PART III - THE EU BUDGET AND THE CONTRIBUTION OF STRUCTURAL POLICIES TO ECONOMIC AND SOCIAL COHESION

2 The contribution of structural policies to economic and social cohesion: results and prospects

2.4 Preparing for enlargement: pre-accession support

Up until 1999, Community intervention in candidate countries was financed by the PHARE programme, in the case of the ten countries in Central Europe, and by the funds allocated to southern and eastern Mediterranean countries, in the case of Cyprus and Malta. Since the beginning of 2000, the funds for the former group have been increased through the creation of two new instruments, the Instrument for Structural Policies for Pre-Accession (ISPA), in preparation for the Cohesion Fund, and the Special Accession Programme for Agriculture and Rural Development (SAPARD).

 

Phare's history - 1989 to 2000 The PHARE programme is one of the three pre-accession instruments financed by the European Communities to assist the applicant countries of Central Europe in their preparation for joining the European Union. The PHARE programme has been providing support to the countries of Central Europe since 1989, helping them through a period of massive economic restructuring and political change. Following the 1993 Copenhagen Council's invitation to Central European countries to apply for membership, PHARE support was reoriented and support for infrastructure investment was expanded markedly. However, PHARE's 'pre-accession' focus was put in place only in 1997 in response to the Luxembourg European Council's launching of the present enlargement process. PHARE funds now focus entirely on the pre-accession priorities highlighted in each country's Accession Partnership. Civil servants from Member States are now seconded through 'twinning' to assist their counterparts in preparing for accession. In addition, PHARE's management was integrated into the structure of government in applicant countries through the creation of the National Fund and a small number of implementing agencies. These basic orientations were adjusted in 1999 to reflect the launch of SAPARD for agriculture and rural development and of ISPA for transport and environment infrastructure. The principal adjustment was to redirect PHARE's funds to adressing the problem of economic and social cohesion.

In 2000-2006, PHARE is providing some EUR 11 billion of cofinancing for institution building support through "twinning" and technical assistance and for investment support to help applicant countries in their efforts:

• to strengthen their public administrations and institutions to function effectively inside the Union;
  
  
• to promote convergence with the European Community's extensive legislation and reduce the need for transition periods;
  
  
• to promote economic and social cohesion.

The 'PHARE 2000 Review-Strengthening preparations for Membership', approved by the Commission in October, 2000, 1 assessed whether PHARE's guidelines, as introduced in 1997, and updated in 1999, still meet candidate countries' needs and whether any further refinements are required.

It takes into account the new context arising from the adoption of Agenda 2000 at the Berlin European Council, including the increase in the PHARE budget, and the progress achieved in the accession negotiations with the ten countries which are eligible for PHARE assistance from 2000.

The review concluded that PHARE's current guidelines continue to address the main needs of the applicant countries. Accession-led programming of PHARE should continue, based on Accession Partnerships, National programmes for the adoption of the acquis, regular reports and the negotiations process. PHARE's primary objective must remain institution building and promoting convergence with the Community's acquis communautaire, directly helping the countries to comply with the political, economic and acquis communautaire criteria set by the Copenhagen Council in 1993.

But the review identified two challenges for PHARE in the period 2000-2006:

1) Delivering on the past reforms. There should be a period of relative stability to consolidate the past reforms and to ensure their full benefit is obtained. In addition, some of the 1997 reforms must be refined to respond to the constructive criticisms of the Court of Auditors and European Parliament. Moreover, efforts to increase the absorption capacity in the applicant countries must be further emphasised.

2) Moving to the Structural Funds. The aim is to devote about half the investment element of PHARE within national programmes to this objective, which is to:

a) prepare for the implementation of Structural Funds in candidate countries by putting in place the necessary administrative and budgetary structures;
b) allow these countries to benefit from a first generation of integrated regional development programmes of an Objective 1 type, so contributing to their economic and social cohesion.

The PHARE-INTERREG programme

Since 1995, following a European Parliament initiative, PHARE, jointly with INTERREG, has also financed cooperation programmes between border regions of the EU and the candidate countries, and between the candidate countries themselves, after the revision of the PHARE-CBC regulation in 1998.

On the basis of the new PHARE CBC Regulation and the new INTERREG guidelines, a Single Programming Document, covering regions on both sides of the border and including joint cooperation priorities for the 2000-2006 period has been prepared for each eligible border.

Further improvements towards better aligning PHARE-CBC and INTERREG were included in the above mentioned Communication, notably to allow PHARE-CBC to support projects similar in size to those under INTERREG (through a new 'measure-by-measure' approach to finance projects between EUR 50,000 and EUR 2 million from 2001).

SAPARD

SAPARD, with an annual budget of EUR 520 million, finances structural measures for agriculture, the processing and marketing of products and rural development (Table A.46, in annex).

By decentralising management, this programme will give the future Members States an opportunity to gain valuable experience in applying procedures for managing rural development programmes. On a broader front, the investment made at present will build skills which will be readily transferable to other Structural Fund activities and to other areas of Community policy. It should, however, be emphasised that SAPARD can only make a limited contribution to meeting the challenges in rural areas.

ISPA

ISPA, with a budget of EUR 1,040 million a year, is aimed at enabling the candidate countries to meet Community environmental standards and at the construction of trans-European transport networks. Priority has been given, in the case of the environment, to drinking water supply, waste water treatment, waste management and reducing air pollution, in the case of transport, to projects which are environmentally-friendly and of wider Community interest, which accord with the priorities established by the Ministers' Conferences in Helsinki and Crete.

Budgetary impact on cohesion

The area of intervention of these three pre-accession instruments is similar to that of the Structural and Cohesion Funds. In particular, the funds allocated under PHARE to 'institution-building' go to a special programme for preparing countries for managing the Structural Funds, while ISPA and SAPARD perform the same task in respect of the Cohesion Fund and the structural part of the EAGGF. The projects financed are similar to those eligible for support from the Structural and Cohesion Funds in Member States.

The amounts committed represent a significant proportion of the current investment by public authorities in the countries concerned (Table 22).

Cyprus and Malta

Cyprus and Malta have been associated with the Union since 1972-73 and have been in receipt of Community assistance under four successive financial agreements. These were replaced in December 1999 by a single pre-accession instrument with a budget of EUR 95 million for the period 2000 to 2004.

In the current phase of pre-accession, more aid has been made available than on previous such occasions, with the aim of accelerating the adoption of the acquis communautaire. Despite being small, the funds committed are a means of helping countries prepare for the implementation of cohesion policies, required to reduce the significant regional disparities which exist.

(see Box ON REGIONAL FEATURES IN TURKEY)

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1. C(2000)3103.