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During the period 000-006 financial assistance from the EU to the candidate countries of Central and Eastern Europe will be provided through the three main pre-accession instruments, PHARE, ISPA and SAPARD. The 10 candidate countries eligible for the pre-accession aid are Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia (pre-accession assistance to Cyprus, Malta and Turkey is provided through different pre-accession instruments). The total amount available to all applicant countries from CEE is EUR 1.8 billion or a little over EUR billion per year, half of which is allocated to Phare.
PHARE is the main channel of support of the EU to countries in Central and Eastern Europe. Its support is concentrated in two areas of adoption of the acquis; Investment Support and Institutional Building. Approximately 0% of Phare funds are used for institutional building.
ISPA (Instrument for Structural Policies for Pre-Accession) is an instrument for financing environmental and transport infrastructure projects. It has an annual budget of approximately EUR 1,080 million.
SAPARD provides pre-accession assistance for agriculture. It is intended to help applicant countries in complying with the acquis in agriculture and rural development. It offers assistance in processing, marketing and quality control of food products.
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After the fall of the Berlin wall in 18, the European Community at that time, quickly established diplomatic relations with the former communist states of Central and Eastern Europe. The diplomatic relations between the EC and the CEECs quickly developed into bilateral relations, which later provided the legal basis for accession negotiations between the EU and the CEECs.
In an effort to support political and economic changes in the CEECs, the Council of Ministers of the EU set up the Phare fund. The fund was to provide assistance to Hungary and Poland, hence its name “Poland and Hungary Assistance for Restructuring of their Economies” or Phare. In 10 the fund was extended to provide support to the Czech Republic and other countries of Central and Eastern Europe.
Agenda 000 proposed to focus Phare program on preparing the candidate countries in Eastern Europe for membership. The objective of the program was to concentrate it support on two priorities in the adoption of the aquis Institutional Building and Investment Support.
The first priority of Phare, Institutional Building accounts for some 0% of the total Phare funds. Institutional Building according to the EU is defined as the process of helping the candidate countries to develop the structures, strategies, human resources and management skills needed to strengthen their economic, social, regulatory and administrative institutions. One of the innovative features of the institutional-building is the so-called twinning program. Ever since its inception the twinning program has taken a central place in pre-accession assistance. The Twinning mechanism allows officials and civil servants in the EU handling administrations policies and officials in the candidate countries to exchange expertise. In this way experts from the EU support applicant countries in their efforts to adopt, implement and enforce important areas of the acquis. In addition, applicant countries administrations can get hands-on transfer of administrative and technical expertise. The approach is relatively simple; the Commission identifies a problem or problems in the candidate country’s administration and than asks the candidate country to come up with a project to reform the administration problems. The Commission than mobilizes experts or pre-accession advisors from the Member States to go and help the applicant country solve the problem. The process is proven to be very pragmatic using case-by-case method of reforming public administration.
The second priority, which accounts for 70% of the Phare funds is Investment Support. The adoption of the acquis means that the candidate countries have to adapt their enterprises and main infrastructure to the norms and the standards of the EU. This however requires considerable investments. Therefore, the EU has agreed to co-finance projects in the areas such as environment, nuclear safety, transport safety, working conditions, marketing of food products, consumer information and control of production processes. The funds are used to help applicant countries to avoid long transitional periods in adapting to Community norms and major infrastructure. The type of investment support also includes structural and social actions, Small and Medium Enterprise (SME) development, adoption of Community norms, and large- scale infrastructure. The investment support objective is also to promote the functioning of market economy and the capacity of candidate countries to cope with the competitive pressure and market forces within the EU.
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