Банкеръ Weekly

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EU CONSIDERS ASSISTANCE EQUAL TO 4% OF GDP

Belin Mollov, Co-Chairman of the panel of experts, working on the negotiations for the Regional Policy chapter, to the BANKER weeklyMr. Mollov, the European Commission (EC) has already prepared the financial framework of the negotiations with Bulgaria on the Regional Policy chapter, some sources reveal. Is that true?- That's correct. By February 28 the EC will have presented its final proposal for Bulgaria concerning the 2007-2009 period. The document will specify the financial resources that Bulgaria will receive from the Structural Funds (the Regional Development Fund, the Agriculture Orientation and Guarantee Fund, the Fishery Fund, the European Social Fund) as well as from the Cohesion Fund, after it joins the European Union. Except for the Regional Policy chapter, the framework is important for the negotiations on other chapters - Agriculture, Budget and Finance, etc.Could you specify any figures?- Most probably the EU is going to fulfil our request, so the Bulgarian matrix will be similar to the one given (at the end of 2002) to the ten Central and Eastern European countries included in the first round of enlargement. The specific figures are still being discussed by Meglena Kouneva, Minister of European Affairs, and Guenter Verheugen, EU Commissioner for Enlargement, in Brussels. The assistance provided to Bulgaria by these four funds and the Cohesion Fund will amount to 4% of the national GDP. A few days ago I received a letter from Mr. Michel Barnier, the commissioner responsible for the regional policy. He informed me that he would vote in favour of that proposal. But let's wait for the EU to make an official announcement first.Will the commissioners decide the amount for each sector?- These are technical details which are still to be clarified. But I can definitely tell you that after 2007 a great part of the assistance will be provided by the Cohesion Fund. This fund will replace the ISPA programme and will finance projects in the field of infrastructure and environment.Is it already clear what commitments will Bulgaria have to undertake as negotiations on the Regional Policy chapter begin?- I have to explain that the positions have been in coordination for two years now. They stress on the way in which Bulgaria implements the Strategy for Participation in the EU Structural Funds and Cohesion Fund, adopted in the spring of 2002. Moreover, the Agency for Economic Analyses and Forecasts must create a plan for economic development for the period following 2006. Then Bulgaria will be able to continue the harmonization of its legislation in the sphere of regional development with the effective laws in the EU. Local authorities and business organisations have to be attracted to the development and implementation of the specific projects, too. Most of the tasks I mentioned above have already been fulfilled.Does it mean that no problems will appear during the talks with the EC? And will these talks be concluded as soon as the financial framework is presented?- Yes, I hope so. I've prepared additional information about the chapter that will be discussed during the meeting of the Council for European Integration with the Government in the end of January and will then be sent to Brussels. Moreover, the Ministry of Regional Development and Public Works maintains daily correspondence with the Enlargement and the Regional Policy departments of the EC. There is a lot of work to be done. For example, we have to prepare lists with names and concrete terms within which our employees should go through several training courses. In my opinion, it is important for Bulgaria to close the so-called financial chapters (including the Regional Policy chapter) while Ireland is presiding the EU, i.e. by end-June 2004. Ireland is not among the EU donators which allocate resources to the Structural Funds, so it may be more willing to support us. It will be far more difficult for the Government of the Netherlands which is currently extending funds to the so-called beneficiaries (the Netherlands will take up the EU Presidency on July 1, 2004) to explain to its taxpayers that from now on they will have to pay additional taxes for the economic recovery of Bulgaria and Romania.Are there specific laws that should be adopted before the Regional Policy chapter is closed?- One of the most important drafts is the new bill on regional development which stipulates that the country be divided into six regions. These are not new administration structures but merely statistical units which will facilitate the planning of the economic development on a regional level. Although it is considered purely financial, the Regional Policy chapter is directly related to lots of other units. We also have to coordinate the Protection of Competition Act, as well as the legislation regarding the state subsidies and public procurement. Negotiations for the EU financial assistance require that the budget sets aside funds to cofinance any projects in the future. There are also a number of requirements towards the protection of the biological variety and water. As a whole, the unit is related to the providing of a normal business environment and the administrative capacity for utilization of the structural funds' resources.But Brussels is still criticizing Bulgaria for the inefficient utilization of the PHARE and ISPA funds. Are there guarantees that the situation will change as soon as the country joins the EU?- Last year our administration made a breakthrough in that direction. In fact, we delayed some of the projects. As a result, suspicions arouse that we would not be able to negotiate part of the funds launched under the PHARE programme. If we talk about the Ministry of Regional Development and Public Works, we organized the work very well and finally signed agreements for almost 100% of the funds under the 2001 National Programme. One of our weaknesses may be that we do not explain to the media and the people how the projects under PHARE are being implemented. Few people are aware that there is a 24-month transition period between the signing of the memorandum for the respective year and the real signing of the implementation agreements. The fears of the EU go in a slightly different direction. From now on, they will monitor how we practically fulfil the projects. And that's not an easy task at all, as long as this process includes companies, non-government organisations, and municipalities, which have no adequate experience. We regard the municipal authorities in particular as a very important partner. We are actively working with the UN Development Programme, with the USAID, and with the governments of Switzerland and Denmark. They finance programmes aimed at increasing the municipalities' capacity to participate in the development and implementation of regional projects.Still, problems with the expropriation of land for ISPA infrastructural projects remain unsolved...- This is a serious problem indeed. I think that if we want to fulfil the measures stipulated by the plans for regional development, they should be guaranteed by structural and land dividing schemes, as well as by specific expropriation procedures. When a company comes to construct a section of a highway, everything else should be perfect. The Ministry of Regional Development and Public Works has offered amendments to the Cadastre Act and the Real Estates Register, that will be coordinated with the requirements of the investors.* Cohesion Fund - a fund aimed at overcoming any regional differences within the EU. It finances projects in the field of transport, environment, and infrastructure. Countries whose GDP is below 90% of the average in the EU are allowed to apply for its funds.

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