Aid plan for CEECs still far from settled

Date: 24/07/1997

By Mark Turner

IT MAY have been described by European Commission President Jacques Santer as part of “a veritable Marshall Plan”, but the Union's revamped assistance programme for central and eastern Europe is far from a done deal.

Although the European Commission announced plans in the spring to make aid more focused on enlargement, details of how this will work in practice are still sketchy and have yet to be accepted by national governments.

The Phare programme is the main plank of EU support to central and eastern Europe, worth 2 billion ecu a year until 1999. If Commission proposals are accepted, this will be raised to 1.5 billion ecu a year from 2000 to 2006.

According to the Agenda 2000 report released last week, the programme will aim in future to solve the main problems identified by the Commission in its opinions on the accession applicants.

“Some are common to the majority of applicant countries, while others are specific, resulting from the different situations prevailing in each country,” it stated.

On this basis, the Commission is proposing to split Phare money roughly 30:70 between training administrators and judiciary in the region, and building essential infrastructure such as roads and cleaner factories.

But while no one doubts that Phare's more 'accession-driven' approach is a step in the right direction, there are growing concerns as to whether it will work in practice.

The first problem is that at the 1994 Essen summit, EU leaders decided to limit Phare infrastructure funding to a maximum of 25&percent; of the available budget. Commission calls to increase that to 70&percent; will therefore almost certainly need to be addressed at ministerial level and are far from guaranteed a rubber stamp.

National diplomats are voicing concerns that since Phare money generally takes the form of a grant rather than a loan, large-scale injections of cash into the East could have several effects.

Not only would they undercut international lending institutions such as the World Bank, but they could also undermine EU calls for budgetary discipline and a private sector mentality in big public projects.

Finally, EU taxpayers might not appreciate their taxes going straight into the pockets of eastern entrepreneurs.

“This could be an unhealthy development,” warned one diplomat, although he added that “if the EU insisted that all Union grants be matched by similar levels of investment from the recipient countries, it might help matters”.

The second pitfall is a Commission plan to twin EU national administrations with applicant country bureaucracies.

The idea would be to set up exchange schemes and direct contacts between, for example, Polish and French judges or German and Hungarian public auditors.

“In most cases, the administrative capability of these countries is very weak. In some sectors it is so poor that the applicants could not ensure the proper functioning of the internal market,” said one Commission official. “This would go some way to bring them up to western standards.”

But national governments, and some Commission experts, remain unconvinced. Although in principle it seems laudable, EU governments are not keen about the prospect of shipping off hundreds of officials whose expertise is needed at home.

National diplomats attack the Commission's failure to consult them adequately on a scheme that hinges on their cooperation.

Critics within the Commission fear that governments could end up sending only less- able staff, and that contacts would be irregular at best.

But a member of the team drafting the new guidelines, which are due to be published in September, defended the idea, stressing that the scheme would be paid for by the EU budget and would be kept within manageable proportions.

“There are many retired officials who would be delighted to do this work,” he added.

Meanwhile, there is also uncertainty within the Commission as to which directorates-general would be involved in the new Phare and to what extent. Since the programme aims to be far more holistic than before, it will involve experts from all over the Commission. But some are demanding only a consultative role, some want to control funds and others are trying to avoid involvement as much as possible.