European Agency for Reconstruction

The European Agency for Reconstruction is responsible for implementing most of the Community assistance to the Republic of Montenegro, the Republic of Serbia (including Kosovo, as defined by United Nations Security Council Resolution 1244) and the Former Yugoslav Republic of Macedonia.

ACT

Council Regulation (EC) No 2667/2000 of 5 December 2000 on the European Agency for Reconstruction [see amending acts].

SUMMARY

The European Agency for Reconstruction is responsible for implementing, on the basis of a Commission decision, most of the Community assistance to the Republic of Montenegro, the Republic of Serbia (including Kosovo, as defined by United Nations Security Council Resolution 1244) and the Former Yugoslav Republic of Macedonia.

Missions

The European Agency for reconstruction has the following tasks:

• gathering, analysing and communicating information to the Commission on damage, the requirements for reconstruction and the return of refugees and displaced persons, and the areas requiring urgent assistance;
• preparing draft programmes for the reconstruction of these three countries and the return of refugees and displaced persons;
• implementing Community assistance by drawing up terms of reference, preparing invitations to tender, signing contracts, concluding financing agreements, awarding contracts, evaluating and controlling projects and payments.

The Agency may also implement reconstruction programmes, programmes providing aid for the return of refugees, and programmes for the restoration of civil society and the rule of law which the Member States and other donors entrust to it, particularly under the arrangements for cooperation with international financial institutions, including the World Bank and the European Investment Bank.

The Agency may also be entrusted with following up decisions regarding support for the United Nations Interim Mission in Kosovo (UNMIK).

It may also be called upon to implement assistance to encourage the economic development of the Turkish Cypriot community following a Commission decision under Regulation (EC) No 389/2006. This possibility has never been used.

Provisions governing the Agency

The Agency's headquarters are in Thessaloniki and it has operational centres in Belgrade, Podgorica, Pristina and Skopje.

It has a Governing Board composed of one representative from each Member State and two representatives from the European Commission, plus an observer from the European Investment Bank (EIB), who does not have voting rights. They are appointed for 30 months. The Board is chaired by the Commission. The Governing Board meets at least every three months. It is responsible for approving recommendations concerning: conditions for implementation of projects, adjustments to projects currently being executed and individual projects which are particularly sensitive. It also decides on:

• arrangements for evaluating the implementation of projects;
• programmes by other donors for possible implementation by the Agency;
• the multiannual contractual framework for Community assistance for the interim administration of Kosovo;
• the presence of observers on the Governing Board;
• the establishment of operational centres of the Agency.

The Director of the Agency is appointed by the Governing Board for a term of office of 30 months. He is responsible for:

• preparing the draft annual action programme;
• organisation of the work of the Governing Board and informing the Board;
• the day-to-day administration of the Agency;
• budget and staff matters;
• the preparation of reports;
• implementation of the Governing Board's decisions.

The Governing Board draws up a draft budget on the basis of proposals from the Director, which is submitted to the Commission and annexed to the General Budget of the EU. After the latter has been adopted, the Agency's final budget is adopted by the Governing Board.

The Director presents a quarterly activity report to the European Parliament. He also submits the Agency's detailed accounts to the Commission, the Governing Board and the Court of Auditors each year.

Once the Commission considers that the Agency has fulfilled its mandate, it will submit to the Council a proposal for the winding up of the Agency. After initially expiring on 31 December 2004, the Agency's mandate was renewed until 31 December 2006. It has been further renewed for a final time until 31 December 2008.

Context

Regulation (EC) No 1628/96, which covered assistance for Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia (which became the State of Serbia and Montenegro) and the Former Yugoslav Republic of Macedonia, was repealed by Regulation (EC) No 2666/2000 on Community assistance for the countries of South-Eastern Europe.

Regulation (EC) No 2667/2000 incorporates the provisions or the repealed Regulation concerning the establishment and operation of the European Agency for Reconstruction (EAR). Originally covering only Kosovo, the Agency's mandate was extended to Serbia and Montenegro and the Former Yugoslav Republic of Macedonia.

The EAR works only in Serbia and Montenegro, including Kosovo under UNSCR 1244, and in the Former Yugoslav Republic of Macedonia, while Community assistance for the other countries of the Western Balkans, Croatia, Bosnia and Herzegovina and Albania, is currently implemented in a directly centralised but deconcentrated way by the Commission Delegations. The Commission decided to accredit the Croatian authorities with managing the assistance in a decentralised manner in the first quarter of 2006.

RELATED ACTS

Report from the Commission to the Council of 23 December 2005 on the future of the European Agency for Reconstruction [COM(2005) 710 final - Not published in the Official Journal]. The Commission hereby reports on the Agency's future before the end of 2005, as required by Regulation No 2667/2000. The closer links between the EU and the countries of the Western Balkans are framed by the stabilisation and association process, complemented by the Thessaloniki Agenda, which aims to ensure their accession to the EU.

In this context, there should be a degree of uniformity in the treatment of each country in the Western Balkans region so that they can gradually meet their financial responsibilities in implementing EU financial assistance in a decentralised fashion. The purpose of transferring of responsibilities for the management of pre-accession instruments to the Commission delegations (deconcentration) and the national authorities (decentralisation) is to enable applicant and potential applicant countries to become familiar with the management of structural funds by the time of accession. In this regard, the Instrument for Pre-Accession Assistance ("IPA"), which will be the sole aid instrument available to applicant and potential applicant countries in the period 2007-2013, fully incorporates the objective of decentralisation.

However, the Agency cannot promote such a process because of the indirect centralised manner in which it managed Community funds. In April 2006 the Commission presented a proposal for a Regulation extending the Agency's mandate until 31 December 2008, after which its activities would be suspended. The Agency should be able to complete the management of funds allocated to these countries under the CARDS Programme by that date. This extension of its mandate will also enable recipient countries to establish their own capacity at national level to gradually take on the management of funds. Moreover, up to the date on which its activities will be suspended, ongoing programmes will be transferred to the Commission and the management of Community aid will gradually be transferred to the Commission delegations. The delegations in Belgrade, Podgorica and Skopje and the office in Pristina will be upgraded.

ANNUAL REPORTS ON THE AGENCY'S ACTIVITIES

2005 Annual Report to the European Parliament and the Council of June 2006 [not published in the Official Journal].

The Agency managed 282 million in Community funds in 2005, bringing the total amount managed since it was set up to a little over 2.6 billion. The bulk of this amount was accounted for by the CARDS programme. However, it does not manage all the funds allocated to Serbia-and-Montenegro or to the Former Yugoslav Republic of Macedonia. Its activities are geared primarily to strengthening local and central administrations, in particular their infrastructures. It thus has an impact on the economic development of the countries in question. It also focuses on social projects, especially those relating to minorities, women, refugees and displaced persons, the strengthening of civil society, and the media. Energy reform also features among its most important work.

2004 Annual Report to the European Parliament and the Council of June 2005 [not published in the Official Journal].

The European Agency for Reconstruction managed 310 million in Community funds in 2004, bringing the total amount managed since it was set up to 2.3 billion. The programmes managed by the Agency related to the process of reform (of legislation, public administration, public finances, the rule of law) launched in the countries covered by its mandate, support for a market-oriented economy, regional development and the strengthening of civil society. Overall, it helps the governments of the countries concerned to carry out the reforms necessary with a view to their accession to the EU. The Directorate-General for Enlargement is henceforth responsible for its activities rather than the Directorate-General for External Relations. A Commission Report of 2004 acknowledged how efficiently the Agency fulfilled its mandate and the Council decided to extend it until 31 December 2006.

2003 Annual Report to the European Parliament and the Council of June 2004 [not published in the Official Journal].

The amount of funds allocated to the Agency for the management of Community programmes was 328 million in 2003, bringing the total amount managed since it was set up to 2 billion. The Agency was more involved in the delegated management of Community funds allocated to the reform process in the region designed to enhance its development and reconstruction. In particular, it managed the funds set aside for the CARDS programme. These programmes covered matters such as good governance, institution building and the rule of law. They were also concerned with the development of a market-oriented economy, whereby investment focussed on infrastructures and environmental measures. Finally, they also provide back-up to social development and the strengthening of civil society.

Report from the Commission to the European Parliament and the Council of May 2003 - European Agency for Reconstruction. 2002 annual report [not published in the Official Journal].

On 31 December 2002 the Agency was managing a budget of 1.7 billion. The Agency's priorities are focused on reconstruction of infrastructure, reviving economic activity and supporting the media and civil society. Good governance has also become an essential focus of its activity. From 1998 to 2002 the Agency devoted 561 million to aid programmes in Serbia, 74 million to Montenegro, 830 million to Kosovo and 166.5 million to the Former Yugoslav Republic of Macedonia.

Report from the Commission to the European Parliament and the Council of 10 June 2002, - European Agency for Reconstruction. 2001 Annual Report [COM(2002) 288 final - not published in the Official Journal].

In December 2001, the Agency's mandate was extended to the Former Yugoslav Republic of Macedonia. A new office and an operational centre were established in Podgorica and Skopje respectively. In 2001, the Agency managed financial resources totalling 525 million. The programmes financed by this budget focused on three priority areas: physical and economic reconstruction (accounting for 60% of resources), development of a market-oriented economy and support for private enterprise (25% of resources), and support for democracy, human rights and the rule of law (15% of resources).

Report from the Commission to the European Parliament and the Council of 30 July 2001 - European Agency for Reconstruction. 2001 Annual Report [COM(2002) 288 final - not published in the Official Journal].

Since its creation, the European Agency for Reconstruction has focused its assistance on the rehabilitation of the infrastructures and public utilities required to bring life back to normal in Kosovo. The main sectors in which the Agency operated were energy, housing, transport, water, enterprise, agriculture and health. The budget allocated for these operations totalled 262 million. They had a particularly significant impact in the housing and energy sectors. Following the changes in the governments in Yugoslavia and Serbia in October/November 2000, the Agency extended its activities to cover the whole of the Federal Republic of Yugoslavia. It thus participated in an emergency assistance programme for Serbia worth 180 million.

Last updated: 05.12.2006