52012SA0006

EXECUTIVE SUMMARY

I. The Court of Auditors assessed whether the Commission is managing the instrument for financial support to the Turkish Cypriot community (hereafter referred to as TCc) in the northern part of Cyprus [1] effectively. Specifically, the Court examined whether the Commission drew up an assistance programme which reflected the instrument’s objectives and put in place appropriate implementing arrangements and whether the individual projects are achieving their intended results.

II. The audit covered the period from the adoption of Council Regulation (EC) No 389/2006 in February 2006 to the third quarter of 2011. It included the examination of a sample of 34 contracts totalling approximately one third (97,5 million euro) of all budget allocations to the instrument from 2006–11.

III. Despite the difficult political context and a compressed timetable, the Commission managed to establish a programme which reflected the regulation’s objectives. It was also able to quickly set up a programme management office and introduce suitable implementation mechanisms. The main weaknesses resulted from the programme support office not operating under more devolved procedures like EU delegations and from contracts for some key staff being limited to three years.

IV. The programme has assisted a great number of different beneficiaries across the TCc and some results have already been achieved. However, the planned construction of a seawater desalination plant, the programme’s largest project (27,5 million euro), cannot be implemented, which represents a significant setback for the programme. More generally, the sustainability of projects is often in doubt due to limited administrative and financial capacity of the TCc authorities and their delayed adoption of relevant "laws".

V. On the basis of the above observations the Court makes a set of recommendations to the Commission covering different possible scenarios based both on developments in the reunification process and the level of future EU assistance:

- If there is no settlement in the short term and it is decided that further significant funding should be provided to the TCc, the Commission should take a number of steps to strengthen its management of the assistance programme (see paragraph 64).

- If it is decided not to support a further large-scale assistance programme, an action plan should be prepared to scale down or phase out the Commission Task Force’s operations (see paragraph 65).

- If clear progress is made in the reunification process, the Commission should make early preparations for a programme to enable the whole country to benefit from EU funding following reunification (see paragraph 66).

INTRODUCTION

BACKGROUND

1. Cyprus became independent in 1960. The Treaty of Guarantee signed the same year by Greece, Turkey, the United Kingdom and the representatives of the Greek Cypriot and Turkish Cypriot communities intended to guarantee the basic provisions of the constitution and the territorial integrity and sovereignty of Cyprus. However, disagreements over the revision of the constitution soon surfaced and led to a political breakdown in 1963 and an upsurge in intercommunal violence. After United Nations (UN) Security Council Resolution 186 in March 1964, the UN Peacekeeping Force in Cyprus (UNFICYP) was established and is still in place with a current strength of approximately 1000 troops.

2. The existing de facto division of Cyprus dates back to Turkey’s military intervention in the northern part of the island in July 1974. This followed years of intercommunal struggles and a short-lived military coup by sections of the Cypriot National Guard led by Greek officers.

3. In the aftermath of the Turkish military intervention the UN Security Council expanded UNFICYP’s mandate, which now includes supervision of the de facto ceasefire and maintenance of a buffer zone along the "green line" which marks out the northern and southern parts of the island. As a result of the 1974 events, the vast majority of Greek Cypriots and Turkish Cypriots live separately on the respective sides of the buffer zone. The resulting property issue has been one of the most difficult problems to solve as part of the ongoing efforts to reach a settlement (see paragraph 32).

4. The self-proclaimed "Turkish Republic of Northern Cyprus" was declared on 15 November 1983 but is recognised only by Turkey. UN Security Council Resolution 541 ( 18 November 1983) states that the attempt to create the "Turkish Republic of Northern Cyprus" was invalid. The UN recognises the sovereignty of the Republic of Cyprus according to the terms of its independence in 1960.

5. At its meeting in Helsinki in December 1999, the European Council decided that a political settlement would not be a precondition for the accession of Cyprus to the European Union (EU), although it underlined that a settlement would facilitate the accession process. In December 2002, the European Council decided in Copenhagen that Cyprus would be admitted as a new EU Member State, while reiterating its preference for the accession of a unified Cyprus.

6. However, in an April 2004 referendum the Annan Settlement Plan was rejected by 76 % of the Greek Cypriots voting, while 65 % of Turkish Cypriots voting approved it. The Republic of Cyprus therefore joined the EU on 1 May 2004 with the island still de facto divided. While the whole island legally is part of the EU, the acquis communautaire is suspended in the northern part, an area over which the Republic of Cyprus does not exercise effective control. This constitutes a unique political, legal and diplomatic context.

7. A new round of UN-sponsored talks was launched in September 2008 and is still ongoing. The United Nations Secretary-General and the leaders of the Greek Cypriot and Turkish Cypriot communities agreed to meet for a fifth time in January 2012.

EU FINANCIAL ASSISTANCE

8. Following the 2004 referendum the Council (General Affairs and External Relations), a week before the accession of the Republic of Cyprus to the EU, requested the Commission to submit a proposal for an aid programme. In its conclusions the Council stated:

"The Turkish Cypriot community has expressed their clear desire for a future within the European Union. The Council is determined to put an end to the isolation of the Turkish Cypriot community and to facilitate the reunification of Cyprus by encouraging the economic development of the Turkish Cypriot community. The Council invited the Commission to bring forward comprehensive proposals to this end, with particular emphasis on the economic integration of the island and on improving contact between the two communities and with the EU." [2]

9. On 7 July 2004, the Commission proposed a package of two regulations: one for a financial support instrument to encourage the economic development of the Turkish Cypriot community and a "direct trade" regulation. It proved, however, difficult for the Council to agree on the adoption of this package and the two regulations had to be decoupled [3].

10. The Council regulation for the instrument of financial support was eventually adopted on 27 February 2006 [4] with an initial allocation of 258,8 million euro. This was in fact the amount which had been earmarked for the Turkish Cypriot community for the implementation of EU policies in Cyprus if a political settlement was reached before accession. Smaller additional amounts totalling 33,5 million euro were allocated over the period 2009–11. The funding allocation to the instrument’s objectives is set out in the Table. A detailed list of the projects funded under each objective is given in Annex I. As at 30 September 2011 some 69 % of the total contracted amount for the instrument had been paid by the Commission.

TABLE

FINANCIAL ALLOCATIONS BY OBJECTIVE (AS AT 30 SEPTEMBER 2011)

(million euro) | Planned | % of total planned | Contracted | Paid | % paid of total contracted |

Objective 1 Developing and restructuring of infrastructure | 129,25 | 44,2 % | 135,02 | 76,49 | 56,6 % |

Objective 2 Promoting social and economic development | 84,65 | 29,0 % | 64,87 | 49,41 | 76,2 % |

Objective 3 Fostering reconciliation, confidence-building measures and support to civil society | 23,50 | 8,0 % | 19,90 | 17,61 | 88,5 % |

Objective 4 Bringing the Turkish Cypriot community closer to the EU | 12,50 | 4,3 % | 8,62 | 7,49 | 87,0 % |

Objective 5 [9999] Preparing the Turkish Cypriot community to introduce and implement the acquis communautaire and unallocated TA and Programme Reserve facility | 21,35 | 7,3 % | 15,69 | 14,15 | 90,2 % |

Subtotal — Operational part | 271,25 | 92,8 % | 244,10 | 165,15 | 67,7 % |

Management (Staff and Missions), Logistics | 21,05 | 7,2 % | 15,30 | 13,64 | 89,1 % |

Total | 292,30 | 100,0 % | 259,40 | 178,79 | 68,9 % |

AUDIT SCOPE AND APPROACH

11. The audit addressed the overall question:

"Is the Commission managing the EU instrument of financial support to the Turkish Cypriot community effectively?"

This question focused on whether:

a) the Commission had been able to draw up an assistance programme which reflected the instrument’s objectives and had put appropriate arrangements in place for implementing it;

b) the individual projects financed in the framework of the programme are achieving their intended results and whether they are likely to be sustainable.

The audit did not seek to assess whether the programme is contributing to the instrument’s political objective of reunification.

12. The audit gathered evidence for its assessment through documentary review, interviews and three on-the-spot audit visits to Cyprus in 2011. In particular, the audit examined a sample of 34 contracts selected from nine of the main projects out of 24 projects funded through the programme and covering all five of the instrument’s policy objectives. The contracts audited totalled 97,5 million euro or one third of the total budget allocations to the instrument (292,3 million euro). The complete list of contracts covered by the audit is given in Annex II.

OBSERVATIONS

THE COMMISSION FACED SIGNIFICANT CONSTRAINTS IN THE SETTING UP AND IMPLEMENTATION OF THE PROGRAMME

13. The audit assessed whether the Commission had effectively managed the setting up of the programme. To do this it examined whether it had established clear, logical and timely priorities and actions focused on the main objectives of the instrument and based on the needs of the TCc. It also examined whether the Commission, in setting up the specific implementation structures and procedures for this programme, had taken account of previous Commission experience, had evaluated different possible options, and had ensured it had adequate expertise to implement the programme.

INTERVENTIONS REFLECTED THE PROGRAMME’S OBJECTIVES DESPITE THE WIDE RANGE OF SECTORS TO BE COVERED, THE REGULATION’S DELAYED ADOPTION, AND THE ABSENCE OF A MULTIANNUAL PERSPECTIVE

14. The overall objective of the assistance financed by the instrument according to Article 1 of the Council regulation is to facilitate the reunification of Cyprus. This is to be done "by encouraging the economic development of the Turkish Cypriot community with particular emphasis on the economic integration of the island, on improving contacts between the two communities and with the EU, and on preparation for the acquis communautaire". Article 2 of the regulation lists a wide range of more specific objectives which the assistance is required to cover (see Box 1). This broad formulation of the objectives meant that assistance had to be funded across a wide range of sectors which represented a considerable implementation challenge for the Commission, including in relation to allocating the necessary human resources. An approach focused on a more limited number of objectives would have allowed the Commission to better target the assistance.

15. All the audited interventions contributed to varying degrees to the regulation’s objectives in Article 2. The focus on infrastructure and economic development of the TCc was intended to ensure that the level of development of the TCc economy compared to that of the Greek Cypriot community would not be an obstacle to a political settlement. The largest financial allocations were made to the water and sanitation and rural development sectors. This reflected the priority needs, the absorption capacity in the different sectors, and the results of the specific feasibility studies carried out (see Table and Annex I).

BOX 1

OBJECTIVES OF COUNCIL REGULATION (EC) NO 389/2006

ARTICLE 1

Overall Objectives and Beneficiaries

The Community shall provide assistance to facilitate the reunification of Cyprus by encouraging the economic development of the Turkish Cypriot community with particular emphasis on the economic integration of the island, on improving the contacts between the two communities and with the EU, and on preparation for the acquis communautaire.

ARTICLE 2

Objectives

Assistance shall be used to support inter alia:

a) the promotion of social and economic development including restructuring, in particular concerning rural development, human resources development and regional development,

b) the development and restructuring of infrastructure, in particular in the areas of energy and transport, the environment, telecommunications and water supply,

c) reconciliation, confidence building measures, and support to civil society,

d) bringing the Turkish Cypriot community closer to the Union, through inter alia information on the European Union’s political and legal order, promotion of people to people contacts and Community scholarships,

e) preparation of legal texts aligned with the acquis communautaire for the purpose of these being immediately applicable upon the entry into force of a comprehensive settlement of the Cyprus problem,

f) preparation for the implementation of the acquis communautaire in view of the withdrawal of its suspension in accordance with Article 1 of Protocol No 10 of the Act of Accession.

16. The "reconciliation and confidence-building" objective also represented an important complementary means of supporting the overarching reunification objective. However, the actual amount of the financing decision of December 2006 was 35 % lower than the initial proposal of July 2004. This shift reflected the outcome of consultations with TCc leaders who considered the TCc’s infrastructure and economic development to be the instrument’s primary objectives.

17. The Commission in its assistance programmes generally makes widespread use of capacity-building support to accompany its projects in order to strengthen national administrations and improve the sustainability of projects funded. However, the Commission’s scope for developing such approaches in this programme has been significantly reduced because the TCc administration is not officially recognised internationally. Thus, for example, the Commission has not been able to use twinning contracts which are its prefered capacity-building instrument in countries preparing to adopt the acquis communautaire [5]. In cases where the Commission used technical assistance from consultancy companies for capacity building, the extent to which such technical assistance could work together with the TCc authorities was also limited by the political circumstances (see also paragraph 45).

18. The long time required for the adoption of the Council regulation (see paragraph 9) meant that the financing decisions for the initial allocation of 259 million euro had to be developed and approved in the course of just one year. A series of preparatory activities which had been planned for 2004–05 could not take place and the Commission had to finance important feasibility studies through a budget of only 2 million euro made available under a 2003 Special Aid Package for the northern part of Cyprus [6]. The time pressure during the project preparation phase was one reason for the major problems encountered in the water desalination plant project (see paragraphs 38 to 40).

19. The delayed approval also had a negative impact on the preparation of contracts to implement the projects, in particular the technical specifications for tenders, which instead of being spread over the four and a half years between July 2004 and December 2009, had to be completed in three years before the contracting deadline expired. This posed a particular challenge for infrastructure projects in the water sector (see Box 2 (c)). As a result, of the total allocations to the contracts covered by the audit, some 62 % were only contracted in 2009, while as many as 44 % were not contracted until December 2009, the month that the deadline expired.

20. Due to the delayed adoption of the regulation it was not possible for the Commission to take advantage of the envisaged multiannual programming framework for 2004–06. Moreover, funding since 2006 has been made available only on an ad hoc and limited basis (see paragraph 10).

21. This absence of a multiannual programming framework has not been conducive to effective management of the programme. In particular, it has meant that the Commission has not been able to plan ahead and sequence its interventions for maximum impact and to move funding between different sectors of intervention according to how well they are performing and lessons learnt. The assistance to the telecommunications sector (see paragraph 35) and to the scholarships programmes (see paragraph 53) are two areas which have experienced particular difficulties in this regard. The lack of a multiannual perspective also makes human resource management more difficult (see paragraph 27).

THE EFFECTIVENESS OF THE COMMISSION’S LOCAL SUPPORT OFFICE HAS BEEN UNDERMINED BY SEVERAL FACTORS

22. The Commission faced a major challenge in finding a suitable structure for implementing the programme. While EU funding in Member States is normally implemented through national bodies, this was not possible for this programme given that the Republic of Cyprus does not exercise effective control over the northern part of Cyprus. At the same time, however, it was also not possible to set up an EU delegation to implement the assistance because delegations can only be established outside the EU and the whole island is legally part of the EU (see paragraph 6). It was originally foreseen in the regulation that the assistance would be implemented using the European Agency for Reconstruction (EAR), through which the Commission had implemented much of its assistance in the western Balkans since 2000, but a decision to close the EAR meant that this was also not an option [7].

23. Faced with this challenge the Commission drew on its wide experience to identify the most appropriate alternative institutional set-up. The model chosen was a headquarters-based task force with a local programme support office — the European Union Programme Support Office (hereafter EUPSO) — in the northern part of Cyprus. This was inspired by the technical assistance offices used by the Commission in the West Bank and took into account the costs and benefits of different approaches as well as the political context [8].The location of EUPSO in the northern part of Cyprus enabled the assistance programme to monitor implementation more closely and better respond to the needs of the project beneficiaries.

24. The Commission was able to quickly establish EUPSO through a service contract signed in December 2006 with GTZ [9]. This contractor was already to provide logistical support for technical assistance in the northern part of Cyprus under an existing agreement [10].

25. Nevertheless EUPSO’s management of the programme has been constrained by the fact that it has not been able to operate in the same way as EU delegations which typically manage EU assistance programmes. In the absence of a head of delegation, all key decisions have to be referred back to Commission headquarters. This also applies to tendering, contracting and payment procedures as they have not been devolved to EUPSO in the way that they are in EU delegations and which slows down operations. Moreover, within the Enlargement DG four different units are involved in authorising contracts and payments. A 2009 evaluation of the programme also highlighted the lengthy verification procedures resulting from the centralised nature of the approval process.

26. EUPSO, unlike EU delegations, does not have its own press and communication section and therefore cannot issue its own press releases. Instead, EUPSO consults with the EC Representation in the Republic of Cyprus, which is located in the part of Nicosia over which the Republic of Cyprus exercises effective control, on all material produced for publication by the EU projects. While there are potential benefits in this arrangement given the politically sensitive context, there is no detailed operational agreement on the procedures for such consultations and delays of up to two months have been encountered in obtaining the EC Representation’s clearance of documents (see also paragraph 55).

27. A further constraint faced by EUPSO is that, according to the Staff Regulations [11] of the European Union, headquarters-based contract agents can only be employed for a maximum of three years. This contrasts with the five-year contract duration, sometimes with the possibility of renewal, for contract agents in delegations. As a result of this shorter contract duration, the Task Force has lost capable and experienced staff even when the projects they managed were not yet completed. Moreover, EUPSO currently has considerable difficulties attracting staff with the appropriate profile to replace them, as the Commission can only offer one-year contracts owing to the uncertainties over the future financing of the instrument (see also paragraph 20).

PROGRAMME IMPLEMENTATION PROCEDURES NOT ALWAYS EFFECTIVE

28. The Commission has taken appropriate steps to evaluate the most suitable implementation methods for individual projects. As it cannot enter into financing agreements with the TCc authorities because they are not officially recognised by the international community, the Commission has primarily implemented the assistance by entering into contracts directly and acting as the sole contracting authority. In addition, the Commission jointly managed some interventions with the United Nations Development Programme (UNDP) and this approach has proved appropriate for launching the EU assistance because it allowed it to build on previous UN activities. There is nevertheless a need to review whether these initial start-up advantages are still relevant given the experience the Commission has now built up before funding new EU interventions through the UN.

29. The monitoring arrangements put in place by the Commission have generally been adequate. EUPSO task managers and heads of section followed up and took corrective action with partners and contractors for the projects covered by the audit. EUPSO was supported where necessary by programme management units and technical assistance experts. Its cooperation in the area of monitoring for projects implemented through joint management with the UNDP has, however, posed problems. The audit found significant weaknesses in the contribution agreements with the UNDP for local and urban infrastructure, the Joint Committee of Missing Persons and demining operations where performance indicators were often not appropriate or not reported on consistently.

30. The Commission recognised from the outset that providing assistance to the TCc involved considerable financial and operational risks. An evaluation carried out in 2009 identified the most significant risks to the programme’s relevance, efficiency, effectiveness, impact and sustainability for each of the instrument’s objectives.

31. This evaluation has provided a sound basis for the Task Force’s risk management and the implementation of an assurance strategy. The Commission has taken several measures to mitigate the need for corrective controls and to reduce exposure to additional demands or penalties from contracting parties. There remains a post-project risk related to the way in which liabilities connected with the ownership and operations of infrastructure investments are transferred to beneficiaries that are not officially recognised [12].

32. A particular risk relates to the fact that an estimated 78 % of privately owned land in the northern part of Cyprus legally belongs to Greek Cypriots [13], whose consent was required for EU-funded infrastructure investments on their land. The Commission has established procedures to verify property ownership in cooperation with the Department of Lands and Surveys of the Republic of Cyprus. While there were initially legal challenges to this process and significant delays, processing times have since been reduced.

33. The Commission, despite considerable efforts, did not effectively manage the implementation risks for the 27,5 million euro contract for the construction of a seawater desalination plant in Sirianokhori/Kumköy (see Box 2).

BOX 2

MANAGEMENT OF IMPLEMENTATION RISKS

THE CONSTRUCTION OF A SEAWATER DESALINATION PLANT

a) The Commission was aware of the risk that if a company with Greek Cypriot workers won a tender under the assistance programme, they might have difficulties performing the contract because of potential restrictions on their access rights to the northern part of Cyprus. This risk materialised for the largest contract to be financed under the programme, the Sirianokhori/Kumköy seawater desalination plant.

b) In the procurement notice for the works contract for the seawater desalination plant it is stated that the tenderer must provide a performance guarantee for the completion of the contract of 10 % of the contract value no later than 30 days after receiving the signed contract or else the contract becomes void. Yet, the contractor never provided it. In accordance with the procurement notice, the Commission should therefore have terminated the contract already on 17 January 2010, in which case the 27,5 million euro would have been de-committed.

c) By contracting the works at the latest possible moment (the contracting deadline expired on 18 December 2009) the Commission also missed an opportunity to offer the contract to another tenderer. The procurement notice states that "if the selected tenderer fails to provide such a guarantee within this period, the contract will be void and a new contract may be drawn up and sent to the tenderer which has submitted the next cheapest compliant tender". As the contracting deadline had expired, this was no longer an option.

d) The Commission only started the high-level dialogue with the TCc political leaders in June 2010, seven months after the contract was signed in December 2009. While the TCc leader responded on 17 June 2010, expressing his political commitment to the project, access restrictions were only partially removed in August 2010. If the Commission had started the dialogue already in December 2009, this would have allowed more time to tackle the access issue.

e) As a mitigating measure, the Commission introduced an addendum to the contract in June 2010, which would legally enable it to cancel the contract without penalties if it could not obtain assurances from the beneficiary concerning the contractor’s access rights. The Commission subsequently terminated the contract on 22 December 2011.

SUSTAINABILITY OF PROJECTS AT RISK DESPITE SOME RESULTS

34. The Court audited a sample of contracts (see paragraph 12 and Annex II) covering the instrument’s five objectives to assess whether they were achieving their intended deliverables and results and whether the results achieved are likely to be sustainable.

OBJECTIVE 1: DEVELOPMENT AND RESTRUCTURING OF INFRASTRUCTURE

TELECOMMUNICATIONS SECTOR

35. The objective of EU support to the development and restructuring of the telecommunications infrastructure is to eventually bring the telecommunications sector in the northern part of Cyprus into line with EU standards in accordance with the acquis communautaire. The support is intended to provide a network where everyone can have access to modern telecommunication services, and which can easily be interconnected with the telecommunications network in the areas under the effective control of the Government of the Republic of Cyprus. Although behind schedule most of the equipment had been delivered by 30 June 2011. The accompanying technical assistance contract was facing significant delays, mainly because TCc "laws and regulations" had not been adopted according to the planned schedule.

36. As for other sectors (see below), in the absence of financing agreements, the Commission has implemented the programme without an obligation for the beneficiary to implement the necessary reform actions before the signing of contracts for the supply of equipment. There is therefore a risk of sector reforms not being implemented, despite the programme’s considerable investment in equipment. Initial announcements from the TCc leadership in May 2011 about restructuring the sector were met by strike action and demonstrations by workers at the "TCc Telecommunications Office".

37. Based on the experience of reforms of the telecommunications sector in other countries, including EU Member States, it can also be questioned whether 18 months was a realistic timeframe for this project. In addition, the financial sustainability of the "TCc Telecommunication Office" as a service provider is undermined by the TCc central administration’s management of the Office’s finances.

WATER SECTOR

38. The construction of the seawater desalination plant at Sirianokhori/ Kumköy is not only the main project in the water sector but also the largest intervention funded under the instrument, amounting to approximately 10 % of total contracted funding. The plant was intended to provide 23000 m3 of clean drinking water per day covering the needs of an estimated 100000 people. The design of the plant changed considerably during the project formulation process. The original proposal had been to build a plant to treat brackish groundwater but this approach was dropped because of concerns over compliance with the Water Framework Directive.

39. Despite its importance, very limited progress was made on the implementation of the contract, mainly due to the Greek Cypriot workers of one of the consortium’s contractors being denied access to the site by the Turkish armed forces and the unresolved issue of the performance guarantee (see Box 2). According to the contract conditions, the Commission, as contracting authority, is responsible for providing access to the construction site but in practice this is outside its control.

40. The failure to implement this project represents a significant setback for the overall assistance programme. Water supply is becoming an increasingly critical issue for the island following a 40 % decrease in the mean annual rainfall in the past 30 years. Moreover, as one of the purposes of the project was to stop the ecologically unsustainable use of groundwater reserves, the cancellation of the project means that this serious environmental issue will not be addressed. The aquifer is under increasing threat from saline intrusion due to over-pumping and pollution from human and agricultural activities.

41. Two smaller water infrastructure projects have been more successful.

a) An EU-funded contract, which represents 50 % of a wider project to renew the water distribution network in Nicosia, has renovated 87 km of the network in the north of Nicosia. However, the Commission did not establish any indicator to assess the effectiveness of the project in terms, for example, of the reduction in leakages or annual repair costs.

b) The construction of the new Mia Milia/Haspolat Wastewater Treatment Plant (WWTP) aims to modernise wastewater treatment in the whole of Nicosia and the surrounding area. Due to the existing plant’s bi-communal organisation, the project also supports reconciliation and confidence building. The builder of the WWTP is contracted to maintain and operate the plant for 10 years after handover to ensure that capacity needs will continue to be met. However, the "joint entity" to be formed by the two communities to manage and supervise this contract has still not been set up, which poses a risk to the project’s sustainability.

42. Equipment for water sampling, analysis and laboratory information management has also been funded to provide additional capacity to carry out water quality analysis for all drinking water and wastewater services in the northern part of Cyprus in accordance with the relevant EU directives. Although all the equipment was supplied as envisaged, it is not clear whether the project objectives will be achieved as the laboratory is not currently performing according to EU standards. While additional training of beneficiary staff was planned under a capacity-building support contract to help ensure the continued use of the supplied equipment, it was not clear at the time of the audit when this training would be provided and if the necessary human resources would be allocated.

OBJECTIVE 2: PROMOTION OF SOCIAL AND ECONOMIC DEVELOPMENT

RURAL DEVELOPMENT SECTOR

43. The expected results of the rural development sector programme included the preparation of a rural development plan, increased administrative capacity to programme and implement an EU-aligned policy, the implementation of grant schemes for on-farm investments and farm diversification in line with these new policies, and the improvement of village conditions.

44. Both a rural development plan and local development strategies of the kind used in the EU Leader programme have been established. More than 200 individual farmers or entrepreneurs have benefited from a grant to enable them to upgrade their operating facilities and move closer to EU standards. In addition, nearly 40 community development grants have been made to local bodies and non-governmental organisations (NGOs). Grant beneficiaries have received Commission-funded technical assistance support during the preparation and implementation of their projects and through the grant schemes have learnt modern bookkeeping, procurement and monitoring practices.

45. Nevertheless, the capacities of the local administrations and the final beneficiaries continue to need strengthening. The transfer of know-how from the technical assistance provided to the TCc authorities responsible for rural development has been hindered by the fact that the technical assistance does not work in the offices of the TCc authorities because of the political situation. At the same time ownership of the new Rural Development Plan, and, in particular, of the local development strategies which are intended for use by Member States in the framework of the EU Leader programme, is still weak. Sustainability is therefore unlikely to be achieved without additional support in the coming years. While further EU interventions are indeed being developed they now face competition from Turkish funding in the sector but direct coordination with Turkey is not possible in the current circumstances.

LOCAL AND URBAN INFRASTRUCTURE

46. EU support to modernise local and urban infrastructure is intended to help revitalise the northern part of Cyprus, including through the opening of new crossing points on the Green Line. Approximately 40 individual interventions have been financed through the UNDP under the two phases of the programme, including some high-profile ones with significant impact such as the opening of two key crossing points (Ledra Street in Nicosia and Kato Pyrgos and Karavostasi — also known as Limnitis/Yeşilırmak) and the restoration of the Bedestan, a major cultural heritage and tourist site in the north of Nicosia (see Box 3). Most of the individual actions have experienced delays although, in many cases, these delays have been linked to political difficulties and problems with property checks, which are largely out of the hands of the Commission and the UNDP.

47. Sustainability of the interventions is potentially undermined by the limited participation of the Turkish Cypriot community. There is no formal mechanism at project level where the TCc is represented, including in the project steering committee. At the level of the interventions, while the UNDP has cooperated closely with the local bodies at municipal level to involve them in project management, the UNDP remains the only contractor, which means that these local administrations have not gained experience as contracting authorities. The issue of sustainability is not explicitly addressed in the UNDP reports with the exception of the Bedestan project (see Box 3).

BOX 3

RESULTS: UPGRADING OF LOCAL AND URBAN INFRASTRUCTURE

OPENING OF CROSSING POINTS

According to Article 2 of the Green Line Regulation, the line shall be crossed only at crossing points authorised by the competent authorities of the Republic of Cyprus. Today there are seven such crossing points, two of which, Ledra Street and Kato Pyrgos and Karavostasi (also known as Limnitis/Yeşilırmak), were opened in the framework of the project in April 2008 and October 2010 respectively.

The opening of new crossing points facilitates contacts between the two communities and promotes mutual understanding. A total of 1,6 million crossings were registered during the latest eight-month reporting period: 26 % by Greek Cypriots from government-controlled areas to the northern part of Cyprus, 46 % by Turkish Cypriots from the northern part of Cyprus to the government-controlled areas, and 28 % by EU citizens other than Cypriots and nationals of non-EU countries [14].

RESTORATION OF THE BEDESTAN

The Bedestan was initially built as a Byzantine Church but was transformed into a closed market in the 16th century. By the 1930s, the building had fallen into disuse. When the EU-funded project started, it was in very poor condition, with a collapsed roof and various other structural damage. The works were completed in two phases: structural work between 2004 and 2006, and conservation and restoration work between 2005 and 2009.

In November 2009, the Bedestan was reopened to the public as a cultural centre and the inauguration ceremony was attended by representatives from both communities. The project was awarded the European Union Prize for Cultural Heritage/Europa Nostra Award in the research category.

OBJECTIVE 3: FOSTERING OF RECONCILIATION, CONFIDENCE- BUILDING MEASURES AND SUPPORT TO CIVIL SOCIETY

48. Support has been provided to the Joint Committee on Missing Persons to try to bring closure in relation to this painful aspect of the history of Cyprus and thereby contribute to the process of reconciliation between the Greek Cypriot and the Turkish Cypriot communities. During the period covered by the first 1,5 million euro agreement (March 2007 to May 2009), 155 remains out of an estimated 1958 missing persons were identified and returned to their families. Funds for future activities will continue to depend on the availability of funding from donors, of which the EU is the most significant. At this stage no clear end goal or exit strategy has been formulated for the support to the Joint Committee on Missing Persons.

49. The Commission also used the instrument to finance seminars organised by the Council of Europe Academy of Political Studies to give both Turkish Cypriot and Greek Cypriot participants a better insight into some of the common challenges which the island will be facing in the future. These seminars have contributed to better integrating Turkish Cypriot leaders although they have not always been well attended. The Commission has not taken any specific action to ensure the sustainability of the "European Forum Cyprus", an alumni network for participants in these seminars.

50. "Civil Society in Action" and "Civil Society Support Team" programmes were launched with the aim of strengthening civil society organisations and the development of a civil society culture in the TCc. Both programmes have been able to build capacity but further support is required to strengthen operational and financial management capacity in Turkish Cypriot civil society organisations.

51. EU assistance has made a major contribution to demining in Cyprus. Almost all minefields in the buffer zone have now been cleared and since 2007 the EU has financed 6,5 million out of a total of 9 million euro invested in this effort. Among the benefits of the demining have been the facilitation of trade and population movement as a result of the opening of new crossing points (see Box 3). It has also helped confidence building through the cooperation between the Turkish and the Republic of Cyprus armed forces during the demining process.

OBJECTIVE 4: BRINGING THE TURKISH CYPRIOT COMMUNITY CLOSER TO THE EU

52. The EU scholarship programme is one of the areas of EU assistance best known and most valued by the TCc. It has played a useful part in reducing the isolation of the TCc by enabling 400 students and teachers to live and study in another Member State for one year [15].

53. However, the programme’s effectiveness and sustainability are hindered by the lack of a multiannual perspective. The timing of the call for proposals is determined not by operational needs but by when Commission financing decisions are taken. The fact that there is no guarantee that the programme will continue from one year to another means that potential applicants cannot plan ahead (in particular those who cannot consider spending one year abroad without a grant).

54. It is not possible to assess the extent to which the overall objective of the project has been met because an ex post survey among the individual beneficiaries has not yet been carried out. The contracting for the latest call concerning academic year 2011/12 has encountered serious delays, due mainly to a temporary shortage of staff in EUPSO (see paragraph 27). The Commission has not been able to sign any contract before the end of August 2011, just before the start of the academic year.

55. The European Union political and legal order information project ("InfoPoint") aims to bring the TCc closer to the EU through information activities and by improving understanding of the EU and of efforts towards a settlement and reunification. The project has already achieved some significant results, including the creation of the open access "InfoPoint" office and a website [16] in English and Turkish. Nevertheless diverging views between the EC Representation in Nicosia and the Task Force on a number of subjects in the framework of the project steering committee have led to the postponement of decisions and subsequent implementation delays. Thus, for example, the launch of the project’s website was delayed by 16 months because of such problems.

OBJECTIVE 5: PREPARATION FOR THEACQUIS COMMUNAUTAIRE

56. The Commission has also funded projects to prepare for the acquis communautaire. The Court examined one of the largest of these projects for air quality monitoring. Despite problems encountered (see Box 4), which are also illustrative of challenges faced by other projects, both the technical assistance and all the equipment were delivered.

57. By including 12 months of "after sales service" in the supplies contract the Commission has made an effort to address the project’s sustainability. The local authorities’ decision to engage the technical assistance contractor for continued operational and maintenance support also represents an attempt to ensure sustainability. A new "environmental law" which complies with EU legislation has been adopted and the TCc beneficiary has developed a concept paper which sets out the budgetary and staff implications of implementing the "law". Nevertheless the overall sustainability is at risk due to the severe budget constraints faced by the TCc "Environmental Protection Department".

BOX 4

IMPLEMENTATION PROBLEMS IN THE AIR QUALITY MONITORING PROJECT

The final report by the technical assistance for the air quality monitoring project addressed the following implementation problems, which pose a risk to the project’s results and their sustainability:

a) the start of the project was delayed four months after contract signature while waiting for the installation of four new air quality monitoring stations under the first of two supply contracts;

b) two other EU-funded technical assistance projects were working with the TCc "Environmental Protection Department" (EPD) at the same time, which meant close coordination was necessary to avoid having four experts simultaneously trying to work with just two "EPD" staff. However, this situation did arise for a few weeks;

c) fewer individuals than planned took part in the training due to the "EPD's" budget constraints.

CONCLUSIONS AND RECOMMENDATIONS

CONCLUSIONS

58. The Commission succeeded in developing a programme where the objectives of the instrument were reflected in the interventions funded and largely appropriate implementing arrangements were put in place. The programme has already achieved some positive results but their sustainability is often in doubt, particularly given the uncertainty over future EU funding.

59. The Commission had to manage the difficult political context and the challenges posed by the broad formulation of the regulation’s objectives, its late adoption and uncertain timeframe. Despite this, it has been able to develop a programme which addresses and appropriately prioritises all sectors referred to in the regulation’s objectives. It also found a way in the face of significant constraints to quickly set up a programme management office in the northern part of Cyprus and use largely suitable implementation methods and risk mitigation measures. The main weaknesses in the management of the programme resulted from the local support office not operating under more devolved procedures in the same way as EU delegations and from the staff contracts being too short for them to manage the projects financed from start to finish. In addition, monitoring in the framework of joint management with the UN was not sufficient.

60. The programme has assisted many different beneficiaries across the TCc, including farmers, students and those using the new crossing points, and some important results have already been achieved. However, it has not been possible to implement the single largest project, the construction of a seawater desalination plant (27,5 million euro). This represents a significant setback for the programme and may also have serious environmental consequences. More generally, the sustainability of projects is often in doubt due to the limited administrative capacity, the delayed adoption of relevant "laws and regulations" and the uncertainties over future funding on the part of the TCc authorities.

61. At the time of the audit it was still unclear whether or not significant further funding for the EU assistance programme would be made available. This uncertainty makes the programme management more difficult and has a negative impact on its effectiveness and sustainability.

62. Despite the efforts of the EU in setting up and implementing the assistance to the TCc, the ultimate objective of the instrument, the reunification of Cyprus, only can be achieved if the two communities involved have the political will to do so.

RECOMMENDATIONS

63. The specific recommendations on the Commission’s management of EU assistance to the Turkish Cypriot community necessarily depend on developments in the reunification negotiations and EU policy in this regard. The recommendations seek to take into account different possible scenarios.

64. In the current situation, where a settlement for the reunification of Cyprus has not been reached and if it is decided that a further EU assistance programme should be funded, the Commission should implement the following measures:

a) put in place a mechanism with a multiannual perspective in order to ensure better planning, implementation and sustainability;

b) identify ways to ensure appropriate flexibility in the length of employment of staff working for the Task Force;

c) devolve management from Commission headquarters to EUPSO where this will increase the efficiency of the programme;

d) develop formal procedures to ensure better coordination between the EC Representation in Nicosia and the Task Force in order to make information from EUPSO and the projects more readily available to the public;

e) better define future contribution agreements with partner organisations, notably the UNDP, in order to ensure proper financial and operational reporting, including more relevant and up-to-date performance indicators;

f) take into account not only new projects but also the need to help secure the sustainability of existing projects when deciding on the allocation of any future funding;

g) give a particular priority to thoroughly preparing a new project to address the major issue of the limited water supply;

h) require the TCc beneficiaries to put in place the necessary legal framework, human and financial resources, and reforms of public administration and financial management to support the effective and sustainable implementation of assistance.

65. If it is decided not to support a further large-scale EU assistance programme, an action plan should be prepared to scale down or phase out the Task Force’s operations.

66. In order to prepare for the scenario where a political settlement leads to the end of the de facto division of the island, the Commission should develop a proposal for a programme to enable the whole country to benefit from EU funding following reunification.

This Report was adopted by Chamber III, headed by Mr Karel PINXTEN, Member of the Court of Auditors, in Luxembourg at its meeting of 6 March 2012.

For the Court of Auditors

+++++ TIFF +++++

Vítor Manuel da Silva Caldeira

President

[1] The phrase "northern part of Cyprus" is a geographical term used to designate the areas of the Republic of Cyprus in which the Government of the Republic does not exercise effective control.

[2] Council Conclusions on Cyprus, DG E I 8907/04. Brussels: Council of the European Union, 27.4.2004.

[3] No progress has been made for the adoption of the "direct trade" regulation. The movement of persons, goods and services from the northern to the southern part of Cyprus is regulated by the "Green Line Regulation" which entered into force on 1.5.2004, Council Regulation (EC) No 866/2004 of 29 April 2004 on a regime under Article 2 of Protocol No 10 of the Act of Accession (OJ L 161, 30.4.2004, p. 128).

[4] Council Regulation (EC) No 389/2006 of 27 February 2006 establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community and amending Council Regulation (EC) No 2667/2000 of 5 December 2000 on the European Agency for Reconstruction (OJ L 65, 7.3.2006, p. 5).

[9999] "Objective 5" here includes Unallocated Technical Assistance and a Programme Reserve Facility to which 1,74 million euro has been allocated.

[5] Twinning contracts involves experts from Member States administrations working alongside civil servants in the beneficiary countries to transfer know-how.

[6] See footnote 1.

[7] Council Regulation (EC) No 1756/2006 of 28 November 2006 amending Regulation (EC) No 2667/2000 on the European Agency for Reconstruction (OJ L 332, 30.11.2006, p. 18). In a December 2005 report to the Council and the Parliament, the Commission proposed to discontinue the European Agency for Reconstruction, but nevertheless to extend its existence until 31.12.2008.

[8] The Task Force is led by a Head of Unit in the Commission’s Directorate-General for Enlargement. The EUPSO is under a Programme Officer who reports to this Head of Unit. The Task Force consists of eight officials and 26 contract staff, of whom two and 20 respectively are on long-term mission in EUPSO. They are assisted by 12 support staff from GTZ (see paragraph 24).

[9] GTZ (Gesellschaft für Technische Zusammenarbeit) was renamed GIZ (Gesellschaft für Internationale Zusammenarbeit) on 1 January 2011. It is a private contractor but brings together expertise from German government agencies.

[10] This was for the EU’s Technical Assistance and Information Exchange Instrument (TAIEX). TAIEX delivers public short-term technical assistance and expertise, helping users to understand and draft EU-compliant legislation. Organisationally, it is part of the Enlargement DG and physically located in Commission headquarters. TAIEX is supporting the TCc to introduce and implement the acquis communautaire through a 13,7 million euro TA Facility funded by the instrument (see Annex I).

[11] Staff Regulations of Officials and Conditions of Employment of Other Servants of the European Union.

[12] An observation made by the Enlargement DG’s internal audit capability.

[13] COM(2007) 536 final of 18 September 2007: Annual Report 2006-2007 on the implementation of Community assistance under Council Regulation (EC) No 389/2006 establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community.

[14] COM(2011) 284 final of 30 May 2011: Seventh Report on the implementation of Council Regulation (EC) No 866/2004 of 29 April 2004 and the situation resulting from its application covering the period 1 May until December 2010.

[15] This corresponds to approximately 1 out of 450 people living in the northern part of Cyprus.

[16] See European Union Infopoint Nicosia, http://www.abbilgi.eu.

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ANNEX I

BREAKDOWN OF ALL INDIVIDUAL PROJECTS/SECTOR PROGRAMMES AS AT 30 SEPTEMBER 2011

Objectives and projects | Planned (euro) [9999] | Contracted (euro) | Paid (euro) | Paid /contr. (%) |

Objective 1: Developing and restructuring of infrastructure

Sub-objective 1: Protecting the environment

Project 1.1: Sector programme for updating the quality and management of water supply and sanitation services | 71400000 | 83852225 | 40619611 | 48 % |

Project 1.2: Support to the Turkish Cypriot community as regards management and protection of potential Natura 2000 sites in northern part of Cyprus | 5000000 | 5176480 | 3855268 | 74 % |

Project 1.3: Solid waste sector programme for the Turkish Cypriot community | 21200000 | 19367570 | 10750517 | 56 % |

Project 1.4: Feasibility study for the rehabilitation of the Lefke mining area | 900000 | 906500 | 906500 | 100 % |

Sub-objective 2: Improving management of the energy sector

Project 1.5: Upgrading the management of the energy sector | 5000000 | 6035972 | 5841195 | 97 % |

Project 1.6: Development and restructuring of the energy infrastructure — Part II | 8750000 | 5341486 | 5135356 | 96 % |

Sub-objective 3: Improving traffic safety

Project 1.7: Improving traffic safety | 3000000 | 2724511 | 2266958 | 83 % |

Sub-objective 4: Telecommunications

Project 1.8: Development and restructuring of telecommunications infrastructure | 14000000 | 11617413 | 7113606 | 61 % |

Subtotal | 129250000 | 135022157 | 76489010 | 57 % |

|

Objective 2: Promoting social and economic development

Project 2.1: Rural Development Sector Programmes I & II | 37350000 | 29837192 | 19941407 | 67 % |

Project 2.2: Upgrading of local and urban infrastructure | 7000000 | 7000000 | 7000000 | 100 % |

Project 2.3: Upgrading of local and urban infrastructure — Part II | 8000000 | 9784225 | 8850803 | 90 % |

Project 2.4: Human resources development sector programme | 9200000 | 8080948 | 6542745 | 81 % |

Project 2.5: Micro and small enterprises loan programme — cancelled in 2009(funds from this project were reallocated to the TAIEX project, ICT/SME, water/wastewater projects) [7777] | 9000000 | 0 | 0 | 0 |

Project 2.6: Sustainable economic development sector programme | 6000000 | 6971860 | 3913291 | 56 % |

Project 2.7: Supporting private sector development within the Turkish Cypriot community | 8100000 | 3198200 | 3160000 | 99 % |

Subtotal | 84650000 | 64872425 | 49408246 | 76 % |

Objective 3: Fostering reconciliation, confidence-building measures and support to civil society

Project 3.1: Reconciliation, confidence-building measures and support to civil society | 14000000 | 13404835 | 11115091 | 83 % |

Project 3.2: Demining assistance programme | 6500000 | 6495894 | 6495894 | 100 % |

Project 3.3: Support to the development of new trends in history teaching for reconciliation and stability in Cyprus — cancelled in 2008(funds from this project were reallocated to the civil society projects) | 1000000 | 0 | 0 | 0 |

Support for the cultural heritage monuments of great importance for the communities of Cyprus | 2000000 | 0 | 0 | 0 |

Subtotal | 23500000 | 19900729 | 17610985 | 88 % |

|

Objective 4: Bringing the Turkish Cypriot community closer to the European Union

Project 4.1: Community scholarship programme | 8000000 | 6256875 | 5536216 | 88 % |

Project 4.2: Promotion of youth exchanges and other people-to-people contacts | 3000000 | 1047892 | 904893 | 86 % |

Project 4.3: Information on the European Union political and legal order | 1500000 | 1313100 | 1053100 | 80 % |

Subtotal | 12500000 | 8617867 | 7494209 | 87 % |

|

Objective 5: Preparing the Turkish Cypriot community to introduce and implement the acquis communautaire

Project 5.1: Technical assistance to support legal transportation as well as implementation of the acquis through the TAIEX instrument — Part II (Component A — Assistance through TAIEX); (Component B — Small scale equipment facility) + Part I | 17150000 | 13699997 | 12911242 | 94 % |

Project 5.2: Capacity building in the environment sector | 2460000 | 1140690 | 1117554 | 98 % |

Unallocated Technical Assistance and Programme Reserve Facility (and wrongly encoded on Decision 2006/018-150)3 | 1740000 | 850203 | 621579 | 73 % |

Subtotal | 21350000 | 15690890 | 14650375 | 93 % |

|

Total 1 | 271250000 | 244104068 | 165152825 | 68 % |

|

Overall technical assistance for the implementation of the programme

Subtotal a (Studies, expertise, office management logistics) | 11400000 | 8436605 | 6776955 | 80 % |

Subtotal b (Staff and mission costs) Decision 2006/018-621, Decision 2006/018-316, Decision 2006/018-317 | 9650000 | 6865323 | 6858993 | 100 % |

|

Total 2 | 21050000 | 15301928 | 13635948 | 89 % |

|

Overall total | 292300000 | 259405996 | 178788773 | 69 % |

[9999] Planned amounts are as indicated in the financing proposals attached to Commission decisions.

[7777] The project could not go ahead due to difficulties to reaching agreement with Kreditanstalt für Wiederaufbau (KfW) in the special conditions prevailing in the northern part of Cyprus.

[8888] This is referred to as "Objective 6" in the financial reports from the Task Force. Funds from the Programme Reserve Facility were transferred on the basis of the Commission Decision (2009)2928 to the following projects: CMP (2 million euro), demining (1,5 million euro). 1,2 million euro was reallocated from the Unallocated Technical Facility in the TAIEX project.

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ANNEX II

OVERVIEW OF AUDITED CONTRACTS

WKS = Works contract | PMU = Project Management Unit |

SUP = Supplies contract | UNDP = United Nations’ Development Programme |

SER = Service contract | CoE = Council of Europe |

C.A. = Contribution agreement | GRS = Grant scheme |

Contract type | Contract period | Contract title | Contracted amount [9999] (euro) | Paid amount [9999] (euro) |

Project 1.1: Sector programme for upgrading the quality and management of water supply and sanitation services

PMU/SUP | Nov. 2009–May 2010 | Supply of water sampling, analysis and laboratory information management equipment | 580500 | 580500 |

PMU/WKS | Feb. 2009–Nov. 2010 | Renewal of water distribution network in the northern part of Nicosia | 2640000 | 2375624 |

PMU/WKS | Dec. 2009–Feb. 2012 | Construction of seawater desalination plant | 27517814 | 0 |

UNDP/C.A. | Jan. 2010–July 2013 | Construction of new Mila Milia/Haspolat wastewater treatment plant | 8192242 | 4657046 |

|

Project 1.8: Development and restructuring of telecommunications infrastructure

-/SUP | Oct. 2009–Oct. 2012 | Upgrading of the telecommunications infrastructure network | 9828453 | 5897072 |

-/SER | Dec. 2008–Dec. 2011 | Development and restructuring of telecommunications infrastructure | 1598750 | 1098750 |

|

Project 2.1: Rural development sector programme

PMU/SER | May 2008–July 2011 | TA to support rural development policy | 2868200 | 2265878 |

-/SER | Sept. 2008–Sept. 2012 | TA to support implementation of the rural development sector programme | 1994080 | 1595264 |

PMU/SUP | Dec. 2009–June 2011 | Supply of equipment for veterinary laboratories | 422154 | 422154 |

PMU/GRS | Nov. 2009–Jan. 2011 | Adataş (Rural development grant scheme call 1, No 127937) | 15192 | 15192 |

| Oct. 2009–Oct. 2010 | Andaç (Rural development grant scheme call 1, No 127937) | 52435 | 52435 |

PMU/GRS | Dec. 2009–Aug. 2011 | Çatalköy — Fight Against Insects | 144098 | 72049 |

| Dec. 2009–Dec. 2011 | Bü yükkonuk Culture House | 158400 | 126720 |

| Dec. 2009–Dec. 2011 | Serdarlι Culture and Art House | 85998 | 68798 |

|

Projects 2.2–2.3: Upgrading of local and urban infrastructure

UNDP/C.A. | Nov. 2006–Sep. 2010 | Upgrading of local and urban infrastructure | 8249869 | 7424869 |

| Dec. 2007–Oct. 2011 | Upgrading of local and urban infrastructure Part II | 9784225 | 8850803 |

|

Project 3.1: Reconciliation, confidence-building measures and support to civil society

UNDP/C.A. | March 2007–May 2009 | Support to the CMP | 1469566 | 1469566 |

CoE/C.A. | Aug. 2007–May 2011 | Council of Europe Academy Pol. Studies | 600000 | 351000 |

-/SER | Feb. 2008–Feb. 2011 | TA to support the development of reconciliation measures and to support civil society in the TCC: the CSST | 1499000 | 1349631 |

-/GRS | Aug. 2009–Dec. 2010 | Post Research Institute: Education for Peace III (CSA call No 126199) | 89310 | 82437 |

May 2009–May 2011 | KYTD: Celebrating Diversity and Volunteerism across Cyprus (CSA call No 126199) | 166909 | 133528 |

May 2009–May 2011 | MRG-KISA: Minority rights: a contribution to the Cyprus problem (CSA call No 126199) | 197313 | 157851 |

Project 3.2: Demining

UNDP/C.A. | Jan. 2007–Feb. 2009 | Landmine and Ordnance Clearance in Cyprus IV | 3995894 | 3995894 |

Jan. 2010–Dec. 2011 | Landmine and Ordnance Clearance in Cyprus V | 2500000 | 2500000 |

|

Project 4.1: Community scholarship programme

-/GRS | Jan. 2007–April 2007 | Call for Interest — Community scholarships programme 2007/08 (Call 1) | 396160 | 396160 |

Oct. 2007–April 2008 | Call for interest — European Community scholarships programme 2008/09 (Call 2) | 1564919 | 1537988 |

Nov. 2008–Feb. 2009 | European Union Scholarships III Programme for the Academic Year 2009/10 Local Grant Scheme (Call 3) | 2346580 | 2271597 |

Dec. 2009–Feb. 2010 | Scholarships for the Turkish Cypriot community Programme for the Academic Year 2010/11 (Call 4) | 1313440 | 1051796 |

Feb. 2011–April 2011 | Scholarships for the Turkish Cypriot community Programme for the Academic Year 2011/12 (Call 5) | - | - |

|

Project 4.3: Information on the European Union political and legal order

-/SER | Feb. 2009–Feb. 2012 | Setting up of an open access information point on the European Union | 1300000 | 1040000 |

|

Project 5.2: Capacity building in the environment sector

-/SUP | June 2009–Feb. 2011 | Supply of Air Quality Monitoring (AQM) Equipment | 645450 | 645450 |

-/SER | June 2009–Sept. 2010 | TA for AQM activities in the northern part of Cyprus | 197983 | 183121 |

|

GTZ contracts for support to EUPSO

-/SER | July 2006–June 2008 | TA in running a PSO in the northern part of Cyprus (GTZ.A) | 3476000 | 2836524 |

-/SER | June 2008–June 2012 | Setting up of a PSO in the northern part of Cyprus (GTZ.B) | 1496795 | 1496795 |

|

Total | | | 97387729 | 57474492 |

[9999] As of 30 September 2011, except for grant contracts: 31 March 2011.

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