Documents considered by the Committee on 25 February 2015 - European Scrutiny Contents


5 EU Pre-accession Assistance to Serbia

Committee's assessment Politically important
Committee's decisionNot cleared from scrutiny; further information requested
Document detailsEuropean Court of Auditors' (ECA) Special Report: EU Pre-accession Assistance to Serbia
Legal baseArticle 287(4) TFEU; —
DepartmentForeign and Commonwealth Office
Document number(36615), —

Summary and Committee's conclusions

5.1 The Instrument for Pre-accession Assistance (IPA[27]) is the means by which the EU supports reforms in the "enlargement countries" with financial and technical help.[28] The IPA funds build up the capacities of the countries throughout the accession process, resulting in progressive, positive developments in the region. For the period 2007-13, the IPA budget was €11.5 billion; its successor, IPA II, will seek to build on the results already achieved, with a budget of €11.7 billion for the period 2014-20.

5.2 On 13 January 2015, the European Court of Auditors (ECA) published this Special Report on the effectiveness of EU pre-accession support to Serbia which became an official candidate country in March 2012. The report covers the period 2007-13. It looks in particular at the key area of governance.

5.3 This Special Report noted that: overall, the Commission is managing pre-accession support to Serbia, including the IPA projects, effectively; IPA financial assistance programming is based on a coherent strategic framework; the approach to selecting projects relevant to preparing Serbia for accession is gradually improving; Serbia has been helped thereby to implement social and economic reforms and to improve its public finance management; and, on the whole, the audited projects delivered their planned outputs. But the auditors also said that projects suffered from weaknesses regarding their design, implementation and sustainability.

5.4 The Special Report sets out six concrete recommendations to enable the Commission to address these weaknesses (which the Commission has taken steps to take forward in the latest IPA programmes), and four actions in relation to the Commission's structured dialogue with Serbia on governance issues

5.5 The Minister for Europe (Mr David Lidington) welcomes this Special Report and its recommendations, and the level of independent scrutiny it provides of EU pre-accession support to Serbia. As "a strong supporter of EU Assistance programmes such as IPA", the Minister also welcomes efforts to draw lessons from past experiences in order to inform and improve future implementation, and ensure the effective use of EU funding. He further welcomes the increased focus in the new IPA-II framework on priorities identified in the EU's Enlargement Strategy; for Serbia, he expects to see this focus on "democracy and the rule of law, including the key area of governance, and on competitiveness and growth". Reforms in these areas "will be vital for Serbia as it looks to progress in its accession negotiations". He also regards the emphasis on a sector-based approach being adopted in IPA II as a positive step, which should help with coordination between development agencies; increase ownership in beneficiary countries; encourage greater efficiencies among Member States, as their efforts will be guided by a common policy framework; and thus provide for enhanced complementarity and a more effective results-orientated impact on the pre-accession process.

5.6 As the Minister suggests, this ECA Special Report has much wider implications for the enlargement process than just Serbia's progress. As the Committee noted when it considered the Commission's 2015 "enlargement package",[29] 2014 was seen as a year of fitful progress. Published last October, the picture painted was thus: in Albania and Macedonia, the opposition was boycotting parliament and thus blocking reforms; in Kosovo, a government had yet to be formed after the June elections; and in Bosnia and Herzegovina (BiH), the Commission's reference to a lack of collective will suggested that it did not expect long-standing political inertia to be resolved by October's elections. Problems with "rule of law/good governance" issues predominated in Montenegro — so much so that the Commission indicated that it might slow down the accession process (the first fruits, perhaps, of "front-loading" the "rule of law/good governance" area, and adjusting the rate of progress accordingly). In the case of Turkey, there was a litany of concerns about the erosion of fundamental freedoms and the separation of powers. Serbia was the country about which the Commission appeared to be most hopeful — even though it was the least supportive of what was regarded as a benefit of the accession process, viz., alignment with the EU's foreign policy priorities, with the new Government preferring to sustain active relations with Russia and to welcome President Putin in Belgrade as recently as 16 October 2014.

5.7 The Minister for Europe welcomed the Commission's "fair and balanced assessment of progress and challenges in EU enlargement countries and of the enlargement process itself", which he said was "closely aligned with the Government's priorities on enlargement, highlighting the importance of addressing the fundamentals first and the need for firm but fair conditionality", and which "focuses correctly on the central challenges of the rule of law, judicial reform and the fight against organised crime and corruption; economic governance and competitiveness; the importance of strengthening democratic institutions and public administration reform, and protecting fundamental rights; and the need for good neighbourly relations and dispute resolution".[30]

5.8 With regard to this Special Report, the Minister says that the Council "is expected to respond … in the form of Council Conclusions in March 2015", which he expects will "welcome the report as a useful tool for improving the effectiveness of EU pre-accession assistance to Serbia under IPA II". We would also hope that those Council Conclusions will underline this Special Report's wider implications, given the emphasis that is now purportedly being placed in the accession process on "up front" conditionality, centring not on commitments by candidate countries, but on a track record of successful implementation of programmes that address those "central challenges" that the Minister rightly highlighted.

5.9 We would therefore like the Minister to provide us with a copy of those Council Conclusions in due course, and to illustrate how the wider lessons of this Special Report have been noted and endorsed in them.

5.10 In the meantime, we shall retain the document under scrutiny.

Full details of the documents: European Court of Auditors' (ECA) Special Report No. 19/2014 EU Pre-accession Assistance to Serbia: (36615), —.

Background

5.11 The European Court of Auditors (ECA) carries out audits, through which it assesses the collection and spending of EU funds. It examines whether financial operations have been properly recorded and disclosed, legally and regularly executed. It also, via its Special Reports, carries out audits designed to assess how well EU funds have been managed so as to ensu re economy, efficiency and effectiveness.[31]

5.12 Since 2007, the EU's financial support to Serbia through the IPA has amounted to approximately €170 million per year. Governance, identified by the Commission as the most challenging area for Serbia, received a quarter of the IPA funding. The EU complements the IPA funding with some non-financial means to help Serbia prepare for EU membership.

5.13 The EU enlargement strategy and the revised IPA regulation are paying increasing attention to financial and economic governance in the accession countries. Accession negotiations with Serbia were formally opened on 1 January 2014.

ECA Special Report 19/2014

5.14 This Special Report, EU Pre-accession Assistance to Serbia, examines whether the Commission managed pre-accession support to Serbia during the 2007-13 period effectively and, in greater depth, its support for the key area of governance.

5.15 The audit examined the IPA programming process and 15 IPA-funded projects from the 2007, 2008 and 2009 IPA annual programmes for Serbia, with a particular focus on the projects' results. The non-financial assistance audited included the EU-Serbia dialogue on governance issues and cooperation to prepare Serbia for decentralised management of EU funds.[32] The Court also reviewed another sample of 10 IPA projects from the 2010, 2011 and 2012 annual programmes to check whether governance and the fight against corruption were cross-cutting issues in projects where good governance was not a primary objective.

5.16 When this Special Report was published on 13 January 2015, in an accompanying press release under the headline "Pre-accession support to Serbia is on track", the ECA said that EU support of about €1.2 billion over the 2007-13 period had been globally effective in preparing Serbia for EU membership. The ECA noted that: overall, the Commission is managing pre-accession support to Serbia, including the IPA projects, effectively; IPA financial assistance programming is based on a coherent strategic framework; the approach to selecting projects relevant to preparing Serbia for accession is gradually improving; Serbia has been helped thereby to implement social and economic reforms and to improve its public finance management; and, on the whole, the audited projects delivered their planned outputs. But the auditors also said that projects suffered from weaknesses regarding their design, implementation and sustainability.

5.17 The EU auditors recommend that, in order to improve the programming, design and implementation of IPA projects in Serbia, the Commission should:

—  make the project prioritisation and selection processes more transparent and improve their documentation;

—  improve the lessons-learnt process by developing a dedicated database incorporating lessons drawn from past projects in Serbia and other relevant beneficiary countries;

—  systematically document the needs assessment underlying the expected outputs from projects and contracts;

—  reinforce the principle of conditionality: in particular, the beneficiary's capacity to do what is required for a high-quality project should be verified in advance and in specific, measurable terms;

—  set up a system for a regular brief progress report in order to ensure an appropriate audit trail for the entire project; and

—  put in place a system to check the usefulness of project outputs (including studies, analyses, procedures, protocols and training materials) in the medium and long term.

5.18 With regard to the increasing emphasis that the Commission is putting on governance issues when planning its financial and non-financial assistance to Serbia, the ECA Member responsible for the report commented thus:

"The EU-Serbia dialogue created a link between political priorities and policy formulation. Learning from its past pre-accession support, the Commission successfully supported Serbia in addressing key areas such as good governance, the rule of law and the fight against corruption.

"Despite gradual improvement in managing the IPA, the Commission needs to further improve the second generation IPA used in the 2014-2020 period."

5.19 The Special Report accordingly recommends that, in relation to non-financial assistance, the Commission:

—  supports the Serbian authorities in further rationalising their national strategies and finalising a fully-fledged public finance management roadmap;

—  improves the consultation mechanism with civil society organisations;

—  systematically assesses the need for specific anti-corruption or other good governance measures during project design; and

—  takes steps to integrate the Commission's audit work on the national IPA structures into the countrywide assessment of public finance management.

5.20 Finally, the ECA noted that, in drawing up the latest IPA annual programmes, the Commission had taken steps to address the shortcomings identified by the EU auditors in the earlier IPA projects.[33]

The Government's view

5.21 In his Explanatory Memorandum of 9 February 2015, the Minister welcomes this report and its recommendations, and "the level of independent scrutiny it provides of EU pre-accession support to Serbia".

5.22 He continues as follows:

"As a strong supporter of EU Assistance programmes such as IPA, the Government welcomes efforts to draw lessons from past experiences in order to inform and improve future implementation, and ensure the effective use of EU funding.

"As the Commission notes in its reply to the report, IPA-funded sector evaluations have drawn lessons from the implementation of IPA from 2007-2012, which will be reflected in the second Instrument for Pre-Accession Assistance (IPA II). IPA II's launch was noted in the Commission's Communication on the Enlargement Strategy 2014-2015.[34] It will provide €11.7 billion for the period 2014-2020, linked more closely to enlargement policy priorities and based on a more results-orientated and strategic approach. The Government welcomes the launch of financial assistance through the new IPA-II framework and its increased focus on priorities identified in the Enlargement Strategy. For Serbia, we expect to see this focus on democracy and the rule of law, including the key area of governance, and on competitiveness and growth. Reforms in these areas will be vital for Serbia as it looks to progress in its accession negotiations. Alongside national programmes, IPA II and Twinning will continue to provide valuable support to Serbia as it seeks to move closer towards meeting the requirements for EU membership.

"The Government believes the emphasis on a sector-based approach being adopted in IPA II is a positive step. This should help with coordination between development agencies. IPA II should also increase ownership in beneficiary countries and encourage greater efficiencies among Member States, as their efforts will be guided by a common policy framework. This approach should provide for enhanced complementarity and a more effective results-orientated impact on the pre-accession process."

5.23 Looking ahead, the Minister says:

"The Council is expected to respond to the report in the form of Council Conclusions in March 2015. Working-level discussions with the Commission will commence on 17 February 2015. We expect any Conclusions to welcome the report as a useful tool for improving the effectiveness of EU pre-accession assistance to Serbia under IPA II."

Previous Committee Reports

None, but see (36392), 14152/14 + ADD 1 et al: Twenty-eighth Report HC 219-xxvii (2014-15), chapter 13 (7 January 2015); and Sixteenth Report HC 219-xvi (2014-15), chapter 4 (29 October 2014).


27   Current beneficiaries are: Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Iceland, Kosovo, Montenegro, Serbia, and Turkey. See http://ec.europa.eu/enlargement/instruments/overview/index_en.htm for full information. Back

28   Iceland remains a candidate country, but its Government decided to suspend accession negotiations in 2013. The other candidate countries are Albania, Macedonia, Montenegro, Serbia and Turkey. Potential candidate countries (those without formal Candidate Status but with an agreed EU perspective) are Bosnia and Herzegovina and KosovoBack

29   The Commission's Communication: Enlargement Strategy 2014-2015 and its associated country progress reports; see (36392), 14152/14 + ADD 1 et al: Twenty-eighth Report HC 219-xxvii (2014-15), chapter 13 (7 January 2015) and Sixteenth Report HC 219-xvi (2014-15), chapter 4 (29 October 2014). Back

30   Ibid. Back

31   See http://www.eca.europa.eu/en/Pages/ecadefault.aspx for full details of the ECA's work. Back

32   Decentralisation is the process whereby management of European Union funds is delegated to the administrations of the beneficiary countries. It implies the setting up of competent infrastructures by the beneficiary countries and effective control of fund management by the European institutions. See http://ec.europa.eu/enlargement/policy/ glossary/terms/decentralisation_en.htm for full information. Back

33   See http://www.eca.europa.eu/Lists/ECADocuments/INSR14_19/INSR14_19_EN.pdf. Back

34   For the Committee's consideration of this Commission Communication and its accompanying country progress reports, see (36392), 14152/14 + ADD 1 et al: Twenty-eighth Report HC 219-xxvii (2014-15), chapter 13 (7 January 2015) and Sixteenth Report HC 219-xvi (2014-15), chapter 4 (29 October 2014). Back


 
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