Commission Report (2002): Latvia

Community Assistance

For the years 2000--2002, total financial assistance to Latvia amounts to around EUR 35 million annually from Phare, EUR 22.2 million from SAPARD, and between EUR 36.4 and EUR 57.2 million from ISPA.

The Phare programme has been providing support to the countries of Central and Eastern Europe since 1989, helping them through a period of fundamental economic and social transition and political change. Its current ``pre-accession'' focus was established in 1997, in response to the Luxembourg European Council`s launching of the present enlargement process.

Phare provides the applicant countries of Central and Eastern Europe with support for institution building, investment to strengthen the regulatory infrastructure needed to ensure compliance with the acquis, and investment in economic and social cohesion. This support comprises co-financing for technical assistance, ``twinning'' and investment-support projects, to help these countries with their efforts to adopt the acquis and strengthen the institutions necessary for implementing and enforcing the acquis. Phare also helps the candidate countries develop the mechanisms and institutions that will be needed to implement Structural Funds after accession and is supported by a limited number of measures (investment and grant schemes) with a regional or thematic focus. In the context of the Action Plans for strengthening administrative and judicial capacity, a particular emphasis is placed on the issue of institution building and associated investment intended to ensure compliance with the acquis. For 2002, the Commission has mobilised special financial assistance of up to EUR 250 million to accompany negotiating countries' efforts, over and above the indicative annual allocations for each of the Phare countries, bringing total Community assistance for strengthening the administrative and judicial capacity of the negotiating countries in 2002 to around EUR 1 billion.

The Phare programme allocated commitments of EUR 320.3 million to Latvia during the 1992--1999 period, EUR 34.8 million in 2000, and EUR 36.2 million in 2001. The 2002 Phare Programme for Latvia consists of an allocation of EUR 27 million for the National Programme, complemented by 5 million under the Phare 2002 supplementary institution building facility. The 2002 Phare programme focuses on the following priorities:

• priority 1: Political Criteria (EUR 3.1 million), including Promotion of the Integration of Society in Latvia and Civil Society;
• priority 2: Free Movement of Goods EUR Consumer Protection (EUR 2.2 million), including Market Surveillance in the non-Food Sector and Food Chain Surveillance;
• priority 3: Free Movement of Services (EUR 0.8 million) including Data State Inspection;
• priority 4: Agriculture (EUR 0.9 million), including TSE/BSE Control;
• priority 5: Statistics (EUR 1 million), including Intra-Community Trade Statistics;
• priority 6: Social Policy and Employment (EUR 1.8 million), including the Employment Strategy (Institution Building);
• priority 7: Telecommunications and Information Technologies (EUR 0.5 million), including the Public Utilities Commission;
• priority 8: Regional Policy and co-ordination of Structural Instruments (EUR 4.5 million), including Public Finance Management and a Project Preparation Facility;
• priority 9: Environment (EUR 1.9 million), including Environment Monitoring;
• priority 10: co-operation in the Field of Justice and Home Affairs (EUR 6.5 million), including Preparation for Participation in the Schengen Information System, Sea Border Surveillance and State Police;
• priority 11: Customs Union (EUR 4.8 million), including the Customs Business Strategy and Customs Data Systems;
• priority 12: Overall Administrative Capacity (EUR 4.2 million) including Community Programmes and Agencies, Twinning Light Facility.

Latvia also participates in and benefits from Phare-funded multi-country and horizontal programmes, such as TAIEX, the Small and Medium-sized Enterprises Facility, SIGMA and the nuclear safety programme.

Furthermore, Latvia participates in the following Community programmes: Leonardo da Vinci II, Socrates II, Youth, Life III, the multi-annual Programme for Enterprises and Entrepreneurship, Culture 2000, Gender Equality, Combating Social Exclusion and the Fifth Framework on Research and Technological Development. It is also affiliated to the European Environment Agency.

Overall, the impact of Phare has been positive. Effective transfer of know-how, equipment and financial resources has taken place in important fields such as the public finance sector, health and safety at work, agriculture, justice and home affairs, eastern border management and statistics. In the agriculture and food control sector, know how and equipment have been supplied to veterinary services and border facilities including training in food safety, hygiene and quality matters at central and regional level.

For example, in Latvia, Phare has played a particularly important role in:

• Major support for the development of the Latvian Eastern Border Management. The facilities of 9 Latvian border-crossing-points are being upgraded to EU standards (EUR 7.3 million) with Phare support, while the other improvements necessary are financed through the Latvian state budget.
• The development of a Latvian Integrated Border Control System (EUR 1 million). This project implemented through a Twinning partnership, has focused on the development of an Integrated Border Management Strategy. It has facilitated a comprehensive assessment of current border security and aims to improve the effectiveness of co-operation and the implementation of joint tasks by the border agencies. All agencies involved in border surveillance have been closely involved in the project.
• Society integration, where Phare has been the most important supporter of the Latvian Language Training Programme (EUR 5.1 million since 1996), a multi-donor programme hitherto administered by the United Nations Development Programme. The programme, now managed by the Latvian authorities, has focused on enhancing Latvian language training in minority schools, providing language training opportunities for targeted groups of adults and promoting society integration at community level by various means.

The Review also provided for the possibility of further decentralisation of Phare management, by waiving the requirement for ex ante approval by the Commission Delegations for tendering and contracting. For this to be possible, strict pre-conditions covering programme management, financial control and structures regarding public finance must be met. An extended decentralised implementation system (EDIS) should be put in place for each negotiating country at the latest by the time of accession. High-Level Working Groups have been established for each country to oversee this process, along with other key procedural steps in the run-up to accession.

The Commission approved the Latvian SAPARD programme in October 2000. The indicative allocation for SAPARD in Latvia for 2002 is EUR 22.9 million, at 2002 prices (allocation 2001: EUR 22.6 million at 2001 prices).

The operational programme is based on the following three priorities: development of sustainable agriculture (4 measures: 54% of the EC funds); integrated rural development (2 measures: 36%); improvement of the environment (3 measures: 4%).

The multi-annual Financing Agreement (MAFA), which sets out the rules for implementing SAPARD, is in force since July 2001. The Annual Financing Agreement (AFA), which sets out the Community financial commitment to Latvia for the year 2000, is in force since May 2001.

The Annual Financing Agreement for 2001. was signed in February 2002, and entered into force in June 2002.

The following structures are responsible for the implementation of SAPARD: the National Fund, located within the Ministry of Finance, administers the SAPARD funds under the responsibility of the National Authorising Officer (NAO) and is responsible for the national accreditation of SAPARD Agency; the Managing Authority is located within the Latvian Ministry of Agriculture; the Rural Support Service (RSS) has been designated by the Latvian Government as the SAPARD agency responsible for the implementation and financial management of the programme. The agency operates from its headquarters in Riga with 9 regional offices throughout Latvia.

The Commission adopted a Decision in December 2001 provisionally conferring management authority for SAPARD, on a fully decentralised basis, to the Rural Support Service (SAPARD Agency) in Latvia. The decision includes approval of six measures covering 92% of the amount available for Latvia. Simultaneously, an initial payment on account of EUR 5.4 million was made to the SAPARD Euro Account in the National Fund. Up to June 2002 the SAPARD Agency has received 444 project applications from potential beneficiaries. Of these 219 have been approved, involving around EUR 10.4 million of public support.

A Monitoring Committee has been established by the Managing Authority and has met three times.

The ISPA programming framework is governed by the national strategy papers for transport and environment which the Latvian authorities finalised in 2000. In the case of transport, the emphasis is on the rehabilitation of the TINA (Transport Infrastructure Needs Assessment) Road Corridor I and the modernisation of the TINA East-West railway link. In the environmental field, the Latvian Government's priorities for ISPA financing are waste and drinking water (in the seven largest cities, as well as for the most important river basins) and waste management (closure of old landfills and opening of new ones that meet European standards).

For the years 2000 and 2001, the full (mid-range) allocation for Latvia has been committed, i.e. EUR 94.8 million (EUR 46.8 million in 2000 and EUR 48 million in 2001). The allocation for 2002 will be between EUR 38.1 million and EUR 59.9 million.

Five environmental projects were approved in 2001, dealing with solid waste management in Ventspils (with an ISPA contribution of EUR 3.0 million), in Liepaja (EUR 5.1 million) and in Ziemelvidzeme (EUR 3.4 million), water services in the Eastern Latvian river basins (EUR 44.6 million) and technical assistance for environmental projects (EUR 3.4 million). Three transport projects were approved in 2001: upgrading of the Riga-Adazi section of the Via Baltica (EUR 10.6 million), modernisation of the signalling systems on the East-West railway link (EUR 67.5 million), and technical assistance for road projects (EUR 0.6 million). So far in 2002, two measures have been approved: a water services project in Jurmala (EUR 8.3 million) and the rehabilitation of the security system on the East-West railway link (EUR 11.3 million). More projects are in preparation. As regards the decentralisation process (EDIS) for ISPA, the Commission approved a technical assistance package at the end of 2001 (with ISPA financing of EUR 0.7 million) to assist the Latvian authorities in their preparations.

Contracts have been signed for three projects in the transport sector, in addition to the technical assistance for EDIS. The tenders for most other ISPA 2000 projects are currently in preparation (except for the Jelgava water services project).

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