Commission Report (2002): Czech Republic

Community assistance

For the years 2000 -- 2002 total financial assistance to the Czech Republic amounts to around EUR 79 million annually from Phare, EUR 22 million from SAPARD, and between EUR 55 and 80 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, 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 664.5 million to the Czech Republic during the 1992 -- 2000 period and EUR 86.6 million in 2001. The 2002 Phare Programme for the Czech Republic consists of an allocation of EUR 60 million for the National Programme, complemented by EUR 24.8 million under the Phare 2002 supplementary institution building facility. The 2002 Phare programme focuses on the following priorities:

• Strengthening civil society (EUR 3 million).
• Ensuring the capacity to apply internal market rules and regulations, in particular in areas such as financial markets, economic competition and customs administration (EUR 18.3 million).
• Ensuring implementation of the acquis in the agriculture sector, including improving veterinary controls and diagnostic methods in the phyto-sanitary sector (EUR 12.4 million).
• Strengthening the environmental sector, with particular emphasis on air and water pollution (EUR 7.4 million).
• Addressing important issues in the area of justice and home affairs, such as border protection, the Schengen Action Plan and Information System and the upgrading of the probation and mediation services (EUR 18.7 million).
• Applying EU directives in the railway sector (EUR 0.7 million).
• Ensuring that the Czech Republic complies with the acquis in the area of employment and social affairs, including the establishment of a modern public health information system, participation in the EQUAL Initiative and social security (EUR 7.4 million).
• Strengthening the administrative capacity to implement the acquis, including improving the management of human resource development and preparing self-government bodies (regions and municipalities) for the implementation of the acquis (EUR 2.7 million).
• Improving economic and social cohesion, in particular by building up the implementation capacity of the designated managing authorities and other bodies responsible for the Structural Funds and the Cohesion Fund. (EUR 6.3 million).

In 2002, the Czech Republic has also participated in and benefited from Phare-funded multi-country and horizontal programmes, such as TAIEX the Small and Medium-Sized Enterprises Facility, SIGMA and the nuclear safety programme.

Phare also co-finances the participation of the Czech Republic in various Community Programmes, namely Socrates, Leonardo, Youth for Europe, the Multi-annual Programme for Enterprises and Entrepreneurship, Culture 2000, Media Plus, IDA, Econtent, Customs 2002 and the European Environment Agency (EUR 7.9 million in 2002).

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 public administration reform, improving the business environment including for small and medium sized enterprises (SMEs), justice and home affairs, agriculture and the environment.

For example, in the Czech Republic, Phare has played a particularly important role in:

• Developing civil society and integrating the Roma community: a total of over EUR 4.5 million has been granted, for 128 projects, including 51 benefiting the Roma community.
• Supporting the reform of the judicial system and of public administration: advice and equipment are being provided for the establishment of a central training academy for judges and advice is being provided on how to implement the new Civil Service Act.
• Improving the business environment, with a project aiming to streamline commercial and trade registers, improve legislation pertaining to bankruptcy and creditor protection, and speed up court proceedings.
• Helping to Make the internal market work, through support for a series of regulatory bodies, including the Energy Regulatory Authority, the Telecommunications Office and the Office for Personal Data Protection.
• Consolidating security, by providing advice and equipment for the fight against organised crime, the fight against drugs and preparations for the Schengen border regime.

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.

In the Czech Republic, the overall management of Phare has continued to improve. Project design is better, and procurement time has been reduced. As regards programming, monitoring and evaluation, the Centre for Foreign Assistance fulfils its co-ordinating role, though its capacity should be increased and it should endeavour to be more proactive. With regard to procurement and payments, the performance of the National Fund and all Phare implementing agencies has been satisfactory, though with some exceptions in the case of the Centre for Regional Development.

The Commission adopted the Czech SAPARD Programme on 26 October 2000. The indicative allocation for SAPARD in the Czech Republic for 2002 at 2002 prices is EUR 23.1 million (allocation 2001:22.9 millions, at 2001 prices). The programme focuses on two major priorities: improvement of production and marketing structures in agriculture and food processing (62% of the EC funds) and sustainable development of rural areas (35% of EC funds), 3% being devoted to technical assistance and vocational training.

The Multi-annual Financing Agreement (MAFA), which sets out the rules for implementing SAPARD, and the Annual Financing Agreement (AFA), which sets out the Community financial commitment to the Czech Republic for the year 2000 were signed on 5 February 2001. The AFA 2001 has been agreed and is in the final stages of the procedure for signature.

The following structures are responsible for the implementation of SAPARD in the Czech Republic: the National Fund, located within the Ministry of Finance, administers SAPARD funds under the responsibility of the National Authorising Officer (NAO) and is responsible for the national accreditation of the SAPARD Agency; the Managing Authority for SAPARD is a separate department within the structure of the SAPARD Agency. The Decision-Making Group will be part of the Managing Authority, and will be set up by the Ministry of Agriculture in agreement with the Ministry for Regional Development; the SAPARD Agency of the Czech Republic is responsible for the implementation of the measures as defined in the Programme. The SAPARD Agency has delegated some tasks - related to selection of projects -- to the Ministry for Regional Development pursuant to a contract concluded between the SAPARD Agency (the Ministry of Agriculture) and the Ministry for Regional Development.

In April 2002, the Commission provisionally conferred management authority for SAPARD, on a fully decentralised basis, to the SAPARD Agency of the Czech Republic. This Commission decision includes approval of seven out of nine measures contained in the SAPARD Programme representing 97% of the amount available for the Czech Republic. Following this decision, the Commission made an initial payment on account to the National Fund.

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

The objectives of the ISPA programme were fixed by the strategy documents produced for the transport and environment sectors in 2000. For road transport, the emphasis is on eliminating major bottlenecks and environmental black-spots, by closing gaps in uncompleted expressways and motorways. In the rail sector, the main priority is to complete the modernisation and upgrading of the main international corridors, as identified in the TINA report (Transport Infrastructure Needs Assessment). Programming for 2002 aims to redress the balance between the transport and environment sectors in terms of annual commitments. An adequate pipeline of projects should be prepared, especially in the environment sector, so as to be ready to absorb the future allocation of ISPA and Cohesion Fund resources.

Three environmental projects were approved in 2001: drinking and waste water in North Bohemia with an ISPA contribution of EUR 12.9 million, waste water treatment in Jihlava (EUR 9.6 million) and upgrading the sewer system in Olomouc (EUR 10.1 million). Three transport projects were approved in 2001: technical assistance for transport project management (EUR 0.2 million) and, in the road sector, the Belotin By-pass (EUR 17.1 million), and the Dobra-Tosanovice-Zukov expressway stage I (EUR 19.8 million).

The commitment of ISPA funds for the Czech Republic amounted to EUR 70 million for 2000 and EUR 69.9 million for 2001, bringing the total to EUR 136.9 million. The figure for 2001 represented 6% of the ISPA budget, which was below the mid-point of the Czech indicative allocation, owing to a lack of suitable environment projects presented for financing. The allocation for 2002 will be between EUR 59.9 million and EUR 87.1 million.

One of the main challenges facing the Czech Republic in 2002 is to achieve an orderly start to implementation of ISPA projects approved in 2000 and 2001. In 2001, implementation in the transport sector was limited to the preparation of tender files and publication of the 2000 projects. Since then, contracts have been signed or are ready to be awarded. At the end of 2001 the Commission approved a technical assistance package to prepare the Czech authorities for EDIS (extended decentralisation) for ISPA (with ISPA financing of EUR 0.7 million).

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