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
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
- 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
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
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
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, 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, 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
The amounts committed represent a significant proportion of the current
investment by public authorities in the countries concerned (Table
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
(see Box ON REGIONAL FEATURES IN TURKEY)