DIRECTORATE-GENERAL FOR EXTERNAL POLICIES OF THE UNION DIRECTORATE B POLICY DEPARTMENT STUDY

Similar documents
DIRECTORATE-GENERAL FOR EXTERNAL POLICIES OF THE UNION DIRECTORATE B POLICY DEPARTMENT BRIEFING

ANNEX: IPA 2010 NATIONAL PROGRAMME PART II - BOSNIA AND HERZEGOVINA. at the latest by 31 December years from the final date for contracting.

COMMISSION DECISION. C(2007)6376 on 18/12/2007

ANNEX ICELAND NATIONAL PROGRAMME IDENTIFICATION. Iceland CRIS decision number 2012/ Year 2012 EU contribution.

Standard Summary Project Fiche IPA centralised programmes Project Fiche: 18

Challenges Of The Indirect Management Of Eu Funds In Albania

Cross-border Cooperation Action Programme Montenegro - Albania for the years

COMMISSION DECISION. on a Multi-annual Indicative Planning Document (MIPD) for Montenegro

Official Journal of the European Union

COMMISSION OF THE EUROPEAN COMMUNITIES COMMISSION DECISION. of 2008

GUIDE THROUGH THE PROCESS OF PROGRAMMING AND MONITORING OF IMPLEMENTATION OF IPA II IN THE REPUBLIC OF SERBIA FOR MEMBERS OF SECO MECHANISM

Progress on the Strengthening of the European Integration Structures

COMMISSION DECISION. C(2007)2497 of 18/06/2007. on a Multi-annual Indicative Planning Document (MIPD) for Serbia

EUR-Lex D EN

COUNCIL OF THE EUROPEAN UNION. Brussels, 16 September 2013 (17.09) (OR. fr) 13649/13 PECOS 1 ESE 6 NT 6 ME 5 COWEB 128 ISL 6 FSTR 98 ELARG 117

EN 1 EN. Annex. Sector Policy Support Programme: Sector budget support (centralised management) DAC-code Sector Trade related adjustments

REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

1.2 Title: Project Preparation and Support Facility (PPF)

EU Enlargement. its Financial Support. Istanbul 27 June European Commission. EU Enlargementand

COMMISSION OF THE EUROPEAN COMMUNITIES REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

MULTI-COUNTRY. Support to Western Balkans Infrastructure Investment Projects for 2014 INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA II)

Multi-annual Indicative Planning Document (MIPD) Republic of Croatia

COMMISSION IMPLEMENTING DECISION. of adopting a

COMMISSION IMPLEMENTING DECISION. of adopting a Country Action Programme for Serbia for the year 2016

POLICY BRIEF IPA II MORE STRATEGY AND OVERSIGHT

Final PF2 Project Fiche IPA centralised programmes Part II of the Horizontal Programme on Nuclear Safety and Radiation Protection

COMMISSION DECISION. C(2007)5980 of 10/12/2007

Open Call for Consulting Services Consultant for Mapping of funding opportunities for Roma integration measures, policies and programs

IPA TWINNING NEWS NEAR SPECIAL

ANNUAL IMPLEMENTATION REPORT

EN Official Journal of the European Union L 77/11

1.5 Contracting Authority (EC) European Commission, EC Delegation, on behalf of the beneficiary

Screening report Montenegro

IPA National Programme 2009 Part II - Bosnia and Herzegovina Fiche 3 Preparation for IPA components III and IV

Infrastructure Projects Facility. Western Balkans Infrastructure Initiative

OPERATIONAL MANUAL FOR PROGRAMMING COMPONENT I OF INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA)

Impact Assessment of EU Financial Assistance to the Republic of Serbia: Time for Change? POLICY BRIEF. Introduction

TWINNING: A TESTED EXPERIENCE IN A BROADER EUROPEAN CONTEXT

Instrument for Pre-Accession Assistance (IPA) Multi-annual Indicative Planning Document (MIPD) Republic of Croatia

COMMISSION STAFF WORKING PAPER. Background document. Accompanying the document

ANNEX. 1. IDENTIFICATION Beneficiary CRIS/ABAC Commitment references Total cost EU Contribution Budget line. Turkey IPA/2017/40201

Project Fiche IPA National programmes / Component I

I N S T R U M E N T f o r P R E - A C C E S S I O N A S S I S T A N C E ( I P A I I ) Priorities incl. cross-border cooperation

ANALYSIS OF THE EUROPEAN COMMISSION PROPOSAL FOR NATIONAL INDICATIVE PROGRAMME FOR GEORGIA

Multi-country European Integration Facility

Instrument for Pre-accession Assistance (IPA) Multi-annual Indicative Planning Document MIPD Republic of Serbia

SERBIA. Support to participation in Union Programmes INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA II) Action summary

Multi-country European Integration Facility

Project number: TR Twinning number: TR03-SPP Location: Turkey Public Administration at Central and Regional level.

Government of the Republic of Serbia

Job Description and Requirements Programme Manager State-building and Governance Job no in the EU Delegation to the Republic of Yemen

Direct centralised management Complementary action / Technical Assistance Direct centralised management DAC-code Sector Multi-sector aid

IPA TWINNING NEWS NEAR SPECIAL

Standard Summary Project Fiche IPA centralised programmes

COUNCIL OF THE EUROPEAN UNION. Brussels, 15 May /07 DEVGEN 89 ACP 94 RELEX 347

COMMISSION DECISION. C(2007)6121 of 12/12/2007

MONTENEGRO. Support to the Tax Administration INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA II) Action summary

COMMISSION IMPLEMENTING DECISION. of adopting a Country Action Programme on Bosnia and Herzegovina for the year 2015

VADEMECUM ON FINANCING IN THE FRAME OF THE EASTERN PARTNERSHIP

ANNEX. Support to the reform of criminal justice system in Georgia - CRIS N ENPI/2008/19630

Standard Summary Project Fiche IPA centralised programmes Project Fiche: 9

DAC-code Sector Public Sector Policy and Administrative Management

Instrument for Pre-accession Assistance (IPA): the Rural Development Component IPARD

Draft COMMISSION DECISION. on a Multi-annual Indicative Planning Document (MIPD) for Montenegro

COMMISSION OF THE EUROPEAN COMMUNITIES. Proposal for a COUNCIL DECISION

BOSNIA AND HERZEGOVINA

The Instrument for Pre accession. EU Enlargement. Assistance IPA II:

Action Fiche for Libya

DRAFT OPINION. EN United in diversity EN. European Parliament 2018/0247(COD) of the Committee on Budgets

STANDARD PROJECT FICHE

Each Programme is managed by EC services or executive agencies in Brussels with dedicated structures normally established at national level.

Conditions for successful preparation and absorption of assistance. Joint presentation by respective units in DGs AGRI, EMPL and REGIO

COMMISSION OF THE EUROPEAN COMMUNITIES COMMISSION DECISION. of 2009

2010 IPA Horizontal Programme on Nuclear Safety and Radiation Protection PF1 Albania - Final Project Fiche No. 1

Council conclusions on the Fifth Report on economic, social and territorial cohesion

At the latest by 31 December At the latest by 31 December 2017

Action Fiche for Armenia Sector Multi Sector

EN 7 EN. Annex II Action Fiche for West Bank and Gaza Strip/ENPI. 1. IDENTIFICATION Title/Number Total cost 10,500,000

INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA II) ALBANIA European Union Integration Facility. Action summary

Council conclusions on the European Union Strategy for the Adriatic and Ionian Region (EUSAIR)

STANDARD SUMMARY PROJECT FICHE PROJECT PREPARATION FACILITY FOR THE PHARE CBC PROGRAMME BULGARIA-GREECE

COMMISSION IMPLEMENTING DECISION. of

Catching up with the EU - the economic case of Macedonia

COMMISSION OF THE EUROPEAN COMMUNITIES REPORT FROM THE COMMISSION ANNUAL REPORT ON THE COHESION FUND (2003) (SEC(2004) 1470)

IMPLEMENTATION OF THE EUROPEAN UNION COHESION POLICY FOR PROGRAMMING PERIOD: EVOLUTIONS, DIFFICULTIES, POSITIVE FACTORS

INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA II)

Standard Summary Project Fiche for the Transition Facility

sustainable micro, small and medium enterprise support structures in place. enhanced capacity to conduct international trade.

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL. on the Instrument for Pre-accession Assistance (IPA II)

Evaluation of Budget Support Operations in Morocco. Summary. July Development and Cooperation EuropeAid

Activities Implemented to Date 1. FOREIGN DIRECT INVESTMENT POLICIES AND PROGRAMMES

Annex I Action Fiche for West Bank and Gaza Strip/ ENPI

Western Balkans and Europe 2020 Supporting Convergence and Growth

DG Enlargement. Support to civil society within the enlargement policy 2. should be focused on enabling and

Contacts: Anastasija Trajkovska, Head of Sector, telephone: (0)

EN Official Journal of the European Union L 77/77

EU For Serbia Financing for SMEs

Annex 1: Conceptual Framework of the Swiss-Slovenian Cooperation Programme

Project Fiche: No. 14 Systematic Electronic Exchange of Data (SEED) in the Western Balkans

Project Fiche IPA centralised programmes Regional Programme on Disaster Risk Reduction in South-East Europe

Transcription:

DIRECTORATE-GENERAL FOR EXTERNAL POLICIES OF THE UNION DIRECTORATE B POLICY DEPARTMENT STUDY ANALYSIS OF THE 2009 ANNUAL PROGRAMME FOR MONTENEGRO UNDER THE INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA) IN THE CONTEXT OF THE 2009 ENLARGEMENT PACKAGE Abstract This Briefing Paper analyses the coherence of the IPA Annual Action Programme 2009 for Montenegro (AAP) with the European Union's (EU) pre-accession objectives. It evaluates the relevance of the elements of analysis put forward in the AAP and their adequacy to the situation in Montenegro. The AAP s allocation of funding and composition of projects will be projected against Montenegro s specific needs as identified by the European Commission s (EC) Progress Report (Commission 2009a) and the Enlargement Strategy (Commission 2009b). This paper is divided into a political section, an economic section, a section on Montenegro's ability to assume the obligations of membership. Each section provides an analysis of the current situation, of the AAP priorities and projects, as well as an assessment of the latter. The briefing closes with conclusions and recommendations. EXPO/B/AFET/FWC/2009-01/Lot1/06 February 2010 PE 433.669 EN

DG EXPO Policy Department This study was requested by the European Parliament's Committee on Foreign Affairs. AUTHOR(S): Dr. Jens Bastian is Senior Economic Research Fellow for South East Europe at ELIAMEP (Hellenic Foundation for Foreign & European Policy) in Athens, Greece. Between 2005 and 2008 he held the position of Economist/Institution Building at the European Agency for Reconstruction (EAR) in Thessaloniki, Greece. E-mail: jbastian@eliamep.gr ADMINISTRATOR RESPONSIBLE: Ghiatis Georgios Directorate-General for External Policies of the Union Policy Department WIB 06 M 045 rue Wiertz 60 B-1047 Brussels LINGUISTIC VERSIONS Original: EN ABOUT THE EDITOR Manuscript completed on 20 January 2010. European Parliament, 2010 Printed in Belgium The study is available on the Internet at http://www.europarl.europa.eu/activities/committees/studies.do?language=en If you are unable to download the information you require, please request a paper copy by e-mail: xp-poldep@europarl.europa.eu DISCLAIMER Any opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament. Reproduction and translation, except for commercial purposes, are authorised, provided the source is acknowledged and provided the publisher is given prior notice and supplied with a copy of the publication. ii

2009 AP for Montenegro under the IPA EXECUTIVE SUMMARY Scope of the briefing: This Briefing Paper analyses the coherence of the IPA Annual Action Programme 2009 for Montenegro (AAP) with the European Union's (EU) pre-accession objectives. It evaluates the relevance of the elements of analysis put forward in the AAP and their adequacy to the situation in Montenegro. The AAP s allocation of funding and composition of projects will be projected against Montenegro s specific needs as identified by the European Commission s (EC) Progress Report (Commission 2009a) and the Enlargement Strategy (Commission 2009b). This paper is divided into a political section, an economic section, a section on Montenegro's ability to assume the obligations of membership. Each section provides an analysis of the current situation, of the AAP priorities and projects, as well as an assessment of the latter. The briefing closes with conclusions and recommendations. Main findings: The objectives of the Annual Action Programme 2009 for Montenegro (AAP) are in accordance with the tasks identified in the European Commission s (EC) 2009 Progress Report, the Multi-annual Indicative Planning Document (MIPD) 2009-2011 and the EC s Enlargement Strategy. The third AAP for Montenegro is the largest to date, allocating 28.4 million of Community contribution in 18 projects. Projects concerning economic criteria (axis 2) and the ability to assume the obligation of membership (axis 3) figure prominently in the 2009 AAP. Together they account for 68.3 percent of the overall Community contribution. Political Criteria: The five projects within the IPA programme reflect Montenegro s priority needs in view of EU approximation as a potential candidate country. Noteworthy is the fact that three out of the five projects include a twinning component in this priority axis. However, the composition of the main activities in this axis displays some overlap with priority axis 3, i.e. approximation membership. Economic Criteria: The threefold project, focused on intra-ministerial drafting capacity, transport and environmental infrastructure, convincingly covers beneficiary needs identified in the priority axis 2 of the MIPD 2009-2011 and the EC s 2009 Progress Report on Montenegro. The extensive use of cofinancing with other IFIs in the railway rehabilitation project will require sustained donor co-ordination. The instrument of twinning is equally applied in this axis, providing for additional coherence and welcome continuity across different axes. For technical reasons the Commission split the AAP into two parts. Approximation Membership: The six projects proposed for funding correspond to various challenges identified in the EC s 2008 and 2009 Progress Reports. The focus is on capacity building interventions in areas such as strengthening control systems for EU financial assistance to Montenegro, protection of intellectual property rights and sustainable development of marine fisheries. The instrument of twinning is equally applied in this axis, albeit less frequently than in priority axes 1 and 2. Joining forces with other donors with a proven track record in the implementation of EU approximation matters in Montenegro is smart policy-making. Community Programmes and Support Activities: Three projects comprise priority axes 4 and 7. They relate to support measures for participation in Community programmes such as Culture, Entrepreneurship and Innovation. A twinning light contract applies to project preparation facility aimed at improving IPA management in Montenegro. iii

DG EXPO Policy Department Main conclusions: The 18 projects in the 2009 IPA National Programme for Montenegro cover key priority areas identified in the Commission s recommendations of the 2009 Enlargement Strategy and Progress Report as well as the MIPD 2009-2011. Throughout the different priority axes the frequent use of the twinning instrument is a major cornerstone of project implementation. The 2009 AAP for Montenegro stands out vis-à-vis other countries AAP in making good use of twinning contracts! The 2009 AAP is focused on bringing all relevant political, economic and legal institutions as well as civil society organizations up to standards with EC requirements. The complexity of the project matrix across priority axes underlines a coherent conceptual approach and the application of a medium- to longer-term time frame. Recommendations: Future AAPs need to continue with the identification of gap assessments in those areas where Montenegrin policies and practices do not comply with EU positions. Industrial policy making in Montenegro requires sustained intervention in order to address alignment priorities. This applies particularly to SMEs policy, micro-finance facilities and removing licensing barriers to register businesses. iv

2009 AP for Montenegro under the IPA TABLE OF CONTENTS EXECUTIVE SUMMARY III 1 INTRODUCTION 2 2 POLITICAL CRITERIA 3 2.1 POLITICAL SITUATION 3 2.2 THE ACTION PLAN 3 2.3 ASSESSMENT 3 3 SOCIO-ECONOMIC CRITERIA 4 3.1 SOCIO-ECONOMIC SITUATION 4 3.2 THE ACTION PLAN 4 3.3 ASSESSMENT 5 4 ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 6 4.1 SITUATION WITH REFERENCE TO THE ABILITY TO ASSUME THE OBLIGATIONS OF EU MEMBERSHIP 6 4.2 THE ACTION PLAN 6 4.3 ASSESSMENT 7 5 COMMUNITY PROGRAMMES AND SUPPORT ACTIVITIES 7 6 CONCLUSIONS 8 BIBLIOGRAPHY 9 1

DG EXPO Policy Department 1 INTRODUCTION The request for this Policy Brief specifies that the briefing should analyze: - the coherence of the annual programme with the Union's overall policy objectives as set for the preaccession process in general and for Montenegro in particular; - the pertinence of the elements of analysis as put forward in the action programme and their adequacy to describe the conditions observed/identified on the ground in Montenegro and considering the recent developments in the area; - the way in which results or lack of them (achievements and/or weaknesses) in implementing previous annual programme(s) and analysis of situation could be taken on board with a view to adjusting the Multi-annual Indicative Programme for Montenegro. In responding to this task, we analyze the IPA 2009 National Programme for Montenegro and its allocation of funding and composition of projects against the country s specific needs as identified by the European Commission s (EC) Progress Report (Commission 2009a) and the Enlargement Strategy (Commission 2009b). We divide this paper into four sections, i.e. a political, an economic and a European standards section. Part four discusses Community programmes and support activities. This approach follows the structure of the Progress Report and the priority axes within the 2009 IPA Programme as well as the MIPD. Each section provides an assessment of the proposed projects in the context of existing political, economic and European Standards criteria. The briefing closes with conclusions and recommendations. The 2009 IPA National Programme for Montenegro represents the third such engagement by the authorities in Podgorica in cooperation with the EC Delegation in leading national EU programming under IPA. The maximum amount of Community contribution shall be 28.4 million. This contribution covers 19 projects (including Part II of the 2009 AAP). Projects concerning economic criteria (axis 2) and the ability to assume the obligations of membership (axis 3) figure prominently in the 2009 AAP. Together they account for 68.3 percent of the overall Community contribution. When Part II of the AAP is included in the calculation in axis 2 the overall ratio would be almost two-thirds of the total 2009 budget. This financial contribution is broken down into 6.35 million allocated in priority axis 1 (Political Criteria), 12 million in priority axis 2 (Socio-Economic Criteria, inclusive of Part II of the 2009 AAP), and 7.78 million in priority axis 3 (Ability to Assume the Obligations of Membership). In addition to the assistance identified in these three priority axes, financial support ( 2.3 million) is also provided to participation in community programmes and support activities. 2

2009 AP for Montenegro under the IPA 2 POLITICAL CRITERIA 2.1 Political Situation The present parliament contains 81 seats, with a 47-seat majority currently held by the Coalition for a European Montenegro as a result of the March 2009 parliamentary elections. The Coalition for a European Montenegro won an absolute majority of seats in the Parliament of Montenegro on a turnout of 66 per cent. Milo Đukanović from the Democratic Party of Socialists (DPS) secured a sixth term as the Prime Minister. The DPS is set to remain the dominant political force in the coalition government over 2010-11. The prime minister, Milo Djukanovic, is expected to stay in his post for now in order to deal with the impact of the recession, but he may later step down to concentrate on business activities. In December 2008 Montenegro applied for membership of the European Union. EU integration will therefore remain the overarching priority of foreign policy. The Commission s decision in July 2009 to lift the visa obligation for Montenegrin citizens was enthusiastically received in the country. The management structures of most government bodies, including ministries, have not substantially changed and in many cases remain over-centralised. Further strengthening of the middle-management level should improve decision-making efficiency and transparency. However, n response to the economic crisis, human resources of the Secretariat for EU Integration (SEI) and line ministries have been subject to cost-cutting measures. 2.2 The Action Plan The first priority axis in the AAP political criteria comprises a total of five projects with an EC funding contribution of 6.35 million. The proposed interventions reflect Montenegro s priority needs in view of the EC s 2009 Progress Report and MIPD 2009-2011. They address administrative capacity building for judicial institutions, investigative competences of the Police Directorate, aligning Montenegrin migration and asylum policy with EU standards as well as personal data protection and civil society development. The latter project intervention corresponds to the single largest funding proposal ( 2.2 million) and operates through grant agreements. It is a positive sign of the project s funding architecture that the implementation of such grants (ranging from 50.000 to 300.000) to beneficiaries will be based on a minimum co-financing contribution of at least 10 percent by the future grant holder. It is particularly noteworthy that three out of the five projects include a twinning component in this priority axis. Such widespread use of the twinning instrument in one priority axis emphasizes the importance of sharing first-hand administrative expertise. The twinning emphasis is all the more necessary since the three projects seek to apply lessons learned from earlier IPA assistance in Montenegro. These lessons include the importance of project maturity and continuity, as well as the timely implementation capacity of prior EC policy decisions, e.g. in supporting the visa liberalization process which came into effect in mid-december 2009. 2.3 Assessment The projects proposed in priority axis 1 of IPA 2009 focus on areas such as implementation capacity of the new Criminal Procedure Code (CPC), strengthening police administration, alignment of Montenegrin migration and asylum policy with EU standards. IPA assistance for 2009 is convincingly formulated in 3

DG EXPO Policy Department reaction to lessons learned. These apply mainly to impact assessment and to assistance sustainability, taking into account the uneven capacity of the various Montenegrin administrations. The projects presented in the 2009 AAP equally mirror the objective of further assisting Montenegro in taking the next steps in the Stabilisation and Association Process (SAP) and continue with sustainable reforms needed to comply with EU approximation. Against the background of Montenegro having applied for EU membership in December 2008 and the EC currently preparing its opinion on the country s application the effectiveness and efficiency of the 2009 IPA Programme will be timely and critical. However, because of the determination of the 2009 AAP to support Montenegro in the SAP the composition of the main activities in this priority axis displays some overlap with priority axis 3, i.e. the approximation to EU standards. Two projects support to the reception centre for asylum seekers and civil society development explicitly aim to align Montenegro with EU standards and support civil society organizations participation in the accession of Montenegro to the EU. A third project proposal, personal data protection strategy, is located in priority axis 1. This may make sense. But it is worth pointing out that the same project title is anchored in priority axis 3 (approximation membership) for Albania s 2009 APP. An explanatory note why these projects are grouped in priority axis 1 and not 3 in the case of Montenegro could be useful. 3 SOCIO-ECONOMIC CRITERIA 3.1 Socio-economic Situation According to Economist Intelligence Unit (January 2010) estimates, real GDP contracted by 5% in 2009. A modest rebound is expected in 2010, with recovery accelerating in 2011. The current-account deficit will decline modestly in 2010-11. Montenegro s industrial output contracted in the course of 2009 and the collapse of commodity prices has negatively affected export capacity and foreign currency inflow. The official unemployment rate remained high at 16 percent during the second half of 2009. In particular the unbalanced regional distribution of unemployment and the workforce remain matters of concern for social policy making and vocational training initiatives. It is noteworthy that despite the challenges and adjustments resulting from the global economic crisis, overall a domestic consensus on economic policy essentials has been maintained within the governing coalition and between social partners. Prudent fiscal policy and developing a more market-oriented approach to highway construction by involving the private sector through Public-Private Partnerships (PPPs) underline this domestic consensus on economic policy in Montenegro. In response to the economic crisis, an IPA crisis package has been created, comprising 200 million for the Western Balkan region. This assistance package is expected to leverage additional investments of at least 1 billion, co-financed by the partner financial institutions such as the EBRD and the World Bank. Montenegro will benefit from a share of these multi-beneficiary funds for competitiveness, SMEs, energy efficiency and banking sector regulation. 3.2 The Action Plan The 2009 AAP for Montenegro proposes to allocate almost 40 percent of the overall budget ( 10.80 million) to priority axis 2 Socio-economic criteria. This includes three projects, namely Supporting the Ministry of Finance and Ministry for Economic Development to draft the Development Strategy of Montenegro (2010-2015) and National Development Plan. 4

2009 AP for Montenegro under the IPA Supporting the rehabilitation of the main rail line Bar-Vrbnica (border with Serbia). This largest EC contribution in the priority axis 2 is co-financed with EIB and EBRD loans to the order of 10 million. Sustained donor co-ordination with these IFIs will be critical for maximum impact on the ground. Environmental EU alignment and solid waste management in the northern municipalities of Montenegro. This municipal infrastructure project for northern Montenegro forms Part II of the 2009 AAP. Additional funds are made available for Montenegro under IPA 2009 from returned resources to the Community budget. Horizontal issues such as environmental impact assessment and equitable representation of minorities are adequately integrated. This focus on intra-ministerial drafting capacity, transport and environmental infrastructure convincingly cover beneficiary needs identified in the MIPD 2009-2011 and the EC s 2009 Progress Report on Montenegro. Good project visibility of EU engagement should be attained at all stages of the funding period for the two activities in the field of railway rehabilitation and waste management in hitherto neglected parts of Montenegro. The latter project has the further advantage that it continues to diversify environmental infrastructure needs away from a prevailing focus on the centre and rather directs added attention and project resources to the periphery, i.e. northern parts of the country. The additional funds made available for Montenegro under IPA 2009 from returned resources to the Community budget are earmarked for municipal infrastructure investments. More specifically, the project is a good example how past Community assistance to Montenegro 1 which was returned to the Community budget can itself be re-allocated in a sensitive manner to the initial beneficiary country. 3.3 Assessment The volume of funding allocated to the Socio-economic criteria under IPA 2009 totals 12 million, or 44 % of the total budget. This amount includes the additional 1.2 million made available for rural transport infrastructure. In light of the impact of the global economic crisis in Montenegro, such funding priorities and project focus adequately address economic requirements including measures to support infrastructure investment, rural disparities and environmental considerations through solid waste management. The four projects assigned to the socio-economic priority axis of the 2009 AAP are convincing and timely in terms of their medium-term economic potential for Montenegro. Moreover, cross cutting issues, in particular environmental impact assessment and good governance, are being taken account in the proposed interventions. As already positively observed in priority axis 1, the project architecture for socio-economic interventions also includes the regular use of twinning contracts (two out of three projects). This continuity is most welcome and underlines coherence of approach across different priority axes. The focus on providing municipalities with adequate machinery to maintain the rural roads network in the northern parts of the country strengthens the objective to regionally diversify funding and project interventions. Furthermore, in this attempt at regional diversification also rests the objective to engage municipalities that are far away from the capital city of Podgorica to gain operational experience in managing EU funded projects. 1 The OBNOVA revolving fund for Montenegro was part of the CARDS programme, which was managed by the European Agency for Reconstruction (EAR). A total of 1.2 million remained in this fund and had to be returned to the Community budget when the EAR was closed in December 2008. These funds were subsequently again made available for Montenegro under IPA 2009. 5

DG EXPO Policy Department Concerning the rehabilitation of the Montenegrin section of the international railway line Bar-Belgrade, the proposed intervention includes substantial co-financing arrangements with two other IFIs. The project fiche indicates that within the project duration the state-owned Railway Company may be privatized. In such a case the project will be cancelled and disbursements recovered (AAP 2009, Annex, Financing Proposal, p.5). The key question is whether sufficient precautionary measures have been taken by the contracting and disbursement authorities in the EC Delegation of Montenegro to guarantee immediate beneficiary compliance with such potential action. What are the set of conditionalities to be applied and how quickly can they become effective (i.e. timely recovery of EC contributions in case of railway privatization)? This matter is not to be underestimated in light of the EC s observation that Montenegro s external audit are at an early stage of implementation and the State Audit Institution is developing its administrative capacities (Commission 2009b, p. 54). 4 ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 4.1 Situation with reference to the ability to assume the obligations of EU membership As noted in the EC Progress Report, Montenegro continued during 2008/09 to make good progress with regard to its ability to assume the obligations of EU membership, in particular in areas such as consumer protection, movement of persons, reporting requirements of commercial banks vis-à-vis the Central Bank and tax administration. Less progress has been achieved in regard of conformity assessment, accreditation, market surveillance as well as finalising negotiations for accession to the World Trade Organisation (WTO). The most critical deficits reside in the fields of anti-trust, public procurement and intellectual property law. The Commission s Progress Report 2009 argues that preparations in the area of intellectual property rights and industrial property rights are at an early stage, in particular with regard to the institutional and enforcement capacity for dealing with complex IPR cases (European Commission, 2009a, p.34). Montenegro is a potential candidate country for EU membership. In December 2008 Montenegro applied for membership of the European Union. The Council requested from the Commission in April 2009 to submit its opinion on the application by Montenegro. The country is continuing to implement its commitments under the Stabilisation and Association Process. In March 2009 a political dialogue was held between the EU (troika) and Montenegro. 4.2 The Action Plan The six projects proposed for funding correspond to various challenges identified in the EC s 2008 and 2009 Progress Reports. The focus is on capacity building interventions in areas such as strengthening control systems for EU financial assistance to Montenegro, protection of intellectual property rights and sustainable development of marine fisheries. The instrument of twinning is also applied in this priority axis, albeit less frequently than in the previous priority axes 1 and 2. However, the use of delegation agreements and direct contribution agreements with other donors and organizations operating in Montenegro is more frequent in the approximation membership axis. Joining forces with other donors and organizations with a proven track record in the implementation of EU approximation matters in Montenegro is smart policy-making. Two projects interventions namely strengthening the State Audit Institution and accession to the Internal Market - rest on the implementation 6

2009 AP for Montenegro under the IPA of joint management between the EC and the German GTZ in Montenegro as well as the European Patent Office (EPO), respectively. Thus, sustained donor coordination with both organizations and with the Government of Montenegro in the delivery of these assistance programmes will be critical. 4.3 Assessment In line with the EC Progress Report and the MIPD, the focus of the 2009 AAP in priority axis 3 is on administrative capacity building in areas such as management of EU financial assistance, strengthening the State Audit Institution, accession to Internal Market and implementation capacity of regulations relating to Labour Inspection and Safety at work. These projects will enable Montenegro to transpose, implement and enforce the acquis. The project mix is equally well balanced in terms of thematic diversity, funding priorities and responding to identified needs from EC Progress Reports. Equally, projects seek to establish continuity and follow-up with other interventions in priority axes 1 and 2. This is most obvious in the case of strengthening the management and control systems for EU financial assistance in Montenegro. More specifically, the project seeks to improve the capacity of the internal audit services in the Ministry of Finance with respect to managing EU funds under the IPA Implementing Regulation. In this respect, the project intervention can be seen as complementary to observed challenges in the rehabilitation of the Montenegrin section of the international railway line Bar-Belgrade (see observation on previous page in priority axis 2). Put otherwise, the possible recovery of disbursed EU funds in the railway project if and when privatization should take place will be made all the more effective through the strengthening of internal and external audit capacities. 5 COMMUNITY PROGRAMMES AND SUPPORT ACTIVITIES Three projects comprise priority axes 4 and 7. They relate to support measures for participation in Community programmes such as Culture, Entrepreneurship and Innovation, participation in the 7 th Framework Programme for Research as well as facilitation of operational management and drafting capacity of current and subsequent IPA National Action Programmes. A twinning light contract applies to the project preparation facility (PPF) aimed at improving planning and implementation capacity of IPA management in Montenegro. Hence, across all priority axes in the 2009 AAP the application of twinning options are proposed. The PPF funding proposal is significant because it seeks to support the entire arsenal of IPA programming, i.e. drafting terms of reference, needs assessments and project evaluation capacity. The enhancement of local expertise to manage the complexities of IPA drafting and implementation through training, seminars and supervisory services is commendable. 7

DG EXPO Policy Department 6 CONCLUSIONS Montenegro applied for EU membership in December 2008. In April 2009 the Council invited the Commission to submit its opinion. Work on the preparation of the opinion is ongoing. The scope and content of Montenegro s 2009 AAP ties into significant developments taking place in Podgorica and Brussels. The authorities in Montenegro are currently dealing with the EC s extensive pre-accession questionnaire. Replying to the questionnaire is a demanding task which will require strong commitment from the entire public administration and political authorities in Podgorica. It constitutes an unprecedented reality check for the country. Forging consensus on a wide range of issues will prove challenging. The answers provided will form the basis of the EC s assessment of the country s readiness to make the transition from potential candidate country and towards being granted full candidate status (Blockmans 2007). Finally, the past year marked a major milestone for Montenegro s road towards Europe. Together with Serbia and the former Yugoslav Republic of Macedonia the European Union lifted visa requirements for its citizens starting December 19, 2009. This change of policy is a critical achievement for the three countries and should add further impetus towards implementing the 2009 AAP in Montenegro. The 18 projects in the 2009 IPA National Programme for Montenegro cover key priority areas identified in the Commission s recommendations of the 2009 Enlargement Strategy and Progress Report as well as the MIPD 2009-2011. Throughout the different priority axes the frequent use of the twinning instrument is a major cornerstone of intended project implementation. It also gives the overall Programme a strong sense of coherence and continuity across priority axes. The 2009 AAP for Montenegro stands out vis-à-vis other countries AAP in making extensive use of twinning contracts! The 2009 AAP is focused on bringing all relevant political, economic and legal institutions as well as civil society organizations up to standards with EC requirements. The complexity of the project matrix across priority axes underlines a coherent conceptual approach and the application of a medium- to longer-term time frame. Future AAP needs to continue with the identification of gap assessments. Montenegrin policies and practices do not comply with EU positions in key areas. Industrial policy making in Montenegro requires sustained intervention in order to address alignment priorities and mitigate the consequences of the economic crisis. This applies particularly to SMEs policy, micro-finance facilities and removing licensing barriers to register businesses. Dr. Jens Bastian is Senior Economic Research Fellow for South East Europe at ELIAMEP (Hellenic Foundation for Foreign & European Policy) in Athens, Greece. Between 2005 and 2008 he held the position of Economist/Institution Building at the European Agency for Reconstruction (EAR) in Thessaloniki, Greece. E-mail: jbastian@eliamep.gr 8

2009 AP for Montenegro under the IPA BIBLIOGRAPHY BLOCKMANS, Steven (2007): Tough Love. The European Union s Relations with the Western Balkans, I.M.C. Asser Press: The Hague. COMMISSION (OF THE EUROPEAN COMMUNITIES) 2009a: Montenegro 2009 Progress Report (SEC(2009) 1336), Brussels. COMMISSION (OF THE EUROPEAN COMMUNITIES) 2009b: Enlargement Strategy and Main Challenges 2009-2010 (COM(2009) 533 final), Brussels. COMMISSION (OF THE EUROPEAN COMMUNITIES) 2009c: National Programme for Montenegro under the IPA Transition Assistance and Institution Building Component for the Year 2009 C(2009)6420 final, Brussels. COMMISSION (OF THE EUROPEAN COMMUNITIES) DECISION 2009: Adoption of a Rural Roads Project for Montenegro under the IPA Transition Assistance and Institution Building Component part II for 2009 C(2009)9396 of 24/11/2009. Economist Intelligence Unit, January 2010, Country Report Montenegro, London, Economist Intelligence Unit. MULTI-ANNUAL INDICATIVE PLANNING DOCUMENT (MIPD) 2009-2011 FOR MONTENEGRO, Commission decision: C(2009)4506 9