www.greennet.org.uk/fern 

The EU Phare Programme

Introduction

The EU's political determination to strengthen commercial and political ties with Central and East European Countries (CEEC) is illustrated by the fact that a great deal of EC aid goes to these countries, as well as to Russia (30% of EC aid in 1998). Of the top ten recipients of EC aid, five are in Eastern Europe or the Balkans; Poland is the single largest recipient.

The ‘Phare’ programme ­ Pologne, Hongrie Assistance à la Reconstruction Economique ­ was set up in July 1989 to support the transition of Poland and Hungary to democracy and to market economies. Phare is now the main channel of EC assistance to countries of Central and Eastern Europe; it currently encompasses a further eleven countries (Albania, Bosnia Herzegovina, Bulgaria, Czech Republic, Estonia, Former Yugoslav Republic of Macedonia (FYROM), Latvia, Lithuania, Romania, Slovakia and Slovenia). With the exception of FYROM, Bosnia Herzegovina and Albania, these countries are preparing to become EU member states in the coming years. Upcoming accession explains the recent shift in focus of Phare towards aid to the ten ‘accession’ countries and continued support for democracy and economic change in the remaining three.

For the period from 2000-2006, EU assistance to countries of Central and Eastern Europe that are candidates for accession to the EU (candidate countries) will be channelled through three instruments. As mentioned, Phare[i] is the largest of these, providing general assistance to help pre-accession countries prepare for membership in the EU. Assistance of a more sectoral nature is also to be provided through the more recently adopted ISPA[ii], the Instrument for Structural Policies for Pre-Accession, aims to advance adjustment to Community infrastructure standards particularly in the areas of transport and environment; and Sapard[iii], the Special Accession Programme for Agriculture Development, which targets agricultural and rural areas and, generally, adjustment to the Common Agriculture Policy. Pre-accession aid is further channelled through co-financing with international financing institutions[iv]; in this manner Phare[v] pre-accession assistance draws parallel funding from other sources.

The main objective of Phare 2000-2006 is to help accession countries prepare to join the EU by meeting the Copenhagen criteria adopted by the Council in 1993[vi], which outline the economic and political conditions of accession. These include institutional stability capable of guaranteeing democracy, the rule of law, human rights and the protection of minorities; a functioning market economy; and adoption of the aquis communautaire[vii].

CEEC forests in danger

Accession presents great opportunities and challenges for the protection and good management of forests ­ opportunities that must not be wasted. Throughout Central and East Europe, forests form an essential part of local and national economies and are of particular importance for social and environmental sustainability. Between them, the ten candidate countries have a great deal of forest cover that is of significant value[viii]; the average forest area in each candidate country is generally considerable greater than in EU member states ­ their addition to the EU could bring important overall gains in terms of biodiversity, and ecological services.

Yet these forests are under threat. A study published by Fern[ix] on the underlying causes of forest loss in Estonia, Hungary and Romania demonstrates that future EU accession could improve ­ or if handled poorly, aggravate ­ the situation of these severely threatened forests. The privatisation of forest lands, increasing activities of foreign forestry companies, agricultural intensification and airborne pollution all present challenges in CEE countries.

Privatisation of forest areas has, until recently, been actively encouraged through EC initiatives but has entailed serious difficulties for the emerging market economies of Central and Eastern Europe. The emergence of new private forest owners, who frequently lack experience in forest management and see forests as recently acquired wealth and a chance for short-term gain, has already resulted in a rapid deterioration of this valuable resource. Scandinavian and other forest companies, eager to tap into rich CEEC and Russian forest resources, also present an increasing threat. At the same time, land-use reforms such as agricultural intensification are placing stress on forests ­ as well as on rural people, who are being laid off from disbanded collective farms. As is true throughout Europe, many CEEC forests are seriously damaged by pollution, and are at risk from pests and disease. Finally, the lack of a stable political climate has contributed to mismanagement, corruption and the implementation of poorly considered policies. Not surprisingly, the above problems have somewhat diminished the initial enthusiasm for a rapid transition to free-market practices, both in the EU and in partner countries.

Phare Programme ­ actors and roles

In recent years a great effort has been made to decentralise management of the Phare programme, to hand responsibilities over to the soon-to-be Member States. More and more, projects are selected and monitored by the candidate countries themselves. Notably, however, the Commission retains the ultimate control over the use of funds; candidate countries can be held to reimburse funds if it is revealed that Phare rules have not been respected.

Elaborating a Strategy: Two basic instruments lay down the strategy for meeting the requirements of EU accession. In 1998, based on priorities and conditions put forward by the Council, the Commission drew up an Accession Partnership Agreement (AP)[x] for each candidate country ­ i.e. a multi-annual framework agreement to help programme the principles, priorities, and objectives of accession; as well as the funds, from all types of EU financial assistance, needed to implement them. The APs outline the priority areas where the candidate country must progress in order to meet the Copenhagen criteria. The Council is responsible for approving the APs. The APs are revised regularly.

Counterpart to the Accession Partnerships but elaborated from the candidate country perspective are the National Programmes for the Adoption of the Acquis (NPAA), which fill in the details of meeting commitments concerning the acquis and the Copenhagen criteria and, again, the resources necessary to do so. The NPAA must take into account broad policy documents such as the Pact Against Organised Crime, or Joint Employment Policy Reviews. This process may ­ but usually does not ­ involve consultations with major stakeholder groups that could potentially lead to clashes of interest.

For the 2000-2006 period, assistance is to be divided between two broad priorities: institution building, and investment. An annual budget of 1.5 billion Euro is foreseen.

Roughly 30% of the budget (figures are indicative at present) is devoted to the first priority, institution building. This seeks to help finance the structures, human resources and skills necessary to tackle the issues of economic, social, regulatory and administrative capacity required for implementing the acquis communautaire and for meeting the Copenhagen criteria. Assistance is foreseen for various professional organisations and trades unions and, particularly where promotion of democracy, human rights and minorities issues are concerned, also for government agencies and NGOs. Concerning civil society, mention is made of strengthening the institutional capacity of NGOs and supporting the participation of those secotrs of society that risk being marginalized. The success of this intention will, of course, depend upon how seriously it is pursued by the candidate country, and how seriously it is insisted upon by the EU over the pre-accession period. “Twinning”, or the practice of long-term secondment of advisors from an EU member state ministry to fulfil a similar role in the candidate country ministry, is the main tool for institution building.

The remaining 70% or so is to be spent on investment: the investment required to strengthen the regulatory infrastructure that must ensure compliance with EU law; and investment of an “economic and social cohesion”-type, to promote the market economy and the capacity to deal with competition.  Investment support will focus on the productive sector, both its human resources and business-related infrastructure. Another focus of investment support will be nuclear safety. “Sustainability” features among the various principles of allocating investment support.

Funding and Implementation: The increasing funds allocated to the Phare programme (below) are representative of its growing importance in supporting the drive towards accession.

Phare assistance can be allocated through national programmes (the basic means of allocating assistance); through cross border co-operation, to assist with development problems in accession-country regions that are near EU borders and between adjacent Central and Eastern European countries, and to develop cross-border co-operation networks; and through multi-country programming. The latter has been and will continue to be reduced to only those projects where there is a special justification ­ such as economies of scale ­ for such an approach.

By defining the priorities for each country, the Accession Partnerhip provides the framework for the multi-annual programming: the financial perspective for the period 2000 ­ 2006 foresees an annual Phare budget of 1.5 billion Euro. The Commission fixes multi-annual indicative national allocations based on the principle of equal treatment, rather than order of accession, and taking into account such factors as GDP per capita, greatest need, past performance and progress in implementing the Accession Partnership agreements. Annual financing decisions to support the AP priorities are taken by the Commission[xi], after consulting the Phare Management Committee. At the end of this process a Financing Memorandum is signed with candidate countries.

In Brussels, the Phare Management Committee, made up of representatives from both Member States and the Commission, exercises programme-level oversight. The committee delivers an opinion, on the basis of a financing proposal and project summaries and in light of the candidate countries’ progress in implementing the Accession Partnerships. Taking this opinion into account, the Commission may continue, re-allocate or withdraw aid allocations on national plans on a monthly basis as well as all projects undertaken under these plans. The Commission presents annual reports on overall pre-accession aid to the Parliament and Council for approval.

As mentioned, the Phare administration has been decentralised, and therefore the relevant ministry in each candidate country is responsible for selecting and evaluating, as well as for monitoring projects. In the candidate country, funds are disbursed to the National Fund within its Ministry of Finance, under the authority of a National Authorising Officer (NAO). These can be allocated to Implementing Agencies or Programme Management Units, under the NAO, that administer the funds (however, these are being phased out). Project selection and monitoring are the responsibility specifically of the Ministries and administrations for whom the assistance is destined, as they are the best placed to judge that which is appropriate or needed in their country. As part of the process of multi-sectoral institution building, the creation of a Central Finance and Contracting Unit (CFCU), to bear the responsibility of tendering and contracting for the programme, is foreseen.

As part of the ‘deconcentration’ process, which claims to have taken account of observations by Court of Auditors and European Parliament, the Commission has installed EU Commission Delegations in each candidate country. These delegations act as a bridge between the Commission and the candidate country, and take on those tasks relating to programming and implementation where some responsibility should remain with the Commission but that are more efficiently carried out within the country instead of wasting time and resources shipping documents to and from Brussels.

Programme and project monitoring: A variety of actors are involved in monitoring the compatibility of Phare assistance with rules and policies of the EU, both at programme level and at the level of specific projects.

Reviewing the programme’s compatibility with the EU environmental and social policies is undertaken “far upstream”, at the programme-design level, according to a Commission representative. Here, verifying compatibility of laws on paper is the primary focus.

Also in Brussels, the Commission’s Joint Service (Service Commun Relex) for the management of Community aid to non-member countries is further responsible for audits and financial evaluations, (usually available from the SCR website). It also fields questions sent to it by Commission Delegations in the candidate countries.

Within each candidate country, and at a more specific level, project monitoring takes place through a Joint Monitoring Committee composed of both Commission and candidate country representatives. Such committees exist to carry out ex-post evaluation, i.e. to appraise project impact with respect to objectives; notably this type of verification does nothing to prevent damage from occurring. Financing Memoranda (above) carry measurable indicators and goals to which implementation of projects can be compared.

The Commission may contract an independent auditor to verify the accounts of the National Fund, the Central Finance and Contracting Units and the Implementing Agencies. Also, in future, “project assessment cells” are to be developed in each candidate country.

Finally, with regard to specific projects that may have an impact on the general environment and on forests, the monitoring arrangements mirror many of the drawbacks that already exist within the European Union. Because of the shift to decentralise responsibility, environmental impact assessment is carried out under the candidate country’s national procedures. These may, or may not be of the same standard as EIA within the EU ­ for example, public participation may not be part of the procedure. The EU Delegation reportedly insists that EIA be carried out for the “large individual projects” and examines a report on the matter[xii]. As for verifying details of specific projects, such as the implementation of conditions attached to project authorisation, the Commission must rely on the candidate country’s reports and assessments of its own implementation ­ indeed, as the Commission must rely on EU member states reports under EU EIA legislation. Appealing to the fox for reports on the chickens’ health presents an obvious potential for discrepancies, particularly where environmental protection is low on the hierarchy or priorities. Where problems do occur in practice, the Commission is reliant on information from the candidate country’s NGOs and individuals to investigate further ­ again, as within the Union, it relies on the complaints procedure. Unfortunately, in candidate countries, as the Commission has itself noted, civil society needs strengthening. NGOs and individuals may have little experience with administrative mechanisms or with appealing to the EU Delegation when problems arise.

Upcoming challenges

No assistance program to date has been perfect. Over the years, efforts have been made to improve the Phare programme. Still, given Phare’s importance for the successful transition and integration of accession countries to the European Union, it is vital that the programme be efficient. The issues below need to be addressed in order to further improve the quality and efficiency of this aid to accession countries.

Generally, the EU should pay increased attention to EU-funded projects that can contribute to forest degradation and destruction directly, by changing land-use patterns and contributing to forest fragmentation/destruction; or indirectly, e.g. by stimulating demand for forest products that in turn increase pressures on forest resources ­ without necessarily promoting/ensuring sustainable forest management[xiii]. The challenge for the EC is to foresee the potential problems and to work towards providing technical and political support for sound forestry practices through aid and other programmes. Priority must be given to improving environmental standards and implementing environmental legislation in order to protect vulnerable or unique species and ecosystems.

Decentralisation within limits: Recent changes in Phare’s structure intended to decentralise the programme have also caused great upheaval. Decentralised implementation can result in the mishandling and misuse of funds, which must be avoided through support and monitoring by the Commission. Decentralisation should be encouraged only where realistic procedures support and enable candidate countries, and where stakeholders are permitted to participate in decision-making, ensuring a certain level of transparency. In this respect, the fact that the Commission has apparently stopped/slowed decentralisation for now should be welcomed.

Ensuring a preventive approach: A side effect of decentralisation is that verification of environmental and social impacts of specific projects is largely left to those who are most interested in seeing those projects approved and implemented. As the Court of Auditors has noted, particularly concerning Phare Cross-Border Cooperation, projects have been undertaken that “focus on large national infrastructure projects with no special concern for the interests of the local population…”[xiv]. This unfortunately makes it very difficult to prevent harm from occurring.

Nevertheless, the fact that prevention of harm is one of the fundamental principles of EU environmental policies, enshrined in Treaty Article XXX, ex-Article 130r (CHECK NEW ARTICLE XXX) must be acknowledged and acted upon. Merely noting negative impacts after the fact through ‘ex-post’ verification, as appears to be the case at present, is for obvious reasons insufficient. As necessary as they may be, projects supported by Phare also have great potential to harm the environment generally, and in particular to damage the rich forest resources of Central and Eastern Europe. The Commission must devote the necessary human resources and expertise to ensure that a preventive approach to environmental harm is taken in the Delegations, and ­ perhaps through the ‘twinning’ procedures ­ also in the relevant positions in the candidate countries. Without this, EU funds risk being used in one sector to undo EU policies in another.

Requiring EIA: The Commission contends that most “larger projects” have been subject to environmental impact assessment ­ an important procedural tool for the prevention of environmental harm and for integrating environmental protection into the definition and execution of policies. As seen, details of the procedure are left up to the candidate countries, and few appear eager to carry these out or to involve civil society in it. Nonetheless, all proposed projects of the types and thresholds included in the annexes of EU EIA legislation should undergo environmental impact assessments, and verification must be made to ensure that civil society is effectively included in the process. For the EU to state that they are urging EIA to be adopted by the candidate countries is insufficient; assessment cannot be left until all the infrastructure projects are completed. It is usual for conditions to be attached to assistance. Where applicable, EIA is a specific tool ­ rather than a general aspiration such as ‘sustainability’ ­ that merits being among these conditions. Furthermore, as the procedure and methodology of assessing social impacts are developed and refined, these too could be carried out on relevant projects funded by the EU ­ in pre-accession countries as well as in the EU.

Involving Civil Society: Generally, civil society in the candidate countries has rarely, if ever, participated in elaborating Phare programmes or projects. This serious issue, now being raised in other EC aid programmes[xv], must be urgently addressed; eventually, it will reflect on the credibility of the Union that, according to the Treaty, intends to move ‘ever-closer’ to its citizens and that aims to be transparent and democratic.

Limitations concerning civil society participation with shaping specific projects have been noted, above, yet even so the Commission has indicated its reliance on NGOs and individuals for news of specific violations of environmental or social standards. The Commission’s intention to investigate seriously complaints brought to it is to be applauded. However, as has often been noted within the EU, as a strategy of implementation and enforcement, reliance on complaints alone for information concerning failure in practice is insufficient. This shortcoming takes on new seriousness in the context of accession countries where in the rush to promote the market economy it may be tempting to disregard costly or inconvenient environmental and social policies. Furthermore, such reliance can only hope to be effective in a democratic context in which civil society is sufficiently informed of EU policies, rules and procedures to know how to become involved, should it so wish.

Commendably, the Phare Guidelines for 2000-2006 do mention support to strengthen civil society as part of institution building efforts. The EU should also make a genuine, targeted effort to enhance civil society’s awareness of EU Delegations in accession countries; to promote knowledge of procedures where they have a right to participate, and of what might constitute an infringement of EU policy or law (particularly social and environmental); and to provide clear guidelines indicating what recourse is open to individuals and NGOs should they become aware of a practical problem or if their right to participate is violated[xvi]. Only in this way can transparency be ensured, and the Union’s credibility maintained.