Indicative Programmes N°21995 published by the European Commission

Indicative Programmes N°21995 published by the European Commission Directorate General External Relations: Europe and the New Independent States, Common Foreign and Security Policy and External Missions (DG IA) 2 Introduction

This brochure aims to give the interested public an insight into the Indicative Programmes, Phare's strategy documents for its partner countries. These set down a partner country's priorities for Phare support and form the framework on which the operational programmes are designed. There are three types of Indicative Programme. Yearly Indicative Programmes indicate a country's priorities by looking ahead no more than a year. Multi-annual Indicative Programmes, which are becoming the norm, plan ahead for anything up to four years. Finally, Cross­ border Indicative Programmes outline the activities fore­ seen for the programmes that build links between the border regions of European Union Member States and Phare partner countries. Indicative Programmes are published after they have been approved by both the Commission and the partner countries. 3 Contents

What is Phare? 4

Albania - Multi-annual Indicative Programme for cross-border cooperation with Greece 5

Albania - Multi-annual Indicative Programme for cross-border cooperation with Italy 9

Baltic Sea region - Multi-annual Indicative Programme for cross-border cooperation 12

Hungary - Multi-annual Indicative Programme 18

Hungary - Multi-annual Indicative Programme for cross-border cooperation with Austria 25

Slovakia - Multi-annual Indicative Programme 31

Slovenia - Multi-annual Indicative Programme for cross-border cooperation with Austria 36 4 What is Phare?

The Phare Programme is a European Community initia­ The main priorities for Phare funding are common to all tive which supports the development of a larger democ­ countries, although every one is at a different stage of ratic family of nations within a prosperous and stable transformation. The key areas include restructuring of Europe. Its aim is to help the countries of central and state enterprises including agriculture, private sector eastern Europe rejoin the mainstream of European development, reform of institutions, legislation and development through future membership of the public administration, reform of social services, employ­ European Union. ment, education and health, development of energy, transport and telecommunications infrastructure, and Phare does this by providing grant finance to support its environment and nuclear safety. partner countries through the process of economic trans­ formation and strengthening of democracy to the stage For countries which have signed Europe Agreements, where they are ready to assume the obligations of Phare funding is also focused on meeting the conditions membership of the European Union. required for membership of the European Community. In particular, this concerns preparation for participation In its first five years of operation to 1994, Phare has in the European Union's internal market and develop­ made available ECU 4,248.5 million to 11 partner coun­ ment of infrastructure, especially in border regions. tries, making Phare the largest assistance programme of its kind. Phare works in close cooperation with its partner coun­ tries to decide how funds are to be spent, within a framework agreed with the European Community. This ensures that Phare funding is relevant to each govern­ ment's own reform policies and priorities. Phare provides know-how from a wide range of non­ commercial, public and private organisations to its partner countries. It acts as a multiplier by stimulating investment and responding to needs that cannot be met by others. Phare acts as a powerful catalyst by unlocking funds for important projects from other donors through studies, capital grants, guarantee schemes and credit lines. It also invests directly in infrastructure, which will account for more Phare funds as the integration process progresses. 5 Albania

Multi-annual Indicative Together with these priorities, the MIP aims to Programme for cross-border strengthen economic cooperation and integration and overcome the socio-economic gap between Albanian cooperation with Greece and Greek border areas. More particularly, it aims to • complement INTERREG programmes on the Duration 1995-1999 Albanian side of the border in the case of common Amount ECU 9 million per annum projects (indicative amount only) • promote cooperation between the Albanian and The Multi-annual Indicative Programme (MIP) has been Greek border regions prepared under the Phare cross-border cooperation • help the border regions overcome specific develop­ programme for the Albanian-Greek border regions. The ment problems stemming from their relative isolation time frame for completion of projects within the MIP is in their national economies five years and coherence is therefore ensured within the long-term development of the region. • address wider environmental problems The Albanian border region, mainly rural and mountain­ • encourage the creation and development of coopera­ ous, suffers from poor infrastructure connections with tion networks on each side of the border and the limited access to the rest of the country and to Greece. establishment of links between these networks and Activities are concentrated in specific sub-areas and wider European Union networks. small towns like Gjirokastra and Korea. The main The following priorities and indicative budgetary split economic activities are agricultural in nature, industrial have been agreed: activities being marginal and the mining sector only having local importance. Labour market conditions and • transport, including road transport and unemployment pose a problem, although the unemploy­ border crossings 52.5% ment level is lower in the south, owing to high emigra­ • utilities, including telecommunications 5.5% tion levels, particularly to Greece. • environment 12.2% The corresponding region on the Greek side has similar difficulties, being mountainous, isolated for the main • economic development, including part and suffering from demographic and economic investment aid and tourism 11.3% inertia, combined with a weak economic structure, • human resources 13.3% despite the relative dynamism of the SME sector and the potential for development of the manufacturing sector. • agriculture 3% The topography of the region hampers communications • programme implementation and management 2.2% and infrastructure is often inadequate. The regions which will be eligible for funding are the The strategic location of the area in the north-east districts of Mediterranean renders it a favourable location for trans­ European networks. Another asset is the area's natural • Saran beauty and valuable ecosystems which offer both • Delvina tourism and agricultural potential. • Gjirokastra The top developmental priorities of the region are to • Permeti • harmonise transport infrastructure operations to facil­ itate the transfer of people and goods between the • Kolonja two countries • Devolli • strengthen economic cooperation by increasing • Korea. economic compatibility between areas on both sides of the border Phare has already financed measures to stimulate cross­ border cooperation between the Member States of the • improve human conditions through interventions in European Union and the central European countries. In health care and the environment. particular, a number of investments to improve border 6 Albania - Multi-annual Indicative Programme for cross-border cooperation with Greece

crossings were approved in 1993 and are being imple­ the insufficient number of border crossings and the lack mented, including crossings between Albania and of road connections. Greece. Improving the road system will benefit all the Albanian Commission Regulation N° 1628/94, on cross-border border regions with Greece, creating new investment cooperation between the Member States and the central possibilities in a wide number of sectors, particularly European countries in the framework of the Phare tourism and SME activities in agriculture and industry. Programme, provides the rules for financing actions of a Measures will be taken to improve the technical condi­ structural nature in border regions of central European tions of roads to adjust them to increased traffic volumes countries sharing a common border with Member States, and higher speeds, including improving road surfaces in harmony with the European Union structural policies and widening. and with INTERREG II in particular. In 1994, a number of infrastructure projects located in the Greek-Albanian Two border-crossing points exist at Kakavija and and Italian-Albanian border regions amounting to ECU Kapshtice. The 1994 cross-border programme aims to 20 million were approved. Two out of six of these open two new border points at Tri-Urat and Konispoli projects relate to upgrading and rehabilitating major and assess the feasibility of a third at Drimada. The roads accessing the borders and crossing points. Two 1995-1999 MIP will provide follow-up support for other projects involve feasibility studies on improving linking the new border points with the nearest principal the road between Kakavija-Rrogozhine and the road Albanian roads. Measures will include rehabilitating leading to Gjirokastra from the Greek border at roads linking existing border crossings and providing Kakavija. The other two projects relate to new border­ infrastructure for new crossings. crossing facilities at the Greek border and strengthening Suggested projects for funding under the MIP include existing cross-border infrastructure. The 1995-1999 MIP rehabilitating 25 km. of the road from Gjirokastra to builds on the experience of the 1994 programme, in Kakavija and further works to rehabilitate the particular in respect of implementation needs and Kapshitce-Pogradec, Konispoli-Saranda and Tri-Urat­ project selection. Leskovic roads. A number of criteria have been influential in project selection, in particular Utilities • cross-border impact Investment in Albania's outdated utilities infrastructure is vital to remove barriers to economic development in • complementarity of the projects of the Albanian the border area and to improve the standard of living municipalities located on the border with INTERREG there. The international telecommunications network projects of the Greek municipalities on the other side has only one automatic national digital exchange which of the border is also used as a terminal international exchange. • the development impact on the population of the International connections are mainly by radio link, border areas fraught with difficulties owing to the distance of the transmission route and its routing over the sea. • the readiness for implementation A telecommunications axis is needed particularly • the coherence of project content with declared project between central/north Europe and the east objectives Mediterranean/Middle East, achieving a combination of • the co-financing possibility low cost, new and high quality technology conferring economic and socio-economic benefits. • bankability of projects Measures will concentrate on connecting Greece and • the environmental impact. Albania through a submarine fibre optic cable network Transport in the context of the ADRIA 1 programme; the network will eventually be connected to Croatia. Improved road connections are needed between the two countries to improve economic development and reduce Environment socio-economic discrepancies, particularly since trans­ port plays a significant role in countries at Albania's The border region comprises the two ecological subre­ level of development. Missing links in transport infra­ gions of the Adriatic sea coast and the inland mountain­ ous region which has sensitive forest and lake ecosys- structure must be dealt with to remedy the problem of Albania - Multi-annual Indicative Programme for cross-border cooperation with Greece 7

terns. Much of the coastal area is characterised by Agriculture discharges of waste water and sewage directly into the More than half the workforce of the southern Albanian sea, with residues of pesticides. The pollution levels in border are active in agriculture. Privatisation has the area severely restrict the potential for economic advanced rapidly and the land distribution process is development, particularly for tourism and fisheries. nearly complete, but subsistence farming is the norm Measures will concentrate on reducing sewage water given the small size of farms. disposal through providing sewage treatment facilities in The efficiency of agriculture needs to be increased. Saranda, the main port in the area. In addition, action Marketing structures need to be improved and new types will be taken to stabilise the ecosystem of Lake Butrinti of activities developed. This will help to minimise and improve fish and mussel exploitation. emigration from the region. Economic development Measures will concentrate on establishing an effective system for sustainable management and conservation of Private sector activity in the border region is concen­ the region's fishery sector, promoting private investment trated largely in the area of small enterprises and in fishery enterprise and developing local fish marketing farming. Marketing and basic commercial management institutions. techniques are weak. Infrastructure facilities for small traders are lacking. Little legal and financial information Indicative projects include technical cooperation on and advice exists for entrepreneurs. know-how for applying modem fishing methods and preparing studies on establishing fish farms. Action will Cooperation and information exchange needs to be also be taken to strengthen contacts between business­ developed between enterprises, including SMEs, on men from both countries to stimulate joint ventures in both sides of the borders and between commercial the fishery sector. A cross-border fish sales network will centres and institutions. Tourism is likely to be an also be set up. important growth sector, given the coastal and moun­ tainous nature of the area and its architectural and Programme implementation and cultural heritage. management Activities will concentrate on providing legal and finan­ Much work is still needed to clarify projects under the cial advice, establishing exhibition and commercial Programme, necessitating a series of technical studies. centres, together with facilities to promote local prod­ Although broad agreement has been achieved, priorities and ucts, information exchanges and cooperation networks. measures will need to be transformed into effective action. Support will also be provided to promote exploitation of specific tourist sites linked to natural and historical Coordination of the economic development of the area assets in the area. will depend on financing common studies and strategies on regional development. Human resources Implementation Standards of health care in Albania are poor and many patients travel to Greek hospitals for treatment. A strat­ A joint programming and monitoring committee, egy to reform the health sector has been developed for composed of the appropriate authorities from Albania Albania and is being implemented with foreign support. and Greece, will play the principal role in assuring This could be complemented usefully by permanent overall coordination between the two governments in cooperation with Greece. the planning and implementation stages of the Programme. It will be the principal forum for the joint Emphasis will be on developing common investment programming of cross-border activities under Phare and programmes and technical cooperation to deal with INTERREG II. The committee will undertake joint common health problems, emergencies, the training project selection in the context of the Programme and needs of health workers and to develop public aware­ will also monitor and coordinate the implementation of ness of health issues. these activities. Indicative projects include rehabilitating the regional The Department for Economic Development and hospital in Korea and supporting selected primary heath Foreign Aid Coordination in the Council of Ministers care centres. will have responsibility for the overall coordination and 8 Albania - Multi-annual Indicative Programme for cross-border cooperation with Greece

financial management of the Programme. The Department will work ciosely with the Ministry of Construction which will be responsible for implement­ ing the Programme, where a Programme Management Unit has been established for this purpose. The Programme will specify projects annually in the framework of a financing proposal and financing memo­ randa. The projects will derive from measures and prior­ ities specified in the MIP, taking account of the develop­ ment of the MIP and the absorption capacity of the different sectors. 9 Albania

Multi-annual Indicative Programme for cross-border Shortcomings in the communication system, particularly cooperation with Italy on the Albanian side, present major obstacles to the exploitation of common economic opportunities in the region. This situation is aggravated by the lack of Duration 1995-1999 modern infrastructure, most notably in Albania, and the Amount ECU 9 million per annum difficult conditions at Albania's ports and maritime (indicative amount only) borders, which cause delays and affect trade networks. The common shared maritime coast and environment is The Multi-annual Indicative Programme (MIP) has been an asset for the border region in terms of tourism poten­ prepared under the Phare cross-border cooperation tial, but development in this sector cannot proceed until programme for the Albanian-Italian border regions. The satisfactory environmental conditions and infrastructure time frame for completion of projects within the MIP is are established on both sides of the border. five years and coherence is therefore ensured within the long-term development of the region. The top priority developmental needs of the region are to In economic terms, the Albanian maritime area is the • strengthen communication, land and maritime most dynamic in the country, accounting for 31 per cent networks of the population, 37 per cent of total economic activity • increase the complementarities of economic activities (with a significant role played by industry and agricul­ in the border regions ture) and 60 per cent of all foreign investment in the country. The two ports of Diirres and Vlora account for • improve environmental and cultural cooperation. 90 per cent of all maritime and commercial exchanges Together with these priorities, the MIP aims to and transfers of persons between Albania and Italy. The strengthen economic cooperation and integration and northern part of the area benefits from a clear knock-on overcome the socio-economic gap between the Albanian effect owing to its proximity to the Diirres-Tirana area, and Italian border areas. More particularly, it aims to whereas the southern part is more isolated with difficult communications and demonstrates potential more • complement INTERREG programmes on the specifically in the tourism sector. Albanian side of the border in the case of common projects The Albanian maritime area suffers from weaknesses in strategic and organisational development. There is no • promote cooperation between the Albanian and real comprehensive concept of regional and economic Italian border regions development, nor any sustained private sector strategies • help the border regions overcome specific develop­ for the region, for example for the use of natural ment problems stemming from their relative isolation resources. Likewise, no clear regional and local cross­ in their national economies border concept or development strategy exists in the context of the market economy. Local government and • address wider environmental problems institutional structures or organisations which could • encourage the creation and development of coopera­ promote private business and cross-border cooperation tion networks on each side of the border and the are also missing. establishment of links between these networks and The corresponding region of Puglia on the Italian side wider European Union networks. has socio-economic and social characteristics which lag The following priorities and indicative budgetary split behind the European Union regional GDP (gross domes­ have been agreed: tic product) average but has a fast transforming economy. The province of Bari represents the most • transport, including road transport developed economy in the area and is undergoing an and port facilities 74.4% evolution towards a service economy, characterised by a • environment 11.7% certain dynamism, based on a high level of innovation and research. However, under-equipped economic and • economic development, including social infrastructures are impeding economic develop­ investment aid and tourism 11.7% ment in the region while the maritime border regions are • programme implementation suffering from specific labour market problems owing to and management 2.2% the recent pressure of illegal immigrants.

(2) I O Albania - Multi-annual Indicative Programme for cross-border cooperation with Italy

The regions which will be eligible for funding are the Transport districts of Further development of transport infrastructure along • Dilrres the Albanian-Italian border is necessary to open up the region generally and contribute to its growth and its • Kavaja foreign investment potential. • Lushnja Emphasis will be placed on providing missing links in • Fier transport infrastructure, with particular attention to improving maritime connections and modernising/ • Vlora. constructing major road links. Investment in roads and Commission Regulation N°1628/94, on cross-border ports in the maritime coastal area will generate new cooperation between the Member States and the central investment possibilities in various sectors, such as European countries in the framework of the Phare tourism, small and medium-sized enterprises (SMEs) Programme, provides the rules for financing actions of a and agro-industry. structural nature in border regions of central European The main objective in the road transport sector will be to countries sharing a common border with Member States, open up the border area, improve traffic flows on major in harmony with the European Union structural policies axes, increase safety and reduce accidents, increase and with INTERREG II in particular. The 1994 cross­ capacity by raising traffic speeds, reduce travel time, border cooperation programme financed actions of a reduce pollution and stimulate economic development in structural nature in Albania which promoted cooperation the region generally. Emphasis will be on improving the with bordering European countries. A number of infra­ technical conditions of roads to adjust them to increased structure projects located in the Greek-Albanian and traffic volume and higher speeds through improving Italian-Albanian border regions were financed, two road surfaces and road widening. relating to upgrading and rehabilitating major roads accessing the border, in particular part of the east-west The sea is the principal means of communication road from Dilrres to Rrogozhine. The 1995-1999 MIP between the two countries and cross-border cooperation builds on the experience of the 1994 programme, in is very dependent on effective communication between particular in respect of implementation needs and the regions covered in the MIP. Therefore, it is impor­ project selection. tant to ensure that the ports are fully operational and able to cope with the increased traffic flows resulting A number of criteria have been influential in project from the opening up of Albania's borders. Emphasis selection, in particular will be on strengthening the port of Vlora to enable it to • cross-border impact handle the rapid increase in passenger and freight exchanges. • complementarity of the projects of the Albanian municipalities located on the border with INTERREG Indicative projects include projects of the Italian municipalities on the other side • upgrading and rehabilitating the Rrogozhine-Fier­ of the border Vlora road, which links the port of Vlora to the • the development impact on the population of the primary highway network and which also forms part border areas of the proposed north-south corridor linking Tirana and the port of Dtirres with northern Greece • the readiness for implementation • upgrading and rehabilitating the Dilrres-Rrogozhine­ • the coherence of project content with declared project Elbasan road, to improve traffic with Italy along the objectives Kakavija-Rrogozhine-Dilrres-Elbasan-Pogradec­ • the co-financing possibility Kapshtica axe • bankability of projects • strengthening the port of Vlora to help it face the rapid increase of traffic flows, by developing a safe • environmental impact. ferry terminal at the old port and conducting a feasi­ bility study to assess the long-term needs of the whole port. Albania - Multi-annual Indicative Programme for cross-border cooperation with Italy 11

Environment Programme implementation and management Much of the Adriatic coastal area is polluted by discharges of waste water and sewage directly into the Much work is still required to clarify further the measures sea, together with pesticide residues. The pollution and projects under the MIP and a series of technical levels not only have detrimental effects on health but studies will need to be conducted. The broad agreement also restrict the potential for economic development in achieved on priorities and measures will need to be trans­ the region, particularly with regard to the tourism and formed into effective actions to implement projects. fisheries sectors. Economic development in the area must also be coordi­ Indicative projects include nated and this will necessitate the preparation of common studies, strategies and regional development plans. • reducing sewage water inflows into the Adriatic from the Vlora/Diirres area, in particular by providing Technical support, monitoring, evaluation and institu­ sewage treatment facilities. tional development activities will also be necessary. Economic development Implementation The envisaged improvements in transport infrastructure A joint programming and monitoring committee, under the MIP and the consequent opening up of the composed of the appropriate authorities from Albania area will provide the necessary basic framework to capi­ and Italy, will play the principal role in assuring overall talise on existing economic development possibilities, coordination between the two Governments in the plan­ particularly in the Diirres-Tirana-Rrogozhine triangle. ning and implementation stages of the Programme. It will be the principal forum for the joint programming of Infrastructure facilities, in particular sites and premises, cross-border activities under Phare and INTERREG II. are needed to support the emerging private sector and The committee will undertake joint project selection in the growing number of foreign investors in the region. A the context of the Programme and will also monitor and more supportive environment is also needed to encour­ coordinate the implementation of these activities. age foreign investment and to promote cooperation, exchanges and the transfer of know-how between entre­ The Department for Economic Development and preneurs on both sides of the border. Foreign Aid Coordination in the Council of Ministers will have responsibility for the overall coordination and Activities to promote investment in the region will financial management of the Programme. The concentrate on creating industrial parks to provide Department will work closely with the Ministry of necessary infrastructure (such as basic services and Construction which will be responsible for implement­ warehouses), offer legal and financial advice and infor­ ing the Programme; a Programme Management Unit has mation exchange, and develop cooperation networks. been established at the Ministry for this purpose. There is considerable potential for tourism development The Programme will specify projects annually in the in the Diirres-Fieri-Vlora zone, based on the natural framework of a financing proposal and financing memo­ assets of the sea, beaches and mountains and the area's randa. The projects will derive from measures and prior­ architectural and cultural heritage. ities specified in the MIP, taking account of the develop­ Indicative projects include ment of the MIP and the absorption capacity of the different sectors. • material support to investors from Bari, in the form of basic services, warehouses, equipment, etc., and soft support, in the form of legal and financial advice, exchange of information and the creation of coopera­ tion networks • support for the creation of industrial parks through providing the necessary infrastructure • support for tourism development, through activities to promote the exploitation of specific sites linked to natural and historical assets in the border area. 12 Baltic Sea region

Multi-annual Indicative development. However, the coastal area of the Baltic Sea is highly polluted, infrastructure is inadequate for Programme for cross-border tourist needs and the roads and communication systems cooperation are poor. The region also suffers from relatively high unemployment in rural areas. Port infrastructure and Duration 1995-1999 transport connections to the interior need to be devel­ oped to maximise the potential which arises from the Amount ECU 14 million per annum strategic position of the countries as a link between east (indicative amount only) and west. The Multi-annual Indicative Programme (MIP) has been The Multi-annual Indicative Programme reflects the prepared to provide a strategic basis for the Phare cross­ results of the findings of a number of multinational border cooperation programme for the Baltic Sea region. studies and the policy priorities of Estonia, Latvia, The time frame for completion of projects within the Lithuania and Poland. These have identified transport MIP is five years and coherence is therefore sought bottlenecks, especially relating to cross-border commu­ within the long-term development of the region. nications at ports, high levels of environmental pollution Commission Regulation N° I 628/94, on cross-border in the Baltic Sea and inadequate public utilities as the cooperation between the Member States and the central major constraints to development. The Programme European countries in the framework of the Phare therefore gives high priority to measures which address Programme, provides the rules for financing actions of a these issues. structural nature in border regions of central European The top developmental priorities of the region are to countries sharing a common border with Member States, in harmony with the European Union structural policies • improve communication, infrastructure and transport and with INTERREG II in particular. The 1994 links within the Baltic Sea region, in particular to European Union budget included a new budget line allo­ complement the development of the 'Via Baltica' cating ECU I 1 million for cross-border cooperation east-west European transport network between the Baltic republics and Denmark and ECU 3.6 • protect the environment and reduce pollution levels, million for cooperation between Poland and Denmark. particularly in the Baltic Sea This was designed to provide co-finance for projects linked with measures supported under INTERREG. • encourage cross-border cooperation as a mechanism Formal linkages between INTERREG and the Phare to maximise the growth potential of the region as a cross-border cooperation programme can now be estab­ whole and to complete the transition to a mature lished for 1995-1999. market economy The borders between the Phare partner states and the • stimulate new, and support existing, cooperation European Union Member States in the Baltic Sea region between local and regional authorities in the coun­ are sea borders. This means that the priority axes and tries of the region measures will address issues specific to sea borders, for • support activities to facilitate the preparation of the example the development of port infrastructure, customs Baltic republics and Poland for accession to the controls and water treatment. Given the similarities and European Union. needs of sea borders in the field of cross-border cooper­ ation, and to keep administrative requirements to the The following priorities have been agreed: minimum, the countries concerned have agreed to adopt • transport, including border-crossing improvements a multi-country programme approach. • environment The border regions of the Baltic republics and Poland have a broadly similar development pattern. They all • utilities and municipal infrastructure have a strategic position as transport links. These links • economic development are accompanied by strong historical and cultural links and the existence of networks in different areas of coop­ • human resources eration. Attractive coastlines, a diversity of natural • technical support and programme management. resources and a rich heritage of architectural and cultural traditions make the region ideal for tourism Baltic Sea region - Multi-annual Indicative Programme for cross-border cooperation 13

The following indicative budgetary split has been used to identify projects for the annual programmes. agreed. Annual programmes will consist of a range of projects taken from these measures and will be prepared in the Priorities &tonia Latvia Lithuania Poland form of a financing proposal, to be submitted to the Transport 30% 40% 50% 15% Phare Management Committee for approval. A series of eligibility criteria will be established for selecting Environment 30% 40% 20% 55% projects for funding, such as Utilities 25% 10% • cross-border and interregional impact Economic • coherence with the overall objective of a priority development 30% 10% 10% • level of combination and integration of the measures Human resources 5% 5% 5% with other measures under the same priority or under Technical support, other priorities etc. 5% 5% 5% 5% • readiness for implementation The following regions will be eligible for funding: • general development impact on the border area as a whole Estonia: the counties of Ida Viru, Laane Viru, Harju, Laane, Hiiu, Saare, Parnu and parts of Viljandi; these • promotion of inward investment include counties on the mainland adjacent to the Baltic • involvement of local and regional authorities Sea as well as the islands (Hiiumaa, Saaremaa). • links to national Phare programmes and other Latvia: all coastal regions bordering eligible regions in programmes other Baltic sea countries, including Liepaja, Ventspils, Talsi, Jurmala, Riga city and region and Limbazi. • levels of co-financing

Lithuania: seven municipalities (cities and regions) • technical indicators, such as the internal rate of return forming part of the Klaipeda district, including the cities based on a cost-benefit analysis and environmental of Klaipeda, Palanga, Neringa and the regions of impact Klaipeda, Kretinga, Skuodas and Silute. The priorities and measures for each participating Poland: the five voivodships bordering the Baltic Sea, country are namely Szczecin, Koszalin, Slupsk, Gdansk and Elblag. Estonia The 1994 cross-border cooperation programme between • transport: port infrastructure, improvement of trans­ Estonia, Latvia, Lithuania, Poland and Denmark port network included projects in several areas of cooperation. Estonia benefited from projects on hazardous waste • environment: waste management, waste water treatment management, a feasibility study for a mobile treatment • economic development: business development, facility for contaminated ground water, the provision of tourism development infrastructure and facilities for an old people's home and training of health workers. Latvia benefited from • human resources: education and training projects on waste water treatment, hazardous waste • programme management: Central Financial Contracting disposal and the establishment of a media centre to Unit promote environmental research and awareness. Lithuania was granted support for modernising the Latvia Klaipeda port facilities. Poland benefited from projects • transport: port infrastructure on waste water treatment, river management, coastal monitoring and harbour works in Leba to encourage • environment: waste management, waste water treat- tourism development. ment • economic development: regional development Priorities and measures • human resources: education and training The MIP is set out in the form of a series of priorities (axes of fields of cooperation) which comprise a set of • programme management: Central Financial Contracting measures under each priority. This framework will be Unit 14 Baltic Sea region - Multi-annual Indicative Programme for cross-border cooperation

Lithuania economic costs/benefits arising from investment in port development. This will help improve efficiency and • transport: port infrastructure, railway infrastructure upgrade the harbours with a view to tourism and • utilities/municipal infrastructure: energy supply, economic development generally. telecommunications infrastructure The second measure will aim to improve selected parts • environment: waste management of the road, rail and maritime transport systems which have particular importance in providing efficient cross­ • programme management: Central Financial Contracting border links. Unit Poland Environment • transport: port infrastructure, improvement of road The Baltic Sea, especially the Riga Gulf, is suffering and rail infrastructure, air and water transport from a high nutrient content, stemming mainly from extensive use of fertilisers in agriculture and municipal • utilities/municipal infrastructure: provision of energy, waste systems. Ground water is seriously affected by water and gas supply, urban renewal untreated sewage and leaks from waste dumps while • environment: waste management, waste water treat­ inadequate waste management is causing problems ment, environmental monitoring, management of generally. environmental resources The first measure will aim to lay a good basis for devel­ • economic development: business development, oping waste management systems, including waste tourism development collection, transfer and disposal, subsequently leading to improvement in environmental conditions. This will be • human resources: disadvantaged groups, employment achieved through the construction of hazardous waste measures, education and culture collection and transfer stations. • programme management: Programme Management The second measure will aim to treat contaminated soil Unit, technical support, studies/regional development and ground water, through creating monitoring systems plans, small projects fund. and providing water and soil treatment plants. The Estonia measures will be directed both at ground water and coastal water. Transport, including cross-border infrastructure Economic development Measures are needed to encourage the process of Many of the country's ports need reconstructing and economic development through small business promo­ repair if they are to remain viable and are to continue to tion, international cooperation and tourism development. play an important role in international freight traffic. This applies equally to the smaller ports and harbours Measures will be taken to promote the process of for local transport. Although the road network is rela­ economic cooperation in the islands of Saaremaa and tively well developed and meets the needs of present Hiiumaa, which are suffering from lack of economic traffic loads, the physical state of roads and bridges infrastructure, technology and access to information needs improving and the Via Baltica road, linking networks, restricting the possibilities of new investment. Finland with western Europe, needs rebuilding. Customs Activities will include introducing training facilities and procedures need to be streamlined and facilities establishing local and international networks to encour­ improved to ensure a more efficient service. age exchanges of information and cooperation with businesses in other countries of the border region. The objective of measures under this priority field is to Support will also be given to developing rural busi­ assess which parts of the transport infrastructure require nesses to safeguard environmental improvements, and improvement (physical and procedural), in particular as assist employment creation. regards cross-border links, and to carry out the neces­ sary improvements in selected parts. A second measure aimed at the entire region covered by The first measure will aim to assess the problems facing the MIP will aim to develop tourism facilities and upgrade existing ones to attract large numbers of port infrastructure in selected ports and to evaluate what national and international tourists. improvements are needed. This will take into account the ports' competitive position in the region and the Baltic Sea region - Multi-annual Indicative Programme for cross-border cooperation 15

Human resources Economic development A key factor for regional economic development is the The region covered by the MIP comprises major urban human capital in the region and measures are needed to areas which have developed through port activities as ensure that this is improved through enhancing skill well as highly rural areas which are characterised by a levels. narrow economic base and comparatively high unem­ ployment rates. Emphasis will be placed on a broad range of activities in the field of education and training, including coopera­ Measures will be taken to encourage economic develop­ tion through schools, universities and other ment, particularly in the rural areas, through technical training/educational institutes in the border region to set support, advice and training for national and local up short-term exchanges, joint training courses and authorities on the main issues of regional development. combined research. Support will also be provided for preparing a needs assessment for regional development plans for parts of Latvia the border region. Transport infrastructure Measures will also be aimed at establishing new and developing existing contacts and links to promote cooper­ Port infrastructure needs to be rehabilitated and more ation between businesses and local tourism bureaux, and favourable conditions developed for cargo handling and at supporting economic development through training, transportation in order to promote the international exchanges and the provision of small-scale infrastructure. competitiveness of the country's major ports. Human resources Measures will concentrate on improving the quality of the port infrastructure, in particular breakwaters, so as to A key factor for regional economic development is improve the overall efficiency of harbour operations. human capital, and measures are needed to ensure that Physical maritime infrastructure will be a priority, as this is improved through enhancing skill levels. well as other issues, such as radio communication Measures will be taken to improve education and train­ systems, to ensure better safety standards. ing through activities aimed at facilitating the process of Environment exchange of experience and know-how on policy issues and labour market concepts. No special system for managing hazardous waste exists In addition, a broad range of activities will be designed and dangerous substances are disposed of along with to improve skill levels, including cooperation through non-hazardous waste in uncontrolled land-sites or schools, universities and other training/educational insti­ dumps. This poses direct risks to health and to the en­ tutes in the border region to set up short-term exchanges, vironment, through direct contact with waste materials, joint training courses and combined research. and leakage from disposal sites into ground and surface water, which may subsequently enter surface water Lithuania and/or drinking water systems. The water quality of numerous small rivers and lakes has deteriorated rapidly Transport infrastructure in recent years and is affected by pollution from untreated municipal waste water and leaching from agri­ The port of Klaipeda is the focal point of the country's cultural land. Pollution of ground and surface water transit industry and a major economic stimulus for the have a direct impact on the Riga Gulf and the Baltic country. Improvements to the port's infrastructure are Sea, as well as zones of ecological value along the needed, in particular as regards the harbour entrance, coastline which lie in the vicinity of river estuaries. railway-port junction and road access. Activities will concentrate on a spectrum of projects to Railways are vital for imports and exports through prepare waste management strategies and to develop Klaipeda and they generate considerable revenue from existing sites for better, more environmentally-friendly transit traffic. Their deterioration through lack of invest­ waste management. ment and maintenance has caused a fall in efficiency. In addition, measures will be taken to improve water quality, in particular through upgrading existing water supplies, sewage and waste water treatment systems. 16 Baltic Sea region - Multi-annual Indicative Programme for cross-border cooperation

Measures will be taken to improve the port of Klaipeda, and curb the illegal dumping of waste material from with concentration on improving the harbour entrance domestic and industrial sources. and building a new ro-ro terminal. Other measures will include activities to help monitor The modernisation and improvement of key railway key indicators concerning the condition of the environ­ links will also be a priority. ment and to support management of national parks and forests in the region. Utilities Transport Measures are needed to promote energy efficiency and to integrate Lithuania's energy and telecommunications Transport links in Poland are poor. There are few roads networks into European Union networks. In particular, connecting the coast with the hinterland and these are this will help to improve the environment and improve generally in a poor state. Although 40 per cent of security of energy supplies, given the country's high Poland's foreign trade is sea-borne, there are no dependence on supplies from Russia. adequate motorway connections to the ports, which are themselves ill-adapted to the needs of modem sophisti­ Measures will be taken to connect the national power cated shipping transport. The two international airports system to the western European power system, with of Gdansk and Szczecin have few facilities for interna­ concentration on electricity supply. tional passenger traffic. Activities will also be directed at modernising the Measures for road transport will concentrate on upgrading telecommunications system. strategic road infrastructure, particularly access roads to the ports. Railway links will be upgraded, with emphasis Environment on completing the electrification of the main trunk lines, Lithuania produces some 200,000 tons of hazardous completing some sections with a second line of track and waste each year, including chemical and heavy metals, modernising the signals system and rolling stock. most of which is untreated and stored on production Consideration will be given to building a new passenger sites. 1.5 million tons of solid waste are dumped each terminal at Gdansk airport and converting ex-military year in landfills, many of which pose a threat to surface airports for civil purposes. Other activities may involve and ground water. The contamination of former military improvements to various ports and to ferry transport. sites is also a major problem. Economic development Measures will concentrate on constructing several regional waste storage sites for hazardous waste, mainly Most investment in the region is concentrated in the industrial waste and unused agro-chemicals. This will Szczecin and Gdansk port areas. The effective liquida­ help to reduce health hazards and water-borne pollution tion of state farms has led to a sudden rise in structural of ground and surface waters which discharge into the unemployment which is very difficult to combat. On the Baltic Sea. other hand, the wealth of natural resources provided by the coastal area and the lake district make the area very Poland attractive for tourism development.

Environment Measures to develop the tourism sector will concentrate on activities to develop the necessary physical infra­ Measures are needed to curb water-borne pollution to structure, as well as to promote agri-tourism and an protect the water in the coastal zone of the Baltic Sea information and marketing system on the region's which is used for tourism and recreational purposes. tourism possibilities. Waste water treatment activities will be directed at Measures will also be taken to develop cooperation cleaning rivers flowing into the sea and at communal, between enterprises in the region, through organising industrial and harbour. waste management. The number events such as conferences and fairs and publishing infor­ of nature reserves will also be increased, to encourage mation on the region and its investment possibilities. ecological and agri-tourism. Consideration will also be given to modernising production techniques in line with environmental protection requirements. Measures will be taken to reduce the number of untreated waste dumps, produce recyclable materials Baltic Sea region - Multi-annual Indicative Programme for cross-border cooperation 17

Municipal infrastructure development Implementation Most municipal facilities are in a poor and deteriorating A joint programming and monitoring committee, state owing to lack of funds and poor original quality. composed of delegates from Estonia, Latvia, Lithuania, Water and energy provision, especially clean energy Poland, Denmark, Finland and Germany, will play the provision, are priorities. Improvements to urban trans­ principal role in assuring overall coordination between port and investment for urban renewal generally are also the four governments in the planning and implementa~ issues of concern. tion stages of the Programme. It will be the principal forum for the joint programming of cross-border activi­ Measures in the water sector will concentrate on improving ties under Phare, INTERREG II and European Union waste water treatment plants, building small storage reser­ Member State bilateral programmes. The committee voirs, monitoring water resources quantity and quality, and will undertake joint project selection in the context of activities aimed at reforestation to raise the water table. In the Programme and will also monitor and coordinate the the energy sector, measures will be taken to extend the gas implementation of these activities. piping system. Activities will also be directed at refurbish­ ing historical buildings and monuments to make towns and Mechanisms for implementing, monitoring and evaluat­ villages more attractive for tourism. ing the Programme will be

Human resources • for Poland, the Programme Management Unit at the Department for Trans-border Cooperation in the The region suffers from high unemployment, which has Council of Ministers suddenly emerged since the state farm system ended. A key • for Estonia, Latvia and Lithuania, the Central priority is to reorient the working population away from Financial Contracting Units, while responsibility for old working methods and attitudes into alternative forms of the overall coordination of the Programme will lie employment, with emphasis on the service sector. with their respective national aid coordination units. Measures will be taken to encourage the transfer of the The Programme will specify projects annually in the Scandinavian experience in setting up special care facili­ framework of a financing proposal and financing memo­ ties to educate and train mentally disabled children and randa. The projects will derive from measures and prior­ youngsters. Measures will also be directed at creating ities specified in the MIP, taking account of the develop­ alternative employment for the potential workforce and ment of the MIP and the absorption capacity of the at stemming the wave of emigration from the region. different sectors. Cross-border cultural cooperation and training activities will be a priority. Studies, management and implementation Spatial planning documents will be developed with the other Baltic Sea countries to establish closer and perma­ nent contacts between the relevant authorities. Support will also be provided for small projects at the level of municipalities, to cover conferences and semi­ nars with Baltic region partners, common training and common publications about the region. Support for proper management and implementation of the Programme will be necessary to ensure that the priorities and measures agreed are transformed into effective actions.

(3) 18 Hungary

Multi-annual Indicative • develop human resources and improve the quality of management, both in the public administration and Programme enterprise sectors. Duration 1995-1999 The Phare Multi-annual Indicative Programme for Hungary is geared to helping the Government tackle these Amount ECU 425 million issues and to build up private sector capabilities. Support (indicative amount only) will be directed at the following areas in particular: Background • European integration, including approximation of laws and public administration reform Hungary concluded a Europe Agreement with the European Union in December 1991 and, in April 1994, • education and training, in particular establishing a formally submitted its application for full membership human resources development fund of the European Union. • public finance and social sector reform In the pre-accession context, Phare support is a tool to • economic development, with emphasis on agriculture, • facilitate Hungary's participation in the process of privatisation and restructuring, SME development, European integration, notably as regards the accom­ regional development, trade and investment promo­ plishment of necessary political, economic and legal tion, tourism development and the labour market reforms • infrastructure development, with concentration on • facilitate the sustainable growth of the Hungarian road and rail transport, communications, transit, economy. water management, energy and the environment Hungary has established a system of democratic politi­ • participation in European Union programmes cal institutions which enjoy general support both at the • flexible non-sector-specific technical support. central and local levels from the country's main social and political forces. European integration The main features of a well-functioning market The Government's commitment to implement the economy have also been established although a variety Europe Agreement successfully has meant that particu­ of problems are still impairing sustainable growth. The lar attention has been paid to harmonising legislation in main areas of concern relate to budgetary and external key areas with that of the European Union. The objec­ deficits, the social security and welfare systems and the tive of Phare support for the approximation process is to privatisation and restructuring of large state enterprises, introduce progressively the 'acquis communautaire', particularly those engaged in manufacturing and making sure that the economy is ready to sustain the banking. A package of stabilisation measures has been effects of integration within the European Union and adopted to address these problems and a comprehensive that the structures inside and outside the public adminis­ medium-term programme for social and economic tration are ready to manage this through adequate train­ modernisation has been proposed, which treats prepara­ ing. The political aspects of the integration process also tion for European integration and modernisation need to be tackled, especially those related to public measures as part of a single process. opinion and information on the European Union. Major efforts are being made to assimilate the 'acquis Support will be provided in the form of technical exper­ communautaire' and to approximate legislation, tise to help introduce and implement laws and related although this enormous exercise will take time. structures in all fields, in particular as regards internal New orientations market legislation, with emphasis on • sector and legal analysis, drafting of legislation and The main issues which must be overcome before translations Hungary can fully integrate with the European Union include the need to • assessing and establishing the necessary institutional structures for effective implementation and operation • restructure the economy so that it can function effec­ of the new legislation tively within, and withstand the competitive forces of, the European Union's internal market Hungary- Multi-annual Indicative Programme 19

• providing technical supporting infrastructure and a pro-active policy in the public and private sectors alike monitoring of the process to provide preventive training for certain groups. • training sessions and study visits for public officials, Concentration will be on technical and financial support decision makers, judges and other selected target to establish a human resources development fund to groups • stimulate the development of local training provision • public relations actions targeted at different segments outside the public system of society, together with documentation and informa­ • develop links with the European Training Foundation tion support. to foster cooperation between European Union and Public administration Hungarian training institutions and to exchange voca­ The transformation of the economy necessitates changes tional training programmes. to the nature of the tasks which the public administration Tempus will be progressively phased out by 1998 as must reform. The Europe Agreement requires numerous Hungary becomes eligible for participation in Socrates administrative operations and procedures to be adapted (higher education), Leonardo (vocational education) and to prepare for accession to the European Union. In addi­ Youth for Europe. More generally, Phare will redirect tion, apart from the changes necessitated by budgetary resources in favour of vocational training and education, reform, the Government has embarked on a major ratio­ in order to improve higher education and adapt the labour nalisation of state operations, involving the elimination force to the new economic structure of the country. and replacement of regulations which are no longer appropriate in the context of economic transformation, Public finance reform and a redistribution of functions between central, regional and local government. These measures raise the Hungary's public finance situation is characterised by a issue of mobility within services, human resources large public sector, a considerable budget deficit and a management and retraining. high level of public debt. Only limited progress has been made in introducing budgetary and social security Phare support will take account of these problems by reform while domestic public finance and external • introducing a flexible facility to provide technical account imbalances interrelate and hinder sustainable expertise, training and access to European Union growth. Amendments to tax legislation and measures to Member State training institutions for civil servants strengthen the administration's tax collection capacity are needed, as well as actions to increase revenue collec­ • continuing pilot projects aimed at upgrading, tion at the level of local authorities. strengthening and decentralising the administrative organisation, together with new projects for central Phare will continue to provide support to the Ministry of and local government and sector-specific organisa­ Finance for the ongoing reform efforts and will also tions provide support for • continuing the provision of computer and information • institutional technical expertise and equipment for the technology expertise and supplies to central and local working groups and the public finance reform secretariat government • renewed procurement practices, through support for the • contributing to the establishment of a training insti­ new central procurement unit, principally in the area of tute for the civil service procurement procedures and information to potential suppliers • providing technical expertise, training and equipment for establishing efficiency units • improved budgetary planning, including a medium­ term framework, arbitration models between compet­ • establishing a national list of experts. ing demands, simulation models for testing alterna­ tive policies and a thorough review of budgetary Education and training programmes Phare will continue to support human resources devel­ • improved preparation of the public investment opment, given its crucial role in the economic transfor­ budget, including the design of a public investment mation process. Economic transition and enterprise programme and its integration with the annual budget restructuring have led to an increase in unemployment and a growing share of the unemployed are unqualified • establishment of a single national treasury. for re-entry into other jobs. There is a growing need for 20 Hungary - Multi-annual Indicative Programme

Support will be provided for tax refonn through Economic development • training, in particular on audit and control issues Agriculture Agriculture accounted for 12 per cent of GDP and 14 • legal and regulatory support per cent of total employment in 1993, but the sector has • information for tax payers been facing an unfavourable macro-economic situation and a lack of availability of rural credit. Public finance • expertise for the municipalities, for example on asset for the sector now represents only 5 per cent of total valuation and organisation of tax collection. public expenditure. The Government is placing empha­ Phare will address the severe inadequacies of the social sis on the role of private sector institutions in the sector sectors by contributing to the wider objective of social but there is still some division at Ministry level over equity and by improving the social insurance and social privatisation and means of financing needs. welfare administrations. Phare will aim to improve the financing of the sector In the field of social insurance, concentration will be on and the availability of rural credit facilities, as well as completing the land registration process. Concentration • establishing a comprehensive inter-institutional will also be on continued restructuring and privatisation, communication and coordination structure between in particular on developing SMEs in upstream and all national administrations, including non-govern­ downstream activities and strengthening sectoral mental actors involved in financing and delivering private-based organisations and institutions. Increasing social insurance attention, however, will be paid to preparing the sector • transfonning the social insurance systems by for future integration in the European Union, and there­ strengthening the technical, administrative and social fore to technical harmonisation of rules and strengthen­ policies of the pension, health and unemployment ing of the Ministry's capacity to fonnulate and imple­ funds ment harmonised agricultural policies and to apply European Union nonns and standards. • developing supplementary and private pension funds and establishing supervisory and monitoring capaci­ Technical expertise will concentrate on ties and responsibilities at government level to clarify • harmonisation of food legislation and standards the interface between social and private insurance provision • policy studies on European Union policy, rural credit and land mortgage institutions • developing institutional capacities to coordinate social insurance schemes with European Union coun­ • institutional strengthening, particularly in respect of terpart institutions. land registration and market infonnation. In the field of social welfare refonn, Phare will provide Financial support will also be provided for further support for • the Rural Credit Guarantee Fund • decentralising the national welfare delivery mecha­ • the Land Mortgage Institution nism, to increase administrative efficiency and reduce public administration and social sector expenditure • equipment and software. • targeting social benefits more efficiently towards vulner­ Privatisation and restructuring able and impoverished groups, with emphasis on means New privatisation legislation has been adopted to accel­ testing, streamlining benefits, and measures aimed at erate and complete the privatisation process by 1998. reinserting the unemployed into the labour market The list of companies which will remain in state owner­ ship over the longer tenn has been reduced but the • strengthening the role of non-governmental and Government is still faced with a considerable restructur­ private institutions in social welfare delivery and ing task, in particular given that the remaining state developing national policy in this context. enterprises cannot be readily privatised and that privati­ In the health sector, Phare will continue to provide sation revenue cannot be sustained at past levels. support aimed at improving management, cost effi­ ciency and the mobilisation of resources. Hungary - Multi-annual Indicative Programme 21

Phare will provide technical expertise for the privatisa­ • supporting the micro-credit and loan schemes and tion process and enterprise restructuring through appro­ possibly the subordinated loan scheme, depending on priate intermediary institutions. Emphasis will be on its performance, and the new interest rebate scheme preparation for privatisation through • launching new initiatives in the field of supporting • environmental audits, valuations and legal advice by services for SMEs, such as technological transfer and way of framework contracts mutual guarantee schemes. • hands-on restructuring support to carefully selected Regional development state enterprises which can be made 'privatisable' A vehicle for an integrated action programme for regions affected by steel industry restructuring is • preparation of HYFERP projects. needed, together with support for projects geared to HYFERP, established with Phare support, is a decision­ activities such as physical infrastructure and rehabilita­ making and filtering mechanism involving the state owner tion which can be co-funded with regional/government representatives. It provides grant and loan financing for resources. various activities as part of an overall restructuring and In addition, a nation-wide regional development system investment plan; activities eligible for funding include in line with European Union concepts and procedures is energy efficiency measures, environmental improvements, needed, with support from the Pilot Action Fund for human resource development, quality assurance and R&D. high priority projects in selected regions. Phare will continue to support HYFERP by Phare support for an integrated action programme in • replenishing HYFERP's resources for the period regions undergoing restructuring of the steel industry 1996-1998 for investment purposes will concentrate on • providing some technical expertise for the prepara- • technical expertise to establish and support the insti­ tion of HYFERP projects. tutional mechanism for strategy development, project SME development identification and implementation Phare has been co-funding the Hungarian Foundation • co-funding of project investment support for Enterprise Promotion through technical support to the national support services (EICC, National BIC and • extension to other regions of the experience gained in entrepreneurs associations) and the Local Enterprise the two existing pilot regions in the area of integrated Agencies, as well as through financial support for SMEs regional development. through micro-credit and loan schemes. A subordinated • Phare will support the development of the new loan scheme has been established for early start funding national regional development system through (a quasi-equity scheme) and an interest rebate scheme is due to be launched shortly. • technical expertise to establish integrated regional development, involving an integrated response from These support programmes remain a priority, notably government, municipalities, the private sector and with regard to funding schemes, since they help to Phare, focusing on three pilot regions in the east and create the conditions under which the SME sector can south of the country grow to become the backbone of the Hungarian economy. The domestic banking sector still needs • co-funding for projects in these regions. support with credit guarantees and medium-term funds Trade and investment promotion to leverage loan funding from the banks. The schemes The Investment and Trade Development Agency was used by the Foundation involve the banking system and established in 1993, with Phare support, to promote are therefore valuable in terms of increasing the aware­ foreign direct investment and stimulate export growth. ness and training of banking staff and in promoting The Agency's activities need strengthening, in close funding for SMEs. cooperation with all relevant government and private Phare will concentrate its activities on organisations, including the Foundation for Enterprise Promotion and other ministries. • supporting the sustainability of the local enterprise agency network while gradually reducing support and encouraging greater responsibility for funding by local and national sources 22 Hungary - Multi-annual Indicative Programme

Phare will support activities geared to this objective • increased cooperation with European Union with concentration on programmes and networks. • organising sectorally-oriented investment promotion Infrastructure workshops and seminars The Government has embarked on a series of measures • conducting targeted searches for potential investors, to assist the transformation and reform of the transport including addressing selected western companies to and communications sectors, whose current inadequa­ propose investment opportunities cies are impeding both domestic and foreign investment • organising export promotion workshops, seminars and contributing to uneven economic development in and other activities different regions of the country. Moreover, the develop­ ment of appropriate trans-European networks is seen as • conducting trade missions for specific sectors to a prerequisite for Hungary's integration with the selected markets European Union and enhanced cooperation with her • organising inward buyer programmes neighbours. • carrying out market research Transport and communications Phare will provide technical expertise to the transport • staff development, including training and communications sectors for • public relations activities. • approximating and harmonising legislation and standards Tourism development • upgrading investment planning and implementation The tourism sector currently represents 9 per cent of GDP capabilities. and income from the sector has doubled in the last five years. However, a national tourism development policy Phare will also provide co-financing support in accor­ needs to be devised while institutions operating in the dance with the Copenhagen co-financing scheme for a sector at central and regional level need strengthening. limited number of infrastructure projects. Projects under consideration include Phare will support activities designed to • road transport: M2 expressway (phase 3 - Budapest • develop a coherent tourism policy at national and Ring), M3 motorway (Corridor V), M7 motorway regional levels and the Budapest Beltway • develop tourism concepts and products • railways: rehabilitation of the Budapest-Kelebia line • prepare related marketing and promotional activities. (Corridor IV), development of the Hungarian- Slovenian line and multi-modal transport " Labour market A reform commission on human resources development • posts and telecommunications: development of the and information systems has been established, with institutional and regulatory framework, including Phare support, to undertake strategic policy reviews and pricing policy, in preparation for European integra­ provide a comprehensive framework for making system­ tion atic policy adjustments to respond to labour market • transit: border crossing modernisation at Redics, development and training needs. Gyula, Zahony, Rajka and Beregsurany, and provi­ Phare will provide support for sion of hazardous substance detection equipment and customs laboratory equipment • developing a comprehensive labour market information system and labour force related information system • water management: improvements to the sewage systems of the larger cities, such as Budapest, and the • developing training actions to improve the employ­ protection of major water resources, such as Lake ment structure Balaton. • labour market analysis and research policy development • pilot projects outside mainstream employment policy, whose results can be integrated into existing and new active employment measures to supplement further local initiatives Hungary - Multi-annual Indicative Programme 23

Energy new national environmental and nature concept has been The energy sector is characterised by an inefficient allo­ developed which will form the basis for the national cation of scarce capital resources, with undue focus on environmental programme. supply compared to distribution, inadequate energy Phare will provide technical expertise with a view to tariffs, high energy intensity, heavy dependence on preparing the sector prior to Hungary's integration imported energy and little privatisation. within the European Union. Concentration will be on Phare support will be geared to transforming the sector • approximating and harmonising legislation and envi­ by helping to implement the Government's energy ronmental protection norms in line with those of the policy and strengthening the integration of the gas and European Union and for adaptation to the require­ electricity networks into trans-European networks. ments of various international conventions Technical expertise and training will concentrate on • institutional development and strengthening, with • implementing the Government's action plan for emphasis on environmental management capabilities, energy conservation and its efficiency promotion monitoring and enforcement capabilities and environ­ programme mental education and awareness. • developing new storage facilities in the gas, crude oil Investment support will be provided and petroleum sectors, and establishing an appropri­ • to municipalities, primarily for sewage and waste ate computer control system with measuring instru­ water treatment, local waste management and the ments to monitor the technical state of storage facili­ development of district heating systems ties and product quality and quantity (some equip­ ment provision may be funded) • to private companies, primarily for environmental investments associated with restructuring and the • supporting the privatisation process in the sector. development of cleaner and less polluting production Financial support will be provided to private entrepre­ technologies. neurs and households for energy saving and energy effi­ Phare will also provide co-financing and related techni­ ciency projects through the vehicle of the new Energy cal expertise with the international financing institutions Saving Fund. with a view to facilitating investments in the sector. Phare may also provide co-financing support in accor­ Projects being considered for selection include activities dance with the Copenhagen co-financing scheme for the connected with development of east-west electricity and gas networks • the protection of Lake Balaton with priority on • municipal services, especially as regards water • developing the Gyora-Baumgarten natural gas (including the 23 cities programme) pipeline and building additional storage facilities • facilities focusing on industry and clean technologies. • connecting the Hungarian power system to UCPTE, especially as regards fulfilling the criteria for Flexible non-sector-specific technical secondary reserve capacity. support Environment Phare will establish a flexible non-sector-specific know­ Hungary has one of the most advanced systems of envi­ how facility targeted at ronmental management in central Europe and its envi­ ronmental problems are not on the same scale as those • projects not covered by sector programmes of some other countries in the region. The most critical • unforeseen needs related to the socio-economic trans­ environmental problems facing the country relate to formation process where there is no alternative water quality owing to uncontrolled run-off which has source of financing. led to surface and sub-surface water contamination, exacerbated by the lack of waste water treatment facili­ Projects may not exceed ECU 100,000 and will be ties. There are also increasing problems with air quality, selected under the responsibility of the two chairmen of owing to high sulphur power production, industry, the Inter-ministerial Committee for Assistance households and transport, with waste water and with the Coordination. inadequate management of solid and hazardous waste. New environmental legislation has been proposed and a 24 Hungary - Multi-annual Indicative Programme

Participation in European Union programmes Following the European Council's decisions at the Copenhagen and Essen summits, Hungary will be able to participate in European Union programmes from the beginning of 1996, subject to the ratification of the appropriate additional protocol to the Europe Agreement. Hungary will then be able to participate in programmes in areas such as human resources develop­ ment, culture, consumer protection, health, environment, energy, transport and the fight against drugs. Provision is therefore made for Phare to contribute towards the costs of participation in those programmes which the Government considers as priorities. Indicative allocations ECU million European integration 28 Education and training 45 Public finance reform 25 Economic development 142 Infrastructure 150 Participation in European Union programmes 30 Flexible non-sector-specific technical support 5 25 Hungary

Multi-annual Indicative The Phare cross-border programme aims to promote Programme for cross-border cooperation between border regions in the European Union and countries of central Europe to help them cooperation with Austria overcome specific development problems which may arise from their specific location within their national Duration 1995-1999 economies. It also promotes the development of networks on either side of the border and the develop­ Amount ECU 7 million per annum ment of links between these and European Union (indicative amount only) networks. Together with these priorities, the MIP for The Multi-annual Indicative Programme (MIP) has been Hungary and Austria aims to prepared under the Phare cross-border cooperation • develop cross-border cooperation by intensifying programme for the Hungarian-Austrian border regions. relations between the border regions, aimed at over­ The time frame for completion of projects within the coming specific development problems in these MIP is five years and coherence is therefore ensured regions in the interests of the population in the adja­ within the long-term development of the region. cent areas Although the Hungarian counties close to the Austrian • jointly develop and protect the potential of the border border are among the most dynamically developing region, for example as regards tourism and industrial regions of the country, the situation in certain subre­ production gions is variable and, overall, the development of these counties is well behind that of the neighbouring • establish and strengthen cross-border cooperation Austrian border region of Burgenland. activities and networks (for example between local/regional authorities, employment services and The Hungarian side of the border suffers from uneven companies) on both sides of the border and establish economic development between urban and rural areas, links with the wider networks of the European Union and a lack of modem business and entrepreneurial skills necessary to manage small and medium-sized enter­ • improve cross-border infrastructure (mainly transport prises, exacerbated by the unfavourable demography of infrastructure) in quantity and quality, and reduce the area with its relatively high percentage of elderly strains caused by various elements, such as noise and people. In addition, infrastructure generally is inade­ pollution from traffic quate and is impeding development. The capacity and • develop the Hungarian border region to raise it to the quality of transport infrastructure remains below development level of the Austrian side of the border, western European standards, while inadequate waste and in particular by aiming to overcome problems stem­ sewage treatment systems are posing environmental ming from the lack of innovative business activities, problems. The information and communications sector relatively high unemployment rates and gaps in the is underdeveloped. The scarce financial resources of qualifications of the labour force local governments render essential modernisation diffi­ cult. Public utilities are also underresourced and there • strengthen the existing good relations between the are gaps in water and energy supply systems. In addi­ two countries through closer cooperation and tion, the border region suffers from a lack of develop­ networking in the economic, social and cultural fields ment strategies based on an adequate regional approach, • extend bilateral cooperation to trilateral cooperation while there is a lack of cooperation and coordination in with Slovenia and Slovakia respectively economic development in the region. • support the process of integrating Hungary into the On the other hand, the Hungarian border region is char­ European Union. acterised by a strong work ethic and a well-qualified labour force. New and dynamic enterprises are begin­ ning to act as a pull factor and a model for further investment and there is a traditional, developing and flexible research and innovation potential. The tourism sector is also ripe for development. Existing cross­ border relations with the neighbouring area of Austria are good and a wide number of cooperation activities have already been established. 26 Hungary - Multi-annual Indicative Programme for cross-border cooperation with Austria

The following priorities and indicative budgetary split • the likely quantifiable impact of a project in relation have been agreed: to the development of opportunities and the overcom­ ing of problems within the border region • regional planning and development 3% • the internal rate of return or cost-benefit relation • infrastructure 31% • the involvement of regional and local authorities • economic development and cooperation 44% • the readiness for implementation and the appropriate • human resources 9% level of preparation in relation to the time-scale foreseen • environment and nature protection 10% • the cross-border impact of a project, including any • small projects fund 3% relationship to projects being implemented on the Austrian side of the border and complementarity with The regions which will be eligible for funding are the INTERREG counties/komitate of • linkages between a project and other actions under • Gyor-Moson-Sopron way or foreseen within the national Phare programme • Vas or through other national or international agencies • Zala. • the environmental impact of a project. Phare has already financed measures to stimulate cross­ Regional planning and development border cooperation between the Member States of the European Union and the central European countries. Cooperation between Austria and Hungary in the field Commission Regulation N° 1628/94, on cross-border of spatial planning has quite a long tradition, in particu­ cooperation between the Member States and the central lar since the Austrian-Hungarian Commission for European countries in the framework of the Phare Spatial Planning was founded in 1985. Cooperation Programme, provides the rules for financing actions of a projects have also been developed and implemented structural nature in border regions of central European within the framework of ZOR, the Austrian aid countries sharing a common border with Member States, programme for the former COMECON countries. in harmony with the European Union structural policies The preparatory work conducted so far between the two and with INTERREG II in particular. countries on regional planing and labour force qualifica­ Following the entry of Austria into the European Union, tions facilitates the implementation of the Phare cross­ the Phare cross-border cooperation programme includes border programme, reducing the need for large alloca­ a specific budget line designated for promoting cross­ tions for studies, basic planning and fundamental train­ border cooperation between regions of Hungary adjoin­ ing. However, some further studies will still be neces­ ing Austria. The MIP for Hungary complements the sary, and institutional and technical support will be INTERREG II operational programme for the Austrian needed to implement and administer cooperation regions of Burgenland and Vienna, sharing common projects. This will be provided centrally to the Project priorities and common objectives within those priorities. Management Unit and to the Unit's sub-office within the designated region. The services needed cover the A number of criteria have been influential in project whole range of project-related skills, from project selection, in particular administration to implementation, monitoring and evalu­ • the conformity of major infrastructure projects with ation. Capacity-building is also needed within the insti­ standard Phare regulations concerning the level of tutions concerned in the form of training and support in matching co-finance decision-making. • the coherence of a project in relation to the overall The Multi-annual Indicative Programme will aim at programme and its relationship to the programme • preparing a joint strategy, defining interregional objectives development programmes and establishing an organi­ • the level of integration between a project and other sational and technical framework to facilitate the related actions within the priority and measure coordinated development of border regions concerned • developing the organisational, technical and human resource conditions for effective and efficient Hungary - Multi-annual Indicative Programme for cross-border cooperation with Austria 27

programme implementation, for example, building implementation, monitoring and evaluation, including and strengthening cross-border institutions and institution-building measures, training activities and networks in the fields of consulting and training support in decision-making • developing and implementing cross-border manage­ • the operation of the joint programme and monitoring ment information and monitoring systems. system, the administrative costs of the Joint Programming and Monitoring Committee responsible Activities will concentrate on for coordinating the cross-border programme with • cross-border regional studies and programmes, such actions under INTERREG, the costs of the as comprehensive regional and industrial develop­ Committee's secretariats and those of the Phare cross­ ment concepts for border regions, reviewing the border cooperation Programme Management Unit regional position in a developing environment; these • the development of an integrated monitoring system, will be future-oriented, taking account of changing meeting the specific needs of the cross-border conditions programme and related INTERREG programmes. • specific implementation-oriented studies, for example in relation to special areas of attention, such as Infrastructure concepts for developing nature parks or particular While roads in the Hungarian border region are not in a sectors, in particular tourism bad condition, their capacity and quality is well below • setting up a fund for programme management and western European standards. Few by-passes exist and organisational strengthening. while a motorway is being built between Vienna and Budapest, all other road connections between the two Projects under consideration for funding include countries are ordinary roads. • Vienna-Gyor-(Bratislava) regional development The most important rail link is the one between Vienna concept (brackets denote third-country involvement) and Budapest but the average time for the 260 km. • Orseg-Raab-(Garicko) comprehensive regional devel­ journey is slow compared to western European stan­ opment concept (brackets denote third-country dards. Few other rail border crossings exist. involvement) The border region also suffers from other infrastructural • a coordinated thermal and health tourism develop­ problems. There are no regional airports in the area and ment concept and common marketing/promotion the Danube River ports lack modern facilities. programme, including focus on the coordinated Information and telecommunication networks and management of water resources energy supply systems are inadequate. • joint development and marketing studies for particu- The Hungarian Government is seeking priority for rail lar border regions and water transport projects, in the interests of the envi­ ronment. Therefore, it is eager to reconstruct rail links and • coordinated concepts for alternative energy exploitation modernise harbour facilities. However, the Government • coordinated traffic concepts for border regions recognises that the road infrastructure, in particular border crossings, will need improving to raise standards. • a complex development programme for the border crossing innovation axis The Multi-annual Indicative Programme will aim at • regional development concepts for border regions • widening the transport infrastructure, including border-crossing facilities, to help develop the border • sectoral development concepts for tourism, environ- region ment and water management. • closing gaps in the provision of public utilities and A fund for programme management and organisational energy supplies and increasing access to these strengthening will be established to provide the institu­ tional and technical support necessary for implementing • establishing environmentally-friendly energy supply and administering projects. This is vital to ensure the systems efficiency and appropriateness of the operation of the • developing cross-border communication networks entire cross-border programme. The fund will finance • providing serviced sites for major economic coopera­ • the services needed to cover the whole r.ange of tion projects, such as cross-border business parks project-related skills, from project administration to 28 Hungary - Multi-annual Indicative Programme for cross-border cooperation with Austria

• promoting know-how transfer and developing • developing R&D activities, know-how and technol­ improved planning strategies. ogy transfer, innovation activities, information and communications systems and networks, for example Projects under consideration for funding include by setting up cross-border technology parks and • developing Gyor and Sarrnellek regional airports promoting cross-border cooperation between SMEs with a focus on technology transfer and innovation • extending river ports (Gyor-Gonyil) activities • modernising roads leading to border-crossing points • implementing joint marketing activities, including a and constructing new by-passes (for example at joint approach to exploiting foreign markets Sopron, Bozsok and Bucsu) • developing a cooperative, coordinated approach to • improving and building main roads and railway tourism development on both sides of the border, in connections particular by improving the quality of the tourism • extending and equipping cycling routes, for example product in the Hungarian border areas, for example around Lake Ferto and Hansag S-100 borderside by providing better accommodation • developing road, railroad, river, pedestrian/cyclist • preparing regional cross-border tourism development border-crossing points, for example at Strem­ programmes and marketing strategies, focusing on Moschendorf-Pinkamindszent, Lutzmannsburg-Zsira foreign markets. and Orseg-Raab Projects under consideration for funding include • infrastructure projects related to industrial parks and • building business parks and innovation centres and estab­ tourism centres, to assist the development of indus­ lishing cross-border partnerships, for example involving trial and entrepreneurial premises Vienna-Gyor, Mosonmagyaruvar-Nickelsdorf-Parndorf, • cooperation on alternative energy through bio-mass Sopron-Deutschkreutz-Siegendorf-Eisenstadt and utilisation projects for regions such as Kormend, Szentgotthard-Heiligenkreutz Szombathely and Agfalva • developing technology transfer projects, including • cooperation on energy, waste and environmental setting up incubator centres technologies • developing information systems and networks • cooperation between regional media. • developing location marketing and cooperation Economic development and cooperation centres, for example involving Vienna-Gyor, East­ West Centre and Window in Vienna Both countries are interested in rebuilding the cross­ • organising fairs and workshops. border economic links which existed before the Cold War and a number of challenging projects have already been Tourism projects under consideration for funding identified for development, conceived in the light of include prevailing regional and sectoral conditions. Initiatives • developing a joint tourism marketing strategy, for include establishing cross-border business parks, develop­ example· using the Liszt-Haydn image as a feature ing environmentally-friendly industrial activities in high and promoting the Sopron-Eisenstadt-Ferto region natural amenity zones, developing cross-border tourism products and packages, and organising joint fairs, confer­ • cooperation on developing national and nature parks, ences and workshops to promote cooperation. in the Ferto Lake, Orseg-Raab-Goricko and Irottko­ Koszeg regions In the light of this existing broad framework, the Multi­ annual Indicative Programme will aim at • designing a coordinated development programme for thermal and health tourism, for example developing • improving the competitive performance of firms on Oriszentpeter as a thermal centre both sides of the border through cross-border cooper­ ation, in particular encouraging economic restructur­ • improving conditions and joint marketing for cycling ing in the Hungarian border areas and promoting and trekking tourism. SME development, for example by setting up cross­ border industrial estates and business incubation centres Hungary - Multi-annual Indicative Programme for cross-border cooperation with Austria 29

Human resources such as waste and sewage, before it is discharged into the environment. In addition, nature in the endangered The success of cross-border cooperation initiatives will zones must be protected, for example through develop­ depend on the capability of the individuals concerned, ing nature parks. primarily their ability to communicate and to understand each other's cultures, problems, economic conditions The Multi-annual Indicative Programme will aim at and administration. This necessitates an integrated • developing an environment-friendly infrastructure approach to education and training, possibly involving through investments in the areas of energy generation the development of common standards, certificates and and consumption, refuse collection and treatment, qualifications. Comprehensive cooperation in the design sewage treatment and the introduction of new and implementation of professional training is also methods and technologies needed to reduce barriers to cross-border labour mobil­ ity, in particular in the fields of SME development, • providing research on environmental issues and exper­ public administration and tourism. tise to help execute particular projects, for example those designed to support joint environmental enter­ The Multi-annual Indicative Programme will aim at prises • strengthening cultural integration in the border areas, • developing natural amenities and a coordinated with emphasis on foreign language courses and the system for active nature protection and setting up history and culture of these areas cross-border nature preservation zones. • cooperation in education at all levels, in particular as Projects under consideration for funding include regards language training, including the development of joint training sessions and teacher/student • developing bio-mass heating plants, for example at exchanges, as well as know-how transfer on labour Gussing-Kormend market opportunities and the design and management • building regional refuse incinerators for toxic waste, of social and employment initiatives for example at Zalaegerszeg • cooperation on basic and further training, with • building joint cross-border sewage treatment plants emphasis on the needs of SMEs, public administra­ tion and the tourism sector. • setting up joint ventures for utilising recyclable energy resources Projects under consideration for funding include • developing two new cross-border nature parks for the • experience transfer and cross-border education Koszeg-Geschriebenstein and Orseg-Raab-Goricko schemes regions. • student/teacher exchanges Small projects fund • cooperation between educational establishments and the development of joint training programmes A fund will be set up to finance small projects, up to ECU 10,000, which aim to promote the following types • know-how transfer on issues such as labour market of cross-border activities: measures, social policy and management • meetings and conferences • school partnerships and exchange programmes • training sessions • foreign language teaching • study tours • coordinated and joint research, linking existing data­ bases and building networks. • publications Environment and nature protection • marketing activities • studies. The Austrian-Hungarian border region is characterised by a proliferation of fragile landscapes and ecosystems which could be endangered by the neglect of environ­ mental considerations. Steps need to be taken to reduce pollution at the point of origin or at least to treat output, 30 Hungary - Multi-annual Indicative Programme for cross-border cooperation with Austria

Implementation A joint programming and monitoring committee, composed of the appropriate authorities from Hungary and Austria, will play the principal role in assuring overall coordination between the two Governments in the planning and implementation stages of the Programme. It will be the principal forum for the joint programming of cross-border activities under Phare and INTERREG II. The committee will undertake joint project selection in the context of the Programme and will also monitor and coordinate the implementation of these activities. A central Programme Management Unit (PMU) will be established at the Ministry of Environment and Regional Policy to oversee all actions undertaken under the Programme and will have responsibility for the overall management of the Programme. To encourage decen­ tralisation of decision-making and to promote the trans­ fer of project management skills, the Programme Management Unit will establish a sub-office within the designated region. The Ministry will retain overall coor­ dination and financial responsibility for the Programme. The Programme will specify projects annually in the framework of a financing proposal and financing memo­ randa. The projects will derive from measures and prior­ ities specified in the MIP, taking account of the develop­ ment of the MIP and the absorption capacity of the different sectors. 31 Slovakia

Multi-annual Indicative Phare has funded programmes in the financial sector for Programme the Ministry of Finance, the central bank and the banking sector generally, on banking supervision, the central bank accounting system, the establishment of a banking Duration 1995-1999 association, training and the introduction of sound prac­ Amount ECU 200-220 million tices in the field of accountancy, auditing and insurance. (indicative amount only) It is also helping the Ministry of Finance to implement a more coherent tax reform and accounting reform Background programme. The 1993-1994 programme is focusing on the financial restructuring of a selected number of banks, Slovakia has made considerable progress in its transfor­ continued support for the bank supervision function and mation process towards a socially-oriented market implementation of a major distance learning programme. economy. The Government is fully committed to a social and economic reform agenda and integration of The agricultural support programme has now taken off, the Republic into western political, economic and secu­ with the placement of a high-level policy advisor to the rity structures, in particular full membership of the Ministry of Agriculture and the launch of programmes European Union as a priority of foreign policy. This to restructure the agro-processing sector and develop commitment includes the eventual adaptation of instru­ primary production. Phare is also helping to modernise ments of monetary, fiscal and customs policy, active the land information and registration system. foreign trade liberalisation, the creation of a convertible In the social sector, Phare has supported labour market currency and gradual preparation for monetary union reform and has helped to create a pro-active labour within the European Union. market intervention fund. The social protection system Past Phare support for modernising the structures of has also benefited from Phare support for improving the state and society have fallen primarily under the general social support and insurance services. Since 1994, know-how facility and have included support for support has been concentrated on funds policy coordina­ reform, creation of a training programme and training tion, management support to insurance agencies, devel­ infrastructure for public administration, training of local opment of a centralised client-based data system for all government staff and elected officials, upgrading of social sector institutions and training for benefit officers standards and statistical services, partial computerisation and social workers. Phare has also contributed to of customs and the legislative implications of the improving health care management and information and Europe Agreement. The Civic Society Development primary health care skills. Fund has also benefited from Phare support. Modernising vocational schools and reviewing adult Phare restructuring and privatisation activities have training and education have also been a priority. A human concentrated on the industrial restructuring of large and resources development fund has been created although medium-sized enterprises, preparatory work in the form the Tempus programme has so far been the most substan­ of sector studies and private sector development. Four tial Phare contribution to human resources development. financial schemes have been set up for the SME sector, A strategic review of vocational training has been consisting of a small loan guarantee scheme, two loan supported with a follow-up programme to implement schemes and a seed capital fund. Phare has also vocational education reform. The renewal of the educa­ supported the establishment of the national SME tional system is also receiving attention and a national agency, regional advisory and information centres, busi­ strategy for science and technology has been prepared. ness innovation centres and a subcontracting exchange Studies are being implemented in the transport sector to agency. It has provided policy development advice, assess transport flows and needs for land transport modes, information, counselling and training to entrepreneurs in including combined transport and border crossings, as the SME sector. well as port development. Other priorities include strate­ The Foreign Investment Agency has developed with gic development and feasibility studies for civil aviation, support from Phare but its future funding will be more optimal location of international transport terminals, firmly secured through adequate government support. physical distribution management, public transport in Bratislava and Tatra and institutional support. The regional development programme has experienced delays but more prominence will be given to this area in future. 32 Slovakia - Multi-annual Indicative Programme

In the energy sector, Phare has supported a comprehen­ approximation of laws. However, relations on political sive energy study, demand projections and pricing/taxa­ dialogue, trade, commercial and economic activities will tion strategies, energy efficiency in selected industries, a also be covered, given the ultimate objective of full regional energy study and a study on diversification. A membership of the European Union. Therefore, priori­ revolving energy fund has also received Phare contribu­ ties and the approach to legislative approximation must tions. In the environmental sector, Phare has been take account of the fact that this is not only a legal exer­ involved in activities on ground water modelling, waste cise but an economic one too. Equally, the cost of handling, nuclear safety, impact assessment of environ­ compliance and the capacity to deal with the tasks must mental pollution, water quality monitoring and policy also be borne in mind. development. Phare will support the following activities. The activities proposed in line with the priorities agreed Approximation for the 1995-1999 period are in many instances a logical extension of ongoing Phare supported programmes. • legal advice, economic advice, programme manage­ ment support, including local experts, training in New orientations legal aspects, linguistics in foreign terminology, access to European Union legal bases, Phare support for the 1995-1999 period will focus on translation/interpretation, creation of a translation preparing Slovakia for accession to the European Union. centre, study visits, seminars, information campaigns, In preparing itself for membership, Slovakia will have to equipment, documentation, publications and adminis­ achieve the following objectives, to which Phare support trative support will be oriented: Public administration reform • adopt the 'acquis communautaire', namely approxi­ mate its laws, standards, rules and practices in line • implementation and policy advice, programme manage­ with those of the European Union and adopt ment support, training, study visits and seminars measures related to adherence to a number of • equipment for the central register, including regional common policies and local offices and for informatics harmonisation • consolidate and strengthen its economy so as to Judiciary enable it to withstand the competitive pressures of the European Union market. • technical expertise on legislation, reorganisation of the court system, information system, training and In line with these objectives, Phare support over the medium needs assessment, together with support for register term will focus on the following broad strategy areas: development, study visits, international cooperation, • adopting the 'acquis communautaire', including access to data bases, training, language training, modernising the structures of state and society and access to commercial registers and translation approximating laws, standards and regulations • support for computerisation of courts and the • private sector development and restructuring Ministry of Justice, the company register, the legal information system and the purchase of software • human resources development, including social sector reform Standards • infrastructure development. • technical support for implementation, advice and training, together with support for study tours, trans­ 'Acquis communautaire' /approximation of lation, publication of European norms and directives legislation and for international cooperation The Europe Agreement signed with the European • equipment for testing, metrology, the standards Union, obliges Slovakia to approximate its legislation education centre and networks with that of the European Union. This will be a demand­ Industrial property ing and long-term process, in which Slovakia will have to rely heavily on the European Union for support. An • funding of reprographic and administrative equipment adequate institutional framework will have to be estab­ lished and the main area of concentration will be the Slovakia - Multi-annual Indicative Programme 33

Customs Further support is needed for the accountancy and audit profession while the finance sector needs a management • technical support for implementation, software appli­ information system. Improvements are also required for cation and training the tax administration, state budget management, capital • funding of hardware and software for central, market restructuring, insurance reform and supervision. regional and district offices National bank operations must be strengthened and efforts must be made to help achieve long-term stability Statistics in the banking sector. • technical support for implementation, advice, training Continued support is needed for agricultural land identi­ and support for study visits, seminars, translation, fication and consolidation, as well as for modernising pilot surveys and data base access the cadastre/registration system. • funding of hardware and software for central and Phare support will be concentrated on the following regional offices, LAN and WAN (local and wide area activities. networks) components, reprographic equipment, data collection equipment and information centres for the Privatisation and restructuring public • technical expertise for privatisation of institutions, Parliament enterprise sales, sales of shares, enterprise restructur­ ing, training, project management, the creation of a • legal advice and advice on working methodologies, subcontracting exchange, facilitating production on study visits, seminars and links with European Union behalf of foreign enterprises and utilisation of avail­ parliaments/institutions able production capacity Civic society • investment support through the new post-privatisa­ • funding for non-governmental organisation tion fund, designed to bring know-how and capital to programmes and project finance medium-sized enterprises Other SME development • general programme/aid coordination, policy advice • technical expertise for policy and programme devel­ and implementation support to other programmes and opment, training, programme management, informa­ new programmes tion, counselling and support for the operations of national and regional agencies Private sector development and restructuring • international and national promotion activities, Support is needed for the restructuring and privatisation procurement bureaux, redeployment of industrial process of large and medium-sized enterprises within assets and spin-off studies key priority sectors, including efforts to promote inward • investment support to replenish the credit guarantee investment, joint ventures and exports. Restructuring of fund and to support loan, venture capital and micro­ the agricultural sector is also a priority. credit schemes Regional regeneration and development will be encour­ Technology transfer aged through measures to consolidate current regional pilot programmes and other structures (such as regional • technical support for the new centre for technology development agencies and SME centres) and to create a transfer and applied research, in particular on organi­ more comprehensive and effective regional development sation, management, contracting, training, policy, programme, including rural and community development. strategy and financing The national agency for the development of SMEs and • promoting international cooperation, preparing docu­ its network of regional advisory and information centres mentation and publications and funding small and business innovation centres, need further support in projects, equipment, database access, study tours, the areas of policy and programme development, infor­ conferences and seminars mation and counselling and credit and guarantee schemes. Appropriate technology transfer will also contribute to enhancing the competitiveness of the SME sector and industry generally. 34 Slovakia - Multi-annual Indicative Programme

Regional development land market, forestry /water management, food industry restructuring, primary sector restructuring, programme • policy development, institutional advice for the management support and the creation of a rural develop­ regional and national agency system, programme ment fund management and training • technical support for the cadastral database system • investment support for the regional and rural devel­ and the topographic information system, as well as opment fund for programme management and training Financial sector • funding of equipment and software • technical expertise for the central bank on banking supervision, cooperation with European Union Human resources development, including central banks and monetary institutions, legislative social sector reform development, training, advisory services, cooperative Measures are needed to establish an effective and effi­ banking, mortgage lending and bank reporting cient social protection and health system which is • project management advice for the central bank for compatible with macro-economic requirements and the banking sector programme and study visits, as socially acceptable. The labour market support and well as funding of software and hardware needed for social partnership system must also be further developed the bank reporting system and of training material and refined. • technical expertise for the commercial banks on The requirements of the economic and social process financial restructuring (including bad debts), postal necessitate the reorientation of human capital to ensure banking, mortgage lending, export banking, payments that training and skills are adequate to meet the new clearing systems and training, as well as funding of challenges. distance learning courses Phare will concentrate its activities on the following. • technical expertise for the Ministry of Finance on Labour market legislation, investment fraud, fraud prevention, budget/treasury reform, tax administration, customs • technical expertise on policy, legislation, the labour systems, capital market reform, export guarantees, market information system, training, industrial rela­ insurance, accounting and audit, institutional support, tions, project management, study tours, international project management and technical cooperation with cooperation, teaching aids and seminars other ministries and European Union finance sector • investment for equipment and for the pro-active institutions labour market fund • funding for hardware and software for the Ministry of Education and science Finance • technical expertise on legislation, curriculum devel­ Foreign investment and trade promotion opment, foreign language teaching methodologies, • technical support for foreign investment, as regards distance education, vocational training, creating tech­ programme management, sector studies, negotiation nology centres and an innovation fund support, pre-feasibility studies, public relations • auditing, project management, educational material, campaigns, promotional activities, exhibitions, publi­ local lawyers, translation, documentation, publica­ cations, study visits and training tions, study visits, conferences, language laboratory • technical support for developing an export information aids and international cooperation centre and for sectoral export development, export • funding of equipment for vocational training centres environmental studies, export marketing, training, and of a distance education fund programme management, equipment, information material, database access for information centres, Human resources development fund export promotion and the creation of an export devel­ opment fund • technical advice for monitoring, ad hoe programme support and project management Agriculture/land information and registration • investment support in the form of grants to training • technical support for food legislation, food standards, providers and soft loans to training institutes extension services, European Union policy, land reform, Slovakia - Multi-annual Indicative Programme 35

Social protection Phare will pursue the following priorities. • technical support on social protection policy and Transport legislation, programme management, financial model­ • support for feasibility studies, sector strategy reviews, ling, training, implementation, social care manage­ railways restructuring, privatisation, programme ment, social work education standards and support for management, training and study visits the cost of training programmes, translation, study tours and international cooperation activities • investment support for modernising railways and motorways • technical support for the social insurance sector on management and financial management, computeri­ Telecommunications sation of the central register and integration of the • support for strategy development, harmonisation of information system, system development, feasibility legislation, regulations, training and financial advice studies and project management, as well as support for study tours, training courses and seminars • investment support for equipment standardisation laboratories, new services, network servers, etc. • support for the computerisation of central and regional social protection offices Energy Health • technical support on legislation, policies, standards, studies, energy savings fund management, feasibility • technical expertise on sector financing reform, privati­ studies on renewable energy and nuclear confinement sation, primary health care, sector management, and cooling systems, decommissioning and waste programme management and administrative support management • support for the cost of study tours, training, documen­ • investment support for the replenishment of the tation, small equipment and local experts energy saving fund, for drills to assess geothermal Tempus/European Union programmes potential and for co-funding interconnecting networks • investment support in the form of grant funds for Tempus and supplementing contributions for partici­ Environment pation in European Union programmes, such as • technical support on the national environmental Leonardo, Socrates and Youth for Europe action plan, policy, economic instruments, institution­ Infrastructure development building and training • financial support for the planned revolving environ­ Slovakia is keen to integrate with trans-European mental investment fund networks and to develop its transport market generally. The technical conditions of the road network are insuffi­ Indicative allocations cient and there are notable deficiencies in maintenance and rehabilitation. Rail restructuring and commercialisa­ % tion are priorities for the government and there is an 'Acquis communautaire' 10-20 ongoing need for port restructuring/modernisation and the development of new water canals. Its postal and Private sector development and restructuring 50-60 commercialised telecommunications services also need Human resources development, including modernising and diversifying. social sector reform 20-25 At present, the energy sector suffers from an inefficient Infrastructure development 10-20 allocation of scarce capital resources, inadequate tariffs, high global energy intensity, heavy dependence on imported energy and bottlenecks in transborder energy network~ Slovakia needs to fulfil international nuclear safety standards and to improve energy efficiency through energy conservation measures and the develop­ ment of renewable energy. The energy sector must also aim to attain economically and socially viable environ­ mental standards. 36 Slovenia

Multi-annual Indicative primary level and only 6.6 per cent having completed Programme for cross-border higher education. The local tradition of large industries offering good in-house vocational training has led to a cooperation with Austria relatively well-qualified workforce but there is a lack of skills to cope with new manufacturing systems and Duration 1995-1999 specialised services. Amount ECU 3 million per annum The Phare cross-border programme aims to promote (indicative amount only) cooperation between border regions in the European Union and countries of central Europe to help them The Multi-annual Indicative Programme (MIP) has been overcome specific development problems which may prepared under the Phare cross-border cooperation arise from their specific location within their national programme for the Slovene-Austrian border regions. economies. It also promotes the development of The time frame for completion of projects within the networks on either side of the border and the develop­ MIP is five years and coherence is therefore ensured ment of links between these and European Union within the long-term development of the region. networks. Together with these priorities, the MIP for The Slovene-Austrian border area is predominantly Slovenia aims to alpine and sub-alpine in nature. Agriculture and forestry • strengthen communication through developing and form an important part of the economic structure, modernising existing infrastructure and establishing although the share of part-time farming is high and bilateral cooperation networks production systems are characterised by outmoded management and marketing systems. Food processing • develop new potential for cooperation and use exist­ also plays an important part in local employment. ing potential to develop local communities in the Industrial activities are concentrated in the major valleys border region with a view to creating synergies and in a few urban centres and include steel production, • encourage activities to protect and manage natural metal industries and mining in the Maribor area and in resources in the border region and reduce pollution Ravne and Mezica, but many of these traditional indus­ tries need restructuring. Since Slovenia's independence • strengthen the friendly relations between the two and the loss of the Yugoslav markets, unemployment countries through cooperation in the social and and emigration have risen sharply. The lack of an entre­ cultural sphere preneurial culture and the low levels of SME develop­ • support the process of integrating Slovenia into the ment means that parts of the region suffer from high European Union. unemployment. An important objective of the Slovene Government's national economic strategy is to promote The following priorities and indicative budgetary split local economies in the border regions. have been agreed: So far, the tourism industry has accounted for a relatively • technical support 6% small proportion of gross domestic product (GDP), but • economic development 40% could become a major player in the more rural border areas. However, major infrastructural investment is • infrastructure and transport 25% needed outside the major tourism centres and certain • human resources 3% environmental problems may impede development in this sector. River pollution is serious, mainly owing to the • environment 26% lack of adequate waste water treatment facilities. The The regions which will be eligible for funding are the region also suffers from inadequate waste disposal districts of systems for household, industrial and other types of waste. In addition, the border region has inadequate trans­ • Gorenjska port links with the capital and within the region itself, • Gomja Savinjska while there is frequent traffic congestion at the main border crossings and bottlenecks in the railways system as • Koroska a result of low technical standards in signalling. • Podravje The educational standard in the area is generally low, • Pomurje. with 51.9 per cent having been educated simply at Slovenia - Multi-annual Indicative Programme for cross-border cooperation with Austria 37

Phare has already financed measures to stimulate cross­ regional concept of the development potential of cross­ border cooperation between the Member States of the border cooperation. A well-developed structure for European Union and the central European countries. cooperation is needed to ensure that priorities are imple­ Commission Regulation N° 1628/94, on cross-border mented jointly and that local, regional and national cooperation between the Member States and the central authorities on both sides cooperate. European countries in the framework of the Phare A Programme Management Unit already established Programme, provides the rules for financing actions of a within the Ministry of Science will manage the structural nature in border regions of central European programme, develop annual projects and implement countries sharing a common border with Member States, them. Its tasks will include animating, facilitating and in harmony with the European Union structural policies coordinating contacts between the partners in the border and with INTERREG II in particular. region. Following the entry of Austria into the European Union, One of the first tasks will involve drawing up a compre­ the Phare cross-border cooperation programme includes hensive cross-border inventory and a strategy for the a specific budget line designated for promoting cross­ border region. The strategy will provide the basis for the border cooperation between regions of Slovenia adjoin­ review of the Multi-annual Indicative Programme and ing Austria. The MIP for Slovenia complements the will be prepared jointly with the Austrian partners. INTERREG II operation programme for the Austrian Lander of Styria and Carinthia, sharing the same objec­ New contacts amongst actors in the border region will tive of pursuing joint development of peripheral regions be established and existing ones strengthened to gener­ along the state border, and the same priorities. ate and disseminate ideas on types of projects needed and to offer practical advice to authorities on preparing A number of criteria have been influential in project proposals. selection, in particular A series of small workshops will be organised, involv­ • cross-border impact ing all relevant organisations in the area. They will • complementarity with the INTERREG II programme present the cross-border initiative together with exam­ and Phare programmes ples of good practice of projects for cooperation. They will also provide advice on preparing project proposals. • degree of combination and integration of the project with other projects Information systems and at least one small office for cross-border cooperation will be set up. • general impact on the special development problems stemming from relative isolation Economic development • development impact on the population of the border The economic base needs to be broadened and diversi­ areas fied, particularly in the rural eastern part of the border • readiness for implementation area. Although business development and diversification is one of the Government's priorities, SME development • coherence of project content with declared project will depend on adequate business support facilities and objectives on investment. Cross-border cooperation will help to • co-financing possibility open up opportunities for development through the combined use of the indigenous resources of the area, • internal rate of return or cost-benefit calculations for example in the field of tourism and agriculture. • environmental impact Business development • involvement of regional and local authorities. Economic development will be encouraged by creating Technical support the necessary technical and institutional pre-conditions and promoting better cross-border contacts. Industrial Planning, programming and implementing cross-border restructuring and SME development will be helped activities requires considerable knowledge of the socio­ along by providing better support facilities. Efforts economic situation in the border region and of the aimed at cross-border linkages will focus on existing regional and local human resources available to propose SMEs, chambers of commerce, research centres and and implement such activities. At present, there is no other business support structures. 38 Slovenia - Multi-annual Indicative Programme for cross-border cooperation with Austria

Projects being considered include developing the structures are needed. Cooperation between small Stajerski technology park, regenerating industrial areas, producers, for example in developing quality control facilitating business contacts and support for companies systems, brand names and product diversification on a seeking to cooperate with companies on the other side of joint basis, would be highly useful in encouraging the border, promoting joint research on market opportu­ economic development in the agricultural sector. nities in the area and elsewhere and organising joint Measures will be taken to facilitate cooperation between training courses on issues such as business management. farmers in the area and to provide support and necessary Tourism development small-scale infrastructure. Activities will concentrate on encouraging exchanges of information, experience and The alpine region, including the Triglav National Park R&D, training courses on new product development, and the border region stretching to Maribor, and the marketing and general business skills, joint participation 'health' district in the eastern part of the border region, at agricultural fairs and marketing agri-tourism. are priority areas for tourism development under the Measures will also be directed at preserving the land­ government's national tourism strategy. The whole scape and the environment. border region has major tourist attractions. Its land­ One indicative project involves an integrated project to scapes, mountains, glaciers, lakes, waterfalls, and spas support the development of local farming activities in are ideal for cultural, health and sporting activities. the area, with emphasis on improving competitiveness However, basic infrastructure such as accommodation is and efficiency, entrepreneurship and new product devel­ lacking outside the major centres and tourism offices are opment, such as tourism. The first phase of the project small, scattered and do not cooperate properly with would be a strengths/weaknesses opportunities/threats national tourism offices. New tourism products need to analysis and an action plan. be developed along with marketing systems and small­ scale infrastructure. Infrastructure and transport Support will be provided to develop an integrated The Slovene Government attaches major importance to tourism zone along the Styrian and Carinthian border. developing the transport sector and wishes to link the Preparatory activities will include joint studies and national system to trans-European networks. This is assessment/evaluation reports to plan and develop joint essential given that Slovenia is a 'transit' country and tourism products or link existing products on both sides that modernisation will help economic development of the border, such as the Styrian wine and fruit road generally and the growth of the tourism industry in and activity tourism. Measures will also be taken in this particular. The border region is reasonably well framework to develop necessary infrastructure and equipped with roads and border crossings, but existing marketing methods, including better links between facilities need improvement to cope with increases in tourism offices. freight and passenger traffic. Other indicative projects will include small-scale activi­ Measures will be taken to upgrade selected roads and ties in the cultural sectors to help develop a general railways which link up to existing border crossings. framework for cooperation. These will include the These will include modernising small roads to reduce organisation of various cultural and sports events as well bottlenecks, in particular at Pavlicevo Sedlo, Holmec, as seminars/workshops on the history, economic situa­ Libelice and Trate. Studies will also be prepared on tion and culture of the border regions. These activities missing road or rail links and on an integrated public will be aimed at both tourists and the local population. transport system for the border area, while transporta­ Cross-border cooperation between different sectors of tion concepts will be developed, for example on multi­ the media will also be promoted. modal transport options. Rural development and agriculture Measures will also concentrate on modernising certain border crossings in line with those on the Austrian side, In selected border regions, small-scale, part-time including construction work and equipment for control farming and wine production play an important role in the local economy. Despite the high quality of certain and immigration procedures. Priority crossings are Jezersko, Ljubelj, Sentilj, Matjasevci and Gederovci. products and some success in establishing brand names and accessing national and international markets, better quality control, marketing strategies and man~gement Slovenia - Multi-annual Indicative Programme for cross-border cooperation with Austria 39

Human resources Measures will be taken to adopt a joint approach to protecting and developing the Triglav National Park, A key factor in regional economic development is the which is a highly valuable ecosystem. A range of activi­ human capital available in the area. High levels in ties will also be launched to promote cooperation on tducation and training, vocational training and technical ecosystems generally in the area, including creating research would be strong assets. Action is needed to links between existing environmental organisations, orient education and training in the region to create an developing joint monitoring systems, preparing manage­ increased and higher-quality supply of human resources ment plans and conducting joint research on conserva­ in terms of both attitudes and skills. tion issues. Some small infrastructure investments may Measures will be taken to encourage cross-border coop­ also be supported. eration in the field of education and vocational training Indicative projects include building a combined to enhance the skill level in the region, broaden the mechanical/biological waste water treatment plant for concept of the regional/local labour market and facilitate Gomja Radgona, designing and implementing a compre­ Slovenia's integration into the European Union. Various hensive and integrated tourism development concept for activities will be carried out to develop contacts, the Triglav Park and restoring mountain huts. exchanges and links between vocational education and further education training schemes on both sides of the Implementation border. Joint projects and structures will also be devel­ oped, focusing on long-term training initiatives to help A joint programming and monitoring committee, combat unemployment and facilitating the reintegration composed of the appropriate authorities from Slovenia of the unemployed into the labour market. and Austria, will play the principal role in assuring overall coordination between the two Governments in Indicative projects include cooperation between univer­ the planning and implementation stages of the sities and other training and vocational institutes in the Programme. It will be the principal forum for the joint border region to set up short-term exchanges, joint train­ programming of cross-border activities under Phare and ing courses and combined research. At the same time, INTERREG II. The committee will undertake joint exchange programmes/intemships will be arranged for project selection in the context of the Programme and students and/or trainees in companies in the area. will also monitor and coordinate the implementation of Similarly, schools will be encouraged to set up exchange these activities. systems, joint courses, seminars and workshops. Activities will include setting up links in the areas of The Ministry of Science and Technology will have administration and institutional reform through staff responsibility for the overall coordination and financial exchanges. management of the Programme. A Programme Management Unit was set up in the Ministry in 1994 to Environment handle the cross-border cooperation programme with Italy and the unit will also coordinate, implement and Certain parts of the region have major environmental monitor the Programme with Austria; a small extension problems, particularly the industrial centre of Maribor of the unit will be set up in the border region. whose surrounding areas suffer from air and water pollution. The management of environmental resources, The Programme will specify projects annually in the, such as the various nature parks, also needs to be framework of a financing proposal and financing memo­ improved. Apart from the benefits in terms of health, randa. The projects will derive from measures and prior­ measures to improve the environment will also help to ities specified in the MIP, taking account of the develop­ develop tourism. ment of the MIP and the absorption capacity of the different sectors. Measures will concentrate on the environmental management and monitoring of the two major cross­ border rivers, the Drava and the Mura. Action will include modernising and building purification plants and water monitoring systems. Feasibility studies will be carried out to improve water management systems and to investigate the possible energy exploitation of the River Mura.