European Scrutiny Committee Contents

9   EU enlargement: pre-accession finance




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COM(10) 687




COM(10) 640

Commission Communication: 2009 Annual Report on the Implementation of the Instrument for Pre Accession Assistance (IPA)

Commission Communication: Instrument for Pre-Accession Assistance (IPA): Multi-annual Indicative Financial Framework for 2011-2013

Legal base
Document originated(a) 25 November 2010

(b) 10 November 2010

Document deposited(a) 1 December 2010

(b) 17 November 2010

DepartmentInternational Development
Basis of considerationEM of 20 December 2010
Previous Committee ReportNone; but see (31255) 5271/10 and (31030) 14685/09 HC 5-x (2009-10), chapter 2 (9 February 2010); HC 19-vii (2008-09), chapter 1 (11 February 2009); (30162) 15620/08 and (30303) 17210/07: HC 19-vii (2008-09), chapter 1 (11 February 2009); also see (29154) 14862/07: HC 16-xvi (2007-08), chapter 9 (19 March 2008) and HC 16-viii (2007-08), chapter 18 (16 January 2008); (28022) 15122/06: HC 41-ii (2006-07), chapter 16 (29 November 2006); and (27653-55) HC 34-xxxvii (2005-06), chapter 52 (11 October 2006)
Discussed in Council(a) To be determined

(b) To be determined

Committee's assessmentPolitically important
Committee's decisionCleared


9.1  From 1 January 2007, all pre-accession assistance has been delivered by the Instrument for Pre-accession Assistance (IPA) — one of a small number of new Instruments for EU External Assistance (the other relevant ones being the European Neighbourhood and Partnership Instrument, the Development Cooperation Instrument and the Instrument for Stability) which replaced a plethora of instruments and budget lines. The IPA replaces PHARE (implementing the acquis communautaire, economic restructuring and political capacity-building), ISPA (environmental and transport projects) and SAPARD (agriculture and rural development). All involved a staged, quality-assured process, which, over time, seeks to ensure that candidate countries are prepared for and finally enabled to access post-accession funding effectively and efficiently on their own. This is called EDIS — Extended Decentralised Management System.

9.2  The purpose of IPA is thus to provide financial support for countries seeking EU membership. It is presently available to candidates (Turkey, Croatia and Macedonia) and to pre-candidates (Albania, Bosnia and Herzegovina, Montenegro, Serbia and Kosovo under United Nations Security Council Resolution 1244). IPA assistance helps to strengthen democratic institutions and the rule of law, reform public administration, carry out economic reforms, promote respect for human as well as minority rights and gender equality, support the development of civil society and advance regional co-operation, and contribute to sustainable development and poverty reduction. The IPA consists of five different components:

i)  Transition Assistance and Institution Building, aimed at financing institution- building measures and associated investment;

ii)  Cross-Border Co-operation, to support cross-border cooperation at borders between candidate/potential candidate countries and between them and the EU countries. It may also fund participation of beneficiary countries in Structural Funds' trans-national co-operation programmes and the European Neighbourhood and Partnership Instrument programmes, as appropriate;

iii)  Regional Development, which finances investments and associated technical assistance in areas such as transport, environment and regional competitiveness;

iv)  Human Resources Development, designed to strengthen human capital and help combat exclusion;

v)  Rural Development, which emulates post-accession Rural Development programmes by financing rural development-type measures that are similar in nature though smaller in scale.

9.3  Components I and II are open to all beneficiary countries. Components III, IV and V are open to candidate countries only, and are designed to mirror Structural, Cohesion and Rural Development funds in preparation for managing such funds upon accession, through a learning-by-doing process. This requires that the country has the administrative capacities and structures to take responsibility for the management of assistance. For potential candidate countries, regional, human resources and rural development-type measures will be implemented through the Transition Assistance and Institution Building component.

9.4  Components I and II are overseen by the IPA Management Committee (made up of Member State representatives and chaired by the Commission ), components III and IV by the Structural Actions Management Committee (COCOF), component IV by them and the European Social Fund Committee, and component V by the Rural Development Committee.

9.5  The overall political priorities for pre-accession are set out in the Accession and European Partnerships, the annual progress reports and the enlargement strategy paper contained in the enlargement package presented by the Commission to the Council and European Parliament each year.

9.6  The Multi-Annual Indicative Financial Framework (MIFF), which is established and presented annually to the Council and the European Parliament, in accordance with Article 5 of IPA Regulation (EC) No 1085/2006, is a breakdown of the overall IPA envelope — €11.47 billion (£10.18 billion) over the financial perspective 2007-2013 — by country and by component, for a three year rolling period. The Commission describes it as the link between the political framework within the enlargement package and the budgetary process. The Multi-Annual Indicative Planning Documents (MIPD) established for each beneficiary country and for the multi-beneficiary programme, through which pre-accession aid is delivered, take into account the indicative breakdown proposed in the MIFF. For the first time for 2011-2013 there will also be a separate MIPD for cross-border cooperation.

9.7  The Commission explains that, as 2013 represents the last budgetary year of IPA, this MIFF covers the same years as the previous MIFF, i.e. 2011-2013. It indicates the allocation of the envelope for pre-accession assistance by country and by component for these years, and also gives an indication of the multi-beneficiary programme envelope and support expenditure. The Commission also notes that, as in previous years, the MIFF is published based on the current status of the countries concerned and so does not at this stage pre-empt any decision by the Council on the Opinions presented with the enlargement package or a likely date of accession for any candidate country. It also notes that, for the first time, Iceland is included as a beneficiary country.

9.8   At the outset, allocations were set out for each country under each component, as well as allocations to regional programmes and to administrative costs. The main criteria used included:

—  no country would receive less funding under IPA in 2007 than they did under previous instruments in 2006;

—  for pre-candidate countries in the Western Balkans, the MIFF set out to reach €23 per capita (in 2004 prices) by 2010;

—  as candidate countries, Croatia and Macedonia were to receive at least €30 per capita (ditto) by 2008; and

—  a gradual increase in per capita levels for Turkey over 2007-2011, taking into account the size of the country and the ability of its institutions to make good and timely use of IPA funding.

9.9  In determining the allocations between components, the Commission says that due account is taken of the readiness of the decentralised management systems necessary for the implementation of components III, IV and V in the current candidate countries.

9.10  The figures are subject to change, according to how countries move through the enlargement process towards accession. For example, as and when Croatia accedes to the EU, it would then receive Structural Funds rather than IPA, and Croatia's allocation would be shared among the remaining IPA recipients.

Previous consideration

9.11  In his Explanatory Memorandum of 6 December 2007, the then Parliamentary Under-Secretary at the Department for International Development (Mr Gareth Thomas) welcomed the IPA's objectives and the support thus provided to candidate and pre-candidate countries, and was content with the approach taken by the Commission on the basis for the allocations between countries and components.

9.12  He also noted, as "a key challenge in the region", that many of the beneficiary governments were still in the process of developing the necessary systems to programme, spend and monitor IPA assistance. This, he said, had been taken into consideration by the Commission in preparing the MIFF; the IPA also provided support to governments to develop these systems and make effective use of IPA funding; he would continue to work with the Commission to ensure that IPA assistance was allocated and spent in order to achieve maximum impact.

9.13  For its part, the previous Committee noted that a theme common to a variety of development-related topics that it had considered was the effectiveness of the assistance provided, which in turn depended not just on developing the necessary systems, but also on:

—   a determination and capacity to make changes where experience showed this to be necessary; and

—  ensuring that this overall process was subject to regular parliamentary scrutiny, since it was British and other European taxpayers' money, as well as their expectations, that were at stake.

9.14  The previous Committee accordingly looked forward to hearing from the Minister in due course on how this requirement would be met in the case of the IPA (and the other new financial instruments).

9.15  In line with its thoughts on other related documents in this Report, the previous Committee also drew this matter to the attention of the International Development Committee.[37]

9.16  In a subsequent letter of 12 March 2008 the then Minister provided information on "the specific issues of effectiveness, evaluation and future scrutiny", as follows:


Changes had been made to the IPA that built on the lessons learnt from previous instruments and addressed the concerns raised by the Court of Auditors, which should result in a significant improvement in the effectiveness of the instrument. Significant changes include:

  • Better project design, monitoring, evaluation and lesson learning, to be scrutinised by an internal Quality Support Group;
  • Increased recognition of the role of beneficiary governments, e.g. through greater involvement in the development of projects; supporting projects aimed at improving the policy and planning capacity of beneficiary governments, to ensure that they can make good use of assistance from the EU and other donors;
  • Increased emphasis on ensuring that IPA assistance complements rather than duplicates the work of other donors.

In response to EM 10984/06,[38] where the previous Committee had sought assurance that lessons had been learned on specific issues raised by the Court of Auditors — "ensuring sustainability"; "supporting co-financing"; "improving contracting rates" and "promoting additionality and catalytic effects": the design of the new instrument incorporated strengthened procedures on all these issues.

The UK would continue to work closely with the Commission to extend good practice and maximise the effectiveness of IPA assistance. The Commission's commitment to improve donor coordination in-country and across the region was particularly welcome.


The IPA Implementing Regulation included a number of measures to promote monitoring, evaluation and lesson learning. Each year, the Commission would formally monitor their programmes and carry out audits and evaluations. These programmes should promote effective implementation and evaluation of projects, as well as ensure appropriate external scrutiny. The evaluation reports would also be a vital basis for ensuring that lessons are learned for future projects.

The 2007 evaluation programme would include an ex-ante evaluation of the IPA with a focus on the three year forward plans known as Multi-Annual Indicative Planning Documents. There would also be evaluations of a selection of projects funded under previous instruments in Albania, Bosnia and Herzegovina and in the wider region.


The UK would continue to work hard to support the Commission to improve the delivery of the IPA. This would include strengthening the DFID presence in Brussels. The Commission would prepare annual reports on IPA, and the Minister's accompanying Explanatory Memoranda would provide the Committee with "regular reports on the progress that has been made on the IPA, including the outcome of evaluations as these become available."

9.17  In reporting the Minister's letter to the House, the Committee observed that the challenges facing the IPA were in many ways more daunting than those handled by its predecessor financial instruments, in that those who were to be assisted included the first prospective Muslim member country and the war-torn and ethnically-riven countries of the western Balkans. The Committee also noted that there was much in the Minister's letter that sounded encouraging, particularly the fact that €5 million had been allocated to monitoring, audit and evaluation (though it was not clear if that is for the IPA alone, or all the Commission's technical assistance work) and that the UK presence in Brussels was to be strengthened in order to support the Commission in the delivery of the IPA. It looked forward to receiving the annual reports to which the Minister referred, and in the meantime drew his letter to the attention of the International Development Committee.[39]

9.18  Two years ago, the previous Committee considered Commission Communication 17210/08, which updated the IPA MIFF to include the period 2010-2012 and included a breakdown of allocations for the whole of 2007-12 by country and component.

9.19  At the same meeting they also considered the Commission's IPA Annual Report for 2007 (15620/08), which outlined how the money allocated to IPA 2007 would be spent in the beneficiary countries and described the main developments in, and the December 2007 General Affairs and External Relations and European Council Conclusions concerning, the enlargement process, which provides the IPA with its strategic framework.

9.20  The Communication also set out the mechanisms for monitoring and evaluation. It noted that no monitoring of IPA projects was carried out during 2007, as the IPA 2007 programmes were generally only adopted at the end of the year and the actual implementation only started in 2008. There was correspondingly limited evaluation.

9.21  Finally, it looked at donor coordination with Member States bilateral programmes, the European Investment Bank and other International Financial Institutions, and drew attention to agreement amongst them that:

—  enhanced coordination between the Commission, EU Member States and non-EU donors was a priority and essential for greater effectiveness;

—  ownership of assistance by beneficiary countries was vital in order to maximize the impact;

—  the capacities of the beneficiary countries to assume ownership needed to be strengthened.

9.22  In his accompanying Explanatory Memorandum of 29 January 2009, the then Parliamentary Under-Secretary at the Department for International Development (Mr Michael Foster) said that a single coherent pre-accession funding instrument was "a huge step forward." But, the IPA having been launched only in 2007 and having encountered some delays in project development, the 2007 Annual Report was produced too early to judge the performance of IPA and was therefore largely descriptive. The UK was working closely with the Commission and the recipient countries to ensure that the funds were put to the best possible use. DFID currently had four offices in the Western Balkans, all of whom worked closely with the Commission delegations, and had also created a new post based in UKREP Brussels devoted to monitoring the IPA. He had encouraged the Commission to reduce the number of projects in each successive annual programme, as he expected that concentration on fewer larger projects would have more transformative impact; the trend had been positive in 2008 and looked set to continue in 2009. The prospective allocation of IPA funds showed a steady rise across all countries. The EC was by far the biggest donor to the region. The size of the EC budget made it more important than ever for DFID country offices "to engage actively with the Commission and for the UK to play an active role on the IPA Management Committee."

Our previous Committee's assessment

9.23  The previous Committee felt that there should be sufficient evidence regarding performance of the IPA by the time the next Annual Report was prepared for it to be analytical as well as descriptive, and said that it would accordingly expect a somewhat more substantial Explanatory Memorandum, with a full assessment of how the outcomes compared with the template — what was going well and less well, and why; and what steps were being taken to address any failings. Though the mechanisms were seemingly in place, the importance of ensuring that they worked as intended was highlighted by the experience in Romania and, particularly, Bulgaria, which had been the subject of several Committee Reports and three European Committee debates in the previous year.

9.24  In the meantime, in view of the experience hitherto, the degree of interest in the next stage of the enlargement process, the sums involved and the present economic challenges and budgetary pressures facing the Union, the previous Committee felt that a debate in the European Committee would be appropriate.[40] That debate took place on 23 March 2009.[41]

9.25  The previous Committee also, as before, drew this chapter of its Report and the documents to the attention of the International Development Committee.

9.26  A year later, the previous Committee found what they described as "a disturbing pro forma ring" about the then Minister's comments on the MIFF report. Having been told a year earlier that a new post had been created in Brussels, the previous Committee felt that there should have been indications of the difference it had made, not a repetition of the previous year's words. They also found it curious that, it being now as much as it was a year earlier, "more important than ever for DFID country offices to engage actively with the Commission", the Minister's Department had reduced its presence in the region by 25%. Three and a half years after the IPA had been introduced, only now was the then Minister described as "the first comprehensive official document that details how the IPA has worked so far". The previous Committee found odd that there was no mention of the country seen as being nearest to accession, Croatia, in which there was plainly much that was not going according to plan; the previous Committee's concern being not with Croatia per se, but with the need to be sure that the situation that was allowed to develop in Bulgaria, even after accession, with regard to the proper use of EU funds could not recur.

9.27  Though conceivable that the mid-2010 evaluations referred to by the then Minister would show that great strides had been made in 2009, the previous Committee felt that a debate in the European Committee was appropriate, so as to enable the then Minister to provide the House with the level of assurance that they felt there should have been by then, that all was on the right track, but which they felt was not yet apparent.

9.28  On 9 March 2010, at the end of that debate (which incorporated a number of related documents on earlier pre-accession assistance), the European Committee approved the following motion:

"That the Committee takes note of European Union Documents No. 5271/10 and Addendum 1, 2008 Commission Annual Report on the Implementation of the Instrument for Pre-accession Assistance, No. 14685/09, Commission Communication on Instrument for Pre-accession Assistance (IPA) Multi-Annual Indicative Financial Framework for 2011-2013, No. 15365/09 and Addendum 1, Commission Annual Report of the Instrument for Structural Policy for Pre-accession (ISPA) 2008, No. 5226/10 and Addendum 1, Commission 2008 Annual Report on PHARE, Turkey Pre-accession Instruments, CARDS and Transition Facility and No. 5516/10 Court of Auditors Special Report 16-2009, the European Commission's Management of Pre-accession Assistance to Turkey; and urges the Commission to learn lessons from previous Enlargements, in particular the need to ensure IPA is well managed and effective."[42]

The Commission's 2009 Annual Report on the IPA

9.29  This report presents the activities undertaken for the implementation of the IPA during the year 2009 and provides a general overview of developments, including some considerations on future perspectives. The Commission says that, in 2009, it has made concrete steps towards improving the IPA instrument's effectiveness, impact and sustainability by paving the way for a sector-based approach to strategic planning and programming, by enhancing donor coordination and by increasing beneficiaries' ownership; and that better policy design and implementation will improve policy dialogue and help achieve better results in the EU integration process of the Western Balkans, Turkey and Iceland.

9.30  Details on programming and implementation activities for IPA beneficiary specific or multi-beneficiary programmes during the reporting period are available in the background document (Sections I and II), followed by financial data (Section III).

9.31  By way of general background, the Commission describes 2009 as a year of stability and security in the Western Balkans and in Turkey, with positive evolutions concerning mobility and neighbourly relations. In the wake of the world-wide financial and economic crisis, the Commission says that it contributed to ensuring macro-economic stability in the region, inter alia by introducing a financial crisis package for the region, including direct budgetary support for Serbia, funded by IPA. The Commission notes that, during the reporting period, new EU membership applications were submitted by Albania (in April), Iceland (in July) and Serbia (in December) while Croatia "made more progress" towards reaching the final stages of accession negotiations. Montenegro, Serbia, and the former Yugoslav Republic of Macedonia achieved visa-free travel to the Schengen area, having fulfilled the conditions set in the visa liberalisation roadmaps. However, the Commission says, challenges remained: the countries of the Western Balkans and Turkey had still, to varying degrees, substantial work ahead in meeting the established criteria and conditions for accession; the pace of reform was often slow; and the international economic crisis added to the strains.

The Commission Communication on the MIFF 2011-13

9.32  Referring to the 2007 per capita income "benchmarks", the Commission says that:

—  per capita levels for each of the potential Western Balkans candidates increase during the course of the current financial framework to above the 2004-2006 per capita average of €23 (in 2004 prices);

—  for Montenegro, the per capita levels of funding are higher than for other potential candidate countries, reflecting a minimum level of funding needed for adequate administrations, irrespective of the size of the country;

—  the global breakdown of funds between countries has been respected with the exception of Kosovo, which received increased IPA funding of €60 million as part of a wider mobilisation of new funds to support its stability and development of Kosovo, supplemented by a transfer of a further €60 million from unused macro-financial assistance (MFA) appropriations; and

—  an additional €40 million was committed as a follow up of the Donor's conference which took place in July 2008.

The Government's view

9.33   In his Explanatory Memorandum of 20 December 2010, the Parliamentary Under-Secretary at the Department for International Development (Mr Stephen O'Brien) welcomes the replacement of the five different earlier EU financial instruments with the IPA, describing this single instrument as "far more coherent than its predecessors."

9.34  He says that the Commission is working to improve IPA's effectiveness, impact, sustainability and ownership by beneficiaries, through a series of lesson-learning conferences and workshops over the past years; that the Department for International Development (DFID) attended two conferences in 2009 with other Member States and beneficiary countries that paved the way for a sector-based approach to strategic planning, and away from piecemeal programming on a project basis; and that this approach was endorsed by the General Affairs Council in December 2009, which emphasised the link between priorities for enlargement policy and the focus of IPA funding. While this shift "has still not been fully embedded" at country level, "steps have been taken during 2010 to ensure that the multi-annual planning processes do emphasise a sector-based approach." One consequence, the Minister then says, is fewer, larger IPA projects designed to make implementation easier and increase impact. He notes that the level of IPA funds successfully contracted and paid are now on the rise and says that this should continue (though noting, however, that 2009 figures "are somewhat flattered by Serbia, which became the first country to use IPA funds for budgetary support, linked to an IMF economic crisis response package").

9.35  Noting that a key objective of the Commission is to prepare beneficiary countries for the decentralised structures they will use to manage EU funds on accession, the Minister comments as follows:

"Progress of countries in gaining accreditation to use decentralised management structures to manage IPA funds has varied. Again, lessons are being learned. DFID has been advocating for greater alignment of decentralised management with the beneficiaries' own systems, in order to strengthen ownership and capacity, and avoid parallel implementation systems."

9.36  On the question of evaluation, the Minister says:

"The Commission is also making significant efforts to further enhance evaluation as a tool to support decision-making, as well as a means to monitor and report on results. Results Orientated Management system (ROM) is being applied to all IPA programmes. ROM is an objective and systematic monitoring tool that is managed by an independent agency and, together with retrospective evaluations and thematic evaluations, should lead to better monitoring and a sharper and more useful assessment of impact. Furthermore, a meta-evaluation of IPA is under preparation and will be the first comprehensive document that details how IPA has worked so far. It is due to be finalised in early 2011 and will inform preparations for the next Financial Perspectives covering the period beyond 2013."

9.37  With regard to the UK's role in this process, the Minister says:

"The UK continues to work closely with the Commission and beneficiary countries to ensure that the IPA funds are put to best possible use. As the largest donor, the Commission is a key player in co-ordination and consultation with governments and with other donors, especially international financial institutions such as the World Bank. DFID has invested in helping governments play a leading role in managing the process by providing technical assistance for improved aid effectiveness.

"As previously announced, DFID's bilateral programmes in Bosnia & Herzegovina and Serbia will close early 2011, leaving Kosovo as the sole remaining DFID programme in the region. Nonetheless, the UK will remain active, through British Embassies in the region, and in Brussels, through staff in the UK Representation and secondments in the Commission (DG Enlargement). The size of the EU budget in the Western Balkans, Turkey and Iceland makes it more important than ever for DFID to join with the FCO in monitoring IPA in countries where DFID is no longer present, and for the UK to play an active monitoring role on the IPA Management Committee."

9.38  Finally, the Minister says that a meta-evaluation[43] of IPA is due to be finalised in early 2011 and will inform preparations for the next Financial Perspectives covering the period beyond 2013, and that he will update the Committee when this is ready.


9.39  It is notable that, this year, the Minister has some encouraging words to say about improvements in effectiveness and evaluation, which we welcome.

9.40  However, the proof of improvement will be in the meta-evaluation to be carried out this year. We presume that this will result in a depositable document, and look forward to hearing more about it from the Minister in due course.

9.41  In the meantime, we clear these documents from scrutiny.

37   See headnote: (29154) 14862/07: HC 16-viii (2007-08), chapter 18 (16 January 2008). Also see chapters 12-17 inclusive of that same Report. Back

38   European Court of Auditors' Special Report on the PHARE programme in Bulgaria and Romania: (27641) 10984/06: see HC 34-xxxvi (2005-06), chapter 16 (19 July 2006). Back

39   See headnote: (29154) 14862/07: HC 16-xvi (2007-08), chapter 9 (19 March 2008). Back

40   See headnote: (30162) 15620/08 and (30303) 17210.07: HC 19-vii (2008-09), chapter 1 (11 February 2009). Back

41   Gen Co Debs, European Committee B, 23 March 2009, cols 3-6. See for the record of the debate.  Back

42   Gen Co Debs, European Committee B, 9 March 2010, cols. 3-7. See for the record of the debate. Back

43   Meta evaluation is "an evaluation of other evaluations"; see "META EVALUATION" by the Carol Scott Powerhouse Museum 1998 at for a concise explanation of the process. Back

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