TWENTY-FIRST QUARTERLY ACCESSION WATCH REPORT streetcarstreetcar calledcalled “IPA”“IPA” Twenty-First Quarterly Accession Watch Report STREETCAR CALLED “IPA” July, 2014 STREETCAR CALLED “IPA” Twenty-First Quarterly Accession Watch Report Publisher: Foundation Open Society - Macedonia For the publisher: Vladimir Milcin, Executive Director Prepared by: Macedonian Center for European Training Proofreading and Translation into English: Abacus Design & Layout: Brigada design, Skopje Print: Skenpoint Circulation: 500 Free/Noncommercial circulation CIP - Каталогизација во публикација Национална и универзитетска библиотека “Св. Климент Охридски”, Скопје 332.1:339.727.22(4-672ЕУ:497.7) ПУСТИ мерак наречен “ИПА” : дваесет и први извештај од следењето на процесот на пристапување на Македонија во ЕУ. - Скопје : Фондација Отворено општество - Македонија, 2014. - 75, 75 стр. : табели ; 18x24 см Насл. стр. на припечатениот текст: Streetcar called “IPA”. - Обата текста меѓусебно печатени во спротивни насоки. - Текст на мак. и англ. јазик. - Фусноти кон текстот ISBN 978-608-218-211-7 а) Европска Унија - Фондови - Македонија COBISS.MK-ID 97241098 TABLE OF CONTENTS I. WHERE ARE WE IN JULY 2014? 5 3. COMPONENT III: REGIONAL DEVELOPMENT 38 3.1. Faking consultations 39 1. SIMILARITIES AND DIFFERENCES 6 3.2. Legitimate selection 39 2. LEADERSHIP AND STRATEGY 8 3.3. Highway section Demir Kapija - Smokvica 40 3. THE DEVIL IS IN PROGRAMMING 9 3.4. Waste water treatment plant in Prilep 41 4. SECTORS, PRIORITIES, COMPROMISES, PROJECTS 11 3.5. Selection of projects 42 5. PARLIAMENTARY OVERSIGHT HEARINGS 13 3.6. Affair AKTOR 43 6. IPA MECHANISM 18 7. METHODOLOGY 19 4. COMPONENT IV: HUMAN RESOURCE DEVELOPMENT 44 4.1. Priority axis 1 45 II. ANALYSIS 21 4.2. Priority axis 2 47 4.3. Priority axis 3 48 1. COMPONENT I: TRANSITIONAL ASSISTANCE & INSTITUTION BUILDING 22 4.4. Again, technical assistance is given primacy 49 1.1. Where is the money? 23 4.5. Too many doubts, too little hope 50 1.2. Large share of funds for consultants 25 1.3. Endless modifications 28 5. COMPONENT V: RURAL DEVELOPMENT 52 1.4. What does IPA General Auditor say? 29 5.1. Modern-day challenges in Europe 53 5.2. Common Agriculture Policy 2014-2020 54 2. COMPONENT II: CROSS-BORDER COOPERATION 31 5.3. CAP and EU accession 56 2.1. CBC Macedonia-Albania 32 5.4. IPA as framework for CAP 57 2.2. CBC Macedonia – Greece 33 5.5. IPARD management structure 61 2.3. CBC Macedonia - Bulgaria 35 5.6. IPARD calls 63 2.4. CBC Macedonia - Kosovo 36 5.7. Pink eyeglasses 67 2.5. SEE Transnational Cooperation Programme 37 2.6. Co-financing fund 38 III. CONCLUSIONS AND RECOMMENDATIONS 68 TABLES Table 1: Similarities and differences between IPA I and IPA II 7 Table 2: Breakdown of witnesses invited and attending IPA oversight hearings 14-15-16 Table 3: IPA financial envelope for the Republic of Macedonia, per component and per year 22 Table 4: Project implementation modalities under IPA Component I in the Republic of Macedonia 27 Table 5: Financial envelope of IPA Component II: Cross-Border Cooperation for the Republic of Macedonia (in EUR) 31 Table 6: Breakdown of financial assistance under IPA Cross-Border Cooperation between Macedonia – Albania (in EUR) 32 Table 7: Breakdown of financial assistance under IPA Cross-Border Cooperation between Macedonia and Greece (in EUR) 34 Table 8: Breakdown of financial assistance under IPA Cross-Border Cooperation between Macedonia and Bulgaria (in EUR) 35 Table 9: Breakdown of financial assistance under SEE Transnational Cooperation Programme for the Republic of Macedonia (in EUR) 37 Table 10: 2011 financial structure for highway section Demir Kapija – Smokvica 40 Table 11: Financial assistance under IPA Component IV for the Republic of Macedonia in the period 2007-2013 44 Table 12: Measures and actions under priority axis I 46 Table 13: Measures and actions under priority axis 2 47 Table 14: Measures and actions under priority axis 3 49 Table 15: Overview of project implementation modalities under IPA Component IV 50 Table 16: IPA Multiannual Indicative Financial Framework, per country and per year 58 Table 17: Overview of applications submitted and approved and rate of approval 63 ...I... n July 2014, the Republic of Macedonia has not made any progress WHERE ARE WE in terms of its accession in the EU. On the contrary, it continues to “run in the spot”, due to the unresolved name dispute with the IN JULY 2014? Republic of Greece and has not been given date to start accession Inegotiations. Once a leader in the Balkan, Republic of Macedonia is slowly, but surely lagging behind Serbia, Montenegro and, of recent- ly, behind Albania. It has joined the group of so-called “unfinished states”, together with Kosovo and Bosnia and Herzegovina. Truth to be told, Kosovo is developing and progressing with unprecedented dynam- ics and likely is that in the future Macedonia and Bosnia and Herzegov- ina would remain the only “problematic” states in the Western Balkan. 5 Twenty-First Quarterly Accession Watch Report Be that as it may, this Quarterly Accession Watch Report does not 1. SIMILARITIES AND DIFFERENCES address Macedonia’s political surrounding and the Western Balkans. In- stead, it focuses on the newly designed Instrument for Pre-accession Assistance intended for EU enlargement countries, popularly known The European Council from 7-8th February 2013 reached an agree- as IPA II, covering the financial perspective 2014-2020, and lessons ment on the EU Multiannual Financial Framework (MFF) for the period learned from implementation of projects funded under IPA I. Instru- 2014-2020, the so-called financial perspective of the EU Budget. In ment for Pre-accession Assistance, popularly known as IPA I, expired this financial perspective, EU enlargement policy is again seen as one on 31st December 2013 and is replaced by new regulation that entered of the most successful EU policies that brought peace, stability and in effect on 1st January 2014. For the financial perspective 2014-2020, prosperity to Europe. the EU has envisaged additional 11.7 billion EUR in financial assis- tance for acceding countries to transform from candidate-countries IPA II should be a more flexible instrument in terms of allocations, into full-fledged EU Member States. IPA II is envisaged as improved programming and implementation. Coherence in approach would be version of IPA I, upgraded and supplemented, based on lessons learned achieved by better involvement of stakeholders in the programming in the period 2007-2013. process and by cutting the “red tape”. In this context, several important development have taken place: If IPA I implied identification of projects to be supported, under IPA adoption of IPA II Regulation and IPA II Implementing Rules; start of II, identification of core sectors is critical to successful accession pro- IPA II programming as joint effort of the European Commission (EC) cess, since successful accession implies early financial allocation for all and the Government of the Republic of Macedonia, i.e. Secretariat of IPA policy areas, which allows better prioritisation (public administra- European Affairs (SEA); start of consultations with so-called “non- tion, justice, etc.). This will give stronger impact and better sustain- state actors”; establishment of working groups within the Government ability of proposed actions. IPA II will build upon lessons learned from tasked to contribute to IPA II programming; drafting of Country Strat- IPA I and continue to pursue the general policy objective on support- egy Paper’s (CSP) first version; and, in the period July–October 2013, ing candidate-countries and potential candidates in their preparations Parliament of the Republic of Macedonia organized oversight hearings for EU membership, including progressive alignment of their institu- on problems affecting implementation and absorption of IPA in the tions and economies with EU standards and policies. It should be noted country. that IPA II aims at preparing countries to assume obligations of EU structural and cohesion policy upon their accession. This report addresses lessons learned from implementation of IPA I, which should serve as basis for programming of IPA II. Table 1 below provides an overview of IPA I (2007-2013) and IPA II (2014-2020), as well as similarities and differences between these two financial instruments. 6 WHERE ARE WE IN JULY 2014? IPA I IPA II Amount 11.468 billion EUR 11.699 billion EUR Beneficiary countries Turkey, Iceland, Croatia, Montenegro, Serbia, Kosovo, Bosnia, Turkey, Iceland, Albania, Montenegro, Serbia, Kosovo, Bosnia and Macedonia and Albania Macedonia Approach Programme Based Approach (PBA) Sector-Wide Approach (SWAp) Focus Outputs Results Involvement EC (Directorates General on Enlargement, Agriculture, Greater involvement of the European Parliament, the Council and Employment, Environment, Transport and Energy, and Education) national parliaments in EU Member States Management Decentralized and centralized management systems (In)direct (de)centralized management systems Structure 5 components No components Programming Multiannual Indicative Financial Framework (MIFF) Multiannual Financial Framework (MFF) Multiannual Indicative Planning Document (MIPD) Country Strategy Paper (CSP) Operational Programmes for IPA Components Sector-Based Programmes Table 1: Similarities and differences between IPA I and IPA II Table above shows that financial assistance under IPA II is almost identi- IPA II will be more flexible and will apply the logic of (co)financing cal to the amount of financial assistance committed under IPA I. Same is valid policy strategies, instead of individual projects, thereby substituting the in terms of beneficiary countries, with the exception of Croatia which - in the previous Project-Based Approach with the so-called Sector-Wide Approach capacity of EU Member State - is now granted access to EU Structural and Cohe- (SWAp). Although Macedonia has certain experience in this regard,1 mid- sion Funds. term budgeting per sector, which is precondition for successful utilization of IPA II funds, will still pose major challenges.