Documents considered by the Committee on 29 October 2014 - European Scrutiny Committee Contents


9 EU enlargement: pre-accession finance

Committee's assessment Politically important
Committee's decisionCleared from scrutiny
Document details2013 Annual Report on Financial Assistance for EU Enlargement
Legal base
DepartmentForeign and Commonwealth Office
Document numbers(36371), 13769/14 + ADD 1, COM(14) 610

Summary and Committee's conclusions

9.1 The prospect of EU membership is open to all European states that respect and promote the fundamental values of the EU. The current enlargement agenda covers the Western Balkans, Turkey and Iceland. The Instrument for Pre-Accession (IPA) is an EU fund which supports prospective EU countries to reform towards EU standards and with the acquis through both financial and technical assistance, which is regarded as vital if aspirant countries are to meet the conditionality requirements prior to accession. IPA allocations amounted to €11.5 billion for the 2007-13 period, with €1.8 billion allocated for 2013.

9.2 This Annual Report covers the progress made on the implementation of IPA assistance in 2013. It also reflects on lessons learnt from evaluations and suggests areas of focus to improve the impact of IPA funds beyond 2014. (see paragraphs 9.5-9.7 below for further details).

9.3 The Minister for Europe (Mr David Lidington) highlights a number of largely-positive developments in 2013. Looking ahead, he notes that the experience of previous pre-accession assistance and developments in the EU's wider enlargement agenda have led to the development of the "fundamentals first" principle, whereby — closely linked to the Copenhagen Criteria and the conditionality of the Stabilisation and Association Process — the rule of law, stability and the proper functioning of democratic institutions, fundamental rights, economic criteria and reconciliation, good neighbourly relations and regional cooperation will be prioritised as part of future assistance to enlargement countries.

9.4 The new Instrument for Pre-Accession Funding (IPA II) replaced IPA in 2014. Allocations for IPA II covering the period 2014-20 amount to €11.7 billion: IPA II will be linked more closely to EU enlargement policy priorities and individual country strategies, resulting in a more results-orientated and strategic approach (see paragraphs 9.13-9.24 below for full details of the Minister's comments on the report and other background).

9.5 Elsewhere in this Report we deal with the Commission's annual enlargement "package": its Communication on EU enlargement strategy and the associated country progress reports on Montenegro, Serbia, Turkey, the former Yugoslav Republic of Macedonia, Albania, Bosnia and Herzegovina and Kosovo.[31] The challenges facing all the candidate and aspirant countries are vividly set out therein.

9.6 As noted in that related Report, the Government is only able to provide an initial position on the country progress reports, as there is time for further developments before the adoption of conclusions on EU enlargement at the December General Affairs and European Councils. There is much emphasis in the Commission Communication on encouraging the west Balkan states to work together on regional projects, particularly in energy and transport. We have therefore asked the Minister to include in his update information on the changes embodied in the IPA-II that will enable the EU to focus on fewer and bigger projects. As we have noted there, with the incoming President of the Commission having publicly stated that there will be no further enlargement during the next five years, concern is bound to arise that public support for EU-inspired reforms may be undermined unless the economic benefits are more tangible. Such are the challenges faced by the new IPA II and those involved in its effective implementation.

9.7 For now, we clear this annual report from scrutiny.

Full details of the document: Commission 2013 Annual Report on Financial Assistance for Enlargement (IPA, PHARE, CARDS, Turkey Pre-Accession Instrument, Transition Facility): (36371), 13769/14 + ADD 1, COM(14) 610.

Background

9.8 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), with €1.8 billion allocated for 2013.

9.9 For each candidate country, the EU sets a negotiating framework, which establishes the general guidelines for the accession negotiations. Negotiations take place between the EU Member States and candidate countries, at the level of ministers and ambassadors. For the EU, it is important to obtain guarantees on the date and effectiveness of each candidate's alignment with the relevant part of EU rules (acquis). The negotiations also cover financial arrangements (such as the new Member's contribution to the revenue of the EU budget and the expected volume of transfers to that Member within the overall expenditure from the EU budget) as well as possible transitional arrangements, requested either by the Member States or by the candidate country. For the purpose of the accession negotiations the EU legislation is divided into 35 subject-related chapters.

9.10 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 and with the acquis through both financial and technical assistance — all with the ultimate aim of acceding to the EU.

9.11 The IPA covers current candidate countries (Croatia prior to 1 July 2013, Iceland, Macedonia, Montenegro, Serbia and Turkey) and potential EU candidate countries (Albania,[32] Bosnia & Herzegovina and Kosovo). According to the OECD definition, it is estimated that approximately 90% of IPA funding counts as ODA.

9.12 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).

9.13 In his Explanatory Memorandum of 23 October 2014, the Minister for Europe (Mr David Lidington) describes the support that IPA provides prospective EU countries as "vital if aspirant countries are to meet the conditionality requirements prior to accession". IPA allocations amounted to €11.5 billion for the 2007-13 period. As well as covering progress made on the implementation of IPA assistance in 2013, the Minister says that it also reflects on lessons learnt from evaluations and suggests areas of focus to improve the impact of IPA funds beyond 2014.

9.14 The Minister notes that the report sets out how the new Instrument for Pre-Accession Funding (IPA II) replaced IPA in 2014:

    "Allocations for IPA II covering the period 2014-2020 amount to €11.7 billion. IPA II will be linked more closely to EU enlargement policy priorities and individual country strategies, resulting in a more results-orientated and strategic approach".

9.15 The Minister then highlights the following "country-related" features of the report:

—  support for Croatia on its path to EU accession on 1 July 2013 was a major feature of IPA country programming during 2013, with a particular focus on strengthening capacity in areas such as the rule of law;

—  good progress in supporting ongoing accession negotiations in Montenegro and Serbia;

—  EU financial assistance played an important role in Albania, with a sharper focus on the rule-of-law Chapters 23 and 24 which were a key issue when Albania was granted Candidate Status in June 2014;

—  in Kosovo, implementation of EU assistance exceeded financial targets, with additional allocations provided following progress in relations with Serbia;

—  despite a fresh impetus to EU-Turkey relations with the opening of Chapter 22,[33] there was less positive implementation of some IPA programmes with problems due to beneficiaries' capacity issues;

—  the management of IPA funds in Macedonia remains challenging due to staffing and managerial capacity in key institutions;

—  the EU integration process with Bosnia and Herzegovina (BiH) is at a standstill, which is affecting the implementation of IPA assistance there; and

—  as the accession process with Iceland is now on hold, ongoing IPA activity is being phased out and new activity is not being commissioned.

9.16 Tables attached to the Report show the financial situation of IPA support to EU aspirant countries by commitment, amount contracted and amount paid, according to implementing Directorates General in the Commission.

9.17 Other parts of the Report to which the Minister draws attention are:

—  cross-regional multi-beneficiary programmes have continued to support priorities in the wider Enlargement Strategy, including in areas such as rule of law, criminal justice and public administration reform, with around 9% of available funds allocated to fund them;

—  in 2013, a 15% increase in Technical Assistance and Information Exchange Assistance (TAIEX), with 2,118 TAIEX events/assignments in 2013, the highest on record, and closely aligned with wider enlargement policy and assistance priorities (as illustrated by the large increase in events in support of Croatia in the run-up to accession;

—  lessons learnt following evaluations completed during 2013: a thematic evaluation on the Rule of Law, Judicial Reform, and Fight against Crime in the Western Balkans suggested that EU programmes had made an important contribution to work in this area. In particular, the Report pointed to legal and institutional frameworks that had been put into place as a result of EU assistance. The Commission states that reforms in these areas resulted in tangible results, including the passing of laws and a sharper focus on the importance of an independent judiciary. It acknowledged that further improvement is achievable through securing greater political buy-in, clearer priorities and more local administrative capacity in recipient countries. These conclusions have been incorporated into the programming for IPA II;

—  a wider interim evaluation of IPA in the Report concluded that outputs were better delivered in countries operating under centralised management; however, translating project outputs into results was not as successful as expected;

—  the Report concludes that IPA needs to be supported by a clearer political process to enhance the effectiveness of its programmes; IPA implementation was in line with expectations but needs to be more flexible to offer more rapid deployment.

9.18 With regard to other lessons learnt, the Minister also notes that the Commission recalls how the experience of previous pre-accession assistance and developments in the EU's wider enlargement agenda have led to the development of the "fundamentals first" principle, whereby — closely linked to the Copenhagen Criteria and the conditionality of the Stabilisation and Association Process — the rule of law, stability and the proper functioning of democratic institutions, fundamental rights, economic criteria and reconciliation, good neighbourly relations and regional cooperation will be prioritised as part of future assistance to enlargement countries.

9.19 Finally, with regard to effectiveness, the Commission says that it has continued work to improve donor coordination in 2013, with commitments made at the High Level Forum on Aid Effectiveness in Busan in November 2011, including on ownership of projects, results, transparency and accountability, to be considered as part of the programming for IPA II.

9.20 The IPA II Regulation, adopted on 11 March 2014,[34] introduces new elements compared to its predecessor:

—  IPA II sets a new framework for providing pre-accession assistance under the 2014-2020 multiannual financial framework. Financial assistance will be available to candidate countries and potential candidates, irrespective of their status;

—  it introduces a reinforced link between the financial assistance and the policy agenda, as well as a stronger ownership by the beneficiaries;

—  a comprehensive country strategy will cover all areas of assistance for the entire seven-year period, with a mid-term review in 2017, on the following policy areas: reforms in preparation for Union membership and related institution and capacity building, socioeconomic and regional development, employment, social policies, education, promotion of gender equality and human resources development, agriculture and rural development, regional and territorial cooperation;

—  IPA II introduces a move towards a logic of financing policy strategies instead of individual projects (sector approach), based on relevant national sector strategies prepared by the beneficiaries. There will be a progressive transition to indirect management of the funding by the beneficiaries;

—  pre-accession assistance will be delivered in a more systematic way with a focus on results and monitoring of the assistance;

—  IPA II fosters an enhanced role of civil society both in programmes implemented through government bodies and as direct beneficiaries of EU assistance.

9.21 The Commission says that the gradual move towards a sector approach aims at better achieving results, impact and added value in the assistance, and that these principles have become key for all new external action instruments for the period 2014-20.

The Government's view

9.22 The Minister begins by underlining the Government's and its predecessors' long-standing support for enlargement of the European Union as "a driver of peace, prosperity and reform across our continent", continuing thus:

    "We remain strong supporters of enlargement to all of the Western Balkans and Turkey, provided of course that candidate countries only join the EU when they have met in full all the conditions and standards for doing so. At the same time, we recognise that many across Europe have been concerned by the large-scale movement of people that has followed the accession of new countries to the EU and this issue needs to be addressed before any more members join."

9.23 The Minister goes on to say that he:

—  remains of the opinion that EU pre-accession assistance plays an important role and is broadly effective in supporting countries on their path to EU membership;

—  welcomes the reforms introduced by IPA II and the emphasis on a sector-based approach, which he says should help with coordination between development agencies; result in better ownership among the beneficiary countries; and also result in efficiencies among Member States as work will take place towards a common policy framework;

—  agrees with the renewed focus on the "fundamentals first" principles in relation to the enlargement agenda, which is being reflected in EU assistance programming:

    "In particular, the emphasis on the rule of law in the region remains a top priority for the UK. Progress in this area amongst aspirant countries is a clear UK priority, including for example in the fight against organised crime and corruption, and illegal migration."

9.24 The Minister then highlights some aspects of the Report that cause him concern:

    "In Macedonia, the management of IPA funding and procurement delays have resulted in financial losses. In Turkey, the implementation of some IPA programmes has suffered from persistent delays. The UK will be consulting the Commission on these issues.

    "The UK is also keen to see further action to ensure programme and project outputs result in better and more sustainable results and long term impact. The second interim evaluation concludes that the IPA track record in this area has not been as good as expected."

9.25 Finally, the Minister says that the report will be discussed at the IPA Management Committee during November 2014.

Previous Committee Reports

None, but see: Nineteenth Report HC 83-xviii (2013-14), chapter 13 (23 October 2013).





31   See (36392), 14152/14, COM(14) 700 and the related Country Progress Reports at chapter ?? of this Report. Back

32   Albania was granted Candidate status in June 2014. Back

33   Regional policy and coordination of structural instruments: the acquis on regional policy and coordination of structural instruments consists mostly of framework and implementing regulations, which do not require transposition into national legislation. They define the rules for drawing up, approving and implementing programmes financed by the Structural Funds (the European Regional Development Fund and the European Social Fund) and - for some Member States - Cohesion Fund programmes reflecting each country's territorial organisation. These programmes are negotiated and agreed with the Commission. Implementation is a shared responsibility of the Member States and the Commission. Member States must comply with the provisions of the acquis, for example in the areas of public procurement, competition and the environment, equality between men and women and non-discrimination, as well as sustainable development, when selecting and implementing projects. Back

34   Regulation 231/2014 establishing an Instrument for Pre-Accession Assistance II (IPAII). Back


 
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