EU ASSISTANCE IN SERBIA: FROM CARDS TO IPA With the support of the European Commission Mrs. Aleksandra Mijalkovic 19 December 2006 Belgrade Open School

With the support of the European Commission 2 From CARDS to IPA IPA, a new Instrument for Pre-accession Assistance, will replace the existing several ones: PHARE (for institution building, economic and social cohesion), ISPA (Instrument for Structural Policies for Accession) and SAPARD (Special Accession Programme for Agriculture and Rural Development), Turkey Instrument. IPA is designed for candidate and potential candidate countries. Most of them have used until now: CARDS (Community Assistance for Reconstruction, Development and Stabilization programme)

With the support of the European Commission 3 From CARDS to IPA The introduction of IPA - a big change: IPA aimed at SAA priorities (CARDS: reconstruction) Serbian Government – main responsibility (not EAR) Three parts of the paper: EU assistance to Serbia and the region during the last six years CARDS and IPA – comparison Preparation for IPA

With the support of the European Commission 4 EU assistance to Serbia and the region during the last six years CARDS – part of SAA Agreement on aid with the EU: Nov 2000 EAR: Feb Jan 2001 – 2008 Aid to Serbia ( ): 1.27 billion euros + Additional aid through other EU programmes

With the support of the European Commission 5 Shifting the focus of aid immediate needs: electricity, heating (2000/01) medium and long-term investment – energy, health, agriculture, enterprise development (2001-) support for the longer-term challenges of economic development, promoting good governance and the rule of law (2002) public finance, justice and home affairs, administrative decentralization (2003) strengthening the partnership with the Government in the process of European integration + fostering economic development and paving the way for investment from international financial institutions + reintegration of refugees (2004) helping the most vulnerable groups, establishing competition and consumer protection bodies, and creating a competitive economy that will attract domestic and foreign investors (2005) strengthening institutions - from the judiciary and the media to local government and the health system (2006)

With the support of the European Commission 6 EU’s financial assistance in Serbia Year Million euros

With the support of the European Commission 7 CARDS Programme Allocation for (million €) Albania Bosnia and Herzegovina Croatia (transfer to pre- accession from '05) The former Yugoslav Republic of Macedonia Serbia and Montenegro a Interim Civilian Administrations Regional Other b Macro-Financial Assistance (grants) c TOTAL ,130.2 Croatia, pre-accession TOTAL including Croatia, ,385 TOTAL

With the support of the European Commission 8 Candidate and potential candidates IPA : 11.5 billion Euros (Commission asked for 14 billion in 2004) IPA : 4.57 billion Euros: CANDIDATES (Croatia, Macedonia and Turkey): 2.93 billion euros POTENTIAL CANDIDATES: 1.64 billion Euros Serbia million Kosovo million Bosnia and Herzegovina 277 million Albania million Montenegro million

With the support of the European Commission Croatia Macedonia Turkey Albania BiH Montenegro Serbia Kosovo Pre-Accession Assistance (IPA) for , in Є Million

With the support of the European Commission 10 How much exactly? Divided by years and per capita, the assistance to the potential candidate countries amounts to 13 euros annually. Central and East European countries that joined the EU in 2004 received 27 euros per capita annually.

With the support of the European Commission 11 Pre-accession assistance (in Million euros) PHARE SAPARD ISPA Total

With the support of the European Commission 12 Five IPA components Serbia, together with other potential candidates, will benefit from only two, out of five IPA components: (1) Transitional assistance and institution building (2) Regional and cross-border cooperation, and some alignment with the acquis communautaire, in particular where this is in the mutual interest of the EU and Serbia. Other three kinds of assistance – (3) regional development, (4) rural development and (5) human resources development are available only to the recognized candidate countries. AIM: progressively adopting the rules and principles of Structural Funds/Rural Development Funds management. A multi-annual indicative financial framework, on a three year basis, by country and by component. This financial matrix is revised yearly.

With the support of the European Commission 13 What is different with IPA? Assistance is driven by the pre-accession process Assistance operates in a medium (not long-term) perspective Bridging function of the assistance, to prepare countries for the time after accession A single framework for assistance Better preparation for Structural and Rural Development Funds, institution building

With the support of the European Commission 14 Areas of assistance (a) Strengthening democratic institutions and the rule of law (b) Public administration reform (c) Economic reform (d) The promotion and the protection of human rights, fundamental freedoms and enhanced respect for minority rights (e) The development of civil society (f) Reconciliation, confidence building measures and reconstruction (g) Regional and cross-border cooperation

With the support of the European Commission 15 IPA’s shortcomings European Stability Initiative (ESI, 2004): should not be a ghetto 1. Less funding, instead of more in critical years (EU’s “soft power”) 2. Implicit assumptions implicit: candidate status (S, M, B-H, A) 2010, membership The key instruments of pre-accession assistance will not to be made available to the potential candidates in the Western Balkans for another five years or more. Suggestion: aid in 2007 to Western Balkan countries should be equal to the aid Bulgaria and Romania had in 1997.

With the support of the European Commission 16 EU money for Bulgaria (in millions Euros) Structural reforms Rural development Transitional instruments (for the budget and inclusion to the Schengen zone) Safety in nuclear stations 70 TOTAL ,132.11,436.6

With the support of the European Commission 17 Comparison: Serbia-Bulgaria EU assistance : – Serbia million – Bulgaria: 3,373.5 million IPA : 4.57 billion Euros: CANDIDATES (Croatia, Macedonia and Turkey) 2.93 billion euros POTENTIAL CANDIDATES: 1.64 billion Euros

With the support of the European Commission 18 Introducing IPA in Serbia Three-year plans: IPA funds will be allocated in line with: the needs of the eligible countries, their ability to absorb and manage the funding, their respect of the conditions for accession. Absorption capacity Serbia’s Government Ministry for international economic relations coordinates all kinds of international financial assistance Low absorption capacity of former candidates – new members. REALLOCATION of funds from one country/ program to another.

With the support of the European Commission 19 Requirements The main documents for programming the pre-accession assistance in Serbia: the Stabilization and Association Agreement (not signed yet), European partnership and National strategy for the EU accession. The Multi-annual indicative financial framework (MIFF) for IPA – financial table covering three year period.

With the support of the European Commission 20 Conditions for the use of funds Instructions for the use of the EU funds in 2007, three pre- conditions : (1) Project must be connected with the Acquis, as a part of national priorities in pre-accession process. (2) National budget for co-financing the investment and technical assistance must be obtained in time. (3) Project maturity for the implementation must be very high.