IPA 1 Third and Forth Component - Preparation for Structural and Cohesion
Funds
Montenegro as the potential candidate country, currently has the opportunity to use resources from the two components of the Instrument for Pre-
Accession Assistance (IPA) 2 . One of the objectives of Montenegrin administration, on its path towards acquiring the candidate status for the
European Union (EU) membership, is the readiness of the overall system to use funds from remaining three IPA 3 components, which will be available after acquiring candidate status, which includes the preparation of the institutions, structures and the necessary documents. This is again showing that two processes can not be carried out independently from one another: on the one hand the process of harmonizing national legislation with the EU legislation, for which Montenegro opted for by signing the Stabilization and Association
Agreement on 15 th October 2007, and on the other hand, the process of preparing the state administration for the use of the EU funds. Aforementioned processes must be conducted simultaneously and Montenegrin objective can be achieved - the EU membership, only by achieving the expected results in both processes.
Regional Development and Human Resources Development Components
Regional Development and Human Resources Development, being the third and fourth component of the IPA, represent preparatory phase of candidate countries for the EU membership for the use of structural and cohesion funds, as well as the instrument for achieving the goals of the EU cohesion policy, which will be available after joining the EU. Similarities are especially reflected in the programming stage, while the implementation and bodies involved in this phase differentiate.
Regional Development Component may support regional development projects, covering: transport area, environmental protection and regional competitiveness improvement. As such, this component can be considered the forerunner of the European Regional Development Fund and Cohesion Fund, used by some EU member states. Component of Human Resources
Development is directed towards achieving objectives in terms of education, employment, training and social inclusion, as well as economic and social cohesion, representing the forerunner of the European Social Fund4.
1 Instrument for Pre-Accession Assistance;
2 I Component – Transition Assistance and Institution Building ;
II Component – Cross-Border Cooperation;
3 III Component – Regional developemnt;
IV Component – Human Resources Developemnt;
V Component – Rural Developemnt.
4 Structural instruments represent funds for meeting the EU Cohesion Policy objective comprising the European Regional Development Fund and Cohesion Fund. Structural Fund means
European Regional Development Fund and European Social Fund;
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Areas covered by the fourth component, i.e. Human Resources
Development are more compatible, and there aren’t major dilemmas arising in preparatory phase for this component, as it is the case with the third component.
It is on beneficiary country of the IPA funds to opt at beginning, whether funds earmarked for financing of projects within the third component will be allocated for covering all three areas or the beneficiary country will opt for a concrete one. This decision becomes more significant by taking into consideration the fact that certain funds used by each individual beneficiary country of the IPA funds annually, are determined on the basis of Multi - Annual
Indicative Financial Framework - MIFF for the programming period 2007-2013.
Thus, gaining the candidate status and by meeting the requirements to use remaining three IPA components, the total available funds will remain at the same level, being only redistributed. Since one part of the projects, being covered by the third and fourth component, are currently funded through the
Technical support and Capacity Building (IPA Component I), it will lead to the redistribution of funds. Given the size of our country, as well as funds at our disposal (in 2007 – was allocated the total of EUR 31.4 million up to EUR 35.4 million by 2012) it implies to opt for smaller number of areas within the third component. This decision will impact the document whose development is the requirement for the use of these two components.
Strategic Coherent Framework and Operating Programmes
The programming process of the Components III and IV, requires the development of documents that weren’t required or did not exist in the first two components. The Article 154, of the IPA Implementing Regulation5 stipulates the obligation to develop a Strategic Coherence Framework, being the reference document for programming of components of regional development and human resources development, on one hand ensuring its compliance with Multi-Annual
Indicative Planning Document -- MIPD, providing linkage to the National
Development Plan of Montenegro, which should be developed within the twinning project financed from IPA 2009. A Strategic Coordinator is responsible for the development of aforementioned document under the full responsibility of the
National IPA Coordinator (NIPAC - Minister for European Integration). At the same time, the Document represents a requirement for the approval of the programme incorporated within these two components. In accordance with the
IPA Implementing Regulation, this Document must be submitted to the European
Commission (EC) for review, at latest when first programmes funded within these two components are being approved. The candidate country is developing the
Strategic Coherence Framework for the whole programming period (e.g. 2007.-
2013, i.e. for the next programming period 2014 - 2020th). Its preparation represents a type of training for candidate countries administrations, in order to
5 Commission Regulation (EC) No. 718/2007 of 12 June 2007 implementing Council Regulation
(EC) No 1085/2006 establishing an instrument for pre-accession assistance (IPA);
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be better prepared to create a similar document also required within the
Structural and Cohesion funds, the National Strategic Reference Framework.
The development of this document requires time and constant consultation with the EC and its Directorate General for Regional Policy and Employment. The
Strategic Coherence Framework regulates activities to be undertaken within these two components, avoiding overlapping both with other components and with the work of some international financial organizations.
Apart from the Strategic Coherence Framework, the beneficiary country of the IPA funds is required to develop multiannual Operational Programms, arising from the Strategic Framework. Operating Structure is responsible for the development of operating programmes. They must be developed in cooperation with the EC which is approving them. Operating programme is a three-year document. The Strategic Framework lists operating programmes arising from this document, containing a short summary of key priorities. The number of operating programmes may vary depending on the decisions taken by the beneficiary country of funds. In principle there is at least one operating programme within each component. On the basis of selected scope, the country can decide to develop two or three operating programmes within the third component. One of the features of this document in the context of the IPA Component III, is that it should incorporate indicative list of so called large projects, with a description of the status of project documentation, expected sources of funding and indicative implementation timeline, as well as the structures managing and controlling the implementation of the Operating Programme. The concept of large projects for the first time introduced under the IPA components III, including projects whose value exceeds EUR 10 million. The selection procedure is special, because the operating structure is directly sending large projects to the EC and this institution is responsible for
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selection .
MIFF
MIPD
Strategic Coherence
Framework
National
Development
Plan
Regional
Development
Component
Human Resources
Development
Component
OP -
Transport
OP -
Environme nt
OP –
Competitiv eness
OP – Human
Resources
Scheme 1: Schematic overview of the Strategic Framework for the IPA
Components III and IV
Necessary institutional framework
Part from main actors in the process - National IPA Coordinator (NIPAC),
Competent Accrediting Officer (CAO), National Authorizing Officer (NAO), the
National Fund, Audit Authority, being already appointed and established, because their establishment is necessary for the first two IPA components, in accordance with the IPA Implementing Regulation, a country preparing for the use of Components III and IV should appoint the Strategic Coordinator for these two components.
Based on the fact that the Strategic Coordinator is responsible for the development of the Strategic Framework under the authority of the NIPAC, the
Assistant Minister for European Integration was appointed for this position.
With regard to the operating structure, it was significantly changed in relation to the Operating structures being established for IPA I and II
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Components. The Operating Structure is composed by: a ministry in charge of the Operating Programme, as well as ministries/agencies responsible for certain priority/measure, as well as implementing body/agency. A head of Operating
Structure is a person from the ministry responsible for Operating Programme
(usually someone who is highly ranked in the hierarchy of the ministry). The
Head of Operational structure is responsible for managing the Operating
Programme.
The Role of Implementing body/agency is envisaged in issuing public tenders, contracting, payments and technical implementation of certain programmes, being involved in other components. One of the recommendations of the EC was to assign this role to the Sector for financing and contracting of EU funds of the Ministry of Finance (CFCU). According to EC recommendations, it was considered irrational to establish a special agency to implement these two components having in mind available funds.
Mutual relations and tasks of individual ministries or bodies within the
Operating Structure, as well as in the first two IPA components, are defined by the Operating Agreement signed by the Head of Operating Structure with all other actors within the structure. The Operating Agreement can be signed only after concluding the Implementing Agreement between the NAO and the Head of the Operating Structure.
Experience of two candidate countries, which were accredited for DIS differentiates. Croatia and Macedonia have differently regulated this issue.
Decentralized Implementation System (DIS)as the Requirement for the Use of Funds within Components III and IV
One of the features of the implementation phase is that funds from these two components may be used only under Decentralized Implementation System of the EU funds, thus our administration will simultaneously work on preparation of institutions for establishing the DIS for Components III and IV, and on preparation of documents for programming the funds for these two components.
The EC requires the development of the National Road Map for all five components, breaking in details all activities to be undertaken with the objective of conferral of management powers for the EU funds from EC to beneficiary country of funds, with clearly defined actors and deadlines, being based on its
Road Map for Decentralized Management of IPA Funds.
There is a huge risk, at the same time representing a challenge for employees involved in institutions subject to the DIS accreditation, which is envisaged in the fact that if Montenegro obtains the candidate status prior accrediting institutions responsible for implementation of funds within the
Components III and IV, i.e. if the conferral of management powers fails, than
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Montenegro will be not be in position to use funds through these two components up to obtaining accreditation. Macedonia had the same experience which obtained the EU candidate status in December 2005, thus on the basis of IPA had the opportunity to use all five IPA Components, but since it failed to fulfill all other requirements it wasn’t in position to use the funds from the IPA
Components III, IV and V. According to assumptions of the EC representatives, in order to go through all six phases prescribed by the Road Map, it takes 28
(optimistic scenario) up to 36 moths (pessimistic scenario). However, since all key actors within the preparation for DIS have been appointed for the IPA
Component I and II, and the biggest part of documents necessary for DIS implementation is developed for these two components, thus acquired experience may accelerate the process for Components III and IV.
Experience of Croatia and Macedonia
Since Croatia and Macedonia are fulfilling basic condition for the use of the IPA III and IV, these two countries including Turkey have faced with this challenge. Croatia and Macedonia had differently regulated the manner of using these two components. Both countries obtained the EU 6 candidate status prior to introducing IPA 7 as unified Instrument for Pre - accession assistance. At the very beginning they were in position to use all IPA Components. In order to be able to use funds, it was necessary to fulfill all requirements. On one hand, these requirements referred to the area of programming (it was necessary to appoint the Strategic Coordinator and to develop all supporting documents), but in the other hand they had to fulfill conditions for introducing DIS. Croatian institutions were accredited in December 2008, for the first four components, while
Macedonian institutions waited a little bit longer, thus they were accredited in
August 2009, for the Component III representing the first phase of the conferral of management powers of the EU funds in this country. Both countries have different approach as for making the decision on priorities being financed within the Component III. Therefore, the number of both Operating Porgrammes and
Operating Structure differentiates.
Component Operating Programmes Croatia Macedonia
50% Environmental Protection 30%
Regional Development Transport 30%
20%
Human Resources
Development
Regional
Competitiveness
Human
Development
Resources 20%
20%
0%
30%
6 Croatia obtained the EU candidate status in June 2004. godine
7 In force from 1st January 2007.
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Table: Distribution of funds by Operating Structures 8
Croatia opted for four Operating Programmes and forur Operating
Structures (three within the third Component and one within forth Component).
The Secretary of the state is the head of the line ministry which is at the same time responsible for Operating Programme. Implementing Authority is different from scope of activity 9 . This model is similar to the model for Structural funds.
There are two Operational Structures in Macedonia, one each for both components 10 .
Next challenges?
The main EC recommendation given to Montenegro is that we should take into account the fact that funds at our disposal are relatively small, so we should consider the possibility to complete some priorities within the third component.
Also the simplification of procedures is the best possible solution in accordance with this recommendation. After the appointment of the Strategic Coordinator, it is necessary to adopt the decision on Operating Structures for Components III and IV, as well as their managers. Following the commencement of the Project financed through the IPA programme 2009, "Strengthening management and control systems for the EU financial assistance to Montenegro ”, which is scheduled for the second half of 2009, it is necessary to develop the National
Road Map for the DIS for Components III and IV, and to commence the implementation of all six stages envisaged by the EC Road Map. Parallel to this process, necessary strategic document must be produced, whose development requires the engagement of a large number of experts, as well as long-term engagement in the development of this crucial document.
It is on our administration to use its best endeavors in order to avoid negative effects imposed by accelerated process for obtaining the candidate status than the accreditation process for the Components III and IV.
This challenge should be understood primarily as the preparation for the use of Structural and Cohesion Finds, i.e. learning through work. The better we establish structure for these two components, we will be better prepared for the
EU membership and potentially higher possibilities for the use of funds.
8 Source: Bender T. and Unterwuzerzacher: Presentation at the Seminar “I PA preparation for
Cohesion Policy “, Brussels 24 th March 2009.
9 Apart from the Central Financing and Contracting Agency (CFCA), Implementing
Authority in Croatian structure is Infrastructure PLL, Croatian Waters, and Fund for environmental protection and energy efficiency, Croatian Employment Institute and
Agency for vocational training and education.
10 Central Finance and Contracting Department is in charge for both components, being the implementing authority/ agency. The Head of the CFCD is the Head of the Operating
Structure.
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Ms. Bojana Kaluđerović, Independent Advisor I
Sector for Finance and Contracting of the EU Assistance Funds
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