Documents considered by the Committee on 23 October 2013 - European Scrutiny Committee Contents

13 EU enlargement: pre-accession finance



COM(13) 625

Commission Report: 2012 Annual Report on Financial Assistance for Enlargement (IPA, PHARE, CARDS, Turkey Pre-accession instrument, Transition Facility)
Legal base
DepartmentInternational Development
Basis of considerationEM of 8 October 2013
Previous Committee ReportsNone; but see (34446)16841/12: HC 86-xxvii (2012-13), chapter 9 (16 January 2013)
Discussed in CouncilTo be determined
Committee's assessmentPolitically important
Committee's decisionCleared


13.1 Between 2007 and 2013, €11.47 billion of EU assistance is programmed for the Western Balkans, Turkey and Iceland through the Instrument for Pre-Accession (IPA). The IPA is the principal funding instrument to support their efforts to strengthen democratic institutions, reform public administration, develop civil society and advance regional cooperation — all with the ultimate aim of acceding to the EU. The IPA covers potential EU candidate countries (Albania, Bosnia & Herzegovina and Kosovo) and current candidate countries (Croatia prior to 1 July 2013, Turkey, Iceland, Montenegro, Macedonia and Serbia). According to the OECD definition, it is estimated that approximately 90% of IPA funding counts as ODA.

13.2 The IPA is divided into five components. Potential candidate countries are only eligible for funding under components 1 and 2 (transitional assistance and cross border cooperation), while candidate countries also receive funds from components 3-5 (regional development, human resource development and rural development).

13.3 We considered the Commission's draft Regulation on a revised IPA for the period 2014-20 at our meeting on 25 January 2012. The Commission had said at that point that, though soundly-based, the IPA could be significantly improved without substantial restructuring by, for example:

·  simplifying the regulatory environment;

·  introducing a new comprehensive format of country strategy documents;

·  a more sector-based, and less project-based, approach, with more tailoring to the needs of each beneficiary; and

·  tailoring management systems better to the needs of beneficiary countries.

13.4 The then Minister (Mr Stephen O'Brien) had said that the UK had proposed a range of measures for the revised IPA, in particular the need for closer focus on the circumstances of the beneficiary country and greater flexibility to reward progress where achieved and reduce country allocations in circumstances where progress was not made; and also improvements to IPA management systems, particularly monitoring and evaluation arrangements that could better highlight the direct impact of IPA funding in the relevant countries. Areas where the Minister would push for greater clarity included:

·  Performance Management: more detail on how funding allocations will be managed flexibly according to progress achieved by beneficiary countries to implementing reforms; and

·  Monitoring and Evaluation: the then Minister would be following progress carefully to ensure the proposed three-tier approach would be applied in practice, which he regarded as a key part of the UK aim to improve results management.

13.5 The then Minister also noted that much of the detail of how the Regulation would be managed would be covered in the implementing rules; he would examine the draft rules closely to ensure that the spirit of the Regulation was incorporated into the day to day management of the revised IPA.

13.6 We retained the draft Regulation under scrutiny, and asked the then Minister to keep the Committee informed of developments.[63] We did likewise with regard to the over-arching Joint Communication, "A new approach to financing EU external action", and to similar draft Regulations revising the (related) Development Cooperation Instrument and the Instrument for Stability.[64] Now that a year had passed, we took the opportunity to ask his successor to update the Committee.

13.7 In the meantime, we cleared the 2011 Commission report from scrutiny, which we drew to the attention of the House because of the IPA's purpose and the amount of EU taxpayers' funds involved.[65]

13.8 The Parliamentary Under-Secretary of State at the Department for International Development (Lynne Featherstone) then wrote to us on 20 February 2013, saying that the IPA-II Regulation was currently under trilogue negotiations between the Council, European Parliament and the Commission. She noted one major area of disagreement common across the trilogue deliberations of the draft Regulations of all the External Action financial instrument — that the European Parliament wanted strategies and programming to be subject to delegated acts under the Lisbon Treaty: the effect of this would be to give the European Parliament a power of veto over programming decisions. The Commission and the Council were resisting this push by the European Parliament, arguing that such documents should be implementing acts subject to agreement by Member State committees. The Commission was seeking to define options for addressing this point in an effort to overcome the impasse. The Minister supported the Commission's position.

13.9 The Minister went on to say that, in parallel, DG Enlargement continued to work on improving the focus and accountability of IPA-II, and looked forward to the IPA-II conference to which she now refers (see paragraph 13.18 below). She concluded by explaining that Member States would be consulted again in May and October 2013 as the Country Strategy Papers started taking shape and undertook to keep the Committee informed of developments.

The 2012 Report

13.10 This report covers the most significant developments on the implementation of pre-accession assistance in 2012. It states that the enlargement countries advanced their path towards the European Union, referring to examples such as Croatia's accession, new impetus injected to relations with Turkey and progress with the Belgrade-Pristina dialogue. However, it also notes that work in most countries on key priorities such as good governance and organised crime remain major challenges. The socio-economic outlook is described as mixed, with Turkey and Iceland deemed to be on a path to recovery in contrast to the majority of western Balkan countries where economies contracted.

13.11 The report notes that work has continued on development of the IPA II regulation, the IPA-specific Rules of Application and strategic planning documents. It says that management of IPA during 2012 to achieve better results and impact was enhanced by the gradual implementation of the sector approach, alignment of IPA to international standards on aid transparency and development of a framework of indicators, at the level of country strategies, for monitoring evaluation and review of progress and performance.

13.12 The main features of country programmes during 2012 were continued work on strengthening Croatia's capacity to meet EU membership obligations, a fresh dynamism in Turkey's accession process after a period of stagnation and good progress being achieved in securing conferral of management of IPA funding for components I to V for Montenegro and Serbia. EU assistance to Kosovo exceeded its financial targets. The report notes that parliamentary elections in Iceland have put accession negotiations on hold, limited capacity in the Former Yugoslav Republic of Macedonia is contributing to delays in procurement and low contracting and disbursement rates and internal difficulties in Bosnia and Herzegovina are leading to significant programming delays.

13.13 The report also describes important work being undertaken by OECD/SIGMA (Support for Improvement in Governance and Management) complemented by ReSPA (Regional School of Public Administration) on promoting good public governance and support for public administration reform.

13.14 Tables attached to the report show the financial situation of IPA support to IPA partner countries by commitment, amount contracted and value paid according to implementing Directorates General.

The Government's view

13.15 The Minister reaffirms the Governments support for EU enlargement, saying:

"It has helped create stability, security and prosperity across Europe. It also gives the UK stronger influence globally in promoting our values in human rights, rule of law and fair rules for workers and businesses. The UK firmly supports a European perspective for all the countries of the Western Balkans as the best way to move the region forward from the conflicts of the 1990's to greater stability and prosperity."

13.16 The Minister notes that many of the provisions of the Commission's Agenda for Change, which is designed to increase the impact of EU Development Policy, are equally important to IPA to develop a comprehensive results mechanism and to demonstrate value for money. She then comments as follows:

"The UK considers IPA to be broadly effective in supporting the accession objectives of its partner countries. Overall the 2012 report maintains this opinion. The priorities identified for EC assistance are appropriate for a region still in transition characterised by institutions that need significant policy and capacity support. Regionally, the improving quality of governance and promotion of work across borders under the Cross-Border-Cooperation programme is helping to ease tensions between countries that were in conflict 20 years ago."

13.17 However, the Minister says:

"Despite the overall favourable tone of the report the UK propose to consult the Commission about progress of IPA with particular partner countries. For example we are concerned at references to procurement delays in Former Yugoslav Republic of Macedonia and delays to programme implementation in Bosnia and Herzegovina. The decision by Icelandic authorities to put accession negotiations on hold will be followed closely albeit the impact on IPA will be relatively small given the modest funding allocation of €12 million (£10.12million) in April 2012 and €10.8 million (£9.11 million) in November 2012."

13.18 Looking ahead, the Minister then says:

"Preparation for the successor to IPA (IPA-II) from 2014 continues. As explained in previous EM 16841-12 ('Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on 2011 Annual report on financial assistance for enlargement') of 17 December 2012, the UK believes IPA could be made better suited to the needs of the region, for example, by ensuring programmes are better aligned to the capacity of governments to absorb funding and the introduction of a results system to identify the impact of IPA support provided.

"The consultation process carried out by DG Enlargement was maintained during 2012 with the publication of an Orientations paper on Planning and Programming of IPA-II assistance that proposed an analysis of the capacity of each partner country and introduced the concept of establishing the progress to have been achieved by each beneficiary country by 2020. An IPA conference was organised on 25 January 2013 with 400 participants to help frame priorities post 2014. The production of country strategy papers in draft form will be an opportunity for Member States to consider how far the Commission has taken on board the comments received and to influence how IPA is managed. The UK will continue to push for IPA to be results focused, more directly conditional on improved governance and managed as part of a sector wide approach (SWAP) to improve donor coordination."

13.19 Finally, the Minister says that the report will be discussed at the IPA Management Committee during this month.


13.20 We seem not to have heard anything from the Minister about the trilogue discussions on this or the other EU external action instruments since the beginning of the year.

13.21 We therefore ask the Minister to bring us up to date on the state of play. We also take this opportunity to remind her that we expect there to be sufficient time for the revised Regulations to be debated, if necessary, prior to any further agreement in Council stemming from the trilogue negotiations.

13.22 In the meantime, we now clear this report, which we are also drawing to the attention of the International Development Committee.

63   See (33537) 18520/11: HC 428 xlviii (2010-12), chapter 9 (25 January 2012). Back

64   See (33559) 18726/11, (33529) 18429/11 and (33553)18657/11 at HC 428 xlviii (2010-12), chapters 8, 10 and 11 respectively (25 January 2012). Launched in January 2007, the Development Co-operation Instrument (DCI) replaced a wide range of geographic and thematic instruments which had been created over time, and was designed to increase the effectiveness of the EU development cooperation outside the "enlargement" area. Measures financed by the Instrument for Stability are designed to contribute to preparedness for responding to natural or man-made disasters, and to rehabilitating countries following a disaster or a situation of instability. Back

65   See headnote: HC 86-xxvii (2012-13), chapter 9 (16 January 2013). Back

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