Enlargement process

Croatia and fYR Macedonia, together with Turkey, are part of the enlargement process of the European Union.

The Treaty of Accession of Bulgaria and Romania was signed by the EU Member States and Bulgaria and Romania in Luxembourg on 25 April 2005. The two countries joined the Union on January 1, 2007.

On 21 February 2003 Croatia applied for EU membership. The European Commission released an 'Opinion' on the country’s application on 20 April 2004, recommending start of EU accession negotiations. On June 18, 2004, the European Council granted Croatia the status of candidate country for EU membership. Accession talks were launched on October 4, 2005.

Until becoming a candidate country, Croatia was part of the European Union’s Stabilisation and Association Process (see below). It signed a Stabilisation and Association Agreement (SAA) with the EU in October 2001; the SAA entered into force on February 1, 2005.

On November 9, 2005, fYR Macedonia receved a positive ‘Opinion’ (based on an Analytical Report) from the European Commission on its application for EU membership, filed in March 2004. The ‘Opinion’ recommended opening of EU accession negotiations with the country and was accompanied by an EC Proposal for a European Partnership submitted to the European Council for approval. On December 16, 2005, the European Council granted Macedonia the status of candidate country.

Regular Reports of the European Commission

The European Commission releases annual reports on the progress of Croatia, fYR Macedonia and Turkey towards EU membership.

Stabilisation and Association Process

The EU's relations with Albania, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro, and previously Croatia, are anchored in the EU's Stabilisation and Association process (SAP). In June 2004, Croatia was granted the status of candidate country to European Union membership; the full implementation of the SAA will help Croatia in its preparations for EU-membership. Conversely, progress in the accession negotiations will also be dependent on Croatia’s fulfillment of its commitments under the SAA. Since 2001 the Community Assistance for Reconstruction, Development and Stabilisation (CARDS) programme has been the main EC financial instrument to deal with the SAP countries. CARDS represents a long-term assistance approach that targets through a single framework the needs of the country and reflects the objectives of the SAP. It focuses on reform support and institution-building, which are crucial for the successful implementation of the Stabilisation and Association Agreements (SAA).

Through launching the new European Partnerships the Thessaloniki European Council in June 2003 enriched the Stabilisation and Association Process with elements drawn from the recent successful enlargement process.

The European Commission prepared, between 2002 and 2004, annual multi-country reports on the progress of Albania, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro in the implementation of the Stabilisation and Association Process, as well as annual country specific reports. In 2005 country reports alone were released on the progress of the countries in moving closer to the EU.

The progress report on Croatia was also accompanied by an EC Proposal for an Accession Partnership, which is to be endorsed by the European Council

Instrument for Pre accession Assistance (IPA)
IPA is the new financial instrument for all pre-accession activities funded by the European Commission as of 1 January 2007. Through a series of three-year plans, funds will be allocated in line with the needs of the eligible countries, their ability to absorb and manage the funding, and their respect of the conditions for accession. A flexible system allows allocations to be made, or, where appropriate, revised in response to specific conditions and requirements in each country. Support will be available to increase administrative capacity and establish the correct management structures for the funding.

It will replace the 2000-06 pre-accession financial instruments PHARE, ISPA, SAPARD, the Turkish pre-accession instrument, and the financial instrument for the Western Balkans CARDS (see below). IPA will concern the countries with candidate status (currently Croatia, the former Yugoslav Republic of Macedonia, Turkey) and potential candidate status (Albania, Bosnia and Herzegovina, Montenegro and Serbia, including Kosovo according to UNSCR 1244). There are five broad categories under which projects fall:

• Transition Assistance and Institution Building,

• Regional and Cross-Border Cooperation,

• Regional Development,

• Human Resources Development,

• Rural Development, the first two of which will apply to both potential candidate and candidate countries, the last three will apply to candidate countries.

As the essential tasks of post-conflict reconstruction have been attained in Serbia, Montenegro and the former Yugoslav Republic of Macedonia, the European Agency for Reconstruction will phase out its activities by the end of 2008. Aid implementation, with priorities adjusted to the new realities, will be taken over by the Commission’s delegations and, when they are ready, by the countries’ own authorities. The Western Balkan countries and Turkey will benefit from almost €11.5 billion over the next seven years.

Table 1: Pre-Accession Assistance envelopes for 2007-2009 in € million

CARDS Assistance Programme to the Western Balkans

The EU's previous assistance programme CARDS ('Community Assistance for Reconstruction, Development and Stabilisation') supported the countries in pursuing their objectives under the SAP. The full financial envelope for 2000-2006 for CARDS was €5.13 billion. Since early 2005 the Directorate-General Enlargement has been responsible for managing all relations with the countries of the Western Balkans. This includes political relations and the development and management of the CARDS programme.

CARDS assistance is implemented in Serbia and Montenegro (including Kosovo) and in FYR of Macedonia by the European Agency for Reconstruction (EAR) and in the other countries by the European Commission (EuropeAid).

As a candidate country Croatia benefits from the three pre-accession financial instruments: PHARE for institution-building and economic and social cohesion, ISPA for environment and transport infrastructures and and SAPARD for agricultural and rural development. Croatia also remains eligible for the CARDS Regional Programme in 2005 and 2006.
 

Table 1. CARDS Programme Allocation for 2000-2006, in € millions

Albania

Following the Zagreb Summit of November 2000, an EU-Albania High Level Steering Group (HLSG) was set up, with the objective of supporting the reforms to be carried out by Albania in preparation for the negotiation of a Stabilisation and Association Agreement (SAA). On January 31, 2003 negotiations for a SAA between the EU and Albania were officially launched. The SAA was signed on June 12, 2006; pending the ratification of the SAA, an Interim Agreement was also signed which will allow the trade and trade-related provisions of the Agreement to enter into force as soon as possible.

Between 1991 and 2004, approximately €1.27 billion in EC assistance was allocated to Albania. This financial support covered a vast number of sectors, including macro-financial assistance, humanitarian aid, infrastructure, agriculture, education, health, public administration reform, judiciary and law enforcement, democracy and human rights, and cross-border co-operation. The 2004 CARDS annual programme foresees commitments of EUR 52.5 million for Albania, and in December 2004 the Commission adopted a new Multiannual Indicative Programme setting aside some EUR 90m for Albania in 2005-2006.

In April 2004, the European Council also adopted a decision to provide macro-financial assistance to Albania for a maximum amount of EUR 25 million, including EUR 16 million of grants and EUR 9 million of loans, to help support its external financing requirements.

Bosnia and Herzegovina

The European Commission approved on November 18, 2003 a Feasibility Study assessing the readiness of Bosnia and Herzegovina (BiH) to start negotiations for a Stabilisation and Association Agreement with the EU. On November 21, 2005, the Council authorized the opening of SAA negotiations, which formally began on November 25, 2005.

On 4 December 2007, Olli Rehn, European Commissioner for Enlargement, and Mr. Nikola Spiric, Chairman of the Council of Ministers of Bosnia and Herzegovina, initialed the Stabilisation and Association Agreement, in Sarajevo. This is the first contractual relation between the European Union and Bosnia and Herzegovina, and a key step towards future membership of the Union.

In the period 1991 - 2002 almost €2.5 billion of European Community funds have been committed to the country. In 2001 the European Commission adopted a Country Strategy for BiH which covers the period 2002-2006 and provides a framework for EU assistance. €100 million has been allocated through CARDS for 2005-2006. Assistance priorities reflect the priorities established in the European Partnership for Bosnia and Herzegovina, with a strong emphasis on capacity-building and economic development. Key areas remain public administration reform (including customs and taxation), justice and home affairs-related issues (including police reform, integrated border management, judicial reform) and improving the investment climate (including trade, education, environment and infrastructure).

Serbia and Montenegro

On April 12, 2005, the European Commission approved a Feasibility Report assessing the readiness of Serbia and Montenegro to negotiate a Stabilisation and Association Agreement (SAA) with the EU. This agreement establishes the first contractual relationship between Serbia and Montenegro and the European Union. Along with the other SAP countries, the EU regards Serbia and Montenegro as a potential EU member, but it needs first to commit itself to sustainable reform efforts. The Union's assistance aims at drawing the country closer to potential membership through providing support for reforms in line with the EU's economic and legal structures.

On October 3, 2005, the Council authorised the Commission to open negotiations on a Stabilisation and Association Agreement. Negotiations were opened on October 10, 2005. On May 3, 2006, these negotiations were interrupted due to failure of the Serbian government to fulfill ICTY-related conditionality.  On June 13, 2007 these negotiations were reopened. The resumption of the talks on the SAA was possible owing to the improvements in Serbia's cooperation with the Hague Tribunal. The pace and conclusion of negotiations will continue to depend in particular on Serbia's progress in developing its legislative framework and administrative capacity, and full cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY).

On June 3, 2006, the Montenegrin Parliament declared independence. This was quickly followed, on June 12, by an EU Council declaration to develop further the relations with Montenegro as a sovereign, independent state. Following this, the Commission was granted a new mandate in order to continue negotiating separately with Montenegro on a Stabilisation and Association Agreement, which was initialed in March 2007.

In total, combining CARDS, macro-financial and humanitarian assistance, EC funds allocated to Serbia and Montenegro since 1991 have been more than €2.9 billion.

In addition to the CARDS assistance, the EC provides support in the framework of an IMF programme aimed at contributing to preserving macro-economic stability.

In December 2002, the EC released a grant of €30 million to the state. This was the first tranche of the new macro-financial assistance package of €130 million, consisting of a loan facility of €55 million and a grant facility of €75 million that will be disbursed in three tranches. €375 million had already been released in 2001 and 2002 under a previous arrangement for macro-financial assistance from the EC.

Kosovo (Serbia and Montenegro, under international administration according to United Nations Security Council Resolution 1244)

EU relations with Kosovo are anchored in the SAP too. Accordingly, Kosovo benefits from the various instruments of the SAP, i.e. financial assistance through the CARDS programme, far-reaching trade concessions and concrete policy advice.

To support Kosovo in its efforts to carry out necessary structural reforms and to keep it firmly on track in its progress towards Europe, the SAp Tracking Mechanism (STM) has been designed. The STM, drawing its substance from/grounded in/ the Stabilisation and Association Process, is a joint technical working group of UNMIK, the Provisional Institutions of Self-Government (PISG) and the European Commission.

Since 1999 CARDS assistance to Kosovo totalled EUR1.6 billion. CARDS priorities for 2005-2006 are: democratic stabilisation - including refugee return, civil society and media; good governance and institution building - including judicial reform, police, organised crime, asylum and migration, public admin reform, customs etc.; and economic and social development - including trade, infrastructure, environment, education. €59.5 million have been committed for 2005 and €54.5 million have been earmarked for 2006.