Commission Report (2002): Poland

Community Assistance

For the years 2000--2002 total financial assistance to Poland amounts to EUR 398 million annually from Phare, 168.6 million from SAPARD (at 1999 prices), and between EUR 312 and EUR 385 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 (around one third of the Phare allocation), investment to strengthen the regulatory infrastructure needed to ensure compliance with the acquis (also around one third of the allocation), and investment in economic and social cohesion (the remaining one-third of the Phare allocation). 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, 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 2534 million to Poland during the 1992--1999 period, EUR 484 million in 2000, and EUR 467 million in 2001. The 2002 Phare Programme for Poland consists of an allocation of EUR 342.2 million for the National Programme, complemented by EUR 51.8 million under the Phare 2002 supplementary institution building facility. The 2002 Phare programme focuses on the following priorities:

• the reinforcement of institutional and administrative capacity in the fields of transport, employment policy, taxation, financial control, public finance, regional policy and preparation for Structural Funds, and statistics (EUR 61 million);
• internal market (customs, market surveillance, medicines and medical devices, food safety, public procurement, chemicals, co-ordination of social security) (EUR 25 million);
• the strengthening of co-operation in the field of Justice and Home Affairs (border management, fight against organised crime, visa and migration policies, justice co-operation, police co-operation, border infrastructure) (EUR 65 million);
• institution building in agriculture and fisheries (TSE control, reference laboratory, veterinary administration and preparation for EAGGF and FIFG) (EUR 35 million);
• institution building in the field of environment (implementation of the water framework directive, monitoring drinking water quality, control of waste shipments, EMAS, and training for environmental protection) (EUR 14 million);
• economic and social cohesion (human resources development and sectoral SME development programmes in all regions and business-related infrastructure in 13 target regions (EUR 170 million);
• participation of Poland in Community programmes (EUR 24 million).

Poland also participates in and benefits from Phare-funded multi-country and horizontal programmes, such as TAIEX, the Small and Medium-sized Enterprises Facility, a steel restructuring technical assistance facility, SIGMA and the nuclear safety programme. Furthermore, Poland participates in the following Community programmes and Agencies: the Fifth Framework programme on Research and Technological Development, Media Plus, Leonardo, Socrates, Youth for Europe, SAVE II, the multi-annual Programme for Enterprises and Entrepreneurship, Altener, IDA, CULTURE 2000, European Environment Agency, EMCDDA, Gender Equality, Incentive Measures in Employment, Combating Discrimination, Health Programmes, eContent.

In order to streamline Community legal procedures and thereby facilitate future participation of Poland in Community programmes, a Decision has been adopted by the Association Council establishing the general principles for such participation.

Overall, the impact of Phare has been positive. Effective transfer of know-how, equipment and financial resources has taken place in a number of important fields such as industrial restructuring and privatisation, SME development, trade and investment promotion, energy, land registration, veterinary and phytosanitary administration, environmental investments and institution building. Phare support for agriculture and SME development has succeeded in developing sector strategies and initiating essential institutional and financial mechanisms servicing enterprises in these sectors. In other sectors, such as customs, taxation, justice and home affairs, fisheries, coal and steel, and employment, Phare support has contributed to the establishment of sectoral development, institutional and restructuring strategies and plans, and has helped to alleviate the social consequences of restructuring.

For example, in Poland, Phare played a particularly important role in:

• the transport sector: construction and renovation of the A4 Motorway (Wroclaw-Katowice-Krakow project) (126 km) were financed by Phare (EUR 105 million) together with the EIB (EUR 375 million). In the railways sector, Phare funding (EUR 38 million) contributed to the renovation of the E30 railway line in the south of the country, following the 1997 floods, together with funds from the EIB (EUR 161 million) and the government (EUR 156 million);
• privatisation: preparatory work, the vouchers for the mass privatisation programme and bad debt work-outs prior to the privatisation of commercial banks were funded by Phare (EUR 20 million) together with the EBRD;
• a regional development programme, where SME development was funded by Phare (EUR 50 million) which co-financed nearly 200 municipal SME infrastructure projects and co-funded over 1,000 SME investment projects through a grant scheme working with commercial banks. This created over EUR 150 million of public and private investment and generated more than 11,000 jobs in the regions concerned;
• numerous institution building projects in the fields of veterinary administration, agriculture and fisheries, regional policy administration, justice and home affairs administration, internal market (e.g. certification and standards, telecommunications regulatory authority) and environment were funded by Phare to reform the sectors concerned and bring them closer to EC standards;
• social alleviation of restructuring of the coal and steel sectors, where Phare funding (EUR 61 million) provided in particular for the counselling and retraining of the unemployed, for SME development and for re-conversion measures in Silesia.

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 are being established for each country to oversee this process, along with other key procedural steps in the run up to accession.

The Commission approved the Polish SAPARD programme in October 2000. The indicative allocation for SAPARD in Poland for 2002 is EUR 177 million, at 2002 prices (allocation 2001: EUR 175 million at 2001 prices).

The operational programme is based on two priorities: improvement of market efficiency in the agri-food sector; improvement of the conditions for economic activities and job creation

A major part of the funds available for the first priority is dedicated to the improvement of marketing and processing of agricultural products. The other measures under this priority concern investment in agricultural holdings. The second priority includes measures for development of rural infrastructure and diversification of economic activities in rural areas. Supplementing these priorities, the programme includes measures for vocational training and technical assistance and pilot-projects for agri-environment.

The multi-annual Financing Agreement (MAFA), which sets out the rules for implementing SAPARD, was signed in January 2001 and The Annual Financing Agreement (AFA) 2000, which sets out the Community financial commitment to Poland for the year 2000, was signed in March 2001. The AFA 2001 was signed in June 2002, and will enter into force when Poland notifies the Commission of the completion of all requisite national formalities.

The following structures are responsible for the implementation of SAPARD: the National Fund, located within the Ministry of Finance, which will administer SAPARD funds under the responsibility of the National Authorising Officer (NAO), and which is responsible for the national accreditation of SAPARD Agency; the Managing Authority located within the Ministry of Agriculture and Rural Development; the Agency for Restructuring and Modernisation of Agriculture (ARMA), which has been designated by the Polish Government as the SAPARD agency and which will operate from its headquarters in Warsaw with 16 regional offices throughout Poland.

In September 2001 Poland submitted a request to the Commission for conferral of management authority for SAPARD related to five measures, representing 87% of the amount available for Poland. There was a request for approval of additional components in October 2001. The Commission Decision on provisional conferral of management of aid, on a fully decentralised basis, for the five measures initially requested was adopted in July 2002.

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

ISPA programming is governed by the national strategy papers for transport and environment, which the Polish authorities finalised in 2000. In the case of transport, the focus is on large projects on the main transport routes, with particular emphasis on an appropriate balance between road and rail projects. The environment strategy has been updated to reflect new information and recent developments. In 2001, ISPA provided funding for major projects in three of the four sectors which are eligible for support; waste water (which accounts for the largest number of projects and received the largest allocation of assistance), drinking water provision and solid waste treatment.

For the years 2000 and 2001, the mid-range allocation for Poland has been committed, i.e. EUR 713.5 million (EUR 307 million in 2000 and EUR 406.6 million in 2001). The allocation for 2002 will be EUR 357 million. This is slightly below the mid-range, so as to take into account the over-commitment in the environment sector in 2001.

Thirteen environmental projects were approved in 2001: three drinking and sewage water projects in Poznan and Suwalki with a total ISPA contribution of EUR 70.2 million; eight sewage network treatment plant projects in Warsaw, Gliwice, Katowice, Przemysl, Lodz, Olsztyn, Bialystok, and Rybnik, for a total IPSA contribution of EUR 245.1 million; and two solid waste projects in Lodz (EUR 13 million). Six projects in the transport sector were approved in 2001: Three infrastructure projects in the rail sector, concerning modernisation of the Wegliniec-Legnica railway (EUR 92.8 million), modernisation of the Poznan rail interchange (EUR 50.6 million), a rail infrastructure project (EUR 83.3 million) as well as technical assistance for preparation of the E65 railway line (EUR 6 million); and two road projects: the construction of the Bielsko-Biala-cieszyn expressway (EUR 103.6 million) and the rehabilitation of the A4 (Wroclaw-Krzyowa) (EUR 189.5 million).

The Commission approved a technical assistance package (with ISPA financing of EUR 1.6 million) to prepare the Polish authorities for the decentralised management (EDIS) of ISPA. Contracts have been awarded for three projects in the transport sector and six projects in the environment sector. Most of the tenders for the remaining ISPA projects approved in 2000 are currently in preparation.

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