Macedonia Deputy PM: Rising EU Aid Requires Effective Management

Earlier this year, Macedonia achieved a milestone in its bid to accede to the European Union: Macedonian officials agreed to a plan by European counterparts eager to help the former Yugoslav Republic meet criteria to accede to the European Union. The agreement, also known as the Instrument for Pre-Accession Assistance's transition assistance and institution-building component, was signed Feb. 23 by Erwan Fouéré, head of the European Commission delegation, and Ivica Bocevski, Macedonia's deputy prime minister. It aims at assisting the eastern European country to meet political and socio-economic criteria that are key for assuming the obligations of EU membership. According to the agreement, the EU will contribute a maximum of 37.12 million euro. Macedonia must sign agreements with contractors by Feb. 22, 2011, and all contracts must be executed two years thereafter. Bocevski is the Macedonian government's top official on European affairs and EU assistance. In an interview with Devex, he addressed questions on IPA funding availability as well as challenges that countries eager to join the EU face in preparing their institutions to take greater responsibility for the management of rising EU assistance. What are in your view the major challenges in managing the IPA funds? What will be the key factors in maximizing its benefit in the near future? One of the major challenges with regards to IPA funds is definitely the establishment of the entire national edifice responsible for their implementation. Namely, this structure comprises a cumbersome system of institutions, decision mechanisms and procedures that must be created and followed by the national administration in order to comply with the strict EU rules stipulated in the IPA regulations. Having said that, it's obvious that IPA beneficiary countries do encounter major challenges in creating entirely new systems for programming, managing, financial control, monitoring and evaluation, and in making the necessary legal, institutional and administrative adjustments. In addition to the institutional setup, the legislation related to public procurement, state aid, financial control and so forth must be in compliance with the EU legislation. Above all, there is the huge challenge of building up the capacities of the administration in order to cope with the new procedures for management of the funds. Investing in human capital through new recruitment, training and tailor-made programs is perhaps the most costly and most lengthy process, but is a prerequisite for obtaining the accreditation and for ensuring smooth management of the funds. At last, but not at least, all potential beneficiaries in society need to be made aware of the IPA, thus special information campaigns, as well as programs for developing their skills in order to be able to command the application and implementation procedures, must be designed. Some say there is a lot of talk about IPA but still little funding available. Is this true? Who is responsible for the delay, national governments or the European Commission? I wouldn't say the IPA funds are late, although there have been some delays in the adoption of the IPA regulations on the part of the commission and some delays in the introduction of the decentralized implementation system by the national governments. The IPA rules require that the beneficiary country possesses a decentralized implementation system, which confers the powers for the managing of the funds from the EU to the beneficiary country; thus, it is bound to ensure the effective usage and prevents any misuse of those funds. Therefore, the system must be in place prior the official start of disbursement of funds and is subject to accreditation by the EC. It is only [when a] decision is taken by the commission [that] the funds may be used in a decentralized manner. Once accreditation is granted, the funds shall be available, and if no delays occur in the further process of project implementation, there will be no loss of funds, i.e. they will be absorbed. As of 2009, it's expected that in the Republic of Macedonia, the first projects shall start to be implemented. The contracts for some projects under IPA component one [institution building] have been signed and the open calls for some of the programs with neighboring countries under component two [cross-border cooperation] are due in the first quarter of 2009. It is extremely important to note that the DIS system is the same one according to which structural and cohesion funds are managed and that IPA generally mirrors the future EU funds. Therefore, looking at it from the long-term perspective, the current delays might be considered as an early start of preparation and a learning period for using the future EU funds. Another argument why IPA funds are not late is that, if there was a delay, then [the EU Directorate-General for Budget] would have proposed to cut some of the allocations made on an annual basis. But it would be fair to say that the introduction of the DIS was constantly changed with new considerations that put additional burden [on] our fragile and young institutions established for this purpose. By saying this I mean … the introduction of a new actor in the process, the competent authorizing officer, and a million small interventions in the field of financial management and control, the interpretations of the operating structure, and so on. One can rightly argue that the establishment of the DIS system is a test for the administration of the [EU] candidate countries for proper implementation of the pre-accession assistance and enhancing the ownership of the process along the way. But, on the other hand, the technical assistance that is provided by the European Commission is very limited vis-à-vis the stipulations in the two IPA regulations. A productive debate can be expected in the future [on] how the European Commission assisted the candidate countries in this exercise. There have been complaints that much of the EU aid to date has gone to expensive foreign consultancies? Do you agree, and will IPA change this? If so, how? This can be true up to a certain point. In the case of technical assistance, especially in the areas where there has been little knowledge or skills by national stakeholders, foreign consultancies have played their role. In the recent period, national and local authorities have been engaged in various programs and have undertaken many activities aiming at strengthening their administrative capacities in different areas, so [as] to be able to meet the challenges of the IPA funds and/or the obligations deriving from the implementation of the acquis communautaire. In parallel, special institutions have been created with the purpose of providing the interested parties with the necessary advice and/or consultancies. These complaints were probably coming from people that are not really familiar with the truly complicated PRAG [Practical Guide to Contract Procedures for EC External Actions] and the procedures within. When one has to follow the rules, there is not much space for maneuver. However, there is another side of the story: It all depends on the quality of the drafted TORs [terms of reference], which is what we want to achieve or how the whole management of the project is done by the beneficiary institution, or the people participating in the evaluation commissions - something that we as a NIPAC [National IPA Coordinator] office pay attention to - or the absorption capacity of the beneficiary to implement regular technical assistance or twinning projects, and so on. The things that IPA will mostly change are the bigger responsibility when it comes to the project implementation and monitoring and evaluation, so the project and program cycles [will] be completed properly. Will the final decisions on awarding projects be with the national authorities, or will the EC retain significant control? There is a split of responsibility because of the ex-ante control responsibility of the EC. The European Commission and the national authorities agree on a multi-annual indicative planning document and operational program for each of the five IPA components. These are the main programming documents for the entire IPA assistance. Thus, naturally, they are prepared by close cooperation of and negotiation between the both sides, and they are giving the frame of the priorities where the assistance shall be focused. Within these defined priority axes, the country is allowed to propose/select projects, which are eligible and which meet the priorities outlined in the operational programs. There is the argument that IPA funding is hostile to smaller actors - nonstate actors, nonprofits and local companies - that they will not meet the requirements to apply. Most current EC tenders require annual turnovers that few or no local actors have. In my opinion, IPA funding is friendly to the above-mentioned actors for a simple reason that in the case of Macedonia, part of component one envisages specific projects to be financed for the development of local self-government infrastructure and support of NGOs, which means that [a] wide range of local and nonstate actors would be engaged and benefit from it. Moreover, the entire IPA component two is designed for smaller actors - such are NGOs, local companies and the communities - to be able to cooperate and implement mutual projects with their counterparts from the other side of the border. The same goes for the component four [human resources development].