Select Committee on European Scrutiny Ninth Report


25 Pre-accession assistance in 2002

(25245)

5171/04

COM(03) 844

Commission Report— General report on pre-accession assistance (PHARE — ISPA — SAPARD) in 2002

Legal base
Document originated5 January 2004
Deposited in Parliament14 January 2004
DepartmentInternational Development
Basis of considerationEM of 22 January 2004
Previous Committee ReportNone
To be discussed in CouncilNo date set
Committee's assessmentPolitically important
Committee's decisionCleared

Background

25.1 The three pre-accession aid instruments, PHARE, ISPA and SAPARD, operate under guidelines implemented in 2002. Areas of responsibility were agreed as follows: PHARE's main purpose is to help candidate countries adopt the acquis communautaire and prepare them for the use of Structural Funds; ISPA finances large infrastructure projects in the transport and environment sectors; SAPARD's purpose is to assist in the implementation of the acquis in relation to the Common Agricultural Policy and all related areas.

25.2 SAPARD is implemented in a fully decentralised manner, whereas PHARE and ISPA are implemented by the Decentralised Implementation System (DIS). Both PHARE and ISPA will however be moving to an Extended Decentralised Implementation System (EDIS) similar to that used by SAPARD.[52] This system requires each country to set up the relevant management and control systems.

The Commission report

25.3 This is the third annual report by the Commission on the three pre-accession instruments and their co-ordination. It sets out the allocation of each instrument on a country-by-country basis, explains how ISPA and SAPARD were developed in 2002 and assesses how well the three instruments were coordinated.

25.4 The total allocation for PHARE in 2002 amounted to €1,699 million. Apart from the allocations to each country, the report gives the figures for: Nuclear Safety Programmes €108 million; Cross-border Co-operation (CBC) €163 million; and Regional and Horizontal Programmes €260 million. Institution Building, primarily through Twinning, accounted for 40% of commitments within national programmes. When combined with associated investment, it accounted for 70% of the PHARE budget. The remainder was in the form of investments to assist in the adoption of the acquis.

25.5 The 2002 allocation for ISPA amounted to €1107 million. This consisted primarily of 80 new ISPA measures and second tranches for projects decided in 2000 and 2001. Of this, €4.2 million was committed for technical assistance for EDIS, and €35.1 million for project preparation. ISPA projects are established on a co-financing basis, with the beneficiary states and International Financial Institutions (IFIs) accounting for an average of 35% of project cost in 2002. The total cost of the 249 projects approved between 2000 and 2002 is €8.75 billion, of which the EU is financing €5.56 billion.

25.6 Commitments in 2002 were divided equally between the environment and transport sectors. In the environment sector, projects focussed primarily on sewage works, and 18% of spending in this sector was applied to solid waste management. In the transport sector, 45.7% of funds were allocated to road projects, and over 50% to rail projects.

25.7 ISPA experienced some delays in project implementation, and some shortfall in the quality of tenders during the reporting period. This was primarily due to delays in land acquisition, problems in traffic flow forecasting and environmental impact assessments, and problems in managing tendering procedures. The training seminars, and other measures begun in 2001 to assist the candidate countries to improve their capacity and compliance with Community policies, continued in 2002.

25.8 The SAPARD programmes for all ten countries were approved by the Commission in 2000. Most were later modified, primarily to take into account the work associated with the expected conferral of the management role on the new SAPARD agencies in the countries concerned. By the end of 2002, the Commission had decided to transfer the management of SAPARD programmes to the national authorities of all the candidate countries. In addition to the €30.5 million transferred to these countries in 2001, €123.8 million was transferred in 2002.

25.9 General co-operation between those managing the three instruments, and between them and the IFIs, is the responsibility of the Enlargement Directorate General, working with the PHARE Management Committee. Co-operation with the European Investment Bank (EIB) and other IFIs continued in 2002 under the 1998 Memorandum of Understanding between the Commission, the European Bank for Reconstruction and Development (EBRD) and the World Bank. This was signed later the same year by the Nordic Environment Finance Corporation, the Nordic Investment Bank, the International Financial Corporation and the Council of Europe Development Bank. Within each country, the EC delegations take responsibility for co-ordination between government ministries with regard to these programmes and also for organising donor meetings with IFIs and bilateral donors to exchange information.

25.10 During 2002, some 125 evaluation reports were issued, covering all aspects of PHARE assistance. The Interim Evaluation system was revised in 2002 to help ensure the sound financial management of PHARE measures. The revision included improvements in methodology and formats, and a faster, more differentiated reporting system, with clearer targeting of specific audiences.

The Government's view

25.11 The Secretary of State for International Development (Mr Hilary Benn) comments that the progress made in the movement towards EDIS is especially welcome, given that this will develop the candidate countries' capacity to handle the significant resources that will be allocated to them on accession. He adds:

"PHARE's monitoring and assessment reports show that the instrument is being effectively implemented, and that there has been a substantial improvement in administrative capacity. While this is welcome, the report also notes some difficulties with financial and time management, and with the recruitment and training of specialists. The continuing emphasis on capacity building, and the improvements in the Interim Evaluation system are however welcomed.

"It is welcome that the results of co-operation between ISPA and participating IFIs, mainly EIB and the EBRD, have been positive. Collaboration with these two institutions resulted in the co-financing of several projects in 2002. Co-operation with IFIs has led to operational improvements, and the EIB and EBRD have also contributed expertise to the preparation of Commission guidelines."

Conclusion

25.12 How effective these three programmes have been in preparing the eight Accession States of Central and Eastern Europe for enlargement may only become apparent after they have become Member States of the EU. This report shows that by 2002 the need to build up their administrative capacity had been recognised. Increasing emphasis was placed on institution building to enable them to implement the acquis successfully and to make good use of the substantial Structural and Cohesion Funds that they will receive. It was unfortunate, perhaps, that this lack of capacity was not sufficiently appreciated earlier and there may be a lesson here for future enlargements.

25.13 We now clear the document.


52   The Extended Decentralisation Implementation System (EDIS) is a process which gives the Commission power to confer on implementing agencies in the Accession States and Candidate Countries management of aid on a decentralised basis and to waive the requirement for prior approval from the EC Delegations for tendering and contracting procedures. The four procedural stages are: gap assessment; gap filling; compliance assessment; and preparation for a Commission decision. Back


 
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