Secretariat of the Committee on Budgetary Control

Brussels, 22 November 2013

Budgetary Control Committee Delegation to in the context of economic and financial impact for the Union by having a Russian enclave within the Union's border

8-9 July 2013

Feedback note

In the Chair: Mr Jan MULDER (ALDE, Netherlands)

EP Participating Members:

Ms Ingeborg GRAESSLE (EPP, Germany), Ms Zuzana BRZOBOHATA (S&D, Czech Rep.), Ms Edit HERCZOG (S&D, Hungary), Mr Soren Bo SONDERGAARD (GUE/NGL, Denmark), Mr Boguslaw SONIK (EPP, ), Mr Joachim ZELLER (EPP, Germany)

The final programme is to be found in Annex I.

A question for oral answer with debate in Plenary sent to the European Commission on Cigarette production and smuggling in the Kaliningrad region is to be found as Annex II.

1 1. The aim of the visit of the CONT Delegation was to verify how the spending of EU funds on various projects in the region of Kaliningrad is done as well as to check the illegal flow of goods - mainly illicit trade of cigarettes and petrol products - into the EU from the region, which harms the income of the EU budget.

2. It aimed also to check how the customs control systems procedures are implemented in the EU external Polish-Russian border crossing point of Grzechotki-Momonowo. Fight against fraud and the protection of the Union's financial interests in general were also on the scope of the delegation.

3. Following intensive exchanges the delegation was invited by the regional authorities of as the Russian Parliament didn’t show interest in issuing an invitation to the Committee delegation.

4. On 8 July am the Delegation visited the Polish-Russian border crossing in II - Grzechotki, which has been built thanks to EU funds (13.3 million EUR under the TACIS CBC Programme). On both sides of the border Members held meetings with respectively the Russian and Polish customs authorities.

5. Mamonowo-Grzechotki is the main border crossing between the two countries and since its opening in 2010 the waiting time on the Pl-Ru border has been significantly shortened and the quality of services improved. Thanks to the modern equipment installed controlling all the freight entering into the EU, illegal goods are now less prone to entering through this border crossing. It seems that they are however shipped into the EU via other means.

6. The Delegation met also with representatives of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union (Frontex) and discussed the safety of the eastern borders of the EU as well as the specificity of each one of them (from Finnish-Russian to Romanian-Moldovan border).

7. On 8 July pm the delegation held meetings with the regional authorities of Kaliningrad oblast. The delegation encountered the Governor Nikolai N. Tsukanov as well as several other ministers of the Kaliningrad Government. The Members highlighted the problem of tobacco smuggling from the region and urged for a rapid intervention of the Russian authorities.

8. After the meeting a press conference was held which was highly attended by regional and local media as well as by some representatives of national Russian media. The issue of tobacco smuggling was raised as well and it was reflected in the press articles the following day.

9. Accordingly with public available sources that estimate that the cross-border cigarette smuggling from Kaliningrad to the European Union (particularly to Lithuania and Poland) is an illegal industry worth an approximate 1 billion US dollars1 CONT decided to send a delegation to Kaliningrad. The Committee paid therefore particular attention to the fight against cigarette smuggling and other forms of illicit trade of tobacco products at this external border of the European Union.

1 http://www.publicintegrity.org/2008/10/20/6353/made-be-smuggled

2 10. Analysis by FRONTEX confirms that cigarette smuggling is one of the main problems affecting the EU Eastern border, and suggests a significant scale of smuggling from the Western Balkan countries. It also suggests that cigarette smuggling significantly affects the work of order authorities on the Eastern land borders, including on the land borders with Turkey, and with Western Balkan countries2.

11. The second day of the visit focused on EU funded projects. The delegation visited a Long Term Control Plan and Drug Treatment Hospital in Kaliningrad, which obtained funds to develop services to contain the spread of HIV and Tuberculosis among injecting drug users in Kaliningrad oblast (331 thousand EUR under the TACIS program). This ongoing project is a successful one and the hospital authorities have already declared that they will attempt to continue funding the project once the EU funding has ended.

12. The Delegation visited the town of on the Baltic coast, where one of the pumping stations of the project of Waste Water Management in Small Towns of Kaliningrad Oblast has been located (9.5 million EUR from the EU funds via the Nordic Environment Finance Corporation (NEFCO)). This project is a part of a series of ambitious projects of the EU aiming at improving the quality of water in the . Despite long efforts of the Commission (lasting already 17 years), the water sanitation projects in Kaliningrad are unfortunately still not functioning.

13. The third visited project was the cross-border bicycle trail between Lithuania and along the old post road on EUROVELO-BALTICA in the Curonian National Park (225 thousand EUR under TACIS program). The Russian bicycle trail project has been rejected by the Russian Ministry of Environment and only the Lithuanian side of the route has been created. Members insisted that the National Park Authorities should guarantee that the project is completed in the Russian side as well.

14. This delegation follows up the 2012 delegation of the Budgetary Control Committee to Rotterdam and Antwerp, on customs control systems at the EU external borders and fight against fraud and illegitimate (smuggled and counterfeit) cigarettes and the hearing organised by the Committee on 17 September 2012 concerning "How to improve the capacity of the future Hercules III programme to promote activities in the field of the protection of the EU's financial interests?"

15. Recalls that in 2011 the amounts of cigarettes seized were 141.000.000 in Antwerp and 81.900.000 in Rotterdam harbours, further recalls that according to the figures provided by "The Dutch Cigarette Manufacturers Association" the illegitimate (smuggled and counterfeit) cigarettes consumption has been increasing year over year and therefore the EU (and Members States) financial interests are being damaged;

16. The Head of Section of the EU-Russia Cooperation Programme and the Head of Finance and Contracts Section of the EU Delegation in Moscow assisted in the delegation.

2 Stepping up the fight against cigarette smuggling and other forms of illicit trade in tobacco products - A comprehensive EU Strategy - COM(2013) 324 final

3 CONT delegation observations and recommendations:

17. Insists that insufficient control at the EU external borders represents a significant decrease of the traditional own resources funding to the revenues for the European budget and therefore deserve from the political authorities greater attention;

18. Underlines that the Treaty states that the Union and the Member States share responsibility for protecting the Union's financial interests and fighting fraud and the Commission should exercise overall oversight, set standards and verify compliance; calls for close cooperation between the Commission and the Member States in order to protect the Union's financial interest effectively;

19. Regrets that annual losses of revenue in the European Union can be estimated, on the basis of seizures of cigarettes notified by the Member States, at about EUR 10 billion per year, of which about 10 % (i.e. 1 billion EUR) would be revenue to the European Union Budget and that it is estimated that 65% of the seized cigarettes are counterfeit3; based on these information the damage of counterfeit to the Union Budget can be estimated at around EUR 650 million per year, the damage due to contraband at around EUR 350 million per year;

20. Notes that accordingly with Frontex-coordinated Joint Operation Focal Points Land 2010 and 2011 the common borders are one of the most important entry points for smuggled cigarettes to the EU, followed by the Eastern Balkans (border with Turkey) and the Western Balkans;

21. Deplores that accordingly with public available sources the estimated cross border cigarette smuggling from Kaliningrad to the European Union (particularly to Lithuania and Poland) is an illegal industry worth an approximate 1 billion US dollars;

22. Notes that Western European countries are destination markets for both cigarettes smuggled from third countries to Member States but also those illegally produced on the territory of the EU and that in the case of Poland and Lithuania, an estimated 60–70% of all smuggled cigarettes are sold there while the rest are smuggled to other European countries;

23. Notes that the expanding flow of illicit goods is caused predominately by price differentials between the two sides of the common borders for a wide range of products, in particular excise goods; further notes that tobacco smuggling continues to be lucrative due to price differences between the EU and third countries and that the main destination countries for smuggled cigarettes are western European countries such as the UK, Ireland, France, Belgium, Germany and the Member States located along the eastern borders of the EU;

24. Underlines that cigarettes and petrol products continue to be smuggled mostly towards the EU, while smuggling of stolen vehicles, household goods (ranging from groceries to electronics) follows the opposite direction, notes that available data indicates that the Russian

3 Europa - Summaries of EU legislation - Contraband and counterfeit cigarettes: frequently asked questions, MEMO/10/448,27.09.2010 - http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/10/448&type=HTML

4 Federation, Belarus and Ukraine remain markets with significant purchasing power and high demand for second-hand vehicles such as motorbikes, cars, heavy machines (agricultural and construction machines) and lorries and that due to these market needs the modi operandi of smugglers of vehicles are varied and change rapidly;

25. Points out that according with information provided by the Polish Border Guard cross- border crime is associated and driven mainly by smugglers of cigarettes, petrol and stolen vehicles and that in September 2011 discovered two lorries fully packed of smuggled cigarettes and that a third lorry belonging to the same shipment with a total of 170 000 cartons of cigarettes was detected after investigation; further notes that five persons were accused of taking part in organised crime group smuggling cigarettes from the Russian Federation and that the lorries used were professionally prepared for smuggling as each vehicle weight was according to declared content of the shipment;

26. Notes that in the period 2007-2013 the Union has spent 132 million euro on the Lithuania-Poland-Russia ENPI Cross-border Cooperation Programme; expects that more conditionally is imposed for further cooperation programmes;

27. Urges the Russian authorities to stop the production of cigarettes in the Baltic Tobacco Factory (BTF) of Kaliningrad in quantities greatly exceeding local demand intended to be smuggled through route or Baltic or Black Sea ports to the EU; notes that according with experts “Jin Ling cigarettes there produced are being legally manufactured in Russian factories but are intended for the European illegal market";

28 .Highlights that roads border crossing (PL/RU and LT/RU) are no more particularly sensitive as regards cigarette smuggling, that smuggling by sea is more concerning with in particular from the Baltic or Black Sea ports as point of departure;

29. Welcomes that the cooperation between Poland and Russia border guards and customs authorities seem to be effective in the main border crossing between the two countries of Mamonowo-Grzechotki;

30. Recalls that on 13 June 2013 the European Parliament voted a resolution on the rule of law in Russia that echoes the deteriorating human rights situation since the latest presidential elections and its repeated calls on the EU institutions to take a stronger stand; considers it deeply regrettable that a few NGOs are already facing trial and recalls that states have an obligation to support, directly or indirectly, the funding of civil society activities, in particular by creating a favourable environment without interfering in their independence.

Summary of the Delegation background and preparation

Kaliningrad Region is located on the south-eastern coast of the Baltic Sea. It is the Russian Federation’s western most territory, not directly connected to Russia by land. Kaliningrad is located between Lithuania and Poland, and has 140 km of shoreline along the Baltic Sea.

Governmental authorities implementing the governmental power in the Kaliningrad region are: the Kaliningrad Regional Duma headed by a Chairman that exercises legislative authority in Kaliningrad Region and the Government of the region.

5 Source: Kaliningrad Region - The territory of opportunities

In 2012, Kaliningrad Region saw a strong economic growth, a steady growth of industrial production, a moderate rise in real incomes as well as a fall of the unemployment rate. The gross domestic product of Kaliningrad Region increased by 8.6 % compared to 2011, well above the Russian average of 3.4 %. The value registered is about 247 billion roubles (approximately EUR 5, 7 billion). In recent years the structure of Kaliningrad economy has not undergone any substantial changes, with manufacturing, wholesale and retail being the most important sectors.

The sub-sectors with the highest growth rate were in car assembly, television equipment as well as production and design of reinforced concrete structures and prefabricated elements. The development prospects of the automobile production sector are based on the plans of AVTOTOR management group. They envisage that by the year 2020, on the basis of joint ventures in Kaliningrad region, to form a cluster of full profile automobile manufactures with the general capacity of 350 000 cars a year.

In 2012, Kaliningrad Region received USD 344.4 million of foreign investment, an increase of 111.1 % over 2011. These investments were mainly originated from Cyprus (37,3%), Poland, Lithuania, Switzerland and Netherlands (2 below).

6 Figure 2 - Foreign Investment, 2012

In 2012 main export destination for Kaliningrad Region was India (3 below).

Figure 3 - Export of Kaliningrad Region by countries - Transactors in 2012

7 In 2012, Germany was the main source of imports mainly components parts for car assembly for the Kaliningrad Region (18,9%).

Figure 1 - Import of Kaliningrad Region by countries - Transactors in 2012

The Special Economic Zone in Kaliningrad Region (SEZ) covers the whole territory of Kaliningrad Region and implies a special legal regime for economic production, investment, and other activities. Legal entities included in the regime of the SEZ enjoy for instance the following benefits full exemption from the income (corporate) and property tax for the first 6 calendar years after inscription. Upon the expiration of that period, this taxes are reduced by half (50%) for the additional 6 years period.

Until April 01, 2016 enterprises have the right to export goods manufactured on the base of imported components to the territory of Russia without paying any duties and taxes.

Eu-Russia Cooperation Programme (TACIS/ENPI)

In the period 1994 – 2006 the EU-Russia Cooperation Programme was funded through TACIS (Programme of Technical Assistance to CIS Countries). Russia has been the biggest beneficiary of support to the countries in the post-Soviet region receiving about half of all funding. Since 1991, when the Programme was launched, 2.7 billion Euro has been granted to Russia and has been used in 1 500 projects in 58 regions.

In addition to national TACIS programmes, Russia has received support through TACIS multi-country programmes, including the Regional Programme and the Cross-Border Cooperation Programme. This funding has covered projects in the fields of telecommunications, the environment, Information Society networks, crime and migration.

The new stage in reinforcing cooperation with countries bordering the European Union has been opened with the adoption in 2007 of the European Neighbourhood and Partnership Instrument (ENPI) which includes a component specifically targeted at cross-border cooperation (CBC).

8 The programmes have a total budget of approximately EUR 437 million until 2013, and are funded by different sources: European Commission (EUR 267 million), Member States (EUR 67 million) and the Russian Federation (EUR 103.7 million). The cofinancing by the Russian Federation confirms the spirit of partnership at the core of the European Neighbourhood and Partnership Instrument (ENPI).

Lithuania-Poland-Russia Cross-Border Cooperation Programme under the ENPI 2007- 2013

More than EUR 44,5 million (EUR 36,5 million from ERDF and EUR 8 million from TACIS) were allocated to the programme for the period 2004 - 2006, which resulted in 162 cross-border projects granted, along two priorities: competitiveness and productivity growth of the cooperation area through development of cross-border infrastructure and border security, economic and scientific/technological co-operation (priority 1); and people to people cooperation, socio-cultural integration and the labour market (priority 2)4.

The Lithuania-Poland-Russia ENPI Cross-border Cooperation Programme (ENPI CBC LT- PL-RU) 2007 - 2013 will be implemented under the 2007 - 2013 financial perspective. It has been based on the joint planning effort of all participating countries. The total allocation for the 2007 - 2013 period is EUR 132 million5.

Grzechotki-Mamonowo Border Crossing Point

The Annex A presents the TACIS Project 2007/126-111 concerning the design and construction of Mamonovo-Grzechotki border crossing that is used for passenger and freight.

Cigarette Smuggling6

Another phenomenon which influences the EU budget negatively is cigarette smuggling. There are two types of cigarette smuggling in the EU: smuggling with contraband cigarettes and smuggling with counterfeit cigarettes.

Contraband Cigarettes: cigarettes that have been imported into, distributed in, or sold in, the territory of a Member State (or where en route to the Territory of a Member State for sale in that Member State) in violation of the applicable tax, duty or other fiscal laws of that Member State or the EU.

Counterfeit Cigarettes: cigarettes bearing a Trademark of a cigarette manufacturer that are manufactured by a third party without the consent of that cigarette manufacturer (the so called fake cigarettes). Counterfeit cigarettes shall in no event include:

i) Cigarettes manufactured by the trademark holder or any affiliate thereof, regardless of the actual or intended market of distribution;

4 Lithuania – Poland - Russia Cross-Border Co-operation programme 2007-2013, Document Adopted By The European Commission On 17 December 2008, Amended On 7march 2011 5http://ec.europa.eu/europeaid/where/neighbourhood/regional-cooperation/enpi-cross- border/documents/enpi_cbc_lithuania-poland-russia_fact_sheet_en.pdf 6 How does organised crime misuse EU funds?- 2011 - EP Study

9 ii) Cigarettes bearing a trademark of a cigarette manufacturer using tobacco either produced by or sold by that cigarette manufacturer;

iii) Cigarettes bearing a trademark of a cigarette manufacturer that are packaged in genuine packaging of that cigarette manufacturer, including genuine cartons and packs of that cigarette manufacturer.

Since the European Communities have a Common Customs Tariff, contraband affects the collection of customs duties to the detriment of the Communities’ financial interests through its impact on own resources. Cigarette smuggling causes a loss in excises and duties for Member States, which are part of the EU resources. This budget directly finances the legislative and democratic activities of the European Institutions.

Cigarette smuggling requires the construction of supply and distribution chains which can, by definition, be classified as organised crime. The international nature of cigarette smuggling results in formal and informal links between criminal groups in different geographical locations. Given the high taxes and excise duties of the goods involved, and the profits generated, perpetrators must also become involved in other types of serious crime, for example protecting themselves through extreme violence and money laundering7.

It is difficult to evaluate the magnitude of cigarette smuggling8, but it is well-known that cigarette smuggling is widespread and well organised. Cigarette smuggling is a growing problem worldwide, which is costing thousands of millions of dollars globally in lost tax revenue9. Because a certain amount of excises and duties of Member States are a means of resource for the EU general budget, the EU is indirectly affected too.

Annual losses of revenue in the European Union can be estimated, on the basis of seizures of cigarettes notified by the Member States, at about EUR 10 billion per year, of which about 10 % would be revenue for the European Union budget. Also, it is estimated that about 65 % of the seized cigarettes are counterfeit10.

According to Europol: “The smuggling of contraband cigarettes and counterfeit cigarettes is a process throughout Europe. The routing of cigarettes is often a complex process which abuses the free movement of goods in the EU and changes constantly. Italy plays an important role in cigarette smuggling.” Italian organised crime cooperates with foreign criminal groups to smuggle both genuine and counterfeit cigarettes to Italy and the EU.

Currently around half of all cigarettes seized in Italy are counterfeits and there are indications that counterfeit cigarettes are currently introduced relatively aggressive into the EU markets. In any case, Greece, Dubai, China and Poland/East Europe play important roles in supplying cigarettes either for the Italian market or through Italy to the other EU countries.

7 OLAF's official contribution to the study on How does organized crime misuse EU funds? 13 May 2011. 8 Van Heuckelom, C., Europol: Smoke, Europol’s fight against the illicit tobacco trade, AWF smoke presentation to illegal trade excise conference, p. 26, http://www.slideshare.net/illegalehandel/awf-smoke- presentation-to-illegal-trade-excise-conference-2 9 Joossens, L. and Raw, M. Cigarette smuggling in Europe: who really benefits?, International Union Against Cancer, EU Liaison Office, Brussels, Belgium, p.66, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1759658/?tool=pubmed 10 Europa - Summaries of EU legislation - Contraband and counterfeit cigarettes: frequently asked questions, MEMO/10/448, 27.09.2010http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/10/448&type=HTML

10 These countries do not necessarily produce the cigarettes but are rather used as transit points towards the north of Europe. Community customs procedures can be extensively abused for criminal ends: cigarettes may be imported into the EU and placed in Community transit; after this, the transit procedure may be changed into export procedure so that the cover load (often consisting of low-value goods such as counterfeit products) is exported but the counterfeit cigarettes stay in the EU; alternatively the cigarettes may be legally exported and then smuggled back into the EU and redirected to the relevant black markets11.

Other organised crime groups which are involved in cigarette smuggling are Lithuanian groups. They redirect and traffic cigarettes from the east towards the west. Besides cigarette smuggling, these groups are involved in trafficking women for sexual exploitation, illegal immigrants, counterfeit goods, synthetic drugs precursors and heroin12. Also Kaliningrad appears to have a similar but more limited role in relation to cigarette smuggling into the EU.

ANNEX A- TACIS PROJECT 2007/126-111 DESIGN AND CONSTRUCTION OF MAMONOVO-GRZECHOTKI BORDER

11 Europol, EU Organised Crime Threat Assessment 2009 (OCTA), The Hague, 2009, p.33, http://www.europol.europa.eu/publications/European_Organised_Crime_Threat_Assessment_(OCTA)/OCTA2 009.pdf 12 Europol, EU Organised Crime Threat Assessment 2009 (OCTA), The Hague, 2009, p.30, http://www.europol.europa.eu/publications/European_Organised_Crime_Threat_Assessment_(OCTA)/OCTA2 009.pdf

11 CROSSING13

PROJECT TITLE DESIGN AND CONSTRUCTION OF MAMONOVO-GRZECHOTKI BORDER CROSSING

Contractor/beneficiary Federal Customs Service of the RF (FCS) EU Contribution: 13.3 million EUR under Tacis CBC Programme, AP 2004 Country: Russian Federation (RF), Kaliningrad region Overall Objective To facilitate the legal flow of, goods and services, increase border security, reduce crime, and promote trade across the European Union’s external borders. Specific Objectives To build a completely new international border crossing, responding to modern management practices, at Mamonovo II to cater for all Project objectives: modes of road transport. The new border post is located on the old German motorway Berlin-Elbag-Koenigsberg ("Transbaltica") that is nowadays a part of the Pan European Transport Corridor I, Branch A (Riga-Kaliningrad-Gdansk-Berlin). The main goal of the EU investment was to eliminate a bottleneck on that Pan-European Transport Corridor and thereby speed up the traffic flow between the EU and the Russian Federation. The construction works of the EU funded part of this joint project commenced in August 2007 and were completed on time, on budget and to a very good construction standard and all concerned with its implementation can take a good deal of pride in their achievements. The Final Acceptance Certificate of the construction works was issued by the Supervisor in December 2010. In addition to the EU investment the Russian Government provided funds (about EUR 9 million) for the construction of road that links the site to the border and for the equipment at the border post. The border crossing was officially opened for international traffic on Project progress: 7 December 2010. The corresponding crossing on the Polish side is Grzechotki, construction works of which were completed in 2006. Construction works were supported by the under PHARE programme. The new international border crossing at Mamonovo has the capacity of catering for a traffic flow of 4000 vehicles (2600 cars, 150 buses and 1250 trucks) per day. It is the largest border crossing on the Russian Polish border, nearly three times higher traffic flow capacity that existing border crossing points at and Mamonovo I and has therefore reduced remarkable the load and waiting times at these two crossings. In the Tacis CBC 2006 Action Programme the Commission Related border crossing allocated EUR 10 million for support for the construction also of the project cancelled: new Border Crossing Post at Sovetsk. With the operation of these Sovetsk two new border crossings at both, Polish and Lithuanian borders (Mamonovo and Sovetsk, respectively) would have been created an efficient transit route from North to South-West of Kaliningrad

13 European Commission - TACIS projects

12 Oblast. However, in the circumstance where - due to the negative impact of the global financial crisis - the RF funding for the construction works of Sovetsk border crossing post in Kaliningrad Oblast was deferred until 2011, the necessary preliminary works could not be completed within the time period that the EU funding was available. The Commission therefore had unfortunately no alternative other than to cancel the tender for the EU funded part of construction works and the EUR 10 million EU support was lost to the Russian Federation.

13 ANNEX B - TAKING UP THE CHALLENGE: DEVELOPING SERVICES TO CONTAIN THE SPREAD OF HIV AND TB AMONG INJECTING DRUG USERS IN KALININGRAD OBLAST

PROJECT TITLE TAKING UP THE CHALLENGE: DEVELOPING SERVICES TO CONTAIN THE SPREAD OF HIV AND TB AMONG INJECTING DRUG USERS IN KALININGRAD OBLAST

Lead partner: Kaliningrad regional non-governmental youth organisation “Young Leaders’ Army” (YLA) (Russia)

Partner: The MONAR Association (Poland) Deutsche AIDS-Hilfe e.V. (Germany)

Total budget: 416 518 EUR

Programme Contribution: 330 715 EUR

Country: Russian Federation (RF), Kaliningrad region

The overall objective of this project is to contribute to the prevention of the spread of HIV and TB in the Kaliningrad Oblast. The specific objectives are two-fold: (1) To improve the provision of services to contain the Project objectives: spread of HIV and TB among IDUs; and (2) To strengthen the partnership between stakeholders from Kaliningrad and their counterparts from Germany, Lithuania and Poland in responding to the HIV and TB epidemics. The main objectives of the Northern Dimension policy are to provide a common framework for the promotion of dialogue and concrete cooperation, strengthen stability and well- being, intensify economic cooperation, and promote economic integration, competitiveness and sustainable development in Northern Europe. The overall objective of this grant scheme with a total budget of 3.5 million euro was to support the cooperation between the EU and Russia by encouraging local stakeholders to participate more Project progress: effectively in addressing common challenges

Main project activities:

WP1. Developing Service Chain to Contain the Spread of HIV and TB among IDUs. Seminar for Professionals "Improving Inter-Agency Cooperation in Prevention, Treatment, and Social Support for the IDUs". Training Workshop for NGOs On Promoting Advocacy and

14 Leadership Skills.

WP2. Establishing Low-Threshold Service Point (LTSP). Renovating and Equipping LTSP.

WP3. Improving Treatment Services for IDUs. Holding Internship at the MONAR’s Rehabilitation Centre in Gaudynki. Training Seminars in Local Hospitals on Promoting User-Friendly Services.

WP4. Developing Action Plan to Contain the Spread of HIV and TB among IDUs.

WP5. Establishing Partnership Among Specialists from Germany, Lithuania, Poland and Russia. Study Tour to Germany (Berlin). Study Tour to Poland (Warsaw). Study Tour to Lithuania (Klaipeda). Final Conference.

15 ANNEX C - TACIS PROJECT - KALININGRAD WASTE WATER IN SMALL TOWNS/NEFCO14

PROJECT TITLE KALININGRAD WASTE WATER IN SMALL TOWNS

Contractor/beneficiary NEFCO /Kaliningrad Regional Government, municipalities and water and waste water companies in the region of Kaliningrad

EU Contribution: EUR 9,500,000.00

Country: Russian Federation (RF), Kaliningrad region

The overall objective of the Action is to develop the waste water collection and treatment capacity in the region, reducing the pollution from waste water and the risks of contamination to drinking water supplies and of waterborne diseases. The specific objectives of the project are: Project objectives: (1) Preparation of investment in OKOS, the United WWTP. (2) Reconstruction of main pumping station in Zelenogradsk, booster pumping station in Kulikovo and pressure collector from Zelenogradsk to OKOS. (3) Reconstruction of gravity pipeline from Svetlogorsk to OKOS.

Overall, the project is extremely important to current policy priorities for the Kaliningrad Regional Government. However the project experienced continuous delay in its implementation due to financial and legal position of some local entities, proposed by the Kaliningrad region government (KRG) for participation. In response to the request of the Ministry of Regional Project progress: Development RF, DEVCO approved an extension of the Financing Agreement until 31.12.2013 and an extension of closure phase until 31.12.2015. Given the financial difficulties faced by the beneficiaries (local municipalities) the legal aspects of the project are more difficult to implement than may have been foreseen.

14 European Commission - TACIS projects

16 ANNEX D - TACIS PROJECT 2007/138-267 CREATION OF CROSS- BORDER BICYCLE TRAIL ALONG OLD POST ROAD ON CURONIAN SPIT: EUROVELO-BALTICA

PROJECT TITLE CREATION OF CROSS-BORDER BICYCLE TRAIL ALONG OLD POST ROAD ON CURONIAN SPIT: EUROVELO-BALTICA

TACIS responsible partner: Administration of Neringa city, Lithuania

Partners: Curonian Spit National Park, Kaliningrad Region; Ministry of economy of Government of Kaliningrad Region; Administration of Zelenogradsk Municipality

Project budget: 224 880 euro (including 194 380 euro TACIS)

Country: Russian Federation (RF), Kaliningrad region

Cooperation in the frontier integration of cultural and natural heritage on the territory of the Curonian Spit.

Settlement of the frontier cooperation in tourism, education, ecology and other sectors.

Project objectives: Immediate (short-term) objective: creation of the conditions necessary for the development of the frontier tourism through elaboration of technical documentation for construction of the bicycle route which will unite Russia and Lithuania and in the course of time will fill the missing section of the international bicycle route “EuroVelo” (Poland, Russia, Lithuania).15

The main result of the project was the technical documentation prepared for building of the bicycle path in the Russian part of the Curonian Spit, which would later be integrated into the international bicycle path Eurovelo. The partner from Lithuania, which has already built the part of Project progress: the Eurovelo on the Lithuanian side of the Curonian Spit, actively consulted the Russian partner in preparing the technical documentation. Also, the staff of the national parks, local municipalities, government of the Kaliningrad region, inhabitants of the Curonian Spit participated in round tables, conferences and seminars on the topic of the development of tourism in the Curonian Spit. Source: http://www.interreg3a.org/interregen/images/stories/dokumentai//158%20PROJECTS.pdf

15 http://europroekt-kosa.ucoz.com/index/0-4

17 Annex 1 Brussels, 5 July 2013

Delegation of the Budgetary Control Committee to Kaliningrad, 7 - 9 July 2013

PROGRAMME

Members of the delegation:

1. Jan Mulder - ALDE (Head of Delegation)

2. Ingeborg Grässle - EPP 3. Joachim Zeller - EPP 4. Bogusław Sonik - EPP 5. Zuzana Brzobohatá - S&D 6. Edit Herczog - S&D 7. Søren Bo Søndergaard - GUE/NGL

Total of 7 participants for this delegation.

CONT Secretariat

8. Mauro De Oliveira (EP mobile as of 7 till 9 July 2013: +32.473.852.339)

Eastern Partnership and Russia

9. Michal Czaplicki Mobile phone number: +32 498 981 369

Advisors of Political Groups

10. Jonas Kraft - EPP 11. Dominykas Mordas - ALDE 12. Maj Aslett-Rydbjerg - GUE/NGL

Interpreters

13. Victor Shevchenko (team leader) 14. Vladimir Burdenkov

18 15. Ekaterina Shutova

19 Languages covered

EN, RU

Members are informed that, according with article 6 of the Bureau decision on travel of the committee delegations, as amended on 13 March 2012, missions should take place during weeks set aside for external parliamentary activities and missions outside these weeks would only be provided with a limited language regime that may not exceed interpretation into one language. Therefore the only interpretation to be provided for this delegation is into English.

Commission

Delegation of the European Union to Russia Kadashevskaya Naberezhnaya 14/1 119017 Moscow Tel +7 495 721 20 00/31 http://www.delrus.ec.europa.eu

Alexis LOEBER Head of Section - EU-Russia Cooperation Programme [email protected]

Anna MOURZINA Project Officer - EU-Russia Cooperation Programme [email protected]

Jacques STAKENBORG - Head of Finance and Contracts Section [email protected]

Coordination in Kaliningrad

Alla Ivanova, Head of the Agency on international and interregional relations of the Kaliningrad region Tel +7 4012 599 082

Accommodation and transport in Kaliningrad

Radisson Hotel, Kaliningrad Pobedy Square 10 236010 Kaliningrad Russia

Tel: +7 4012 59 33 44 Fax: +7 4012 59 33 45 E-mail:[email protected]

Transportation

20 The delegation will have a bus for the duration of the delegation visit.

21 Recommended flights of delegation

7 to July 2013

From Brussels to Kaliningrad 18:15 BRU – 23:50 KGD - 1 stop Riga (journey time 4h 35)

9 of July 2013

From Kaliningrad to Brussels 15:55 KGD – 18:40 BRU – 1 stop Berlin (journey time 3h 45m)

Main objectives of the delegation:

This delegation follows up the interest of CONT in the system of (traditional) own resources, collected by Member States on behalf of the EU, and the customs control systems and aims to find how these procedures are implemented in the EU external Polish-Russian border crossing point of Grzechotki-Momonowo.

Special attention will be paid to the fight against counterfeit production and cigarettes smuggling and other goods in the context of the protection of the Union's financial interests.

Kaliningrad "enclave" has been also the recipient of EU funds since 1991. TACIS and other EU instruments have provided over EUR 100 000 000 for projects in the region. A special envelope of EUR 25 000 000 under TACIS was created in 2004 to support economic and social development.

Furthermore Kaliningrad is included in cross border programmes in the period 2007-13 and the EU is a major donor to the Northern Dimension Environmental Partnership Support Fund which helps finance environment related projects.

The CONT delegation aims therefore to assess the control of the implementation of such funds in the region including the cost-effectiveness of those Union financing instruments.

I. Sunday 7 July 2013

16:15 Arrival in Brussels airport

18:15 Departure from Brussels airport

23.50 Arrival in Kaliningrad; transfer to hotel

22 II. Monday 8 July 2013

Visit to the project "Mamonovo II Border Crossing", meetings with Customs Authorities and Frontex agency

09.00 Transfer from the hotel to the crossing point of Grzechotki-Mamonowo

10.00 Meeting with the Russian Customs Administration and project visit: "Mamonovo II Border Crossing" (Mamonovo/Grzechotki design and construction of the border crossing point (13.3 million EUR) (TBC)

11.00 Meeting with the Polish Customs Administration (in the Polish border) (NB different time zone) and continuation of the project visit: "Mamonovo II Border Crossing"

12.00 Meeting with Mr. Javier Quesada, Head of Risk Analysis Unit - European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union (Frontex) (NB different time zone)

13.00 Transfer from the Polish border to Kaliningrad

14.00 Arrival in Kaliningrad

14.00 Lunch

Meeting with representatives of the regional authorities

16.00 Welcome Speech K.V. Suslov, Deputy Chairman of the Government of the Kaliningrad Region

16.05 Welcome Speech M.E. Orgeeva, Chairman of the Kaliningrad Regional Duma

16.10 Speech Jan Mulder, Head of delegation of the EP Committee on Budgetary Control

16.15 Presentation of economic capacity of the Kaliningrad region A.L. Kuznetsova, Minister of economy of the Kaliningrad region

16.40 A.G. Ivanova, Minister – Head of the Agency on international and interregional relations of the Kaliningrad region.

16.50 Questions & Answers

17.00 Joint press conference in the Government of the Kaliningrad region

Venue: Ulitsa Dmitriya Donskogo 1, office. 203, Kaliningrad

23 * * * Free dinner arrangements

III. Tuesday 9 July 2013

Visit to 3 Tacis Projects in the Kaliningrad Region

9:00 Transfer from the hotel

9:10 Visit to LTCP Long Term Control Plan and the drug treatment hospital. Project 2011/263-372 Taking up the challenge: Developing services to contain the spread of HIV and TB among injecting drug users in Kaliningrad oblast (330 715 EUR)

Venue: Kaliningrad drug treatment hospital, ul. Barnaulskaya 6a, main entrance, ground floor - "Time"

10:00 Press Point (TBC)

10:20 Transfer to Zelenogradsk

11:00 Visit to Zelenogradsk pumping station. Project 2009/133-244 Zelenogradsk pumping station (part of Kaliningrad Waste Water in Small Towns) (9,5 million EUR)

12:30 Visit to Bicycle trail / Curonian Spit. Project 2007/138-267 Creation of cross- border bicycle trail along the old post road on Curonian Spit: Eurovelo-Baltica (201 942 EUR)

Venue: Curonian Spit National Park, Kaliningrad Region

* * *

14:00 End of delegation visit

14:30 Arrival to Kaliningrad Airport

15:55 Departure from Kaliningrad Airport

18:40 Arrival in Brussels airport

24 Annex 2

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