This is the seventh report on activities financed by the three pre-accession instruments: Phare, ISPA and SAPARD and covers the year 2006. The report focuses on coordination between the three instruments as specified in the Council Regulation on the co-ordination of pre-accession assistance; typically referred to as the “Coordination Regulation”. In line with the positive accession negotiations in Copenhagen, an increased emphasis has been put on creating the administrative capacity required for a successful implementation of the acquis and participation in present or future European Community programmes.

In summary, the main findings of the report are as follows:

PHARE: under the Phare structure a joint monitoring committee (JMC) has been set up in each country that is supported by Sectoral Monitoring Sub-Committees (SMSC). These meet twice a year. In 2006, DG Enlargement generated 24 individual country, sectoral ad-hoc or thematic reports on Phare support to Bulgaria and Romania. The key message derived from the Bulgaria and Romania evaluations is as follows:

On the whole, the performance of Phare has improved with time though some results are mixed. Implementation of Phare remains a challenge with widespread contracting delays. Outputs have been delivered adequately, by and large, though sometime later than planned. Twinning has proven to be a particularly effective tool for institution building and increasing the absorption capacity of beneficiaries. The sectoral performance of Phare was varied. In Romania, Environmental and Internal Market sectors scored the highest rating. The lowest rated sectors, by contrast, were Economic and Social Cohesion and Energy Transport. In Bulgaria the Environment scored the highest rating whilst again the lowest ratings scored concerned Economic and Social Cohesion, Energy and Transport. Phare support was needed to help initiate reform of public administrations as well as the judiciary. Only adequate progress has been recorded however. Phare has had a limited effect on preparing beneficiaries for the Structural Funds. Any acceleration and advanced preparation from these Funds was due mainly to candidate countries own efforts. Phare did not contribute significantly to the setting up of national coordinating structures and procedures.

Phare assistance and its sustainability, however, is growing in line with the strengthening of Phare’s legal, organisational and administrative systems.

ISPA:

No ex post evaluations or projects have been complete in Romania or Croatia by the end of 2006. Although some projects were being carried out in Bulgaria they were completed towards the end of 2006 and thus no investment projects have been wound up. As a result an ex-post evaluation in Bulgaria was not launched there either.

SAPARD: throughout 2006, the Commission continued to work closely with the beneficiary countries on adapting and running the monitoring and evaluation systems. The Monitoring Committee meetings held in 2006 provided a useful opportunity to discuss and decide on i) monitoring and implementation of the programmes; ii) approval of modifications needed to close certain programme and improve the absorption capacity of the programmes and iii) approve the annual reports on progress achieved in relation to implementation of the Sapard programmes.

Coordination: in line with legislative requirements to do so, the Commission has continued to support close coordination between the three pre-accession instruments through a number of committee meetings as well as the general framework for assistance under the press-accession instruments as set up by the Accession Partnerships. To avoid duplication, the Commission has clarified the interface between Phare and SAPARD, taking account of provisions in the Coordination Regulation. As regards project monitoring, coordination takes the form of the JMC, which in turn is supported by the ISPA Monitoring Committees and Phare sub-committees. In addition the Commission strongly encourages the candidate countries to enhance their inter-ministerial coordination – a key pre-condition to their successful future management of the Structural Funds. Indeed a coordination “checklist” is forwarded to the candidate countries.

Similarly, the Commission regularly consults the international financial institutions (IFI’s) and bilateral donors throughout a programming cycle in order to identify scope for joint activities and complementary approaches to address pre-accession priorities. The EIB, for example, and the Commission have established a facility at border regions, as requested by the Nice European Council. The project concentrates on the implementation of small municipal infrastructure in border regions to promote integration with current EU regions.

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PURPOSE : to present a report on pre-accession assistance in 2005.

CONTENT : this is the sixth report covering activities financed by the three pre-accession instruments, Phare, ISPA and SAPARD in 2005.

The report focuses on the coordination between these instruments in accordance with Article 13 of the Council Regulation (EC) No 1266/99 on the co-ordination of pre-accession assistance. In line with accession negotiations in Copenhagen 2002, an increased emphasis was put on creating the administrative capacity required for a successful implementation of the acquis and participation in present or future European Community programmes.

The actions of the pre-accession programmes may be summarised as follows:

Phare : Execution of the Phare programmes is subject to a structured monitoring and evaluation process. A Joint Monitoring Committee (JMC) in each country is supported by Sectoral Monitoring Sub-Committees (SMSC) which meet twice a year. In 2005, all new Member States had set up their decentralised monitoring and interim evaluation (IE) functions. In Bulgaria and Romania, whilst the responsibility for monitoring was decentralised in 2001, the IE function remained centralised. As a preparation for decentralising the IE function, both countries started in 2005 to draft their Action Plans on decentralised monitoring and interim evaluation. Croatia started to prepare for decentralisation of monitoring.

The key messages derived from the reports are the following:

- objectives are too ambitious/vague/unclear, and require subsequent reformulation to become operational;

- there is insufficient capacity for, and preparation of, multi-annual programming/project fiche design;

- effectiveness of multi-annual programming is reduced as a result of cumulative implementation delays;

- sustainability is at risk due to limited institutional absorption capacity as well as lack of progress with public administration reform;

- Phare has had limited effect to date in preparing beneficiaries to the Structural Funds;

- on the whole, effectiveness of twinning projects is satisfactory.

ISPA: all ISPA projects are subject to the ISPA Regulation and the Financing Agreement provisions of both monitoring and evaluation. As no project had been completed by end 2005, no ex-post evaluation was launched in that year.

SAPARD: the Commission continued working closely with the beneficiary countries on adapting and running the monitoring and evaluation systems. The 14 Monitoring Committee meetings held in 2005 provided a useful opportunity to discuss and decide on: (i) monitoring the implementation of the programmes (ii) approval of modifications necessary regarding the closure of the programme and improving the absorption capacity of the programmes (BG, RO) as well as (iii) approval of the annual reports on progress achieved in relation to the implementation of the Sapard programmes, before their official submission to the Commission.

Coordination of the 3 instruments: as required by the Coordination Regulation, the Commission ensures close co-ordination between the three pre-accession instruments. The Commission’s Co-ordination Committee for the 3 pre-accession instruments, set at Directors level, has not officially convened during 2005, although an important number of meetings have taken place notably in view of creation of the new Instrument for Pre- Accession (IPA) and its relevant components. A General Assistance Document, through which the Commission informed the Phare Management Committee of the co-ordination of pre-accession aid in 2005 and planned assistance for 2006, was presented in May 2005. At the national level, the Commission strongly encourages the candidate countries to enhance inter-ministerial coordination, which is a key pre-condition for the candidate countries’ successful future management of the Structural Funds.

Allocations for PHARE, ISPA and SAPARD in 2005: the principal operations financed were as follows;

- Bulgaria /Romania Roadmap (plus Kozloduy) (PHARE + SAPARD + ISPA) : EUR 1,502 million;

- Kozloduy Decommissioning: EUR 50 Million;

- Croatia: EUR 80 Million by PHARE ; EUR 25 million by ISPA.

Total (3 instruments, all operations) : EUR 1,653 million in 2005.

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This is the fifth Commission Report on the pre-accession instruments, Phare, Ispa and Sapard in accordance with Article 13 of Regulation 1266/99/EC and covers the year 2004. It is a general Report and gives an overall description of the three instruments; their structure, spending, monitoring and funding procedures. Thus, for example, it describes in detail how funds are transferred, the implementation of the structures in the candidate countries and the move towards decentralisation under the Decentralised Implementation System or DIS. Also scrutinised is the Co-ordination Regulation, which seeks to bind the three instruments. Phare, for example, falls under the responsibility of DG Enlargement, ISPA under the responsibility of DG Regional Policy and SAPARD under the responsibility of DG Agriculture. The Co-ordination Regulation, however, ensures close co-operation between the three pre-accession instruments, specifying carefully the field to which each instrument provides assistance.

To recall, Phare is a programme which seeks to help in the adoption of the EU’s acquis communautaire . This can be done either through investing in the applicant countries’ administrative procedures or through investing in related economic activities. It also has an element of Economic and Social Cohesion. IPSA is an instrument through which funding can be channelled in support of major environmental and transport infrastructure projects and SAPARD offers agricultural and rural development funding. For more detail on the individual programmes, the Commission has prepared reports unique to each of them.

As far as the monitoring and evaluation of Phare is concerned the final evaluation results report mixed findings. Three shortfalls have been identified. First, substantial weaknesses in Phare require further analysis. Second, the objectives set by Phare have not been adequately achieved and third, implementation of the programme suffers from pervasive inefficiency. In spite of these findings the Commission Report suggests that in view of the complexities involved in the pre-accession objectives and in light of the constraints vis-à-vis implementation periods, Phare achievements are nevertheless remarkable. For ISPA, an ex-post evaluation is impossible to deliver given that many of its projects have not yet reached fruition.

Lastly, for SAPARD, the Commission notes that eight out of the ten beneficiary countries became new Member States in May 2004. However, many of the acceding countries continued with Sapard projects until they were in a position to switch to post-accession programming. As a result of this, up to the end of 2004, the Sapard agencies approved as many as 37 000 projects involving EUR 2.2 billion.

Also discussed by the Commission is co-ordination with the EIB and other International Financial Institutions. As in previous years co-operation with the EIB and other IFIs continued in 2004. Figures available for the years 2000-2004 show that IFI operations to pre-accession assistance amounts to some EUR 6.9 billion in loans signed with Bulgaria and Romania.

To conclude, the Report gives a Financial Overview of allocations per country for PHARE, ISPA and SAPARD in 2004. This overview states that in 2004 Bulgaria was allocated a total of EUR 497 million and Romania a total of EUR 907 million. A total of EUR 31 million was awarded to multi-country programmes such as nuclear safety, statistics and the European Training Foundation.

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The European Commission has presented its fourth report on the three preaccession instruments and their co-ordination. In line with the positive accession negotiations in Copenhagen 2002, an increased emphasis was in 2003 put on creating the administrative capacity required for a successful implementation of the acquis and participation in present or future European Community programmes as of membership.

- PHARE: an ex-ante evaluation report was conducted in 2003, which revealed needs for more strategic programming, increase of resources for project design and the introduction of a more systematic quality control. Overall, evaluation results concluded satisfactory Phare performance. Good progress was made in meeting objectives in cross border co-operation, environment, justice and home affairs, public administration/finance, transport and the social domain. Outcomes were more mixed in agriculture, economic and social cohesion/regional policy. Results in the SME and in the internal market sectors have been uneven but improving.

- ISPA: given the early stage of ISPA implementation, no ex-post evaluation was launched in 2003.

- SAPARD: the Commission continued working closely with the beneficiary countries on adapting and

running the monitoring and evaluation systems. Meetings provided a useful opportunity to reinforce Commission Guidelines on the mid-term evaluation; to ensure that the evaluation exercise would be undertaken in a comprehensive and timely fashion; and to address specific queries which the evaluators wished to raise in the early stages of their work. The Commission also organised a seminar on the theme ‘Developing and promoting local initiatives in the Candidate Countries (Pardubice, Czech Republic, 8-11 May) aiming to provide a forum for the exchange of views on the implementation of the SAPARD programme.

As regards cooperation with EIB and the International Financial Institutions (IFIs), the report states that co-operation with the EIB and other IFIs in 2003 therefore continued under the framework of the

“Memorandum of Understanding on co-operation in the pre-accession assistance”. Figures available for the years 2000 to 2003 show that the yearly operations of the IFIs are in excess of EUR 22.8 billion in loans signed with the 10 enlargement countries. This amount also demonstrates the leverage effect of Community pre-accession assistance having been reinforced since 2000.

On the issue of the financial overview, the report highlights that the allocations for PHARE, ISPA and SAPARD in 2003 amounted to EUR 3389 million (PHARE: EUR 1699 million; ISPA: 1128 million and SAPARD: EUR 561 million).

The breakdown by country was as follows: Bulgaria EUR 268 million; Czech Republic EUR 195 million; Estonia EUR 84 million; Hungary EUR 244 million; Latvia EUR 124 million; Lithuania EUR 152 million; Poland EUR 963 million; Romania EUR 695 million; Slovakia EUR 128 million; Slovenia EUR 60 million; others EUR 476 million.

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Regulation 1999/1266
OJ L 161 26.06.1999, p. 0068

OJ C 279 01.10.1999, p. 0255-0364
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T4-0436/1999

Debate in Parliament

A4-0191/1999
OJ C 279 01.10.1999, p. 0004

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06924/1999

OJ C 379 07.12.1998, p. 0121-0139
T4-0669/1998

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Debate in Parliament

A4-0397/1998
OJ C 379 07.12.1998, p. 0005

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OJ C 329 27.10.1998, p. 0013
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OJ C 140 05.05.1998, p. 0026
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