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CHAPTER 5 (*)

External aid
5.0. CONTENTS Paragraph reference 5.1 5.5 Ð 5.4 Ð 5.11

Introduction Trend regarding the utilisation of appropriations in 1997 Drawing-up of budgets Implementation mechanisms The management of external actions Planning, programming, strategy Implementation systems Staff and resources Monitoring and evaluation Measures taken by the Commission to overcome the difficulties in using its external aid Technical and administrative support for programmes (STAP) Reorganisation of departments
ÐÐÐÐÐ (*) The Commission's replies are on page 100.

5.12 Ð 5.18 5.19 Ð 5.33 5.19 5.20 Ð 5.22 5.23 Ð 5.27 5.28 Ð 5.31 5.32 Ð 5.33 5.34 Ð 5.44 5.35 Ð 5.41 5.42 Ð 5.44

INTRODUCTION
5.1. This chapter is devoted to the implementation of external aid within the meaning of headings 4 and 6 (1) of the 1993-99 financial perspective adopted by the European Council in Edinburgh in 1992 and made more specific in Cannes in 1995. For the financial year 1997, this aid was entered under Subsections B7 and B8 of the general budget (appropriations for commitments: 5 940,6 Mio ECU; appropriations for payments: 5 007,3 Mio ECU).

composition of the aid, reflecting political priorities. While the sub-Saharan African region still receives the largest proportion of Community aid, its share declined substantially from 70 % at the beginning of the 1970s to under 40 % in 1994/95 as the large programmes in favour of the central and east European countries, the new independent States and the Mediterranean and the Middle East have developed, reaching respectively 23 % and 9 % in 1994/95 (2).

5.2. During the 1990s, taking together external assistance funded through the general budget and the European Development Funds (see the report on the European Development Funds), the European Community has become one of the world's largest aid donors. Its programmes have grown rapidly, at the same time as there has been a shift in the regional
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5.3. The framework for development cooperation, at both policy and operational levels, has developed significantly in recent years. Articles 130u to y of the Treaty on European Union set out the legal basis and overall objectives for development cooperation as a part of the policy of the Union. The Development Council has, on the basis of proposals of the Commis_________________

(1) External action (heading 4) and reserves for emergency aid and the loan guarantee fund (heading 6).

(2) `Understanding European Community aid', ODI and the European Commission, 1997, page xiii. In 1995 the European Community accounted for 10,5 % of all aid disbursed by the OECD countries.

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sion, adopted a number of resolutions in order to strengthen different aspects of development policy and to increase its effectiveness. The Commission has proposed regulations to provide legal bases for different components of the policy. The Commission has also undertaken several initiatives to improve its management of its external aid funds. These include the introduction of improved project management procedures, the establishment of finance and resource management directorates and the development of guidelines on the evaluation of programmes and projects. In 1997 the Commission decided to create a joint service (the SCR) to simplify and rationalise the execution and management of its external programmes (see paragraphs 5.42 to 5.44).

better indication of the level of progress in implementing the aid programmes. Tables 5.1-1 to 5.1-4 thus show an increase in the measures that have been under way since 1990 in the top priority areas.

5.7. In some cases, the burden of the past that is apparent from these tables is, however, overstated because of the delays in decommitting the sums remaining unused when programmes have come to an end.

5.4. In recent years the Court has published several special reports on a wide range of external actions. These reports have frequently identified similar management, resource and organisational problems. This chapter draws overall conclusions from these findings about the management of external action. It highlights many of the key issues which are the subject of ongoing efforts by the Commission to reform its internal management and organisation.

TREND REGARDING THE UTILISATION OF APPROPRIATIONS IN 1997

5.5. The financial year 1997 was the first for which the Commission, as part of its initiative for sound and efficient management (SEM 2000), set budgetary priorities that reflected the EU's political priorities. Following the Cannes Summit in June 1995, the top priority of external aid was deemed to be the central and east European countries and the southern Mediterranean countries. The Commission assigned a relative priority to former Yugoslavia, Asia and Latin America, South Africa, the new independent States, emergency aid, fisheries agreements and the CFSP.

5.8. The rate at which the appropriations for payments of the financial year are implemented is, for its part, quite a good indicator of the implementation of the aid during the financial year. This rate may, however, be pushed up by two practices, namely transfers of appropriations and payments of advances. Except in three cases (TACIS, former Yugoslavia and the CFSP), Tables 5.2 and 5.3 show satisfactory takeup of appropriations in the areas which have relative priority. In the case of South Africa, the high rate of utilisation in relation to the final appropriations is due to a transfer reducing the initial appropriations by 25 %. By contrast, the budget headings which correspond to a top priority are showing unsatisfactory rates of implementation, even though their appropriations have likewise decreased during the financial year. Despite payments of advances, implementation of headings B7-4 (MED) (3) and B7-50 (PHARE) is still limited. Moreover, in the case of PHARE, when advances of this kind are paid, this creates an intermediate cash fund between the Commission and the final aid recipients over which the public authorities can exercise control only from afar (about 370 Mio ECU for PHARE at 31 December 1997). These transfers and advances indicate that there are difficulties in implementing the programmes which the budgetary authority would do well to look into carefully.

5.6. The rate of utilisation of commitment appropriations, generally regarded as the main indicator of how operations are being implemented, gives rise to confusion because the accounting commitments for the most part correspond to intended measures, but the specific form these measures are to take has often not yet been determined by the time it comes to agreeing the annual programmes or the financing agreements. The situation as regards commitments still outstanding and how it has developed over a period of time give a

5.9. In the case of PHARE, a special operation in 1997 had a marked effect on the programme's implementation. For example, in the wake of the floods that struck three countries in the early summer of 1997 (Poland, Romania and the Czech Republic), about 10 measures were amended to fund reconstruction work on small-scale infrastructure in the affected areas. The total amount needed (97,1 Mio ECU) was thus withdrawn from technical assistance operations (48 Mio ECU), from financial instruments (25 Mio ECU) (4) and from infrastructure projects (24,1 Mio ECU).
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(3) The payments to assist Mediterranean countries, which totalled 403,8 Mio ECU for heading B7-4, can be broken down into 128,0 Mio ECU (32 %) for the protocols, 211,6 Mio ECU (52 %) for MEDA and 63,6 Mio ECU (16 %) for the countries of the Near and Middle East. (4) Investment funds, holdings, interest-rate subsidies.

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Table 5.1-1 Ð Commitments outstanding under the PHARE programme (B7-500 and B7-502)

3 500

3 000

2 500

1997 1996 1995 1994 1993 1992 1991 1990

Mio ECU

2 000

1 500

1 000

500

0 1990 1991 1992 1993 1994 1995 1996 Situation as at 31 December of the financial year 1997

Table 5.1-2 Ð Commitments outstanding under the TACIS programme (B7-520 and B7-521)

1 600

1 400 1997 1996 1995 1 000
Mio ECU

1 200

1994 1993 1992 1991

800

600

400

200

0 1991 1992 1993 1994 1995 1996 1997

Situation as at 31 December of the financial year

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Table 5.1-3 Ð Commitments outstanding under the Mediterranean protocols, MEDA and the Middle East (B7-4)

2 500

2 000

Mio ECU

1 500

1997 1996 1995 1994

1 000

1993 1992 1991

500

<1991

0 1990 1991 1992 1993 1994 1995 1996 1997

Situation as at 31 December of the financial year

Table 5.1-4 Ð Commitments outstanding under cooperation with Asian and Latin American countries (B7-30 and B7-31)

3 000

2 500

2 000
Mio ECU

1997 1996 1995 1994 1993 1992 1991 <1991

1 500

1 000

500

0

1990

1991

1992

1993

1994

1995

1996

1997

Situation as at 31 December of the financial year

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Table 5.2 Ð 1997 external aid

91

(Mio ECU)

Appropriations for commitments Budget nomenclature Headings Available Used Rate of implementation (%)

Appropriations for payments Available Used Rate of implementation (%)

B7-2 B7-3 B7-4 B7-5 B7-6 B7-7 B7-8 B7-9 B8

Humanitarian and food aid Cooperation with developing countries in Asia, Latin America and southern Africa Cooperation with Mediterranean third countries and the Near and Middle East Cooperation with countries of central and eastern Europe, the new independent States and Mongolia Community measures to support NGOs European initiative for democracy and the protection of human rights Cooperation with Latin American developing countries Reserve External aspects of certain Community policies Total

1 027,21 802,09 1 101,12 1 805,60 424,73 90,12 313,71 344,00 32,00 5 940,58

1 018,18 797,50 1 078,36 1 774,34 370,48 89,57 307,38 5,27 18,09 5 459,17

99,12 99,43 97,93 98,27 87,23 99,38 97,98 1,53 56,53 91,90

1 108,97 506,34 627,60 1 542,97 368,51 66,43 413,80 333,02 39,64 5 007,28

1 077,62 472,16 403,85 1 184,33 327,59 59,32 360,94 0,03 24,57 3 910,41

97,17 93,25 64,35 82,01 88,89 89,30 87,23 0,01 61,99 78,09

NB: The commitment and payment appropriations include the appropriations of the reserve (B0-40) and the appropriations carried over.

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Table 5.3 Ð Appropriations for payments available in 1997 for budget headings that are regarded as priority
(Mio ECU)

Budget headings

Initial appropriations (1)

Amendment of initial payment appropriations

Final appropriations (1)

Use of appropriations

Rate of implementation as a % of initial appropriations

Rate of implementation as a % of final appropriations

Top budget priorities B7-4 B7-50 MED (including the Middle East) CEECs 675,70 1 048,59 ‘ 48,10 ‘ 121,71 627,60 926,88 403,85 824,85 59,77 78,66 64,35 88,99

Relative budget priorities B7-2 B7-30 B7-31 B7-32 B7-52 B7-54 B7-60 B7-7 B8 Humanitarian and food aid ALA South Africa Cooperation with Latin America Former Yugoslavia NGOs Human rights CFSP 958,83 373,84 97,00 489,80 238,00 176,55 64,93 39,64 150,14 60,00 ‘ 24,50 None ‘ 127,00 ‘ 3,00 1,50 None 1 108,97 433,84 72,50 489,80 111,00 173,55 66,43 39,64 1 077,62 401,17 70,99 396,13 42,38 160,92 59,32 24,57 112,39 107,31 73,19 80,88 17,80 91,15 91,36 61,99 97,17 92,47 97,92 80,88 38,18 92,72 89,30 61,99

(1) The initial and final appropriations comprise the appropriations in the reserve (B0-40) and the appropriations carried over. Source: Report on the implementation of the Commission budget as at 31.12.1997.

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5.10. At the end of 1997, the volume of outstanding commitments for budget chapter B7-41 MEDA had risen by 162 % from 475,0 Mio ECU to 1 244,7 Mio ECU (5). Of payments totalling 211,6 Mio ECU disbursed from B7-41 in 1997 (67 % of payment appropriations), 155 Mio ECU concerned just four rapid disbursement projects: 130 Mio ECU was for tranches of structural adjustment support in Jordan, Morocco and Tunisia, and 25 Mio ECU was a special cash facility for the Palestinian National Authority. These payments were fully justified, but these figures show that payments concerning other, more classical projects were small, and less than initially foreseen.

5.13. However, as the Commission chose to interpret the Court's investigative powers in a particularly narrow sense, the latter was thus unable to obtain all the information and explanations that it considered necessary for reaching definitive conclusions. For example, for PHARE and TACIS, the Court was not able to obtain precise information on the reasons underlying the choices and the volume of the appropriations requested. Nevertheless, the Court was able to make the following findings from the study carried out under these circumstances.

5.11. Thus, the situation as regards the 1997 appropriations does not show any significant progress in relation to previous years. In the light of this finding, the Court has sought to understand the reasons for this situation by studying the extent to which the budget estimates are realistic and by examining the implementation mechanisms.

Á 5.14. The requests in the `fiches financieres' focus on commitment appropriations and are based essentially on the forecasts in the financial perspectives, and the conclusions of the European Council.

DRAWING-UP OF BUDGETS

5.15. The payment appropriations, as mentioned in paragraph 5.8, provide a reasonably good indication of the actual implementation of programmes and projects. Á However, the `fiches financieres' contain no analyses of estimated requirements, by country and/or sector. Moreover, they are not backed up, in particular in the case of PHARE and TACIS, by working documents which take into account such factors as historic disbursement rates, the real status of project and programme implementation, the absorption capacity of the countries concerned, and the state of advancement of projects in the pipeline. It is not possible, therefore, to determine whether the requests for payment appropriations are realistic.

5.12. The effects of the measures taken by the Commission in recent years to boost the rate of implementation of its measures are for the most part tempered by the concern to retain control of operations so as not to expose the Community's financial interests to unnecessary risks. In the light of this finding, the Court has sought to appraise the effectiveness of the procedures that the Commission departments follow to ensure that the preliminary draft budget they present to the budgetary authority is sufficiently rooted in reality to have a good chance of being implemented. With this Á in mind, the Court examined the `fiches financieres' (financial record sheets) of the preliminary draft budget for the aid earmarked for the east European countries and for MEDA and, for the east European countries, it made an analysis of the various stages of the drawing-up of the 1997 preliminary draft budget.
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5.16. The MEDA, PHARE and TACIS programmes are each presented in the budget under a single heading, so that it is not possible to assess in detail the requests for appropriations in the preliminary draft budget. Given that such global amounts are entered in the budget, it is essential that the preliminary draft budget provides much more clearly than at present analyses of the amounts requested by country, programme, and sector of intervention. This should be done in such a way that these analyses can be used later when assessing implementation. Furthermore, no attempt is made to explain how the results of the evaluations and the requests for appropriations are related, even though guidelines to this effect are laid down in the initiative for sound and efficient management (SEM 2000).

(5) Council Regulation (EC) No 1488/96 of 23 July 1996 on financial and technical measures to accompany (MEDA) the reform of the economic and social structures in the framework of the Euro-Mediterranean partnership, OJ L 189, 30.7.1996.

5.17. During implementation, the reports on the utilisation of appropriations consist simply of a comparison of the figures in the overall estimates with what has been carried out; they do not, however, go on to make a specific analysis by country, intervention

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sector or financial instrument because the estimates have not been put together in such a way that they can be used at this level. This being so, the reports are of limited use and can serve only as a basis for redirecting budgetary choices for subsequent years.

5.18. To conclude, it would appear that the underutilisation of payment appropriations can to a large extent be ascribed to the fact that the requests which the Commission makes in its preliminary draft budgets need to take better account of the actual possibilities for implementation.

istrative, financial and logistical capacity to manage them. The combination of pressure to implement the programmes and inadequate capacity means that operations are frequently launched without sufficient assessment of the true needs of the beneficiary or a clear specification of aims and objectives. Consequently, it becomes difficult to assess to what extent the operations are successful.

IMPLEMENTATION MECHANISMS

The management of external actions
5.19. In many areas of the world the Community plays a leading role in the provision of external assistance, often in difficult circumstances and in environments which present particular problems of management and control. It is thus all the more important that the management by the Commission of its aid be of the highest possible quality. However, in recent years, many reports of the Court have contained similar observations on the management of the full range of Union external actions funded from the budget. Paragraphs 5.20 to 5.33 are a summary of these recurring observations for which references to reports published by the Court are given in the annex (6).

5.21. Greater account needs to be taken of the wider context, generally beyond the Commission's control, in which a programme and/or project will be implemented. The factors concerned typically include the degree of local political support available for the measures financed, whether the prevailing legal framework is appropriate and certain, the administrative capacity of local authorities and the effectiveness of law enforcement. Unrealistic programming, low absorption rates and unsustainable results are often the outcome, as illustrated in the Court's reports mentioned in the annex.

5.22. The number of individual projects for which overall management responsibility is kept at the level of the Commission's central services has grown to unmanageable proportions. As the volume of funds under management has grown, and as the Commission has been called upon to intervene in more and more sectors with an increasing number of partners, it has become more difficult, with unchanged management practices, for the Commission to cope. As a result, there are a large number of small projects implemented by many different organisations, about which the Commission often knows very little. Insufficient attention has been paid to assessing whether these represent the most efficient and cost-effective means to achieve programme objectives.

Planning, programming, strategy
5.20. The Commission is increasingly committed to ambitious external actions, involving substantial budgetary funding, without sufficient regard to its admin_________________

Implementation systems

(6) The Court has published the following special reports in the external relations field since the 1996 discharge procedure: Ð Special Report No 1/98 in respect of bilateral financial and technical cooperation with non-member Mediterranean countries (OJ C 98, 31.3.1998); Ð Special Report No 5/98 on reconstruction in the former Yugoslavia (OJ C 241, 31.7.1998); Ð Special Report No 7/98 in respect of the European Community development aid programme regarding South Africa (OJ C 241, 31.7.1998); Ð Special Report No 11/98 in respect of the development of the private sector Ð PHARE and TACIS (being published in the OJ).

5.23. Programme management is largely centralised. The Commission has not transferred significant financial or management responsibility to its delegations. In seeking to maintain maximum control over financial operations, the Commission has developed decisionmaking processes which are slow and formalistic, with routine operational decisions frequently being referred too high up the Commission hierarchy. This causes delays in implementation which adversely affect project performance, without producing tangible benefits

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in terms of control. It also damages the reputation of the Commission in the eyes of its partners and beneficiaries.

four external relations directorates-general and ECHO means that the limited resources are used inefficiently, with functions duplicated and the necessity for many inter-service groups.

5.24. Tender procedures have been found on many occasions to be slow and in some cases lacking documentary justification.

5.25. The performance of contractors, carrying out either management or operational contracts, is not always of adequate quality. Few records of past performance are maintained which could prove valuable in the selection of contractors for subsequent operations.

5.29. Frequent changes within the organigramme of the relevant Commission services, especially at a senior level, have undermined the coherence of management strategy and the application of personal accountability for decisions taken. The need to strengthen management functions in some of the external relations directorates-general has been recognised by the Commission and measures are being taken under the SEM 2000 initiative. Strengthening the management `culture' takes time, and it is essential that efficient and effective management of the programmes is seen as a key priority from the most senior echelons of management downwards.

5.26. In the wake of the radical political, social and economic change which has occurred in many beneficiary countries, public administrations often have neither the necessary experience nor the resources to handle external funding and projects to the standards required. With the greater emphasis being placed by the international donor community on developing `ownership' of projects and programmes by their beneficiaries, the Commission should focus more on institution-building measures so that decentralised implementation to beneficiary countries becomes feasible.

5.30. In general, for the purpose of effective supervision of project management, the Commission has not deployed sufficient staff in the field in beneficiary countries, whether it has a delegation or not. Particularly in the PHARE programme, it cannot persuade sufficient (suitable) staff to take postings outside the EU and has not developed the tools necessary for obliging them to do so. Greater use could be made of local staff. The Court has emphasised on several occasions the key role that staff can play on the spot in ensuring effective project implementation.

5.27. Coordination between the Commission, other international donors Ð including the Member States Ð and financial institutions, NGOs and local agencies often presents huge difficulties. The Commission has frequently been placed under an obligation, by the Council or by the donor community at large, to ensure such cooperation. It has made substantial efforts to meet this obligation, both at the policy and operational levels. Nonetheless, its success in this field has often been compromised by circumstances beyond its immediate control, including the failure of other parties to meet their reciprocal responsibilities. The results include inconsistent policies, overlapping activities and a failure to maximise impact through exploiting synergies.

5.31. The Commission has increasingly contracted management and administrative functions to outside personnel and firms (BATs Ð `Bureaux d'assistance technique'). This has not been done within a clearly thought out and coherent framework and, in general, the Commission has allowed management structures to evolve on an ad hoc basis. In doing so, there has not been a consistent approach to the division of tasks and responsibilities between permanent officials, local agents and outside contractors. In such arrangements, confusion has occurred, communication has frequently been poor and, in the case of the MED programmes, confusions of interest have arisen.

Staff and resources Monitoring and evaluation
5.28. The Commission has not allocated sufficient human resources adequately to manage its programmes, in particular in the light of the management approach applied (see paragraph 5.22 above). The division of responsibility for external actions between

5.32. The Commission's monitoring of the financial and material progress of projects is in many cases weak,

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largely because of excessive project numbers combined with complex reporting requirements, poor communication with implementing partners, poor accounting mechanisms and the low priority accorded to this activity. Too much of the Commission's limited resources for monitoring is taken up with purely administrative rather than technical tasks.

5.33. The Commission has not generally placed sufficient emphasis on evaluating the impact of the measures financed Ð a situation exacerbated by the multiplication of separate evaluation services in the different external relations directorates-general. Its ability to do so is in many cases limited by the lack of firm criteria and precise indicators by which impact can be measured in programme and project documentation. Still less is the Commission able to point to the global impact of the programmes it finances. If opinionformers and the general public do not know whether external programmes are having a positive impact, it is difficult to maintain public support for them. Also, the effective formulation of future strategies is undermined if insufficient evaluation results are available.

a set proportion of the operating appropriations for financing activities in support of the programmes and for coping with the shortfall in usable resources from the administrative appropriations part of the general budget (7). In 1997, this system was actually introduced for the PHARE and TACIS programmes. As for the MEDA programme, it took a year to set up the STAP and to arrange the invitations for tender and so the `MEDA-teams' (8) were not formed until 1998. In the 1998 budget, this system was extended to the programme in support of the reconstruction of former Yugoslavia (B7-541).

5.36. In its annual report concerning the financial year 1996 (9), the Court pointed out that, with regard to expenditure in support of the Commission departments' administration, the sums committed were supposed to be used during the year. For the financial year 1997, it examined the extent to which the new mechanism helped to satisfy the concerns of the budgetary authority, namely to set a limit on the amounts devoted to managing the programmes and to improve transparency by separating operating expenditure from administrative expenditure.

MEASURES TAKEN BY THE COMMISSION TO OVERCOME THE DIFFICULTIES IN USING ITS EXTERNAL AID

5.34. In 1997, the Commission took two initiatives to tackle the difficulties it was experiencing in mobilising aid, one to boost its administrative resources by using operating appropriations (technical and administrative support for programmes) and the other to increase the efficiency of its departments by setting up a joint programme management department.

5.37. As regards the PHARE and TACIS programmes, the aim of restricting the amount of support expenditure to a limited proportion of the operating expenditure during the financial year has not been achieved. Indeed, in the absence of an unambiguous definition of the nature of the costs to be borne by the STAP, the amounts devoted to support expenditure for the financial years 1996 and 1997 would be more than twice as high (10) as the ceilings that have been set (173,95 Mio ECU has been noted where the maximum amount allowed is 66,96 Mio ECU).

5.38. The second objective, that of introducing greater transparency into the management of this expenditure,
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Technical and administrative support for programmes (STAP)

5.35. In 1996, the budgetary authority set up a new mechanism for the PHARE, TACIS and MEDA programmes which enabled the Commission to deploy

(7) The 1997 budget provides for 2 % of the total appropriations for PHARE, 3,5 % of the appropriations for TACIS and 3 % of the MEDA appropriations. (8) Technical support teams based in Brussels and in delegations, recruited by open tender. (9) Annual report of the Court concerning the financial year 1996, paragraphs 13.17 and 14.10 (OJ C 348, 18.11.1997). (10) The Court's audit has not made it possible to establish a comprehensive amount for support expenditure. In order to make such a calculation it would be necessary to examine all the programmes and contracts made in 1996 and 1997. For PHARE, 101,03 Mio ECU was identified even though the ceiling was 38,32 Mio ECU. For TACIS, 72,92 Mio ECU was identified for a ceiling of 28,64 Mio ECU.

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has not been attained either. Indeed, because of the poor definition of the support expenditure, following the introduction of the STAP mechanism the running costs of many programmes continued to be directly charged to the latter, but this could not easily be identified in the accounts. In the reports presented to the budgetary authority in March 1998, however, the Commission gave the impression that the system was operating in a transparent manner. The case of the trans-European networks programme, where 9,5 Mio ECU was largely earmarked by the financing memorandum for the management of the programme but not charged to the STAP, is a telling example of this. 5.39. In this context, greater clarity would be achieved if, instead of setting a limit in the notes to the budget, each of the headings concerned were split into a strictly operational component and a support component. The latter would cover all the expenditure devoted to identifying, designing, preparing, flanking, monitoring and auditing the programmes. In a system such as this, which would enable the Financial Controller to have the intentions of the budgetary authority respected to a greater extent, it is probable that the rates provided for in the budget comments would have to be revised upwards. 5.40. For PHARE, the Commission has adopted a mechanism whereby the STAP commitments of one financial year have to cover the whole implementation (i.e. several years) of the programmes that are financed using the appropriations of that financial year. Not only is this system unworkable but it also gives rise to delays owing to the administrative confusion that it creates. It thus quickly became apparent that the commitments were in fact very often used for all the operations concerning similar aid measures being carried out at a given time, without it being possible to distinguish between the years of origin of the programmes. This confusion enabled the Commission to commit 31,5 Mio ECU in addition to what was authorised in 1996 and 1997, for programmes prior to the introduction of the STAP. This being so, the system adopted for PHARE should be abandoned in favour of that adopted for TACIS and MEDA; the latter system is simple, thus reducing the risk of confusion, and enables more explicit monitoring, even though it does not make it possible to link the support appropriations exclusively to those operations carried out using the appropriations of the financial year. However, since the programmes are implemented on a multi-annual basis, there is in practice no risk that, in the end, insufficient appropriations will be available to ensure the implementation of operations committed in respect of previous years.

5.41. For 1997, the Commission sent the European Parliament a partial report without first verifying the quality of the information it contained. A report such as this does not enable the budgetary authority to exercise rigorous control over the STAP.

Reorganisation of the departments
5.42. On 15 October 1997, the Commission decided to establish a joint service to manage Community aid to non-member countries. This decision provides for a first stage of reorganisation of the Commission's structure for dealing with external actions, and forms part of the general reform of the Commission's services for this area announced for the year 2000 in the conclusions of the Amsterdam Summit of the European Council.

5.43. The decision transfers to the joint service financial, legal, administrative and certain technical tasks related to the management of projects. The four external relations DGs and ECHO (European Community Humanitarian Office) retain responsibility for the definition of policy, programming and planning. The Commission expects that a single common service will be better able to overcome some of the main weaknesses in the Commission in the area of programme management, such as insufficient staff, unnecessary duplication of services and functions, complex, unclear and time-consuming procedures, unclear division of responsibilities, a lack of common procedures and approaches, and problems of coordination.

5.44. The project cycle management approach used by the Commission requires that projects are managed in a coherent manner throughout the whole period of their implementation (identification, appraisal, monitoring, evaluation). Switching responsibility for the tasks involved at different stages of the project between the DGs and the joint service, as provided for in the Commission decision, means that no one service will have responsibility for a given project throughout its life. The Commission will need to ensure that this separation of responsibilities and functions, which is intended to improve implementation performance, does not aggravate problems that already exist as a result of the division of responsibilities between the technical and geographical units within some DGs.

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Table 5.4 Ð Changes in the 1997 budget during the various stages of its preparation
(Mio ECU)
Preliminary draft Chapter Description Commitments 10,0 10,0 531,0 372,0 903,0 428,5 266,4 140,0 834,9 76,0 842,0 82,0 1 000,0 1 273,0 0,0 540,7 0,0 100,0 1 913,7 166,0 4,5 89,5 8,0 62,5 8,6 23,8 362,8 82,0 82,0 280,0 13,2 0,3 0,0 21,8 3,0 53,5 371,7 329,0 0,0 329,0 5 807,1 0,0 0,0 0,0 Payments Council (first reading) Commitments Payments Parliament (first reading) Commitments Payments Council (second reading) Commitments Payments Parliament (final budget) Commitments Payments

Amended Approved Amended Approved Amended Approved Amended Approved Amended Approved Amended Approved Amended Approved Amended Approved ‘ 10,0 ‘ 10,0 ‘ 29,5 ‘ 20,5 ‘ 50,0 ‘ 52,0 ‘ 26,4 ‘ 5,0 ‘ 83,4 + 0,0 + 0,0 + 0,0 + 0,0 + 0,0 + 0,0 + 0,0 + 0,0 ‘ 12,0 ‘ 12,0 ‘ 16,0 ‘ 4,5 ‘ 12,3 ‘ 3,0 + 0,0 ‘ 5,6 + 0,0 ‘ 41,4 ‘ 6,0 ‘ 6,0 + 0,0 ‘ 3,5 + 0,0 + 0,0 ‘ 12,5 + 0,0 ‘ 11,5 ‘ 27,5 + 0,0 + 0,0 + 0,0 ‘ 230,2 + 50,0 + 50,0 + 50,0 0,0 0,0 501,5 351,5 853,0 376,5 240,0 135,0 751,5 76,0 842,0 82,0 1 000,0 1 273,0 0,0 540,7 0,0 88,0 1 901,7 150,0 0,0 77,2 5,0 62,5 3,0 23,8 321,5 76,0 76,0 280,0 9,7 0,3 0,0 9,3 3,0 42,0 344,3 329,0 0,0 329,0 5 576,9 50,0 50,0 50,0 ‘ 10,0 ‘ 10,0 ‘ 32,0 ‘ 28,0 ‘ 60,0 ‘ 26,0 ‘ 18,3 ‘ 5,0 ‘ 49,3 + 0,0 ‘ 50,0 + 0,0 ‘ 50,0 ‘ 73,0 + 0,0 ‘ 45,0 + 0,0 ‘ 15,0 ‘ 133,0 ‘ 16,0 ‘ 1,8 ‘ 12,5 ‘ 3,0 ‘ 20,0 ‘ 4,4 + 0,0 ‘ 57,7 ‘ 9,5 ‘ 9,5 + 0,0 ‘ 3,5 + 0,0 + 0,0 ‘ 7,5 + 0,0 ‘ 14,5 ‘ 25,5 + 0,0 + 0,0 + 0,0 ‘ 395,0 + 40,0 + 40,0 + 40,0 0,0 0,0 388,0 339,5 727,5 190,0 155,0 87,0 432,0 274,0 270,0 87,0 631,0 1 095,0 0,0 445,0 4,2 65,0 1 609,2 131,5 2,7 57,3 3,5 34,0 3,0 22,5 254,5 60,0 60,0 250,0 7,7 0,3 0,6 13,3 2,5 63,0 337,4 329,0 0,0 329,0 4 380,5 40,0 40,0 40,0 + 0,0 + 0,0 + 28,3 + 23,0 + 51,2 + 24,7 + 15,7 + 10,0 + 50,3 + 0,0 ‘ 5,3 + 0,0 ‘ 5,3 ‘ 166,5 + 0,0 ‘ 0,2 + 0,0 + 166,1 ‘ 0,6 + 56,0 + 9,5 + 11,7 + 3,0 + 5,0 + 1,0 + 5,0 + 91,2 + 2,6 + 2,6 + 0,0 + 3,2 + 0,0 + 1,5 + 8,3 ‘ 0,2 + 10,3 + 23,0 + 0,0 + 15,0 + 15,0 + 227,4 ‘ 20,0 ‘ 20,0 ‘ 20,0 0,0 0,0 529,8 374,5 904,2 401,2 255,7 145,0 801,8 76,0 836,7 82,0 994,7 1 106,5 0,0 540,5 0,0 254,1 1 901,1 206,0 9,5 88,9 8,0 67,5 4,0 28,8 412,7 78,6 78,6 280,0 12,9 0,3 1,5 17,6 2,8 52,3 367,2 329,0 15,0 344,0 5 804,3 30,0 30,0 30,0 + 0,0 + 0,0 + 21,3 + 23,5 + 44,7 + 20,7 + 8,0 + 10,0 + 38,6 + 0,0 + 44,7 + 0,0 + 44,7 ‘ 96,4 + 0,0 + 44,8 + 0,0 + 159,0 + 107,4 + 45,1 + 6,8 + 8,9 + 3,0 + 25,0 + 1,0 + 5,0 + 94,8 + 4,9 + 4,9 + 0,0 + 3,2 + 0,0 + 0,7 + 3,8 ‘ 0,2 + 13,3 + 20,6 + 0,0 + 150,0 + 150,0 + 505,7 ‘ 10,0 ‘ 10,0 ‘ 10,0 0,0 0,0 409,3 363,0 772,2 210,7 163,0 97,0 470,6 274,0 314,7 87,0 675,7 998,6 0,0 489,8 4,2 224,0 1 716,6 176,6 9,5 66,2 6,5 59,0 4,0 27,5 349,3 64,9 64,9 250,0 10,9 0,3 1,3 17,1 2,3 76,3 358,0 329,0 150,0 479,0 4 886,2 30,0 30,0 30,0 + 0,0 + 0,0 + 0,3 ‘ 5,9 ‘ 5,6 + 0,0 ‘ 0,5 ‘ 5,0 ‘ 5,5 + 0,0 + 5,3 + 0,0 + 5,3 + 166,5 + 0,0 + 0,2 + 0,0 ‘ 154,1 + 12,6 ‘ 56,0 ‘ 9,5 ‘ 11,9 ‘ 3,0 ‘ 5,0 ‘ 4,0 ‘ 5,0 ‘ 94,4 ‘ 2,6 ‘ 2,6 + 0,0 ‘ 3,2 + 0,0 ‘ 1,5 ‘ 8,3 + 0,2 ‘ 10,3 ‘ 23,0 + 0,0 ‘ 15,0 ‘ 15,0 ‘ 128,2 + 20,0 + 20,0 + 20,0 0,0 0,0 530,0 368,6 898,6 401,2 255,2 140,0 796,3 76,0 842,0 82,0 1 000,0 1 273,0 0,0 540,7 0,0 100,0 1 913,7 150,0 0,0 77,0 5,0 62,5 0,0 23,8 318,3 76,0 76,0 280,0 9,7 0,3 0,0 9,3 3,0 42,0 344,3 329,0 0,0 329,0 5 676,1 50,0 50,0 50,0 + 0,0 + 0,0 + 0,3 ‘ 7,4 ‘ 7,1 ‘ 5,8 ‘ 0,3 ‘ 5,0 ‘ 11,1 + 0,0 ‘ 44,7 + 0,0 ‘ 44,7 + 96,4 + 0,0 ‘ 44,8 + 0,0 ‘ 144,0 ‘ 92,4 ‘ 45,1 ‘ 6,8 ‘ 8,9 ‘ 3,0 ‘ 25,0 ‘ 1,0 ‘ 5,0 ‘ 94,8 ‘ 2,6 ‘ 2,6 + 0,0 ‘ 3,2 + 0,0 ‘ 0,7 ‘ 3,8 + 0,2 ‘ 13,3 ‘ 20,6 + 0,0 ‘ 150,0 ‘ 150,0 ‘ 423,2 + 10,0 + 10,0 + 10,0 0,0 0,0 409,5 355,6 765,1 204,9 162,7 92,0 459,6 274,0 270,0 87,0 631,0 1 095,0 0,0 445,0 4,2 80,0 1 624,2 131,5 2,7 57,3 3,5 34,0 3,0 22,5 254,5 62,3 62,3 250,0 7,7 0,3 0,6 13,3 2,5 63,0 337,4 329,0 0,0 329,0 4 463,0 40,0 40,0 40,0 + 0,0 + 0,0 + 0,0 + 5,9 + 5,9 + 0,0 + 0,5 + 5,0 + 5,5 + 0,0 ‘ 5,3 + 0,0 ‘ 5,3 ‘ 66,5 + 0,0 ‘ 0,2 + 0,0 + 154,1 + 87,4 + 56,0 + 9,5 + 11,9 + 3,0 + 5,0 + 4,0 + 0,0 + 89,4 + 2,6 + 2,6 + 0,0 + 3,2 + 0,0 + 1,5 + 8,3 ‘ 0,2 + 10,3 + 23,0 + 0,0 + 15,0 + 15,0 + 223,4 ‘ 20,0 ‘ 20,0 ‘ 20,0 0,0 0,0 530,0 374,5 904,5 401,2 255,7 145,0 801,8 76,0 836,7 82,0 994,7 1 206,5 0,0 540,5 0,0 254,1 2 001,1 206,0 9,5 88,9 8,0 67,5 4,0 23,8 407,7 78,6 78,6 280,0 12,9 0,3 1,5 17,6 2,8 52,3 367,2 329,0 15,0 344,0 5 899,5 30,0 30,0 30,0 + 0,0 + 0,0 + 0,0 + 7,4 + 7,4 + 5,8 + 0,3 + 5,0 + 11,1 + 0,0 + 44,7 + 0,0 + 44,7 ‘ 46,4 + 0,0 + 44,8 + 0,0 + 144,0 + 142,4 + 45,1 + 6,8 + 8,9 + 3,0 + 25,0 + 1,0 + 0,0 + 89,8 + 2,6 + 2,6 + 0,0 + 3,2 + 0,0 + 0,7 + 3,8 ‘ 0,2 + 13,3 + 20,6 + 0,0 + 15,0 + 15,0 + 333,5 ‘ 10,0 ‘ 10,0 ‘ 10,0 0,0 0,0 409,5 363,0 772,5 210,7 163,0 97,0 470,6 274,0 314,7 87,0 675,7 1 048,6 0,0 489,8 4,2 224,0 1 766,6 176,6 9,5 66,2 6,5 59,0 4,0 22,5 344,3 64,9 64,9 250,0 10,9 0,3 1,3 17,1 2,3 76,3 358,0 329,0 15,0 344,0 4 796,5 30,0 30,0 30,0

EN

B7-10 B7-1 B7-20 B7-21 B7-2 B7-30 B7-31 B7-32 B7-3 B7-40 B7-41 B7-42 B7-4 B7-50 B7-51 B7-52 B7-53 B7-54 B7-5 B7-60 B7-61 B7-62 B7-63 B7-64 B7-65 B7-66 B7-6 B7-70 B7-7 B7-80 B7-81 B7-82 B7-84 B7-85 B7-86 B7-87 B7-8 B7-91 B7-95 B7-9

Cooperation with the African, Caribbean and Pacific States European Development Fund Food aid and support operations Humanitarian aid Humanitarian and food aid Cooperation with Asian developing countries Cooperation with Latin American developing countries Cooperation with the countries of southern Africa and South Africa Cooperation with developing countries in Asia, Latin America and southern Africa, including South Africa Cooperation with Mediterranean third countries MEDA (measures to accompany the reforms to the economic and social structures in the Mediterranean non-member countries) Support programme for the Middle East Cooperation with Mediterranean third countries and the Middle East Cooperation with countries of central and eastern Europe European Bank for Reconstruction and Development Cooperation with the new independent States and Mongolia Other Community measures in favour of the countries of central and eastern Europe and the new independent States Cooperation with the republics formerly part of Yugoslavia Cooperation with countries of central and eastern Europe, the new independent States and Mongolia Community measures to support NGOs Training and promotion of awareness of development issues Environment, health and the fight against drugs in the developing countries Population and demography in the developing countries Specific aid schemes in the field of development Measures to combat fraud in the cooperation sector and management and assessment of Community aid Specific measures involving third countries Community aid to support NGOs European initiative for democracy and the protection of human rights European initiative for democracy and the protection of human rights International fisheries agreements External aspects of environment policy Financial obligations linked to agreements between the European Union and international organisations External aspects of transport policy External aspects of the common commercial policy External aspects of the European Union customs policy Promotion of commercial relations External aspects of certain Community policies Emergency aid reserve Support expenditure for external policies Reserve

10,0 10,0 420,0 367,5 787,5 216,0 173,3 92,0 481,3 274,0 320,0 87,0 681,0 1 168,0 0,0 490,0 4,2 80,0 1 742,2 147,5 4,5 69,8 6,5 54,0 7,4 22,5 312,2 69,5 69,5 250,0 11,2 0,3 0,6 20,8 2,5 77,5 362,9 329,0 0,0 329,0 4 775,5 0,0 0,0 0,0

Official Journal of the European Communities

Total B7 External measures B8-01 B8-0 Common foreign and security policy Common foreign and security policy

Total B8 Common foreign and security policy

17.11.98

NB: The appropriations include those in the reserve (B0-40).

17.11.98

Annex External relations Ð Recurring observations (The following table gives examples where particular problems have been referred to in past reports. It is illustrative rather than exhaustive)
1997 annual report Paragraph reference (subject covered) 1/96 (MED programmes) 4/96 (Palestinian elections) 2/97 (humanitarian aid) Special reports in external relations field (paragraph references) 3/97 (DIS) 6/97 (TACIS: Ukraine) 1/98 (Mediterranean protocols) 5/98 (former Yugoslavia) 7/98 (South Africa) 11/98 (PHARE/TACIS private sector)

EN

5.20 (Lack of adequate resources or needs assessment) 5.21 (Inadequate regard to context and local conditions) 5.22 (Unmanageable numbers of projects) 5.23 (Over-centralisation and slow procedures) 5.24 (Problems with tendering procedures) 5.25 (Problems with performance of contractors) 5.26 (Problems with performance of local authorities) 5.27 (Weak coordination) 5.28 (Insufficient human resources) 5.29 (Staff turnover and lack of management culture) 5.30 (Inadequate deployment of staff on the ground) 5.31 (Problems with subcontracting administrative tasks) 5.32 (Poor monitoring) 5.33 (Poor evaluation) 39-40 112-113 110-111 36-37 32-33 25 34-36 118, 136 121 123 47-49, 50-57, 134-135 87-96, 136 24-25

2.26, 3.19, 3.22, 6.2

2.5, 5.3 (b), 5.23 2.5, 3.2

4.11 3.12, 3.17

31 (a)

2.2, 3.14, 5.3, 5.5 3.33 2.4, 3.4, 5.10

summary (§ 5) 56, 57 26, 57

2.8, 4.1 4.7, 4.18, 6.5, 7.4, 7.16

Official Journal of the European Communities

4.47, 6.6 4.26, 4.27, 5.46 3.25

2.8, 2.12, 2.13, 5.4, 5.5 3.33, 4.4-4.10, 5.16 3.32 2.5, 3.2, 3.14

2.20-2.30, 3.20-3.23, 4.8, 4.9

17-20, 39, 43, 153 46

summary 2.4, 3.15, 3.22, 3.23, (§ 4, § 8), 3.33, 3.47-49, 5.4, 25, 26, 66, 71, 100, 5.6 102 3.12, 3.40 66 annex, 8 and 9 2.6, 3.5 2.2, 2.6, 2.14, 3.3, 3.8, 5.4 2.4, 3.13, 5.4 3.26 88, 90 89, 90, 91 57 6.18, 7.6 7.1 7.5 5.1, 5.8, 5.21, 6.1

3.12

82-87 46

2.27, 2.28, 3.24, 6.3-6.4, 6.7 6.6 5.3 3.25 4.47, 6.6 2.16, 5.4, 5.5 2.20 3.23, 4.51-52, 5.44, 6.9 3.19 2.18, 4.13, 4.29, 4.31 5.23

2.13, 2.15, 3.7-3.9, 3.30-3.37, 4.4, 4.10 2.10

131 153

2.11, 2.12, 4.8 2.18, 2.19, 3.47 2.16 4.11

41-42 31 (b), 38, 153 31 (c), 52, 155-156 31 (a)

2.4, 2.14, 3.15, 3.22, 3.33, 5.4 5.8, 7.5, 7.6 3.52-54 39-44 annex, 4-9 summary, § 4, § 21 annex, 10-11 7.2 2.9

Report references are as follows: Ð Special Report 1/96 on the MED programmes (OJ C 240, 19.8.1996) Ð Special Report 4/96 on the accounts of the electoral unit set up by the joint CFSP action concerning the observation of the Palestinian elections (OJ C 57, 24.2.1997) Ð Special Report 2/97 concerning humanitarian aid from the European Union between 1992 and 1995 (OJ C 143, 12.5.1997) Ð Special Report 3/97 concerning the decentralised system for the implementation of the PHARE programme (DIS) (OJ C 175, 9.6.1997) Ð Special Report 6/97 concerning TACIS subsidies allocated to the Ukraine (OJ C 171, 5.6.1997) Ð Special Report 1/98 in respect of bilateral financial and technical cooperation with non-member Mediterranean countries (OJ C 98, 31.3.1998) Ð Special Report 5/98 on reconstruction in the former Yugoslavia (OJ C 241, 31.7.1998) Ð Special Report 7/98 in respect of the European Community development aid programme regarding South Africa (OJ C 241, 31.7.1998) Ð Special Report 11/98 in respect of the development of the private sector Ð PHARE and TACIS (OJ C 335, 3.11.1998)

99