11 PHARE programme
| (26422)
7225/05
COM(05) 64
+ ADD 1
| 2003 Commission Report on the PHARE programme and the pre-accession instruments for Cyprus, Malta and Turkey
|
| Legal base | Article 10 of Council Regulation 3906/89/EEC, Article 11 of Council Regulation 555/2000/EC and Article 11 of Council Regulation 2500/2001/EC
|
| Document originated | 1 March 2005
|
| Deposited in Parliament | 14 March 2005
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| Department | International Development
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| Basis of consideration | EM of 30 March 2005
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| Previous Committee Report | None
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| To be discussed in Council | April 2005 GAERC
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but relevant to any debate on the proposed new EU external financial instruments
|
Background
11.1 In order to assist the applicant countries to adopt the acquis
communautaire and to equip themselves to benefit from EU funds
on accession, the Union provides financial assistance as part
of its Pre-Accession Strategy. The PHARE programme (originally
the Poland/Hungary Assistance for Reconstruction of Economy programme),
first introduced in 1989, was extended to cover all the acceding
and candidate countries from central and eastern Europe, and principally
involves Institution-Building measures (with accompanying investment)
and measures designed to promote Economic and Social Cohesion
(ESC). Within the Commission, it comes under the responsibility
of the Directorate-General for Enlargement, which is also responsible
for overall co-ordination of pre-accession assistance —
PHARE, ISPA (the Instrument for Structural Policies for Pre-Accession,
which deals with large-scale environment and transport investment
support) and SAPARD (Special Accession Programme for Agricultural
and Rural Development). Cyprus, Malta and Turkey receive pre-accession
assistance via separate but similar instruments, budget lines
and procedures.
The report from the Commission
11.2 The Commission's 2003 Annual Report assesses the progress
of the PHARE programme in the ten beneficiary countries and the
pre-accession instruments for Cyprus, Malta and Turkey. Eight
of the ten countries which were previously eligible — the
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia
and Slovenia — became Member States in May 2004, together
with Malta and Cyprus. As a result, 2003 was the final programming
year for pre-accession assistance to these countries, though contracting
is envisaged to continue till 2005 and payment of funds till 2006.
Pre-accession aid will be substantially increased in the remaining
candidate countries; Bulgaria and Romania together have been allocated
some €4.5 billion for the period 2004-2006, while Turkey
is due to receive €1.05 billion during this period.
11.3 The report briefly summarises progress in 2003
in the accession negotiations for Bulgaria and Romania. While
continuing to fulfil the political criteria, neither yet fully
complied with the economic criteria. Both were on track to complete
the required legislative alignment, but sustained efforts were
required in order to develop sufficient administrative and judicial
capacity to ensure proper implementation of the acquis.
Revised Accession Partnerships were adopted in April 2003, and
pre-accession assistance was increased for 2004-2006. Both countries
were judged to be on track for accession in 2007. As regards
Turkey, its government had accelerated reforms and had made significant
efforts towards meeting the economic and political criteria, but
further efforts were needed in a number of areas, such as the
civilian control of the military and the exercise of fundamental
freedoms, including freedom of religion. A revised Accession Partnership
providing detailed guidance about the areas where further reforms
are needed was adopted. The report also notes that Croatia applied
for membership in February 2003 and received candidate status
in June 2004.
11.4 PHARE guidelines have changed in recent years:
about 65% now goes to Institution Building and 35% towards investment
in ESC. "Twinning" is the main instrument for Institution
Building through secondment of experts from Member States. There
was a particular ESC focus in 2003, to prepare for post-accession
EU funds. The guidelines also encouraged accession candidates
to use their PHARE National Programme funds to support actions
of a cross-border nature at their external borders, so as to address
potential dividing lines on the future border of the Union. As
accession neared, greater emphasis was placed on moving towards
the Extended Decentralisation Implementation System (EDIS) —
the full decentralisation of EU support, whereby the management
of EU pre-accession funds is devolved to candidate country administrations,
with the Commission, whilst retaining the final responsibility,
exercising no systematic ex-ante control over individual transactions
and limiting its role to ex-post control. Overall, in 2003 the
total PHARE commitment was €1,699m (£1,172m). The UK's
share of this assistance was 18.12%; €308m (£212m).
Total assistance comprised: National Programmes €1,223m
(£844m); cross-border co-operation €161m (£111m);
regional and horizontal programmes €187m (£129m); and
nuclear safety €128m (£88m).
11.5 The Commission explains that the move to EDIS
is a 4 stage process (set out in detail in the Commission working
document, "Preparing for Extended Decentralisation",
sent to the candidate countries in 2000, and the "Roadmap
to EDIS for ISPA and PHARE", sent to candidate countries
in 2001). As the Commission puts it, "the obligation to
put EDIS in place by the date of accession was included in the
Act of Accession (article 33) and provided a clear impetus for
final preparations to move to EDIS". After detailing various
measures taken in 2003 to help achieve this goal, it says that
preparations for EDIS were accelerated in all candidate countries
in 2003, and the Czech Republic, Hungary, Lithuania, Latvia, Slovakia
and Slovenia reached the final stage whereby EDIS would be fully
granted, and the ex-ante control on management of pre-accession
funds be waived. For the 12 countries concerned, the state of
play on EDIS at the end of 2003 was:
- " Bulgaria and Romania
had progressed further in Stage 1 (Gap assessment);
- Poland and Estonia had completed stage 3 (Compliance
assessment), but had not yet submitted the EDIS applications to
the Commission required to initiate the final Stage 4 of the Roadmap.
Both applications were submitted in early 2004;
- The Czech Republic, Hungary, Lithuania, Latvia,
Slovakia and Slovenia had submitted the required EDIS applications
to the Commission. This initiated the final Stage and triggered
a verification audit by relevant Commission audit services. In
the case of a positive assessment, it would lead to the granting
of EDIS in the form of a Commission Decision, waiving ex-ante
control on management of pre-accession funds. In November and
December, DG Enlargement auditors undertook on-the-spot verification
audits in Hungary and in Slovenia. However, the outcome of these
audits did not lead to the launch of the process to adopt a Commission
decision to grant EDIS before the date of accession."
Follow up audits were made in Malta and Cyprus. These
did not lead to the launch of the process to adopt a Commission
decision to grant EDIS before the date of accession.
11.6 The report then looks briefly at Monitoring
and Evaluation, which aims both to assess performance and
derive lessons to be learned and, at the same time, support the
development of local monitoring and evaluation capacity and thus
strengthen the states' capacity to manage and control pre-accession
aid. It says that the ex ante evaluation report of programming
mechanisms in 2004 and beyond "illustrated the needs for
a more strategic programming approach, an increase of resources
for project design and the introduction of a more systematic quality
control. This resulted in an action plan and follow-up measures
addressing the report recommendations" including "guidelines
for multi-annual programming". The PHARE Monitoring and
Interim Evaluation scheme generated some 123 individual
country, sectoral and thematic evaluation reports of the PHARE
programmes. "On the whole, interim evaluation results concluded
that PHARE performance was satisfactory. Projects' priorities
were in line with those of the Accession Partnerships, Regular
Reports and Action Plans. Interim evaluation itself is now widely
accepted as an integral part of the project management cycle.
Following through on evaluation findings and recommendations generated
a cascade of beneficial effects, and led to the diffusion of an
evaluation culture". Finally, the 2003 ex post evaluation
of PHARE 1997-98 national programmes "revealed the very high
relevance of Phare, which addressed problems that "were very
critical or rather critical obstacles on the path towards accession",
the highest impact in acquis-oriented policy domains (third
Copenhagen criterion), and a strong domination by the Commission
Services of the programming process, that partly reflects the
programming weaknesses of the Candidates Countries."
11.7 The detailed work upon which the Report is based
— 13 country analyses in part 1; analysis of 11 cross-cutting
issues in part 2; financial data in part 3 — are set out
in the lengthy annex that forms ADD 1.
The Government's view
11.8 The Secretary of State for International Development
(Mr Hilary Benn) says:
"The UK is content with the findings of the
report. With the accession of the 10 countries in 2004, the programme
has substantially achieved its aim of assisting candidate countries
in their preparations for joining the European Union. Pre-accession
assistance played a significant part in the 2004 accession process
which was the largest ever undertaken, and involved countries
very different to those involved in previous processes. There
are now only four current candidate countries: Bulgaria and Romania
(due to join in 2007) and Turkey and Croatia, whose entry negotiations
are due to begin in 2005.
"The improved monitoring and evaluation process,
now managed in partner countries, is welcome and paves the way
for better quality control of programmes and assessment of their
continued relevance. Value is also enhanced through the attention
given to co-ordination with other pre-accession instruments, SAPARD
and ISPA. The continued adaptation of programme guidelines to
reflect changing needs is further evidence of the attention paid
to programme management. These lessons are being taken forward
in the current negotiations with the Commission over the shape
of assistance when the new neighbourhood and pre-accession policies
and instruments are introduced in 2007.
"Progress towards EDIS is particularly welcome
as not only pre-accession funds, but also significant accession
resources, will be devolved to country administrations. All new
Member States have now been EDIS accredited and Bulgaria and Romania
are expected to achieve accreditation by the end of 2005."
Conclusion
11.9 It is easy to forget the realities of central
and eastern Europe in the days of the demolition of the Berlin
Wall and the Velvet Revolution. The Secretary of State is right:
after 50 years of totalitarianism, they were very different
countries from those involved in previous enlargements, and the
fact that eight of the ten are members of the Union only 15 years
later is a testament to the creativity, energy and determination
of all those who have made a success of the PHARE programme.
11.10 Nonetheless, the Secretary of State is also
right in not being complacent. Earlier this year we considered
the Court of Auditors' Reports on the 1998-2002 PHARE and 2000-2003
SAPARD programmes and the Commission's own report on the 2003
ISPA programme.[25]
As we said then, the lessons learned from operating this inter-related
trio of Instruments need to inform and be embedded not only in
activity with the remaining candidate countries but, more importantly,
in the successor Instruments the Commission is proposing for 2007-13,
which, if it has its way, would result in total EU expenditure
on external assistance of €95 billion.[26]
Common features include the challenges posed by lack of institutional
capacity among the recipients. As we also noted then, the experience
of these three Instruments is mixed; essentially positive, but
at the end of the period only very limited implementation of the
"learning by doing" EDIS approach, which is central
to moving towards real decentralisation and local ownership, and
of multi-annual programming (MAP). Curiously, both the Commission's
report and the Secretary of State pass over MAP, the lack of which
the Court of Auditors' noted in its evaluation of the 1998-2002
PHARE programme (at which point only Hungary had a programme lasting
more than one year). The Secretary of State does say, however,
that all the new Member States are now fully EDIS-accredited:
given the state of play at the end of 2003, a significant effort
must have been made in the ensuing four months, unless liberties
were taken with the accreditation requirements in order to fulfil
the accession timetable.
11.11 In other, less-developed and more distant
areas of the world, the same theoretical commitment to decentralisation
and local ownership has produced far less satisfactory results:
witness the Special Framework of Assistance put in place in 1999
to help the twelve traditional ACP banana suppliers to cope with
the transition to new market conditions, which we described earlier
this month as "a tale of unadulterated woe".[27]
Once the Secretary of State is able to tell us more about the
pace of the negotiations in the Working Groups dealing with the
proposed new external instruments, we are minded, as we have noted
earlier, to recommend them for debate.[28]
In the meantime we regard this Commission Report, as relevant
to any debate on the proposed new financial instruments.
25 See (26130) 14412/04 (26139) 14727/04 + ADDS 1&2
and (26145) 14729/04 + ADD 1; HC 38-iii (2004-05), paras 15-17(12
January 2005). Back
26
See (26042) 13687/04 (26043) 13688/04 (26044) 13689/04 (26045)
13690/04; HC 38-i (2004-05), para 13 (1 December 2004) and HC
38-v (2004-05), para 2 (26 January 2005). Back
27
See (26259) 5132/05; HC 38-xi (2004-05), para 8 (15 March 2005). Back
28
See (26042) 13687/04 (26043) 13688/04 (26044) 13689/04 (26045)
13690/04; HC 38-i (2004-05), para 13 (1 December 2004) and HC
38-v (2004-05), para 2 (25 January 2005). Back
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