposed regulation provides for the preparation of an annual
   progress report.
In addition to these modifications, the Commission would draw
attention to the Importance of retaining the provision of the previous
regulation for the award by restricted Invitation to tender and by
private treaty for operations up to ECU 300,000. Any heavier procedure
would introduce excessive delays and Impede the delivery of
assistance.
Tne Commission would also draw attention to the importance of the
provision, retained from the previous regulation, which calls for the
effective co-ordination, by the Commission, together with the Member
States, of the technical assistance efforts by the Community and
Member States on-the basis of information provided by the Member
States.
On this basis, the Commission would invite the Council to adopt the
attached proposal.
 ---pagebreak---                                                             - 4 -
                                                     Proposal for a
concerning the provision of technical assistance to economic reform and recovery
   in the independent States of the former union of Soviet Socialist Republics
                                                      and Mongolia
   THE COUNCIL OF THE EUROPEAN COMMUNITIES,
   Having regard to the Treaty establishing the European Economic Community, and in
   particular Article 235 thereof,
  Having regard to the Treaty establishing the European Atomic Energy Community, and
   in particular Article 203 thereof.
   Having regard to the proposal of the Commission,
   Having regard to the opinion of the European Parliament,
   Whereas pursuant t o t h e European Council meetings i n D u b l i n and i n Rome the
   European Community i n t r o d u c e d a t e c h n i c a l a s s i s t a n c e programme i n favour of
   the economic reform and recovery i n the former Union of Soviet S o c i a l i s t                          Republics;
   Whereas Council R e g u l a t i o n (EEC, EURATOM) No 2157/91 of 15 J u l y 1991 concerning
   the p r o v i s i o n of t e c h n i c a l assistance t o economic reform and recovery i n the
                                                          1
   Union of Soviet S o c i a l i s t Republics lays down t h e c o n d i t i o n s f o r the p r o v i s i o n s
  of t h i s t e c h n i c a l a s s i s t a n c e and foresaw such o p e r a t i o n under t h e 1991 and 1992
  budgetary p e r i o d s ; whereas since the s a i d reform and recovery i n the former Union
  of Soviet S o c i a l i s t Republics i s s t i l l underway, i t              i s necessary t o c o n t i n u e t h i s
  effort;
   Whereas it is necessary to take express account of the consequences of the
  dissolution of.the Union of the Soviet Socialist Republics, of which Armenia,
   Azerbaijan, Belarus, Georgia, Kazakhstan, Kirghizstan, Moldavia, the Russian
   Federation, Tadjikistan, Turkmenistan, Ukraine and Uzbekistan, hereinafter called
   "the independent States" were part;
   Whereas in view of Mongolia's close traditional links with the former Union of
   Soviet      Socialist         Republics          and   of  the  fact       that    it  is    in  the
  process        of     transition            to   a   market  economy      and     hence  has
  1
    0J No L 201, 24.7.1991, p. 2.
 ---pagebreak---                                             -  5 -
need of technical assistance with economic reconstruction, comparable with the needs
of the independent states, it is appropriate to extend the technical assistance to the state
of Mongolia;
Whereas the priority sectors for technical assistance cover the fields of human
resources development; support for enterprises, including financial services; food
production, distribution and marketing; transport and energy ;
Whereas to ensure that unforeseen circumstances do not unduly hamper the process of
recovery in the independent States and Mongolia, it is necessary to permit a certain
amount of the financial allocation to be used for humanitarian aid;
Whereas the requirements of economic reform and restructuring now in progress, and
the effective management of this programme require a multi-annual approach;
Whereas assistance for economic reform and recovery may require specific types of
expertise particularly available in the PHARE beneficiary countries and in certain
other states;
Whereas the continued provision of technical assistance will contribute to the
attainment of the Community's objectives, and the Treaties have not provided, for the
adoption of this Regulation, powers other than those of Article 235 of the EEC Treaty
and Article 203 of the EAEC Treaty,
HAS ADOPTED THIS REGULATION:
                                          Article 1
A programme to assist economic reform and recovery in the States listed in the Annex
(hereinafter called the "beneficiary States") shall be implemented by the Community
as from 1 January 1993 in accordance with the criteria laid down in this Regulation.
Assistance shall be concentrated on sectors and, where appropriate, on selected
geographical areas where it can play a central role and serve as an example in
support of the reform process.
The assistance will be reviewed if the political situation in a beneficiary State impedes
the effective implementation of the programme.
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                                            Article 2
The budget authority shall determine the appropriations available for each financial
year, taking into account the principles of sound financial management referred to in
Article 2 of the Financial Regulation applicable to the general budget of the European
Communities and with due regard for the financial perspectives.
                                           Article 3
1.      The programme referred to in Article 1 shall take the form of technical
        assistance for the economic reform under way in the beneficiary States. It shall
        also cover reasonable costs of supplies required in support of the
        implementation of the technical assistance .
        The cost of the projects in local currency shall be covered by the Community
        only to the extent strictly necessary.
2.      The assistance shall also cover costs related to the preparation, implementation,
        monitoring and evaluation of the execution of these operations.
3.      Technical assistance shall give priority to the fields of human resources
        development; support for enterprises, including financial services; food
        production, distribution and marketing; energy and transport.
4.      Operations to be financed under this Regulation shall be selected taking account,
        inter alia, of the recipients' preferences and on the basis of an assessment of
        their effectiveness in achieving the objectives aimed at by the Community
        assistance.
5.      Technical cooperation shall be implemented on a decentralized basis. The final
        recipients of Community assistance shall be closely involved in the evaluation
        and execution of the projects.
6.      At the request of a beneficiary state humanitarian aid and technical assistance
        for its implementation maybe provided. In the first instance such aid shal I not
        exceed 10% of the annual financial allocation to be made available under this
 ---pagebreak---                                       - 7 -
   Regulation. Amendment to either the objectives of such aid or to the percentage
   mentioned above may be made in accordance with the procedure provided for
   in Article 7 (2) and (3).
                                     Article 4
1. Community assistance shall take the form of grants which shall be released in
   tranches as projects materialise.
2. Financing decisions and any contracts resulting therefrom shall expressly
   provide, inter alia, for supervision by the Commission and the Court of
   Auditors to be carried out on the spot, if necessary.
                                     Article 5
1. Indicative programmes covering a three-year period shall be established for
   each of the beneficiary States in accordance with the procedure provided for in
   Article 7 (2) and (3). They shall define the principal objectives and orientations
   of Community assistance in the priority areas referred to in Article 3. They
   shall be adopted every three years and may be amended in accordance with the
   same procedure during the period of their application.
2. Action programmes based on these indicative programmes shall be adopted in
   accordance with the procedure provided for in Article 7 (2) and (3). These
   action programmes shall include a list of the main projects to be financed
   within the priority areas referred to in Article 3.
                                     Article 6
1. The Commission shall implement operations in accordance with the action
   programmes referred to in Article 5(2).
2. Supply contracts shall be awarded by means of open invitations to tender except
   in the cases provided for in Article 116 of the Financial Regulation applicable
   to the general budget of the European Communities.
   Service contracts shall, as a general rule, be awarded by restricted invitations to
   tender and by private treaty for operations up to ECU 300 000.
 ---pagebreak---                                           - 8 -
   Participation in invitations to tender and contracts shall be open on equal terms
   to all natural and legal persons in the Member States and in the benef i c i a ry
   States.
   Participation by natural and legal personsfromthe countries benefiting from
   PHARE as w e l l as from adjacent Mediterranean c o u n t r i e s may be
   a u t h o r i s e d by the Commission on a case-by-case b a s i s i f                  the programmes
   or p r o j e c t s concerned r e q u i r e s p e c i f i c forms of a s s i s t a n c e    particularly
   a v a i l a b l e i n economies i n t r a n s i t i o n or i n c o u n t r i e s w i t h  traditional
   economic or g e o g r q p h i c a l links.
3. Taxes, duties, charges and the purchase of immovable property shall not be
   funded by the Community.
4. In the case of co-financing,the participation of third countries in invitations to
   tender and contracts may be authorised by the Commission, but on a case-by-
   case basis.
                                        Article 7
1. The Commission shall be assisted by a committee composed of the
   representatives of the Member States and chaired by the representative of the
   Commission, to be known as the "Management Committee for Assistance to the
   independent States and Mongolia".
2. The representative of the Commission shall submit to the Committee a draft of
   the measures to be taken. The Committee shall deliver its opinion on the draft
   within a time limit which the chairman may lay down according to the urgency
   of the matter. The opinion shall be delivered by the majority laid down in
   Article 148 (2) of the EEC Treaty in the case of decisions which the Council is
   required to adopt on a proposalfromthe Commission. The votes of the
   representatives of the Member States within the Committee shall be weighted in
   the manner set out in that Article. The chairman shall not vote.
3. The Commission shall adopt measures, which shall apply immediately.
   However, if these measures are not in accordance with the opinion of the
 ---pagebreak---                                            - 9 -
        Committee, they shall be communicated by the Commission to the Council
        forthwith. In that event, the Commission shall defer application of the measures
        which i t has decided f o r a p e r i o d o f s i x weeks.
        The Council, acting by a qualified majority, may take a different decision
        within the period laid down in the first subparagraph.
4.      The Committee may examine any other question relating to the implementation
        of this Regulation which may be put to it by its Chairman, possibly at the
        request of the representative of a Member State and, in particular, any question
        relating to general implementation, the administration of the programme co-
        financing and the coordination referred to in Article 8.
5.      The Commission shall inform the Committee at regular intervals concerning the
        implementation of the technical assistance programme.
                                         Article 8
   The Commission shall, together with the Member States, ensure the effective co-
 ordination of the technical assistance efforts undertaken in the beneficiary states by
 the Community and individual Member States on the basis of the information
 supplied by the Member States.
 In addition coordination and cooperation with the International Financial
 Institutions shall be stimulated.
                                         Article 9
  At the end of each financial year the Commission shall draw up a progress report on
 the implementation of the technical assistance programme. This report shall be
 addressed to the European Parliament, the Council and the Economic and Social
 Committee.
                                         Article 10
  This Regulation shall enter into force on the third day following that of
   its publication in the Official Journal of the European Communities.
 ---pagebreak---                                          - 10 -
It shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels,                                                     For the Council
                                                                       The President
 ---pagebreak---                          - 11 -
                        ANNEX
                   BENEFICIARY STATES
 Armenia
Azerbaijan
Belarus
Georgia
Kazakhstan
 Kirghizstan
Moldavia
Russian Federation
Tadjikistan
Turkmenistan
Ukraine
Uzbekistan
Mongolia
 ---pagebreak---                                    - 12 -
                              FINANCIAL STATEMENT
                       SECTION 1: FINANCIAL IMPLICATIONS
1. Title of operation
   Technical cooperation with the independent states of the former Soviet
   Union and Mongolia
2. Budget heading involved
   B7-620        Technical cooperation with the independent states of the
                 former Soviet Union.
                 Mongolia's inclusion in the list of recipient countries will
                 require the title of the budget heading to be changed.
3. Legal basis
   Council Regulation (EEC) No 2157/91 of 15 July 1993, which only covers
   1991 and 1992.
   The attached proposal for a Regulation (from 1993).
4. Description of operation
   4.1  Specific objectives of operation
        To assist the reform process, in particular by financing or helping
        to finance technical assistance operations aimed at supporting the
        transition towards a market economy, mainly in the field of human
        resources, business support including financial services,
        production, distribution and marketing of food products, energy and
        transport.
   4.2  Duration
        Unlimited
   4.3  Target population
        The population of the former Soviet Union and Mongolia.
5. Classification of expenditure or revenue
   Non-compulsory
   Differentiated
6. Type of expenditure or revenue
   100% subsidy
7. Financial impact
   7.1  Method of calculating total cost of operation (commitment
        appropriations)
        1992    Budget   ECU 445 million
        1993    PDB      ECU 520 million
 ---pagebreak---                              - 13 -
   7.2  Breakdown of operation.
        Ten per cent could be used as part of humanitarian aid operations at
        the request of the recipient countries.
8. What anti-fraud measures are planned in the proposal for the operation?
   Anti-fraud measures are carried out by the delegation staff, who check
   that the proper procedures are followed and work well at each stage of
   the development of the projects, and that the projects are carried out.
   Inspection and audit missions are also planned for the various countries.
   A management information system has been set up to monitor:
        the technical execution of the programmes;
        contracting procedures, and
        expenditure.
9. Elements of cost-effectiveness analysis
   9.1. Objectives
        The aim of the technical assistance programme for the former Soviet
        Union and Mongolia is:
        (a) to secure their transition to a market economy;
        (b) to modernize their economies.
        It is not possible at this time to determine how long the programme
        will run given the scale of the problems confronting the countries
        concerned.
   9.2. Grounds for the operation
   The operation is part of the implementation of decisions taken by the
   European Council in Rome in December 1990.
   The community aid is intended, by transferring skills and knowledge, to
   achieve a multiplier effect in the five sectors concerned, helping to
   create the conditions for internally-generated economic development in
   the Soviet Union and Mongolia and an attractive environment for foreign
   investors.
   The community•s contribution will be mainly to provide consultants (both
   individual experts and consultancies) and training programmes.
   9.3. Monitoring and evaluation of the operation
   Performance indicators
   The success of the technical assistance operations will be measured by
   the ability of the former Soviet States to take over from European
   experts on programmes run with Community assistance. Every effort will be
   made to ensure that European experts are progressively replaced by local
   staff in the relevant sectors.
   The European experts will be recruited under service contracts containing
   detailed terms of reference, specifying the objectives to be met and the
   time limit for the work, so as to permit their programme to be evaluated
   afterwards.
 ---pagebreak---                              - 14 -
Details of evaluation
Commission staff will draft regular reports on the progress of the
operations, the problems encountered and how they are to be tackled.
The experts responsible for the projects will also draft regular reports
on the execution of their duties.
The commission will regularly inform the Member states on the progress of
the programme via a Management Committee for Assistance to the
Independent States and Mongolia.
 ---pagebreak---                                              - 15 -
                                                                     ISSN 0254-1475
                                                              COM(92) 475 final
                                                      DOCUMENTS
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                                 Catalogue number : CB-CO-92-586-EN-C
                                                             ISBN 92-77-50853-1
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