A2 Unit 3 IR 1945-2004: (23) The further enlargement of the EU: Political & Economic integration & its impact on International Relations

source: EU archives on ‘Enlargement’


Youtube documentary on the history of EEC/EU enlargement

EEC/EU The Geo-Politics of EEC/EU enlargement – its impact on Europe and beyond by Dr Dan Hamilton

Enlargement is one of the most important opportunities for the European Union as it begins the 21st century. Its historic task is to further the integration of the continent by peaceful means, extending a zone of stability and prosperity to new members. In June 1993, at its Summit in Copenhagen, the European Council declared that ‘the associated countries of Central and Eastern Europe that so desire shall become members of the Union’. In December 1997, at Luxembourg the European Council launched the process that will make enlargement possible. This process presently embraces thirteen countries: Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, the Slovak Republic, Slovenia and Turkey. In June 2001, at Gothenburg, the European Council affirmed that the objective was to complete accession negotiations by the end of 2002 with those countries that would be ready to join. In December 2002, meeting again in Copenhagen, the European Council concluded accession negotiations with ten countries. The Union now looks forward to welcoming Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia as members from 1 May 2004. The Accession Treaty with the ten acceding countries was signed on 16 April 2003 in Athens. Negotiations with Bulgaria and Romania continue. Depending on further progress in complying with the membership criteria, the Union’s objective is to see Bulgaria and Romania join the European Union in 2007. With regard to Turkey, the Copenhagen European Council confirmed that it would re-examine Turkey’s progress towards meeting the accession criteria at its meeting in December 2004, on the basis of a report and a recommendation from the Commission. If the European Council then decides that Turkey meets the political criteria, the European Union will open accession negotiations with this country without delay. Building on the historic decisions of the 2002 European Council in Copenhagen, the Union continues to work towards the completion of the ongoing enlargement process which is at once continuous, inclusive and irreversible. The EU has a long history of successful enlargements. In 1957 six founding members signed the Treaty of Rome: Belgium, France, Germany, Italy, Luxembourg and the Netherlands. Four enlargements have followed: 1973 Denmark, Ireland and the United Kingdom 1981 Greece 1986 Portugal and Spain 1995 Austria, Finland and Sweden. The enlargement facing the EU today is without precedent in terms of scope and diversity: the number of candidates, the area and population and the wealth of different histories and cultures.

The benefits of enlargement are both political and economic. In brief: ■ The extension of the zone of peace, stability and prosperity in Europe will enhance the security of all its peoples. ■ The addition of more than 100 million people, in rapidly growing economies, to the EU’s market of 370 million will boost economic growth and create jobs in both old and new member states. ■ There will be a better quality of life for citizens throughout Europe as the new members adopt EU policies for protection of the environment and the fight against crime, drugs and illegal immigration. ■ Enlargement will strengthen the Union’s role in world affairs – in foreign and security policy, trade policy, and the other fields of global governance. Benefits are already visible: ■ In Central and Eastern Europe, stable democracies have emerged. ■ The economic reforms in these countries have led to high rates of economic growth (twice the recent EU average) and better employment prospects. ■ This process has been helped and encouraged by the prospect of EU membership, and by the EU’s financial assistance. ■ The Union currently enjoys a trade surplus of approximately 18 billion with the 13 candidate countries and this generates employment and growth in the member states. Non-member countries will also benefit from an enlarged Union. A single set of trade rules, and a single set of administrative procedures will apply across the Single Market of the enlarged Union. This will simplify dealings for all firms within Europe and improve conditions for investment and trade, bringing benefits not only to the EU but also to our trading partners across the world. FROM CO-OPERATION TO ACCESSION Soon after the fall of the Berlin Wall in 1989, the European Community quickly established diplomatic relations with the countries of Central and Eastern Europe. It removed long-standing import quotas on a number of products, extended the Generalised System of Preferences (GSP) and, over the next few years, concluded Trade and Co-operation Agreements with Bulgaria, the former Czechoslovakia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovenia. In the meantime, the European Community’s Phare Programme, created in 1989, set out to provide financial support for the countries’ efforts to reform and rebuild their economies. Phare soon became the world’s largest assistance programme in Central and Eastern Europe, providing technical expertise and investment support. During the 1990s, the European Community and its Member States progressively concluded Association Agreements, so called ‘Europe Agreements’, with ten countries of Central and Eastern Europe. The Europe Agreements provide the legal basis for bilateral relations between these countries and the EU. The European Community had already established similar Association Agreements with Turkey (1963), Malta (1970) and Cyprus (1972). In the case of Turkey, a Customs Union entered into force in December 1995.

Under the Europe Agreements, trade between the EU and the countries of Central and Eastern Europe grew rapidly, not least because these countries reoriented their trade away from the markets of the former Soviet Union’s Council for Mutual Economic Assistance (CMEA). As their single largest source of trade, assistance and investment, the EU soon became the main economic partner for the countries of the region (see Annexes 5 and 6). Indeed, as early as 1994, the EU had become the most important market for exports originating in the region, absorbing more than half of the total. Today the EU absorbs approximately 68% of exports from the countries of Central and Eastern Europe. An unprecedented enlargement ENLARGEMENT OF THE EUROPEAN UNION, AN HISTORIC OPPORTUNITY 7 MEMBERSHIP APPLICATIONS The Europe Agreements recognised the associated countries’ aspiration to become members of the European Union, an objective that was later confirmed in the individual applications for membership by these countries. DATES OF APPLICATION FOR EU MEMBERSHIP (in chronological order) Turkey 14 April 1987 Cyprus 3 July 1990 Malta 16 July 1990 Hungary 31 March 1994 Poland 5 April 1994 Romania 22 June 1995 Slovak Rep. 27 June 1995 Latvia 13 October 1995 Estonia 24 November 1995 Lithuania 8 December 1995 Bulgaria 14 December 1995 Czech Republic 17 January 1996 Slovenia 10 June 1996 The basic conditions for enlargement were already set out in Article O of the Treaty of Rome, now article 49 of the Treaty on the European Union as further modified by the Amsterdam Treaty. They stipulate that: “Any European state which respects the principles set out in Article 6(1) [i.e. ”liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law”] may apply to become a Member of the Union. It shall address its application to the Council, which shall act unanimously after consulting the Commission and after receiving the assent of the European Parliament, which shall act by an absolute majority of its component members.” ACCESSION CRITERIA In 1993, at the Copenhagen European Council, the Union took a decisive step towards the current enlargement, agreeing that “the associated countries in Central and Eastern Europe that so desire shall become members of the European Union.” Thus, enlargement was no longer a question of ‘if’, but ‘when’. Concerning the timing, the European Council states: “Accession will take place as soon as an associated country is able to assume the obligations of membership by satisfying the economic and political conditions required.” At the same time, it defined the membership criteria, which are often referred to as the ‘Copenhagen criteria’.

THE EUROPE AGREEMENTS WITH THE COUNTRIES OF CENTRAL AND EASTERN EUROPE As basic legal instruments of the relationship between the EU and the ten associated countries of Central and Eastern Europe, the Europe Agreements cover traderelated issues, political dialogue, legal approximation and various other areas of cooperation. The Europe Agreements aim to establish free trade between the EU and the associated countries over a maximum period lasting ten years for Bulgaria, the Czech Republic, Hungary, Poland, Romania and the Slovak Republic, six years for Lithuania and Slovenia, and four years for Latvia. Free trade was established with Estonia from 1 January 1995. No new customs duties or quantitative restrictions are to be introduced in trade between the European Community and the associated countries from the date of entry into force of each Europe Agreement. For other areas, the association includes a maximum transition period: for Bulgaria, the Czech Republic, Hungary, Poland, Romania and the Slovak Republic, this period is limited to ten years; for Slovenia, six years; for Latvia and Lithuania, no later than 31 December 1999. Estonia has no transition period. The Europe Agreements provide for progressive alignment with Community rules as well as a number of specific provisions in areas such as capital movement, rules of competition, intellectual and industrial property rights and public procurement. Despite the asymmetry of the Europe Agreements, which lift restrictions on exports from the countries of Central and Eastern Europe more quickly than those on EU exports, the overall trade balance of the EU with these countries remains largely positive, although it has declined in recent years. In 2001 the trade surplus was €15 million vis-à-vis all ten candidate countries of Central and Eastern Europe. Since 1994, for each country with which a Europe Agreement is in force, there has been a cycle of annual meetings of the Association Council (ministerial level) and the Association Committee (high-level civil service) as well as frequent multidisciplinary sub-committee meetings (technical level). These institutions of the Europe Agreements have assumed an enlarged role within the reinforced pre-accession strategy, in particular in regard to monitoring the progress made by the partner countries in the adoption and implementation of the acquis and the implementation of the Accession Partnerships. Pre-accession strategy ENLARGEMENT OF THE EUROPEAN UNION, AN HISTORIC OPPORTUNITY 13 THE ASSOCIATION AGREEMENTS WITH CYPRUS, MALTA AND TURKEY The legal framework for the relationship between the European Community and respectively Cyprus, Malta, and Turkey, are the Association Agreements, which date back to the sixties and early seventies. These Agreements cover trade-related issues and various other areas of co-operation. They aim progressively to establish a customs union between the European Community and each of the countries concerned. In the case of Turkey, this objective was achieved in 1995, with the entry into force of the Customs Union Agreement. For Cyprus and Malta, progress towards a customs union was taken up in the framework of the accession negotiations. As opposed to the more recent Europe Agreements, these early Association Agreements do not provide for political dialogue. Such dialogue takes place, in the case of Cyprus and Malta, on the basis of a specific decision of the General Affairs Council, and, in the case of Turkey, on the basis of specific Association Council resolutions and the conclusions of the Helsinki European Council. ACCESSION PARTNERSHIPS In Agenda 2000 the European Commission highlighted the need to direct assistance towards the specific needs of each candidate country by providing them with support to overcome particular problems, as illustrated in the Opinions and subsequently in the Regular Reports which the Commission has been producing since 1998. The Accession Partnership responds to this need, and constitutes the central pillar of the reinforced pre-accession strategy. It sets out the priorities for the candidates as they prepare themselves to become members of the EU and brings together all the different forms of EU support within a single framework. The European Council in Luxembourg in December 1997 endorsed the Accession Partnership as the key instrument in strengthening the pre-accession strategy. The first Accession Partnerships for the countries of Central and Eastern Europe were decided in March 1998 and updated for the first time in 1999 and for a second time in January 2002. For Bulgaria and Romania, a third update took place in spring 2003. For Cyprus and Malta, Accession Partnerships were decided in March 2000, on the basis of a separate (similar) Council Regulation and were updated in January 2002. A first Accession Partnership with Turkey was adopted in March 2001, equally on the basis of a separate (similar) Council Regulation. It was updated in spring 2003. Each country’s Accession Partnership sets out clear priorities for further work with a view to preparing for accession. It also highlights the main instruments and financial resources available, all of which should be maximised to target the objectives effectively. The Accession Partnerships have thus become the single programming framework for European Community assistance. Bulgaria JUDICIAL CAPACITY implement a strategy for reform of the judicial system, paying particular attention to strengthening the administrative capacity of key institutions, such as the Supreme Judicial Council and Ministry of Justice, through building budgetary, supervisory, planning and human resource management capacity. Cyprus ADMINISTRATIVE CAPACITY improve the capacity to take on the obligations of membership across a variety of sectors: work towards a political settlement. Czech Republic ADMINISTRATIVE CAPACITY complete the reform of the public administration system by implementing the recently adopted Civil Service Act and ensure that the benefits of reform are felt immediately from the first years of accession. Estonia POLITICAL CRITERIA continue the integration of non-citizens by implementing concrete measures, including language training, for non-Estonian speakers; provide the necessary financial support for the implementation of these measures. Hungary ADMINISTRATIVE CAPACITY ensure that the designated managing and paying authorities progressively develop their capacity in order to be able, upon accession, to fulfil their responsibilities and deliver the tasks assigned to them according to the Structural Funds Regulations. Latvia POLITICAL CRITERIA continue to implement further concrete measures for the integration of non-citizens on the basis of the National Programme for the Integration of Society in Latvia and provide the necessary financial support. Concrete measures include language training and information campaigns. Lithuania ENERGY implement a National Energy Strategy, and prepare for the final closure and decommissioning of the Ignalina Nuclear Power Plant in particular the legal, technical, economic and social aspects. Malta ENVIRONMENT adopt a strategy and a detailed, directive-specific programme for the transposition, the implementation and the enforcement of the EU environmental acquis, in particular through the development of framework and sector legislation, together with preparation of the necessary implementing regulations and capacity building requirements. Poland ADMINISTRATIVE CAPACITY upgrade the capacity of the agricultural administration and complete preparations for the enforcement and practical application of the management mechanisms of the Common Agricultural Policy. Romania ADMINISTRATIVE CAPACITY implement a comprehensive public administration reform package enabling reform of the legal framework for the civil service. Issues to be addressed include: devising mechanisms to ensure the political independence and accountability of civil servants, improving provisions for both initial and in-service training, and ensuring a career structure based on transparent promotion and assessment. Slovak Republic ECONOMIC CRITERIA ensure medium-term sustainability of public finances, complete the financial sector restructuring and privatise the remaining state-owned banks and insurance company; ensure implementation of the bad-debt recovery mechanisms; implement new bankruptcy and investment promotion legislation. Slovenia POLITICAL CRITERIA continue improving the functioning of the judiciary especially by further reducing the backlog of pending court cases. Turkey POLITICAL CRITERIA continue working towards ensuring the stability of institutions guaranteeing democracy, the rule of law, human rights, prevention of torture and respect for and protection of minorities.

PRE-ACCESSION ASSISTANCE TO TURKEY Pre-accession assistance is provided to Turkey under a specific Council Regulation with an annual target allocation of €177 million on average. Financial assistance is aimed at institution building and investment in all sectors, including integrated regional development programmes. Particular weight is attached to measures designed to help Turkey meet the Copenhagen political criteria. THE PHARE PROGRAMME In Agenda 2000, the European Commission proposed to focus the Phare Programme on preparing the countries in Central and Eastern Europe for EU membership by concentrating its support on two crucial priorities in the adoption of the acquis: Institution Building and investment support. Following a Communication from Commissioner Verheugen to the Commission: ‘Phare 2000 ReviewStrengthening preparations for membership’ two additional challenges concerning Phare were identified for the period 2000-2006: delivering on past reforms and linking to the Structural Funds. Phare provides a bridge to the Structural Funds and it aims to help the candidate countries familiarise themselves with the structures and procedures that they will need in order to use the Structural Funds efficiently upon accession. PRE-ACCESSION INSTRUMENTS FOR THE COUNTRIES OF CENTRAL AND EASTERN EUROPE FROM THE YEAR 2000: Phare: ■ finances Institution Building measures across all sectors and investment in fields not covered by the other two instruments, including integrated regional development programmes; ■ has an annual budget of €1,560 million; ■ comes under the responsibility of the Enlargement Directorate General, which also assumes the overall co-ordination between the three instruments, supported by the Phare Management Committee. ISPA: ■ finances major environmental and transport infrastructure projects; ■ has an annual budget of €1,040 million; ■ comes under the responsibility of the Regional Policy Directorate General. SAPARD: ■ finances agricultural and rural development; ■ has an annual budget of €520 million; ■ comes under the responsibility of the Agriculture Directorate General. Pre-accession strategy ENLARGEMENT OF THE EUROPEAN UNION, AN HISTORIC OPPORTUNITY 17 INSTITUTION BUILDING Institution building means adapting and strengthening democratic institutions, public administration and organisations that have a responsibility in implementing and enforcing Community legislation. The integration process is not simply a question of introducing legislation, it is also one of ensuring the effective and efficient implementation of the acquis. The process includes the development of relevant structures, human resources and management skills. Institution building means designing management systems and training and equipping a wide range of civil servants, public officials, professionals and relevant private sector actors: from judges and financial controllers to environmental inspectors and statisticians, to name but a few. Approximately 30% of Phare funds are being used to meet these institution building needs, in accordance with the conclusions of the Luxembourg European Council, in particular through the Twinning mechanism. The Action Plans for administrative and judicial capacity [see page 15] which the European Commission prepared jointly with each of the negotiating countries in spring 2002 have played an important role in highlighting specific areas in which institution building is required, and identifying targeted assistance required to support the countries concerned in their efforts. To accompany these efforts, the Commission has mobilised additional financial assistance of up to €250 million in 2002, bringing the Community’s total effort to strengthen the administrative and judicial capacity of these countries in 2002 to around €1 billion. TWINNING Twinning was launched in May 1998 as the principal instrument for institution building. It aims to help the candidate countries to develop modern and efficient administrations, with the same structures, human resources and management skills needed to implement the acquis as already exist in the Member States. Twinning involves the secondment of EU experts to the candidate countries to accompany an ongoing process. Each Twinning project is led by an official from the candidate country who, together with an official from a Member State administration, is responsible for the thrust of its design and implementation. At least one PreAccession Adviser, an individual seconded from a Member State administration or other mandated Member State body to work full time in the corresponding ministry in the candidate country for a minimum of 12 months, ensures the daily progress of the project. A carefully designed work programme of ad-hoc advisory or training missions by Member State staff complements the permanent presence. A total of 683 Twinning projects, primarily in the fields of agriculture, environment, public finance, justice and home affairs and preparation for the management of Structural Funds, have been funded by the EU between 1998-2002. These represent principal priority sectors that have been identified in the Accession Partnerships. But also other important sectors of EU legislation have been addressed through Twinning for example, social policy, the fight against drugs, transport, telecommunications regulation and so forth. In this way Twinning provides the framework for administrations and semi-public organisations in the candidate countries to receive advice and support from their counterparts in Member States in developing and implementing projects involving the transposition, enforcement and implementation of a specific part of the acquis. The main feature of Twinning projects is that they set out to deliver specific and guaranteed results. They are not designed to foster general co-operation, but to achieve specific targets agreed between the parties in advance for the implementation of priority areas of the acquis, as set out in the Accession Partnerships. TWINNING: EXAMPLES OF PROJECTS Bulgaria: Improvement of the efficiency of the SAPARD Task Force (Greece, lead partner). The project achieved the following results: ■ preparation and approval of the National Agricultural and Rural Development Plan (NARDP), ■ establishment of the legal and administrative organisation of the SAPARD paying agency. ■ reinforcement of the capacity and the skills of the Bulgarian officials of the Ministry of Agriculture and Forestry and of the State Fund Agriculture. Cyprus: Twinning project in the area of Justice and Home Affairs (Spain/Greece). This project has as its objectives the establishment of a National Drugs Monitoring Centre (Reitox Focal Point) and the strengthening of the administrative capacity of the Anti-Drugs Council of Cyprus to review and implement a national drugs strategy, including a drugs demand reduction strategy. Czech Republic: Restructuring of the Ministry of Agriculture and Establishment of Market Intervention Agency (Germany, lead partner). This Twinning project focuses on: ■ analysis of the general organisation, functions and activities of the Czech Ministry of Agriculture (at both central and regional level) and proposals for restructuring, ■ establishment of a State Agricultural Intervention Fund for the implementation, financing and control of CAP measures, including a Paying Agency, ■ adaptation of the Czech Market Organisations to the CAP rules, ■ implementation of an agricultural market information system to deliver agricultural data in real time for the use of operators and administrators at national and EU level. Estonia: Sound Financial Management and Control Systems for the strengthening of good governance and accountability in the public sector (Ireland, lead partner). Significant efforts are required for Estonia to meet EU standards in respect to financial control systems in order to be able to handle the increased responsibility of managing pre-accession instruments and EU funds upon accession. The Irish partners provide support for the analysis and development of financial control systems, drafting of legislation, capacity building of financial control departments and training of trainers and auditors. Hungary: Training for Investigation of Organised Crime (United Kingdom, lead partner, in co-operation with the Netherlands, Germany, Italy, France). The project aims to establish a training programme for Hungarian law enforcement agencies, in order to strengthen their capacity to efficiently and effectively combat organised crime. The training is tar- Pre-accession strategy ENLARGEMENT OF THE EUROPEAN UNION, AN HISTORIC OPPORTUNITY 19 geted at trainers enabling them to develop their own training strategy and design and implement programmes to meet future demands. The training is of a highly specialised nature and includes several modules devoted to criminal terrorism, witness protection, cross border criminality, criminal intelligence analysis, corruption, financial and computer related crime, and undercover operations. Latvia: Improvement of the State Revenue Service (Sweden/Belgium). This project seeks on the one hand to create and implement a human resources development plan for the Latvian tax administration, and on the other to establish a pre-arrival control system for the transit and import of prohibited, sensitive and highly taxed goods. Lithuania: three Twinning projects (Denmark, lead partner) are taking place in the Lithuanian energy sector. The aim of the Twinning project located in the Ministry of Economy is to ensure that policy and a legal basis for the regulation of the energy sector is put in place. At the two energy utilities, Lithuanian Energy and Lithuanian Gas, Twinning projects assist with restructuring, introducing western management techniques and information systems, and supporting the unbundling process. Malta: Strengthening Malta’s operational and administrative capacity to implement the EU acquis in respect of border management and asylum (United Kingdom/Spain). The project aims on the one hand to train all staff involved in border management and asylum and on the other hand to improve the technical infrastructure with the aim of strengthening the controls necessary for the management of the future EU external border. The project also aims to develop a national strategy for the integration of Malta’s national information technology systems with the Schengen Information System. Poland: Reinforcement of the Ministry of Internal Affairs and the Ministry of Justice in the fight against organised crime (France, lead partner), through the training of specialised prosecutors and scientific police. The project focuses also on white collar crime and operational training for forensic police in the treatment of finger prints, criminal analysis, and information technology. Romania: Establishment of a National Anti-Corruption Structure (Spain, lead partner). Within the General Prosecutor’s Office a special unit will be established dedicated to investigating and combating corruption and related organised crime, involving national officials in relation to both “active corruption” and “passive corruption”. This highly topical project will strengthen the role of the newly created unit and expose staff to modern investigation techniques. Slovakia: Water Management and Protection (Netherlands, lead partner). This Twinning project focuses on the harmonisation of sectoral policy and institutional strengthening in the field of water management. A strategy defining the legal and organisational implications of the EU Water Framework Directive and recommendations for a time schedule for its phased implementation are being elaborated. In parallel, the monitoring performance for water quality is being assessed and Slovak policy makers and managers are being trained. Slovenia: Employment project (Sweden, lead partner) focusing on helping Slovenia to implement the acquis on free movement of workers and improve the social security schemes. Emphasis on strengthening the capacity of the Slovene institutions will enable them to participate in the co-ordination of social security at EU level. Initially, Twinning was limited to the countries of Central and Eastern Europe. However in 2001 Cyprus and Malta began participating in the programme. In early 2003 the first Twinning project in Turkey got underway and preparations for more projects there are well advanced. INVESTING IN THE ACQUIS Phare’s second objective, investment, takes two forms: investment to strengthen the regulatory infrastructure needed to ensure compliance with the acquis is now complemented with investment in Economic and Social Cohesion. Around 70% of Phare resources are allocated for investment, this percentage being equally divided between the two types of investment. The adoption of the acquis means that the candidate countries have to adapt their enterprises and main infrastructure to respect Community norms and standards as soon as possible. This requires considerable investment. This is particularly the case for the enforcement of Community rules in areas such as environment, nuclear safety, transport safety, working conditions, marketing of food products, consumer information, control of production processes. Investment efforts are necessary to adapt to Community norms and to develop major infrastructure. Such investments in regulatory infrastructure enhance candidate countries’ ability to meet the EU’s accession requirements and to cope with competitive pressure. Launched in 2000, the second component of investment support is action in the field of Economic and Social Cohesion, based on a National Development Plan. This type of investment focuses as a priority on helping the candidate countries strengthen the institutions that will be needed to implement Structural Funds after accession. In general, the two types of investment support include diversified actions such as structural and social actions, SME development, adoption of European Community norms, and small and medium -scale infrastructure. Since the year 2000, ISPA and SAPARD (see above) have more than doubled the investment capacity in acquisrelated projects under EU public funding for the candidate countries of Central and Eastern Europe. CO-FINANCING WITH THE EIB AND INTERNATIONAL FINANCIAL INSTITUTIONS In December 1999, the Council of Ministers agreed an envelope of € 9,280 million (originally 8,680 million) for guaranteeing the lending activities of the European Investment Bank (EIB) to Central and Eastern Europe for the period February 2000 – January 2007. In January 2000, the EIB’s Board of Governors approved an extension of the EIB’s pre-accession facility for lending to the candidate countries for an amount of up to €8,500 million over a period of three and a half years. Cyprus, Malta and Turkey are at present also eligible for EIB pre-accession financing. Pre-accession strategy ENLARGEMENT OF THE EUROPEAN UNION, AN HISTORIC OPPORTUNITY 21 The EIB’s pre-accession support covers priority investment in all the candidate countries, in particular those projects that facilitate the adoption of the acquis communautaire and strengthen integration with the EU. The financing covers all sectors normally eligible for EIB support, and focuses on environmental protection; the development of transport, telecommunication and energy links; industrial competitiveness and regional development. The effectiveness of pre-accession support is enhanced when it mobilises funds from the international financial institutions (IFIs). With this in mind, the European Commission signed a Memorandum of Understanding on 31 March 2000 with the European Bank for Reconstruction and Development (EBRD), the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the Nordic Investment Bank (NIB), Nordic Environment Finance Corporation (NEFCO) and the Council of Europe Development Bank to reinforce their co-operation in pre-accession preparation for Central and Eastern European countries and to facilitate co-financing. The EIB works closely with the European Commission in serving the EU’s policy objectives and collaborates with the other IFIs in the spirit of the Memorandum of Understanding. Since 2000, the pre-accession instrument ISPA has been the main facility for cofinancing infrastructure projects with the EIB and other IFIs. Jointly financed projects in the environmental and transport sectors are under implementation in all the candidate countries of Central and Eastern Europe. Under PHARE, the main co-financing instrument is the SME facility which was created in 1999 in co-operation with the EBRD. The EIB joined in 2001, with the CEB and the Kreditanstalt für Wiederaufbau (KfW) also participating. In addition, the Commission decided to extend the reach of the facility for Turkey through a €4 million co-operation with CEB/KfW. Since 2002, the EIB has also been co-operating with the Commission in two newly created instruments: ■ a special EIB programme: the Municipal Infrastructure Facility to finance local municipalities in border regions (in the framework of the Commission Communication on Impact of enlargement on Border Regions) ■ the Municipal Finance Facility (developed by the Commission together with EBRD and KfW/CEB) designed to provide incentives for banks in the candidate countries to expand their lending to municipalities for the financing of small infrastructure investments, to extend loans over longer maturities, and to enhance their capacity to assess and monitor the related risks and to manage their loans. Collaboration with the EIB, the EBRD and other IFIs has resulted in the joint co-financing of a substantial number of projects since 1998. At the project level, the exchange of information is carried out at a very early stage in the procedure of project identification in order to identify possible proposals for co-financing. EXAMPLES OF CO-FINANCING BY ISPA AND IFIS ■ The Transit Roads III Rehabilitation programme in Bulgaria was jointly financed by ISPA and the EIB. It concerned the rehabilitation of the main trunk roads along the priority route Pan-European Transport Corridors IV, VIII and IX. It was a continuation of the successful Transit Roads I and II programmes financed by the EIB, Phare and Bulgaria. It provides fast and efficient road connections – thereby fostering Bulgaria’s efforts to promote trade and economic development – reduces operating costs, and enhances road safety. ■ A wastewater treatment plant in Krakow, the third largest city in Poland, was financed jointly with the EBRD under a single turnkey contract. It complies fully with Community legislation, and has had a major impact on the local water quality and improved conditions in the Baltic Sea. The area was identified as a hot spot in the Helsinki Convention. The investment includes a new biological and tertiary treatment plant, sludge handling and bio-gas utilisation. However, the needs of the candidates in terms of alignment with European Community standards and norms are too great to be met solely by Community grants or loans from the EIB or IFIs. Greater investment in the candidate countries by EU companies would considerably lighten the burden, in particular in areas such as the environment. It is for the candidate countries to put in place the legal framework, such as public service franchises, which will allow the private sector to help them meet the challenge of alignment with Community standards through investment that cannot be financed solely from public funds. OPENING OF EUROPEAN COMMUNITY PROGRAMMES AND AGENCIES Community programmes are designed to promote co-operation between Member States in specific policy areas (such as public health, environment, research and energy) and to support student and youth exchanges (such as Socrates, Leonardo da Vinci and Youth). The principle of opening up Community programmes to the countries of Central and Eastern Europe was decided by the European Council in Copenhagen in June 1993, and confirmed by the Essen European Council in December 1994. The objective of the candidate countries’ participation in Community programmes in a wide range of areas is to familiarise them with the way Community policies and instruments are put into practice and to facilitate, for instance, the exchange of students, young people, scientists, and civil servants, prior to the accession of their countries to the European Union. Pre-accession strategy ENLARGEMENT OF THE EUROPEAN UNION, AN HISTORIC OPPORTUNITY 23 In Agenda 2000, and in the conclusions of the European Council meeting in Luxembourg at the end of 1997, the importance of participation in Community programmes as part of the enhanced pre-accession strategy was reiterated. Furthermore, the European Council indicated that candidate countries should steadily increase their own financial contribution, but agreed that Phare, in the case of the ten associated countries of Central and Eastern Europe, if necessary, would continue to part-finance these countries’ financial contributions “up to 10 per cent of the Phare appropriation, not including participation in the research and development framework programme”. The European Council also stated that candidate countries should be allowed to take part, as observers and for points that concerned them, in the management committees responsible for monitoring the programmes to which they contributed financially. Following the conclusions of the Helsinki European Council in December 1999, equivalent part-financing may be applied to Cyprus, Malta and Turkey on the basis of the relevant Community “pre-accession” funds devoted to these three candidate countries. At present, all candidate countries from Central and Eastern Europe as well as Cyprus, Malta and Turkey participate in Community programmes, in particular in the fields of education, vocational training, youth, culture, audio-visual policy, social policy, public health, research, energy, the environment, small and medium-sized enterprises, customs, indirect taxation and information technology. Similar participation of candidate countries in Community agencies is also underway. Participation may take several forms, ranging from full participation as members of the agency to participation in occasional meetings, groups of experts and other specific work of mutual interest being carried out by the Agencies. The 13 candidate countries have ratified their respective membership agreements allowing their full participation in the European Environment Agency in 2003. Concerning the European Monitoring Centre for Drugs and Drug-Addiction (EMCDDA), bilateral agreements on full participation are to be concluded with Bulgaria, Romania and Turkey in 2003. The remaining 10 candidate countries are to join the EMCDDA through their accession to the Union in 2004. Moreover, Phare support is provided for the implementation of preparatory measures for full participation in further eight Community agencies. In order to define a consistent approach to this matter, in a communication to the EU Council in December 1999, the European Commission proposed general guidelines for the participation of all candidate countries in Community programmes, agencies and committees. As a result, new legal instruments have been put in place to streamline procedures facilitating the participation of the candidate countries in Community programmes. Consequently, numerous Memoranda of Understanding on participation in specific programmes have been signed between the Commission and the governments of these countries in 2002.

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