To recall, in
2006 the Community established an instrument of financial support that seeks
to encourage the economic development of the Turkish Cypriot Community. A sum
of EUR 259 million has been earmarked from the Pre-accession strategy to
fulfil this purpose.
In accordance
with provisions set out in Regulation (EC) No 389/2006 the Commission is
obliged to prepare annual reports containing information on actions financed
during the year and on the findings of monitoring work. It is also required
to give an assessment of the results achieved in the implementation of the
assistance.
This report,
the first such one, covers the period from February 2006 to February 2007. It
covers, in particular: i) financial assistance; ii) the implementation
mechanisms for the programme; iii) the first actions in terms of tendering and
contracting; and iv) conclusions that include an assessment of the challenges
posed by this specific programme.
Financial
Assistance programming: Out of the EUR 259
million allocated to the aid programme, EUR 240.15 million has been earmarked
to operational activities, whilst the remainder (i.e. 7.2% of the overall
financial allocation) has been earmarked to support the implementation of the
aid programme. Three financing decisions were adopted that represent a
balanced package of actions. Financial assistance focuses on five priority
objectives:
- Objective
1: Developing and restructuring of infrastructure (approx. EUR 129.25 million): Objective 1 seeks to redress
the serious gap in infrastructure provisions that currently exist in the
northern part of Cyprus, Focus will therefore be given to funding water
and sanitation, solid waste, nature protection; energy; traffic safety;
and telecommunications. Following years of underinvestment and neglect,
key infrastructure sectors are in need of rehabilitation and upgrading
in order for the Community’s body of law to be applied. Certain
flexibility has been built into the programme as regards the funding of
reserve projects should some of them be unable to proceed due to the
respect of property rights.
- Objective
2: Promoting social and economic development
(approx. EUR 70.2 million): This priority covers a broad range of
activities that seek to enhance the long term economic sustainability of
the Turkish Cypriot Community and includes: rural development; the
restoration of urban and local infrastructure; new crossing points
across the Green Line; human resources development; and actions
promoting the competitiveness of the private sector.
- Objective
3: Fostering reconciliation, confidence building measures, and support
to civil society. (approx. EUR 13 million):
Under this priority, the aid programme will fund activities that seek to
strengthen civil society and support reconciliation and confidence
building measures; it will seek to continue de-mining the buffer zone
with special attention given to the de-mining of future crossing points;
and it will seek to support work between the two communities in the
field of history teaching.
- Objective
4: Bringing the Turkish Cypriot Community closer to the European Union (approx. EUR 9.5 million): The main priority of this heading
will be to remove the isolation of the Turkish Cypriot community by
facilitating contacts with the EU. This is to be achieved through:
community scholarship schemes; grants for people-to-people contacts; and
raising awareness of the EU and its policies. An EU information point
will be set up in the northern part of Cyprus.
- Objective
5: Applying the Community’s acquis communautaire(approx. EUR 13.46 million): Objective 5 will assist with the
preparation of legal texts as well as reinforcing the ability of the
Turkish Cypriot Community to implement the acquis in view of the
withdrawal of its suspension in accordance with Article 1 of Protocol 10
to the Act of Accession.
- Unallocated
Technical Assistance and Programme Reserve Facility (approx. EUR 4.74 million): This will provide some limited
resources to respond to requests for new activities, which may become
needed once implementation starts and which may arise from changes in
the political situation.
Implementation
mechanisms: The Commission is responsible for
administering the assistance. Implementation follows Article 53 (a) of the
Financial Regulation with DG Enlargement acting as the Contracting Authority.
To implement the programme, a dedicated Programme Team, composed of
Commission officials and contract agents has been set up as part of the
Turkish Cypriot Community Task Force within DG Enlargement. During the
reporting period, the Programme Team has gradually been built up. At the end
of February 2007, the Programme Team comprised of 20 staff including 2
statutory Commission officials, 8 contract agents and 10 staff provided for
by a private contractor.
Actions
Financed: Most financing decisions were taken in
Autumn 2006. Initial activities include:
- The
setting up of TAIEX: TAIEX has delivered
technical assistance to the Turkish Cypriot community under previous
funding arrangements. Funds under the aid programme were used for
setting up the TAIEC Local Support Point.
- Information
and publicity: Funding was given to raising
awareness of the aid instrument. Information was provided through
kick-off seminars; press conferences and the production and distribution
of leaflets. A DG Enlargement website dedicated to the aid programme was
also funded.
- Financial
executions (contracting and disbursement):
At the end of the reporting period, a total of EUR 14.5 million was
earmarked for contracts. Of this amount, around EUR 13.2 million was
contracted under the operational part of the aid programme and EUR 1.3
million for supporting activities. As regards disbursement, the
Commission disbursed a sum of around EUR 4.25 million to its
contractors. Of this amount, around EUR 3.7 million was contracted under
the operational part of the aid programme and EUR 550 000 for supporting
activities. Additionally, the Commission spent around EUR 400,000 on
staff and mission costs.
Conclusions:
Most of the activities undertaken during the
reporting period focused on: the programming of assistance; the setting up of
the implementation mechanism; and ensuring continuity with previous EU funded
activities. The legal, diplomatic and political context within which the
Commission is operating is unique and poses a number of challenges and risks
to the successful implementation of this aid Regulation.
These
challenges include:
- tight
contracting deadlines;
- property
issues ( it is estimated that 78% of privately owned land in the
northern part of Cyprus belongs to Greek Cypriots);
- low
absorption capacity by the beneficiary community (the Turkish Cypriot
Community is small and not well equipped in terms of infrastructure);
- staffing of
the Commission Programme Team (due to staff rules a major staff turnover
will take place in 2009 close to the contracting deadline) and lastly;
- cooperation between
the Turkish Cypriot Community and the Greek Cypriot Community.
The overall
success of the programme depends greatly on the successful cooperation of the
two communities. Political issued not directly related to the aid programme per
se but rather to the overall political context on the island might induce
both communities to block implementation of certain parts of the programme.
In this sense, implementation will be greatly facilitated by progress on the
reunification process under UN auspices.