IPA CBC Albania – Montenegro - gov.me · principles underlined in IPA implementing rules and provisions established in the IPA regulation. The overall objective of this programme

Cross-border programme 2007 - 2009

IPA CBC

Albania – Montenegro

Final : 03.09.2007

TABLE OF CONTENT GLOSSARY OF ACRONYMS

2

SECTION I. DESCRIPTION AND ANALYSIS OF ELIGIBLE AREAS 1. INTRODUCTION AND PROGRAMMING PROCESS

1.1. Introduction ........................................................................................................................................................5

1.2. Programming process .....................................................................................................................................5

2. DESCRIPTION OF THE PROGRAMMING AREA 3. CURRENT SITUATION AND ANALYSES OF THE PROGRAMMING AREA

3.1. History..................................................................................................................................................................8

3.2. Demography .......................................................................................................................................................8

3.3. Ethnic Minorities ...............................................................................................................................................9

3.4. Geographical Description .............................................................................................................................10

3.5. Infrastructure....................................................................................................................................................10 3.5.1. Road infrastructure ...............................................................................................................................10 3.5.2. Railways ...................................................................................................................................................11 3.5.3. Seaports and Airports ..........................................................................................................................11 3.5.4. Hydropower system ..............................................................................................................................11 3.5.5. Water and Sewage.................................................................................................................................11 3.5.6. Telecommunication...............................................................................................................................11

3.6. Economic Development ................................................................................................................................12 3.6.1. General economic description ...........................................................................................................12 3.6.2. Agricultural and Rural Development ................................................................................................12 3.6.3. Industry ....................................................................................................................................................13 3.6.4. SMEs Sector............................................................................................................................................13 3.6.5. Tourism ....................................................................................................................................................14

3.7. Human Resources...........................................................................................................................................14 3.7.1. Education, Research and Development ..........................................................................................14 3.7.2. Labour Market (employment and unemployment) ........................................................................15

3.8. Environment and Nature ...............................................................................................................................15

3.9. Culture ...............................................................................................................................................................16

3.10. Institutional Arrangements ...........................................................................................................................16

3.11. Major gaps, disparities and potentials for development of the programming area.......................17

3.12. SWOT analyses of the programming area................................................................................................18

SECTION II PROGRAMME STRATEGY 1. EXPERIENCE WITH CROSS BORDER ACTIVITIES

2. STRATEGY OF THE CROSS BORDER COOPERATION PROGRAMME

3

2.1. Overall strategic objective of the programme .........................................................................................23

2.2. Specific objectives..........................................................................................................................................23

3.PRIORITIES AND MEASURES

3.1. PRIORITY AXIS I Promotion of regional cohesion and competitiveness, through an approach that integrates economic, environmental, cultural and social development.................................................25

3.1.1. MEASURE I.1 - Economic development with an emphasis on tourism ................................26 3.1.2. MEASURE I.2 - Environment protection and promotion ..........................................................29 3.1.3. MEASURE I.3 - Enhancing social cohesions through people-to-people actions ...............30

3.2. PRIORITY AXIS II: Technical assistance for an effective programme management and information flow .............................................................................................................................................................32

3.2.1. MEASURE II.1 - Programme administration, monitoring and evaluation ..............................33 3.2.2. MEASURE II.2 - Programme Information and Publicity .............................................................34

4.COHERENCE WITH OTHER PROGRAMMES

SECTION III. FINANCIAL PROVISIONS

1. Financial Allocation Plan 2007-2009 ...............................................................................................................37

SECTION IV IMPLEMENTING PROVISIONS

1. Programme Structures .......................................................................................................................................38 1.1. Organisational structures at the national level ..................................................................................38 1.2. Operating Structures at Programme level ...........................................................................................38 1.3. Contracting Authorities (art. 139.6) .......................................................................................................39 1.4. Joint Monitoring Committee ....................................................................................................................40 1.5. Joint Technical Secretariat ......................................................................................................................41 1.6. Programme Beneficiaries.........................................................................................................................42

2. Implementing Rules ............................................................................................................................................43 2.1. Basic Implementation Rules....................................................................................................................43 2.2. Call for proposal .........................................................................................................................................43 2.3. Selection of projects following a call for proposals..........................................................................44

3. Information, Publicity and Consulting............................................................................................................45

4. Monitoring and Evaluation ................................................................................................................................46 4.1. Monitoring on Project Level ....................................................................................................................46 4.2. Monitoring on Programme Level............................................................................................................46 4.3. Programme Evaluation .............................................................................................................................46

5. Financial Management........................................................................................................................... 46

4

GLOSSARY OF ACRONYMS CA Contracting Authority

CBC Cross-border Cooperation

CBIB Cross-border Institution Building

CEFTA Central European Free Trade Agreement

EU European Union

GDP Gross Domestic Product

IPA Instrument for Pre-Accession Assistance

JMC Joint Monitoring Committee

JTS Joint Technical Secretariat

MDG Millennium Development Goals

MIPD Multi-annual Indicative Planning Document

NARDS National Agricultural and Rural Development Strategy

NDP National Development Plan

NGO Non Governmental Organization

NSSED National Strategy for Social Economic Development

NSDI National Strategy for Development and Integration

NUTS Nomenclature of Units for Territorial Statistics

OS Operating Structure

OSCE Organization for Security and Cooperation in Europe

SAA Stabilization and Association Agreement

SME Small and Medium Enterprise

SWOT Strength, Weaknesses, Opportunities, Threats

TA Technical Assistance

UNDP United Nations Development Programme

UNSCR United Nations Security Council Resolution

VET Vocational Education and Training

PRAG Practical Guide for Contract Procedures financed from the general budget of

the European Union in the context of external actions

FAQ Frequently Asked Questions

5

SECTION I. DESCRIPTION AND ANALYSIS OF ELIGIBLE AREAS 1. Introduction and Programming Process

1.1. Introduction The Cross-Border Programme between the Republic of Albania and the Republic of Montenegro will provide strategic guidance to implementation of assistance under Component II – “Cross Border Cooperation” of the Instrument of Pre-Accession Assistance (IPA). It is designed following the principles underlined in IPA implementing rules and provisions established in the IPA regulation. The overall objective of this programme is to promote cooperation between people, communities and institutions on the bordering areas, aiming good neighbourly relations, sustainable development, stability and prosperity in the mutual interest of the two countries. The programme is building on the existing partnerships and joint cooperation initiatives between the two countries and the local government units in the bordering area. While there are some achievements made so far towards building local partnerships in particular in trade and environmental protection areas, cooperation between civil society, business communities and cultural institutions is yet at a very modest level. Motivating local institutions and people to make effective use of cooperation opportunities offered by IPA Component II will be the key challenge for Albania and Montenegro in the implementation of this programme. This Cross-Border Programme will be implemented during the period 2007-2013. The programme will be implemented in both countries under the existing centralised management schemes.

1.2. Programming process

The programming process took place from January to May 2007. The programme was developed following a process of wide consultations with the local stakeholders and potential beneficiaries in both sides of the border. The national authorities and joint structures were assisted during this process by the "Cross-border Institution Building CBIB" project1. The following table summarises the process of preparation of this programme.

Timing Activities and scope

January 2007 Establishment of the Operating Structures (OS) and joint programming committee.

14 February 2007

First meeting of Operational Structures, identification of responsible institutions, for the preparation of the cross-border programme, development of the preliminary action plan.

26 February 2007 Meeting of the Joint Programming Committee. Agreement on the eligible areas and the action plan,

March 2007 Situation and SWOT analysis process and consultation with the main local stakeholders.

March-April 2007 Several meetings of the operating structures, discussions on the situation and SWOT analysis, identification of priorities and measures.

17 April 2007 Meeting of the Joint Programming Committee. Agreement on the situation analyses and discussion on priorities and measures

23rd May 2007 Joint Programming Committee. meeting for approval of the draft cross-border programme

1 a regional project funded by the European Union

In addition, the EU Member States and IFIs have been consulted on the draft programme during the programming process in order to identify complementarities between donors' assistance projects. 2. Description of the Programming

Area The Cross-border Programme covers a territory of 11.681 km2. The length of borderline between the two countries is 210 km of which 172 km are land border and 38 km border waters of Adriatic Sea, Shkodra Lake and mountainous rivers.

Table 1: Cross Border Programming area

6

ELIGIBLE AREAS

ALBANIA: Eligible area

Territory = 5.936 km2

Population = 337,247 inhabitants

Shkoder Region

Kukes Region MONTENEGRO 1 . Eligible area Territory = 5.745 km2

Population = 357 654 inhabitants.

Budva Municipality

Berane Municipality

Andrijevica Municipality

Plav Municipality

Danilovgrad Municipality

Podgorica Municipality

Bar Municipality

Ulcinj Municipality

Cetinje Municipality

2. Adjacent Area

Rozaje Municipality

Total Cross border Programming area

Territory = 11.681 km2.

Population = 694,901 inhabitants. For the purpose of this programme, in Albania the regions are considered equivalent to NUTS III level2. The Albanian part of the programming area covers two regions with a total population 337,247 inhabitants3 living in 8 municipalities and 52 communes or 468 settlements (towns and villages).

4Montenegro is divided in 21 municipalities as a basic unit of self-government . The eligible territory in Montenegro covers a territory of 9 municipalities. In addition, there is one adjacent area (in accordance with Art. 97 of the IPA Implementing Regulation): the Rozaje Municipality. In total, the 10 municipalities and 613 settlements (towns and villages) have a population of 357 654 habitants. The total population living in the eligible area counts for 694,901 inhabitants.

Table 2: Comparison of territory and population between the eligible areas

Figure 2: Share of territory in the programming area

Albania51%

Montenegro

49%

Total 28,750

Eligible Areas

5936

Total, 13,812

Eligible areas 5745

- 5,000

10,000 15,000 20,000 25,000 30,000

Albania Montenegro

Figure 1: Territories in km2

Total country Eligible areas

42% 21%

2 The eligibility criteria for defining the cross-border area is determined in accordance with article 88 of the IPA implementing regulation where only NUTS III regions are eligible for cross-border programmes. 3 INSTAT population data , 2005 4 Montenegro is divided in three geographic regions: northern, central and southern which don’t have managerial or decentralized powers

7

Figure 4: Share of population in the programming area

Albania49%

Montenegro

51%

Total 3,142,100

Eligible area

337,247 Total 620,145 Eligible area

357,724

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Albania Montenegro

Figure 3: Population (inhabitants)

Eligible area

57.7% 10.7%

Total country

The Figures 1 and 3 indicate a different situation in terms of the total share of population and territory each eligible area takes within the country. The territory of eligible municipalities in Montenegro constitute 42 % of total Montenegrin’s territory and 57.7% of the population, while the eligible regions in Albania constitute 21% of the total Albania’s territory and 10.7% of Albanian population. Population of eligible areas on each side of the border is almost equally shared, as shown in figure 4. 3. Current situation and analyses of the Programming Area

3.1. History Montenegro has been an independent kingdom from the late Middle Ages until 1918. After the First World War, Montenegro became part of Yugoslav Federation and remained in the federation with Serbia even after the collapse of the Yugoslavia in 1991-92. The independent status of Montenegro was decided by a referendum on independence on May 21st, 2006 and immediately after the Parliament of Montenegro declared the independence of the country. On June 28th, 2006 Montenegro became the 192nd member state of The United Nations. After 50 years of totalitarian communist regime, in 1991 Albania entered the path of democratic reforms. Rebounding from the financial collapse of 1997, Albania performed very well in sustaining high rates of economic growth. The average annual growth at the rate of 7 % over 1997-2005, is amongst the highest of transition economies. Successful macroeconomic management has been an important contributor to growth, which has been the critical factor in reducing the level of poverty5 in the country and overall economic development.

Both countries participate in the Stabilisation and Association Process. Albania signed the Stabilisation and Association Agreement on 12 June 2006.

3.2. Demography

5

8

World Bank, “Albania: Restructuring Public Expenditure to Sustain Growth – A Public Expenditure and Institutional Review”, December 2006 , Volume I, pg 2

9

The overall population of the programming area accounts for about 0.7 million6 inhabitants. The bordering areas manifest many common features as well as diversities regarding demographic developments. The programming area has a sparse population and limited number of big towns (over 50,000 inhabitants). The area is characterised by strong trends of migration over last decade, directed mainly towards urban centres with higher economic potentials. The population living in the Albanian eligible area accounts for 0.34 million, or 10.7 % of the total Albanian population. This area has a low urbanisation level (particularly Kukesi region). Shkodra town is the biggest urban centre with around 83,000 inhabitants. The significant migratory movements since the fall of communist regime have negatively affected the population growth and population structure of the area. Despite of high fertility rates and positive natural growth, the population in the Albanian bordering area is reduced by 1/3 due to internal and external population migratory movements. The population living in the Montenegrin eligible is about 0.35 million, accounting for 58% of the total population of Montenengro. This area has high urbanisation level and population is concentrated mostly in economically developed urban centres (like Podgorica, Bar, and Budva). The inter-regional migration has affected population growth trends. In the most economically developed districts occurs a positive population growth hindering somehow the negative trend of natural growth. The opposite happens in less developed areas.

Table 2: Data on population Actual

Population

Population change (%)

Urban population (%)

Population density

(inhabitants per sq km)

Age dependency ratio (%)

Cross Border Programming Area

2005 2005/1991 2005 2005 2005

Albania 337,247 -31 % 44% 57 22,5 %

Montenegro 357,724 +9,489 % 60.4% 60 55.25 %

Total 694,971 -12 % 52.4% 59 53.4 %

The programming area has a relatively low population density, around 59 inhabitants per km2. Both eligible areas have the same average population density 57 inhabitants per km2. In the Montenegrin part due to concentration of number of towns the population density is closer to the national average of Montenegro (68 inhabitants per km2). In the Albanian part the population density is twice lower than the national average (109 inhabitants per km2).

3.3. Ethnic Minorities In the programming area live several ethnic groups, particularly in the Montenegrin part. Heterogeneity of population results in a variety of cultural and social norms in different locations. In the Montenegrin part, apart from Montenegrins majority, other ethnic minorities are Serbs, Albanians, and Bosnians. The largest ethnic groups in Montenegrin part are Serbs who make 27.9 % of total population. The second largest minority groups are Albanians who count for 9.4 %, Bosnians are around 8.9 %. The Albanian part is more homogenous inhabited by ethnic Albanians, with some exception in Shkodra Region where lives a very small minority (less than 1 % of Shkodra Region population) of ethnic Montenegrins. 6 Population for Albanian apart in year 2005 and the population for Montenegrin part in the year 2003.

10

3.4. Geographical Description The programming area between Albania and Montenegro is positioned in South-Eastern Europe, close to the southern end of East shore of the Adriatic Sea. It borders with Serbia in the north-east and Kosovo in the East. The area is extended across mountains, fields, valleys and lakes. The lowlands in the Shkodra Region together with Valley of Zeta compose the biggest lowlands and the most fertile part of the programming area. Other fertile agriculture land lies along valleys of Drini and Moraca rivers favouring the cultivation of vegetables and fruits. Mountains are rich with water, timber and mineral resources. Slope, altitude, relief and temperature make mountainous areas variable with differentiated ecosystems. The mountains of this area include some of the most rugged terrain in Europe with average altitude more than 2,000 meters above sea level. In the centre of the programming area, the massif of the Albanian Alps (south-eastern of Montenegro and northern Albania) reach the highest peak in Jezerca with an altitude 2,642 meters above sea level. Dispersion of many small communities in rugged remote areas, particularly in the Albanian part, has implications for their subsistence that is based on limited arable plots and shorter growing seasons.

3.5. Infrastructure

The infrastructure in both parts of programming area is obsolete, having suffered greatly from lack of investments. Roads and railways are in bad condition. Port equipments, airstrips (Montenegrin part) are somewhat in better conditions. In order to fully harness their potentials both parts have to make significant improvements to their infrastructure, especially in the areas with potential for tourism. This includes guaranteeing uninterrupted power supplies, restoring and modernizing the water and sanitation. The supply of adequate water is a key factor in developing the tourist infrastructure.

3.5.1. Road infrastructure

The geographical location of programming area is of great importance, since transport Adriatic – Ionian corridor of the European road network crosses the territory. The road infrastructure accounts for 10.0537 km. The road density of 866.6 km per 1,000 km2 is far less than EU average (1,253 km). Albania and Montenegro participate in the SEETO8, the Technical Secretariat to develop the MOU on the South East Europe Core Regional Transport Network. The most important route in this area is the road section Shkoder – Podgorica, which is linked through Hani i Hotit. This route is a part of the European Core Roads Network. There are 5 road border crossing points between Albania and Montenegro, while one of them offers railway connection between the two countries and through Podgorica to the regional railway network. The road infrastructure is being upgraded with the reconstruction of the Shkoder-Muriqan and the rehabilitation of the Shkoder-Zogaj road segments. Other improvements in transport infrastructure are planed which include the construction of a ferry line through the Lake of Shkodra/Skadar and a new bridge over the Buna River, which will significantly shorten the connection between the two sides of the border.

7 This is total length of modern roads, national roads and rural/communal roads 8 South East Europe Transport Observatory. Road Corridors & Links involves in: Albania, Bosnia and Herzegovina, Croatia, UNMIK/Kosovo under the UN Security Council Resolution 1244, the former Yugoslav Republic of Macedonia, Serbia, Montenegro.

11

Despite of the ongoing improvements, the connections between the two parts remain incomplete and limited. The transport infrastructure is far from meeting contemporary technical requirements. It requires substantial rehabilitation and reconstruction interventions, in particular in the Albanian part. Furthermore, unevenly distribution throughout the territory and insufficient development to meet intense traffic, hamper the economic development and optimal use of geographic location. A functioning road transport network is essential to the programming area’s further economic development and increased level of tourism.

3.5.2. Railways

Three railway sections operate in the programming area; one in Albania and two in the Montenegrin part. The Albanian section connects Tirana with Shkodra via Lezha and crosses the border continuing all the way to Podgorica9. Since the infrastructure development focuses at roads network, the railway network has received little attention from the respective governments, thus leading to deterioration of physical conditions of this railway over years.

3.5.3. Seaports and Airports

Bar is the major seaport of programming area (in Montenegro). It has a capacity of handling about 5 million tons of cargo, and is a port for ferries to Bari and Ancona in Italy. The main airport is the international airport of Podgorica. There is also an airport at Berane, which is used mostly for general aviation, and it is not equipped to handle larger aircraft. The new airports in Kukesi (Albania) will in near future extent civil aviation services to domestic flights.

3.5.4. Hydropower system

Given the natural resources, programming area has potentials for energy hydropower production. The current installed capacity in Albania is 1,446 MW, representing a utilization rate of only 35 percent of its hydropower potential. Almost 90 percent of this energy is generated in the Albanian part of programming area (along the cascade of Drin river) which encloses the three biggest hydropower plants of the country, Fierza, Koman and Vau i Dejes with a respective installed capacity of 500 MW, 600 MW and 250 MW.

3.5.5. Water and Sewage

Water supply, sewage systems and irrigation is another poor infrastructure component in the programming area. Due to insufficient investments over years, the overall water and wastewater treatment infrastructure of the area is poor, more problematic in the Albanian side. In the Montenegrin side there are more investments on modern systems of waste collection, such as “Lovanja” landfill, the first and currently the only regional sanitary landfill in Montenegro that was built in line with EU standards.

3.5.6. Telecommunication

Telecommunication in the programming areas is based on both land (fixed) and mobile system. User’s access to telephony service is different among countries. There are 134.706 land phone subscribers in the programming area, but the major part of them 88.3% are in Montenegro. With the exception of the main cities, penetration of Albanian telecom in rural areas is low. Malfunctioning of land system in Albania and its low coverage (only 1/5 of households living in the Albanian part) is replaced with the use of mobile communication. In the programming area, the mobile telephony service is one of the greatest penetrations of cellular phones per habitant in Europe. Four operators

9 This is a single-track not electrified rail track, which serves both passenger transport and freight traffic.

10(two in Albania and two in Montenegro ) offer GSM services. All providers have national coverage, and offer advanced services. Extensive communication difficulties result in lack of information and in isolation. Also spread of internet services is low, especially in the Albanian part.

3.6. Economic Development

3.6.1. General economic description 11Both Montenegro and Albania are members of the Central European Free trade Agreement

(CEFTA). Free Trade Agreement includes a number of potentials commodities that improve export capacities of both countries. The list of commodities include agricultural and agro industrial products like fresh and processed fruits, vegetables, fish, diary products, honey, medicinal and aromatic plants, spices, wood products, textile and leather, etc. The overall economic development of the programming area is unbalanced. The Albanian part has lower economic development not only compared to Montenegrin part but also compared to the rest of Albania. The GDP per capita in Montenegrin area12 is 33 % higher than the national average, meanwhile in Albania there are no official figures of the GDP per capita at regional level.

13In the Albanian part the agriculture sector based on limited agriculture land (in average 0,22 ha per capita) occupies 68 % of total employment, compared to 41.15% % in Montenegrin part. In the Albanian part, from around 2,600 private non-agriculture enterprises, 65 % of them operate in trade (44 %) and services (21 %) and only 14 % in light industry. Poor infrastructure provisions and problems related to land ownership have affected heavily development of local businesses and discouraged foreign investors. Even though direct foreign investments have played an important role in restructuring the Albanian economy and boosting the economic growth, only a small fraction of foreign capital is invested in the Albanian part of the programming area, while the situation is slightly better in the Montenegrin part due to investments in tourism. There are no available data for Montenegro on SMEs distribution by main sectors of economy, but judging by the employment data the most dominated sectors result to be trade (15.3%) and processing industry (14.1%).

3.6.2. Agricultural and Rural Development

Agriculture land, totalling 227 thousand hectares (Albania 76 thousand ha, Montenegro 151 thousand ha), represents an important economic attribute for the area. The overall agricultural land per capita is 0.33 ha, with Albanian area 0.23 ha per capita and the Montenegrin with 0.42 ha per capita. Agriculture land is not adequately exploited. This is a consequence of the topography and geological composition that predetermines the dominance of low fertile soil. Coastal areas in Montenegrin part and areas around the Shkoder/Skadar Lake (Zeta valley and lowland of Shkodra) are suitable for fruit (subtropical fruits and olives) and field crop production (Figure 5). This area has optimal conditions for potato and vegetable production. Hilly parts of programming area are suitable for breeding of small ruminants; this relief is rich with honey plants, medical herbs etc. Natural

12

high han

10 The third mobile operator obtain license in Montenegro and it should be in function starting from S eptember.11 Montenegro signed CEFTA on 19th Dec, 2006 but the implementation will start on 12st June 2007. 12 In three municipalities from programminig area (Budva, Bara and Podgorica) GDP per capita is er t

7.6

17 .8

9 .4

3 .6

20%

40%

60%

80%

100%

26.514

81

0%A lbania M o ntenegro

Figure 5: Distribution of area cultivated w ith crops (in %)

Wh tea C o rn Vegetables P o tatonational average. The GDP per capita for 2004 amounted 2,645.43€ 13The figure represent the agrarian divided by total population

conditions are suitable for diversified development of agriculture, and are at the same time extremely complex. Hilly-mountainous zones with distinctive relief and a deficiency of lowland are the main limiting factor in agriculture development. Both Montenegro and Albania agricultural productivity is based on small-scale family households often oriented to self-consumption. In the northern south and southeast part of the area the largest part of the territory is grassland, proper for summer pasture of cattle. In Albania, the large-scale migration of labour force from rural areas has brought about declining of utilisation of arable land and the production too.

3.6.3. Industry The industrial sector of the programming area is based on electricity generation, steel, aluminium, coal mining, forestry and wood processing, textiles, leather industry. The industry sector is more present in the Montenegrin part, with significant capacities especially of agro-industry processing and finishing products, production of cigarettes and confectionary products, etc. In the programming area are located the Montenegrin biggest companies such as Aluminium plant in Podgorica. Industrial sector in the Albanian part is underdeveloped. Copper industry, once very important for the area and country’s economy, today has become insignificant. Agro-processing capacities in general are limited. Although there seems to be great interest in establishing agricultural and dairy processing centres there are very limited financial opportunities for investing on contemporary technologies. Mining. In the Montenegrin part there is a brown coal mine in Berane. Also the Albanian part is rich in underground resources, in particular copper. During communism the mining industry was extensive. Currently all mines in Gjegjan and Nimce, (Kukes district), in Golaj (in Has district) and Kam (in Tropoje) are closed.

3.6.4. SMEs Sector

Improvement of the business climate in both parts of the programming area has contributed to increasing the number of SMEs. According to Tax Administrations (Montenegrin and Albanian) there are about 13,000 SMEs registered in the programming area: 80 % in the Montenegrin area

and 20 % in the Albanian part. The largest number of SMEs is situated in Podgorica, Budva and Herceg Novi, for the Montenegrin part and in Shkoder for the Albanian part. (see Figure 6 and 7)

The SMEs play an important role for economic development of both areas. They are vital for offering employment opportunities, promoting the diversification of economic activity, supporting sustainable growth, and contributing significantly to exports and trade exchanges. So far there have been efforts to increase the cooperation between the chambers of commerce and SMEs, but there are still enormous opportunities to intensify the

Figure .7: SMEs distribution in Montenegrin eligible area

4% 5% 1%1%3%

51%

12%

6%4%

13%

Rozaje Berane Andrijevica Plav Danilovgrad Podgorica Bar Ulcinj Cetinje Budva

F igure 6: A lbania - SM Es distribut io n by e ligible area

Shko der62%

Kukes38%

13

14

level of cooperation and knowledge sharing activities, in particular in the service and tourism sectors.

3.6.5. Tourism Tourism is a sector of potential growth, due to natural resources and cultural and historical sites residing in both parts of the programming area. Each part of the border has its own individual potentials: attractive nature, beautiful sea costs, attractive lakes, national parks, historical sites and possibilities for developing mountain sports and village tourism. The level of tourism in the Albanian eligible area (with a slight exception of Shkodra) is symbolic. This is due to numerous factors such as: poor condition of infrastructure (roads, energy, water and sanitation), small capacities for accommodation, unprofessional marketing and lack of information and tourist guides. Shkodra is an ancient town with a rich historical background. There are numerous attractive sites for developing tourism. In the vicinity of Shkodra there are: Velipoja beach, Shkodra Lake, Rozafa Castle; Church of Shirgji, Mes Bridge, Illyrian ruins of Gajtan and medieval city of Sarda. Shkodra is also a good starting point for trips to Albanian Alps. Kukes region wilderness is renowned for it rugged beauty and could be of great interest to mountain tourists. The numerous lakes and rivers provide an excellent backdrop for resort and adventure tourism in this area. The Montenegrin’s eligible area has a much better-developed tourism infrastructure. About 0.8 million tourists visited the area in 2006, with an average stay of 6.4 days. 1/3 of visitors were foreigners. Beautiful sea cost lies along the western part starting from Ulcinj (velika plaźa13 km long), Bar and Budva (21 km long with 17 beaches). Bar is a port town, but well – known for many important historical and cultural sites offering a great number of festivals and cultural events. The Budva coast is the centre of Montenegrin tourism. Development of tourism in this area is however facing a lot of difficulties due to problems with water supply, town planning, a numerous numbers of non-registered accommodations, and illegal construction and bad road Infrastructure (in mountain areas).

3.7. Human Resources 3.7.1. Education, Research and Development

The education system in Montenegro is well developed in the three levels. There are 221 primary schools with 44,866 students. There is a low illiteracy rate counting for less than 2%. Only in Podgorica there are 12 secondary schools, in Bar and Cetinje 3, Berane 4 and in every other town one secondary school. The major university center is Podgorica, with 10 faculties. Cetinje and Budva have regional departments of University of Montenegro. In Albania there are 310 primary and lower secondary schools with 60,678 students and 49 secondary schools with 16,949 students. There is one university in the city of Shkodra with a total number of 10,089 students. Shkodra University represents the most important centre of intellectual, cultural and social development of the Albanian programming area. Dense demographic changes have influenced normal functioning of schools, especially in the rural areas. In some urban areas there is overpopulation of classes. Beside some improvements, still many schools do not offer a qualitative education due to lack of qualified teachers, lack of laboratories and didactic means, insufficiencies in investments, etc.

3.7.2. Labour Market (employment and unemployment)

Even though no big differences are reported between Albania and Montenegro in relation to unemployment rates at national level, the situation in the programming area is the opposite. The average unemployment rate is around 15, 6% in Montenegrin part, while in the Albanian part this is 28.8%. Unemployment rate in the Albanian part is twice higher than the national average, and it counts for about ¼ of total unemployed people in Albania. The age group under 45 years old represents 80-90 % of unemployed people (Figure.8 below). Unemployment rates by level of education are different among countries (Figure 7). Unemployment level among people with secondary education in Montenegro is higher (63%) than in Albania (52%), while in Albania the level of unemployment among population with primary education is higher (46%) than in Montenegro (29%).

46%

52%

2%

29%

63%

8%

0%

20%

40%

60%

80%

100%

Albania Montenegro

Figure 8:Unemployement rate by education level

Primary Secondary University,MSc, PhD

44%

41%

15%

29%

63%

7%

0%

20%

40%

60%

80%

100%

Albania area Montenegrin area

Figure: 9 Unemployment rates by age's groups

(16-24) (25-45) (over 45)

The structure of employment by sector is different in each side of the border. In Montenegro the sectors of tourism, services, agriculture, architecture and trade employ the majority of labour force. In the Albanian side the majority of labour force is employed in agriculture, trade light industry (textile and leather) and services. High unemployment rate and domination of agriculture sector contribute to a higher poverty level in the Albanian part. The indicator of “population share living with less than $2 USD per day” measured in 2002 showed a high number of total population living under poverty line. Preliminary data from LSMS 2005 showed improvements, but the poverty is still high and persistent in rural and mountain areas. According to Montenegrin Poverty Reduction Strategy Paper of 2004, 12.2% of the population is poor. The poverty rate is largest among the Roma, Aškelja and Egyptian minority (52.3%).

3.8. Environment and Nature

The programming area is rich in natural reserves and protected areas. In the Montenegrin area there are two National Parks (Skadar Lake and Lovćen). In Albanian part there are 7 national parks, natural reserves and protected landscape (Thethi, Tropoja, Shkoder, Buna–Velipoje).

15

16

The Lake of Shkodra/Skadar basin is very important for the area due to its biological, scientific, cultural, health, recreational and tourist values. The lake today is one of the most important bird areas of South-eastern Europe with about 270-recorded speeches breed including rare pelicans. Industries and agriculture farms’ deposits, free waste disposal and lack of sufficient sewage treatment are leading to the eutrophication of Shkodra/Skadar Lake. In addition, over fishing in both sides has led to shortage of food for fish-eating birds. The aluminium company in Podgorica is Montenegro’s biggest single polluter. There is no proper filtering in the processing of bauxite to aluminium. High levels of fine dust particles, solvents and fluorides are the result of missing or defective air filters. The soil is polluted with PCBs. The groundwater is polluted with PCBs and fluorides. An agriculture pesticides (selinon) deposit in Kukes Region in Albania is specially toxic to humans and carcinogenic. Also all mines closed in Kukes region create pollution. Nature resources in the Albanian part are preserved but there are some locations which are polluted and at high risk of degradation. The forests risk the de-foresting; rivers and lakes risks the pollution from illegal landfills (poor industrial and urban waste management) and intensive agriculture pesticides; fauna is threatened from over fishing and illegal hunting. Land degradation is present in both Kukes and Shkoder regions. In 2005 Albania and Montenegro organized a high level meeting dedicated to discussions on how to protect the resources and diversity of the Lake of Shkodra/Skadar. The representatives of the two governments decided to establish a committee to deal with Lake Shkoder environmental challenges. The Office for Sustainable Development under the cabinet of the Montenegrin Prime Minister was created with the assistance of the UNDP. Both Albania and Montenegro have given priority to environmental issues. Joint programmes, notwithstanding limited, aim at intensifying the actions for protecting the nature and environment in the area. In Montenegro, the Ministry of Environmental Protection has established few years ago the systems for monitoring air and soil quality, while the Ministry of Agriculture, Forestry and Water Management has the legal obligation to monitor the water quality. However, there is a need for improving the data from environmental monitoring systems to be addressed in both sides.

3.9. Culture

The culture in the programming area is, in overall, characterized of elements of different common and individual traditions. Tourist centres and big cities are rich in cultural heritages that include monuments and religious sites (churches, monasteries and mosques), old towns, archaeological sites and different museums. The programming area is also rich in diversified culinary and handicraft traditions that could play an important role in further promotion and tourism development. A few women NGO in both sides has started to work on the valorisation and conservation of these heritages. Communication and exchange among the public cultural institutions and different associations, even though at the modest level have contributed to establishing the new networks. These contacts should be intensified in the future, thus creating a basis for more active cross border co-operation. Protection of cultural heritage is very important for protecting the identity of this region.

3.10. Institutional Arrangements

Montenegro is divided into 21 municipalities as a basic unit of self-government. Albania has different administrative set up. The country is divided into 12 regions, comprising 36 districts.

17

Districts are divided into municipalities (in urban centers) and in communes (in rural territories). The regional development is a core element of the ongoing decentralization reform process in Albania14. Recent fiscal reforms are aiming to provide full authority to local government units on the small business tax. Efforts to introduce the municipal borrowing framework will give more freedom to the local unit towards implementing the development programmes.

3.11. Major gaps, disparities and potentials for development of the programming area

The analysis of strengths and weaknesses of the eligible areas in both countries contributed to highlight some peculiar aspects of difficulties/problems on the one hand and the resources/opportunities on the other hand, which are cumbersome to cross border cooperation in this area. The situation analysis of the programming area resulted in the following key conclusions on strengths of the area: The tourism sector is recognised to be very important for the economic and social development

of the regions situated in the programming area. Further intensification of culture exchange and valorisation of historical culture heritage will contribute to strengthening the region identity. However, tourism development is facing growing difficulties arising from road connection network and the environmental situation.

The existing natural resources present significant importance for the life quality and economic

benefits of the population in the area through putting these resources in the function of the tourism sector development objective. However, the whole area is facing environmental problems in terms of safeguard and preservation. One of the emerging priorities is related to protection of the costal zones from the waste water and solid waste disposals, as well as air pollution from the industrial activities.

The local economies are growing up and their target is to become more attractive for foreign

direct investments. Strengthening of SMEs networks and service connections existing on each part of the programming area is crucial. Development of infrastructure and the diffusion of networks and services connections able to support diffusion of knowledge and innovation, will contribute towards a general increase of wealth and economy.

The following are the main weaknesses deriving from the socioeconomic analysis: - the labour market structure presents high unemployment rates at youth and especially female

levels.

- the presence of strong migration flows has impacted the labour force and resulted in loss of the skilled and educated workers.

- the standard of living levels of the whole community in the territory of the programming area

during the last years have deteriorated and together with the labour market crisis have increased the phenomenon of marginalization, social hardships and youth emigration;

14 The role of Regional council for coordinating the development activities in the respective regions has increased in parallel with the transfer of

power to the local level for provision of the public services.

18

- the poor development of economies is closely linked with inferior use of the existing potentialities of natural and cultural resources and in particular potential of tourism;

In the meantime the territory shows substantial potentialities, opportunities and resources such as:

o a great number of young people seeking employment in possess of middle-high schooling

levels, thanks also to the presence of a wide and qualified educational university system;

o a system of smaller enterprises diffused at the programming area, particularly dynamic.

o an environmental, natural and historic-artistic heritage important and present on much of the territory of the programming area ;

o a system of offer of training and innovation, wide and diffused over the territory, able to properly

support the demands coming from the socioeconomic system as a whole;

o a geographical location which gives to the area the role of privileged crossroad of the communication guidelines for the Balkan area at one hand and the Middle-Europe on the other (corridor n.10).

3.12. SWOT analyses of the programming area

The following tables provide detailed analysis of the four categories, weaknesses, strengths, opportunities and threats of the programming area:

STRENGHTS WEAKNESSES OPPORTUNITIES THREATS

I LEGAL & INSTITUTIONAL FRAMEWORK

• Existing Protocol of cooperation between Albania and Montenegro

• Existence of the Regional Forum of cooperation between Shkodra Region and Montenegro

• Implementation of the joint agreements and programmes for the conservation of Shkodra/Skadar Lake

• Favourable overall legal and institutional frameworks attractive for FDIs development;

• Discrepancies among the local administrative units in the field of social and economic development.

• Limited capacities of the local-self government authorities, coupled by poor level of information and communication infrastructure.

• Limited experience in the eligible areas for identifying and implementing joint programmes and cross border projects.

• Opportunity to develop various mechanisms and instruments aiming at facilitating the establishment of partnerships for cross border initiatives;

• Opportunity for increasing the capacity of the civil society organizations to participate in joint programmes and developing public private partnership initiatives.

• Delays in the adoption and enforcement of the respective property legal framework ,impact negatively the implementation of strategic regional and local development programmes

• Underdeveloped and under equipped local - self government administrations.

• Lack of incentives and capacities of the public sector employees to keep up with demanding reform programmes.

II ECONOMY / PRODUCTION / SMES

• Free-trade agreement between the two countries

• Cultural and nature resources suitable for accelerating economic development;

• Natural resources, Lake of Shkodra/Skadar, and cultural heritage as potential for development of tourism

• Relatively good level of education in the programming area, because of universities and other vocational training centres;

• Existence of business incubators (MN) and regional development agencies (AL)

• Investments in infrastructure aiming to support development of tourism industry in the areas surrounding Shkoder/Skadar Lake

• Discrepancies between the local-self government units in the area of social and economic development; high inequality in urban and rural development;

• Lack of awareness of international standards to improve access to regional and EU markets.

• Underdeveloped technology and labour intensive industries and agriculture sector

• Opportunity to create and develop integrated tourism product including both lake, coastal and mountain areas

• Growing competitiveness in tourism; • Opportunity to attract investments and to increase public/private partnership for building adequate road infrastructure;

• Encouragement of cross border cooperation among agencies supporting SMEs, urban centres and development agencies

• Opportunities for fostering economic connections of Albanian enterprises with the Montenegrin enterprises

• Dominant mountainous relief can have a negative impact on local economic development;

• Delays in resolving property issues


III INFRASTRUCTURE & COMMUNICATION

• The access to the Corridor 10 enables the transport traffic to the inner Balkans and from there to Middle - Europe.

• Important shortfalls and problems on the secondary road network coupled by unfavourable weather conditions during the winter time.

• Adriatic–Ionian main road that could integrate Albania and Montenegro within modern European transport routes.

• Out-dated electrical infrastructure • Underdeveloped roads, railways and ports infrastructure;

• Increased traffic flow at cross-border points in the last few years.

• Better use of the existing communication and transportation networks

• Insufficient local financial resources for reconstruction and maintenance of the deteriorated local infrastructure;

• Under equipped border crossing points for transport of goods and merchandise. • Railway connectivity • Opportunities for making easier the movement

of people and goods through improved road and cross – border points infrastructures

• Unsafe transport, coupled by the hard geographical conditions; • Ongoing programmes for improving

road networks • Illegal constructions putting additional pressure on infrastructure and having negative impact in protecting the costal areas • Lack of proper waste water treatment and

sewerage • Increasing investments in water supply and sewage systems

• Delays in solving property restitutions issues

IV ENVIRONMENT & QUALITY OF LIFE

• Rich with natural resources and parks • Existence of especially sensitive ecosystems demanding a high level of protection

• Area reached with natural resources relatively preserved due to the lack of developed industries;

• Lack of solid waste dumps built by EU standards; • Existence of several Natural Parks

suitable for eco-tourism development. • Lack of proper environment impact assessment before investment is started. • The natural resources have yet to be

recognised as a potentially significant source of revenue

• Opportunity for an expansion of national parks and natural reserves and for a cross border management of natural resources.

• Lake of Shkodra/Skadar and forests of major environmental importance • Lack of control and excessive exploitation of

the natural resources could seriously jeopardize the environment, living standards and local population welfare

• Rich with medical plants and numerous endemic plant species.

• Existence of Programme for development and protection of the National Parks (Lake of Shkodra/Skadar)

• Lack of sewage and waste water treatment systems lead to increased pollution of natural water resources;

• Increased public awareness on the environment protection needs

• Opportunity for environmental protection activism by non-governmental organizations in the region

• Risk of native species disappearing and loss of biodiversity • Insufficient control, with regard to waste

disposal endangers both the quality of water and the quality of the soil.

• Opportunity to develop local capacities (both at local self – government units and non-governmental organisations) to undertake proper environment impact assessment before a license or permission for an investment activity is issued.

• Low level of implementation of EU environmental related legislation in private and public sectors.

20


V HUMAN RESOURCES & EDUCATION

• Existence of research institutions and Universities Shkodra and, Podgorica (with faculties and department of faculties in Budva and Cetinje) as well as establishing new private ones has as a result young and educated labour force that keep up with contemporary market needs;

• Lack of skilled workers for specific industry and agro-processing needs

• Improvement of the level of vocational education, which has a direct impact in the qualification of labour market more attractive for the foreign enterprises.

• Due to rigid labour regulation, non-registered labour force.

• High unemployment level in particular in urban areas

• The social infrastructure shows obvious weaknesses. The rural and mountain regions are particularly affected. • Depopulation, demographic deterioration of the

eligible regions and labour migration; • Development and implementation of different courses for upgrading present qualifications.

• Concentration of economic activity and opportunities for employment in the major cities that further deepens the problem with depopulation of the rural settlements.

• The migration has been growing up over the years.

• Existing opportunities for increasing the employment potentials in the private sector and market demand-driven entrepreneurial initiatives;

• Existence of a network of vocational training institutions and training courses for supporting the upgrade of employees’ qualifications;

• Ageing population and increasing number of older households in the rural areas, due to migration of the young population

• Implementation of internationally accredited education programme especially at university level (Bologna declaration);

• Lack of foreign languages and IT skills especially among older and middle age labour force necessary for accelerating economic development;

• Relatively young population ; • Lack of practical exposure and low level of

technical knowledge absorbed by the students, impact on creation of a labour force that do not meet the standards of a new labour market.

VI CULTURE & TOURISM

• Opportunities for development of eco-spa-cultural and other forms of tourism, inducing the development of cross-border regional tourism.

• Multicultural diversity as a positive force in furthering society's nationhood or cultural identity.

• Little protection and preservation of historical and archaeological heritage

• Little attention to protection and preservation of monuments and culture and historical heritage • Inability to develop the shared elements of

cultural heritage with the other side of the border • Richness in cultural resources and heritage • Potential growth of cultural facilities (Cultural organizations)

• Still low level of economic development doesn’t provide enough means for investment in culture;

• Pleasant Mediterranean climate • Insufficient practices for development of historical and cultural tourism.

• Existence of tradition in cultural exchange • Opportunities for development of specialized types of tourism (lake and mountain tourism, city visits, etc.)

Inadequate service delivery – such as continuity of water supply, drinking water quality, electricity supply will affect the quality of tourism and in turn tourism revenues.

• Opportunity to develop joint strategies and programmes for tourism development, protection and promotion of historical and cultural heritage;

• Lack of understanding of potential that cultural and historical heritage can bring to the region.

•

• Opportunity to develop and strengthen local institutional capacities related to cultural and tradition issues.

21

SECTION II PROGRAMME STRATEGY 1. Experience with cross border activities The level of cooperation between Albania and Montenegro is relatively recent. The cooperation has taken place more at the level of central institutions and less between the bordering regions. The countries cooperation is based on the following existing protocols and agreements: • Free-trade agreement between two countries. • The Protocol of Cooperation15 between the two countries according to which both parties agree

to develop joint activities to promote tourism; to open other border points and modernize the existing ones in order to ensure more facilities for the transportation of people and goods; to develop a convention for cooperation in the area of tourism; to act together for the project of the development of Shkodra/Skadar Lake; and to promote signing of contracts between tourism firms and hotel companies of both countries. The results of this protocol to date have been modest with little impact.

• The Regional Forum of cooperation between Shkodra and Montenegro. This forum aims at

promoting cooperation between the two regions. In the forum there are representatives of the local government and the private sector, who should organize joint meetings 3-4 times a year.

• The Navigation Agreement of November 2004, according to which the parties agree for the

operation of an international navigation line for Shkodra-Virpazar. • The Strategic Action Plan for Shkodra/Skadar Lake of March 2007, established between the

Ministry of Tourism and Environment of Montenegro and the Ministry of Environment, Forests and Water Administration of Albania.

Lessons learned Most of the cross-border initiatives started only recently, making it premature to define “lessons learned”. However, the following points can be highlighted from cross-border experience in the Western Balkans countries: • The projects focusing on environment protection reflect the priorities defined by the national and regional

institutions, providing for a sound embedding in local and national development priorities. However, it is important to strongly associate civil society and the private sector in programme development.

• The small calls for proposals for cross-border actions launched in previous cross-border programmes showed a low capacity in project preparation of most of the final beneficiaries. This could impede the implementation of the programme. Specific training of potential applicants will be essential throughout the programme.

• A few municipalities have had a leading role in the past and current cross-border initiatives. These municipalities should have a key role when implementing the programme (transfer of know-how, etc.).

In addition, an independent evaluation on the CBC programmes under PHARE was conducted by MWH consortium. Experience has shown that the preconditions for effective implementation

15 This Protocol was signed in Ulqin on December 4, 2000 between the Ministry of Tourism of Montenegro and the Albanian Committee for the

Development of Tourism.

23

include, besides close co-ordination between participating countries at political and operational levels: • cross-border cooperation between line ministries and effective working relationships between related

organisations; • functioning regional development authorities and local authorities, with appropriate staff in a stable

environment; • close working relationships between regional institutions and the respective Commission Delegations; • functioning cross-border cooperation between respective organisations of the private sector, such as

chambers of commerce, company associations and NGOs. 2. Strategy of the Cross Border Cooperation Programme

The cross-border programme between Albania and Montenegro will contribute to the implementation of IPA Component II "Cross-border cooperation" of the Multi-annual Indicative Planning Documents (MIPDs) for both countries. This programme will provide assistance for "Democratic stabilisation and administrative capacity building", "Economic and social development", "Infrastructure" and "Technical assistance", identified as major areas of intervention in the MIPD for Albania, and will address the need for "Development of cross-border economic, social and environmental activities of border areas", to "Address common challenges in particular in the field of environment and public health and development" and to "Promote local "people to people" type actions including NGOs and local authorities" in the MIPD for Montenegro. Rationale. The above SWOT and situation analyses reveal that the programming area is very rich in natural and cultural resources but significant parts of it are underdeveloped compared to respective national standards. There is a great potential for tourism and economic development that is generally underexploited. There is a high level of unemployment and unskilled labour force and the economy of the area is mainly based on agriculture, fishing and small uncompetitive industries. As of 1990 the level of exchanges across the border has increased rapidly, but still based on some low cross border trade transactions of foreign goods. The relations between Albanian and Montenegrin economic operators and regional and local organisations are weak and there seem to be little common understanding of the cross-border region’s economic opportunities.

2.1. Overall strategic objective of the programme

The strategy of this programme defines appropriate priorities and measures necessary for ensuring a harmonized and integrated cooperation of stakeholders in the programming area, also supporting and fostering both countries’ aspirations for deepening regional cooperation.

As mentioned earlier, the overall strategic objective of this programme, proportional to the disposed financial allocations, is to:

⇒ promote cooperation between people, communities and institutions on the bordering areas, aiming sustainable development, stability and prosperity in the mutual interest of citizens of the two countries.

In addition the programme will aim to build capacities of local stakeholders, municipal, regional institutions and civil society to participate in cross-border initiatives.

2.2. Specific objectives

The specific objectives of the programmes include: ⇒ Promotion of economic development of the programming area through the economic

valorisation of its tourist and cultural potentials ⇒ Support joint initiatives and actions aimed at protecting, promoting and managing sensitive

ecosystems and sustainable environmental development ⇒ Encourage citizens cooperation and partnership building across the border ⇒ Strengthen capacities of national and joint structures to manage cross-border programme ⇒ Prepare and disseminate programme information and improving capacities of potential

beneficiaries to prepare and implement projects ⇒ Provide technical expertise for external programme evaluations

3. Priorities and measures

Taking into account both strengths and weaknesses of the eligible areas, the strategic framework of the programme is structured into two major priority interventions which are further detailed into measures:

Nr Priority

Promotion of regional cohesion and competitiveness through an approach that integrates economic, environmental, cultural and social development Priority Axis I

Priority Axis II Technical assistance for an effective programme management and information flow

The rationale behind selecting these two priorities is based on identification of potential interventions of common interest and benefits to a broad spectrum of beneficiaries located on both sides of the border. The first priority will promote joint cross border initiatives and actions aiming to improve regional economy in a socially and environmentally sustainable way, while the second priority will ensure effective management and implementation of the whole programme through technical assistance support. While substantial attention is given to social, economic and environmental sustainability, the cross border programme will encourage the design and implementation of projects emphasizing two vital horizontal principles, cross-border partnership and equal opportunities. Creation of real partnerships with cross-border effects is indispensable to the implementation of this programme. The programme will support initiatives that promote equal opportunities and gender mainstreaming. Priority will be given to projects that will clearly demonstrate their efforts to create equal opportunities for gender, ethnicities and disabled according to EU principles.

24

OVERALL OBJECTIVE PROMOTE COOPERATION IN THE BORDERING AREAS, AIMING GOOD NEIGHBOURHOOD RELATIONS,

SUSTAINABLE DEVELOPMENT, STABILITY AND PROSPERITY

IN THE MUTUAL INTEREST OF THE TWO COUNTRIES

PRIORITY AXIS 1 PROMOTION OF REGIONAL COHESION AND COMPETITIVENESS, THROUGH AN APPROACH THAT INTEGRATES

ECONOMIC, ENVIRONMENTAL, CULTURAL AND SOCIAL DEVELOPMENT SpePromote e

through the its tourist

Measure 1.1 Economic development with an emphasis on tourism promotion

Measure 1.2 Measure 1.3 Enhancing social cohesions

through people –to - people actionsEnvironment protection and

promotion

25

Measure 2.1 Measure 2.1 Programme Administration, Monitoring and Evaluation Programme Information and Publicity

Strengthen capacities of national and joint structures to manage cross-

border programme,

Prepare and disseminate programme information and improving capacities of potential beneficiaries, to prepare and

implement projects

Provide technical expertise for external programme evaluations

Specific Objective III

Capacity building will be an important element of the programme. It will aim to intensify and consolidate cross border dialogue and institutional relationships between local, regional institutions and civil society in order to improve collaboration, cooperation and sharing of experience between relevant stakeholders and enhance capacities to manage cross-border projects. The measures presented above provide detailed information on related activities as well as the beneficiary groups. For each measure a set of indicator is proposed which will serve to properly evaluate the effectiveness in the process of implementing the cross-border cooperation programme. They provide a concrete useful instrument in order to measure the quantitative as well as the qualitative results of the programme. 3.1. PRIORITY AXIS I Promotion of regional cohesion and competitiveness, through an

approach that integrates economic, environmental, cultural and social development

The situation & SWOT analyses and feedback received from beneficiaries on both sides of the border clearly indicate the need for interventions in areas supporting economic development, environment, culture and social cohesion. After ample joint consultations with stakeholders it was decided to specifically put the focus of this programme on interventions aiming to promote regional cohesion and competitiveness through an approach which integrates economic, environmental and social development. The rationale of this priority is based on the fact that both eligible areas are compatible in terms of their individual resources and needs. There is a missed opportunity of cooperation over decades for

PRIORITY AXIS 2 TECHNICAL ASSISTANCE FOR AN EFFECTIVE PROGRAMME MANAGEMENT AND INFORMATION FLOW

Specific Objective I

Specific Objective II

26

sharing common values and potentials for economic development and social cohesion, while the countries are overcoming their immediate transitional problems. This programme aims to capitalise further on existing national initiatives targeting individually development of these regions. This priority of the programme will contribute to quality of life and living standards by providing opportunities for wider economic partnerships and exchanges of common interest across the border. Actions to be implemented are expected to effect improvement of quality of services, generate jobs, entrepreneurial opportunities, business-support facilities and environmental situation. The measures under this priority of the programme have a relatively wide scope of interventions. Interventions will support economic development with focus on tourism (but not exclusively), as tourism is considered to have a great potential for the region as a whole. In addition, cultural and other social exchanges will be supported. Part of the programme is designed to support environmental protection measures, awareness and respect of environmental aspects focusing in particular at Shkodra/Skadar Lake. The people-to-people partnership and cooperation is a core element of the programme. It will seek to enhance the flow of exchanging experience and communication across the bordering area. Actions under this measure will intensively facilitate the strengthening of local communities and NGOs and promote social cohesion. It should be noted that the measures and actions envisaged under this programme tend to be realistic on how much it can be achieved considering the limited financial resources available. Certainly a significant part of problems identified in the situation and SWOT analyses cannot be supported. A regrettable area is in particular modernisation of infrastructure, which requires substantial funding. This priority will include three specific measures:

Nr. Measure

Measure I.1 Economic development with an emphasis on tourism promotion

Measure I.2 Environment protection and promotion

Measure I.3 Enhancing social cohesions through people-to-people actions

3.1.1. MEASURE I.1 - Economic development with an emphasis on tourism

The specific objective of this measure is:

⇒ promotion of economic development of the programming area through economic valorisation of its tourist and cultural potentials.

This measure will focus mainly on actions supporting the promotion of this bordering area as a tourist destination.

27

Actions will aim to help promoting local economic activities and create favourable conditions for enhancing quality of services, competitiveness and attractiveness in tourism and cultural exchanges. The rationale of interventions under this measure is based on the fact that existence of rich and favourable natural resources and climate, as well as cultural and historical sites residing in both parts of the programming area, make tourism the most potential sector that can contribute not only to promotion of economic development, but also intensification of culture exchange and valorisation of historical heritage and identity of the programming area. The promotion of tourism in the programming area will provide incentives and support for cross-border cooperation and exchanges through a process of sharing and transferring of know-how and information. The programme will encourage initiatives of modernizing tourism services by development of joint business advisory services, stimulating regular interaction between businesses located across the cross-border region via: business-to-business networks; joint marketing & promotion on domestic & EU markets; enhancement of innovativeness by cooperation with educational organisations for innovation and vocational training services; selected investments in business infrastructure, promote the area’s image to potential investors and visitors etc. The expected results will have an impact on promoting tourism entrepreneurial activities across the border and enhancing exchanges of cultural and historical values and cultural diversity as a unique feature of those areas on each side of the border share. The following table provides a summary of indicative activities and potential beneficiaries to be supported under this measure, as well as beneficiaries and monitoring indicators.

28

This measure will be implemented through grants schemes. Specifications on size of projects, other requirements and selection criteria will be detailed in the “Call for Proposals/Guidelines for applicants”.

16 Indicators are calculated only for the period of 2007-2009 for which the level of financing is already defined

PRIORITY AXIS I Promotion of regional cohesion and competitiveness through an approach which integrates economic, environmenta, culturall and social activities

MEASURE I.1 Economic development with an emphasis on tourism promotion

Indicative Actions Beneficiaries

o Local Government Units

(Regions, Municipalities and

Communes) • Support to joint innovative actions aiming at introducing new tourist practices; • Establish networks and associations for the purpose of achieving a coordinated development of

joint entrepreneurial activity o Professional association, • Know-how transfer for improving knowledge and skills of people in entrepreneurship, new

technologies, marketing, promotion; o Chambers of commerce; • Joint activities for development of basic infrastructures for protection of historical, cultural,

artistic, and linguistic heritage in the cross-border area; o National and local

institutions/agencies; • Marketing and joint activities to enhance typical products in the cross-border area; o Public enterprises; • Development of activities aiming to support cooperation between SMEs, education, research &

development organisations for improving business innovativeness and technology o Educational and research

institutions; • Joint vocational /adult training projects addressing market demanding and sectoral needs skills • Research studies to identify market gaps, market opportunities, high value products,

dissemination of results across border region o Vocational Training Centres • Joint initiatives for establishing cross-border clusters (e.g. multi-media, tourisms, ICT, food

processing, electronics, biotechnology) o Business Support

Organisations • Stimulate use of ICT in production, for tourism information and marketing & management of SMEs.

o SMEs • Support to re-building or up-grading of small-scale tourism infrastructure (walking paths, cycle routes, equipping visitor centre, information points, networking tourism centres) o Local labour offices

o NGOs

16INDICATORS

Number of interventions to be implemented (45) Number of joint activities for promoting new tourist practices (6) Number of research studies to identify market gaps, market opportunities, high value products, dissemination of results across border region (4) Number of actions focusing on the innovative actions (11) Number of bussiness contacts and partnership activities organised (6) Number of joint trainings/workshops and conferences organised (11)

Objective Verifiable Indicators

Number of small –scale infrastructure projects implemented (7)

Cross-border territory experiencing the joint management of tourist areas Firms and institutions involved in projects regarding tourism/regional development related activities Promotional initiatives and events Heritage and cultural sites up-graded/improved

Result Indicators

Increased stable cooperation between public entities in the tourist and cultural sectors Increased variety of the tourist and cultural offers/products Increased volume of business in the cross border tourist sector Increased potential for use of innovative business methods and applications

Impact Indicators

Increased level of cooperation between the public and private institutions in the bordering area

Number of applications submitted Ratio (%) of approved projects versus application submitted Ratio (%) of approved projects versus financed projects Number of projects started Ratio (%) of finished projects versus started projects Number of projects withdrawn

Procedural and progress indicators

Number of projects cancelled

29

3.1.2. MEASURE I.2 - Environment protection and promotion

The programming area is rich in natural resources and protected areas. The Montenegrin part includes three National Parks, while in the Albanian regions reside 7 National Parks, natural reserves and protected landscapes. Shkodra/Skadar Lake constitutes a crucial ecosystem key to the overall development and environmental balance of the whole area. Its basin encloses exceptional natural values due to its biological, scientific, cultural, and recreational and tourist values. The lake is one of the most important bird areas of South-Eastern Europe. There is great concern for the protection of natural resources in both sides of the border. Industrial pollution, poor waste and water management, use of agriculture pesticides, over fishing and illegal hunting, illegal constructions in urban and tourist areas are all elements that have already damaged and continue to be a serious threat to the sustainability of environment in this area. There is low level of awareness of population and business community on the importance of environmental matters. The objective of this measure is to:

⇒ support joint initiatives and actions aimed at protecting, promoting and managing sensitive ecosystems and sustainable environmental development of the area.

The measure will support cooperation of environmental protection organisations active in the programming area to prepare and implement management plans for eco-tourism sites with the main focus at Shkodra/Skadar Lake and its surroundings. The actions envisaged to take place under this measure will seek to strengthen cross-border collaboration through joint activities designed to protect environment and the natural heritage. The following table provides a summary of indicative activities and potential beneficiaries to be supported under this measure, as well as beneficiaries and monitoring indicators.

PRIORITY AXIS 1 Promotion of regional cohesion and competitiveness through an approach that Integrates economic, environmental and social activities

MEASURE I.2 Environment protection and promotion


• Support to integrated protection and management of sensitive ecosystems and good use of surface waters, giving priority to the protection of Shkodra/Skadar Lake basin;

• Support development of integrated environmental monitoring systems and data bases; • Actions designed to reduce the negative effects on environment and encourage

environmentally-friendly economic activities; • Support improvements of the waste water and solid waste disposal systems, aiming at

protecting the area from the on-going pollution. • Actions designed to prevent and manage natural disasters and man-made environmental

hazards • Cross-border cooperation between organisations involved in environmental protection and

management of protected sites • Actions designed to deal jointly with pollution in the eligible region; • Cooperation on the matters pertaining to the provision of information and awareness raising of

the population about the importance, protection and promotion of the environment and natural heritage.

• Preparation of feasibility studies and other technical documentation for large-scale infrastructure interventions, to be financed by sources other than this programme

o Local Government Units

(Regions, Municipalities and

Communes)

o Professional associations,

o National Parks;

o National and local agencies;

o Public organisations at

national and local levels

o Educational and research

institutions;

o NGOs

30

INDICATORS 17

Number of interventions to be implemented (16) Number of awareness raising actions (5) Number of actions related to integrated environmental monitoring systems and data bases; (4) Number of feasibility studies and technical documentations for other small-scale infrastructure interventions (2)


Number of actions for supporting integrated protection and management of sensitive ecosystems and good use of surface waters, giving priority to the protection of Shkodra/Skadar Lake basin (3)

Cross border territory covered by the joint management of protected areas Involvement of Institutions concerned by territory management and protection projects Cross border territory covered by monitoring system % Decrease in number of cross border pollution episodes Natural resources in the cross border areas included under protection and monitoring systems

Result Indicators

Increased awareness of population on the environmental issues

Balanced development of Lake’ surrounding areas Improved compliance with environmental standards in the cross border area Improvement of waste management systems

Impact Indicators

Improved management of natural resources and reduced level of pollution


Procedural and progress indicators



3.1.3. MEASURE I.3 - Enhancing social cohesions through people-to-people actions

This measure aims at encouraging the citizens of the programme area to get involved in a wide variety of opportunities for cooperation and partnership building. The people-to-people kinds of actions are expected to directly enhance the flow of information and communication across the bordering area. Actions under this measure will intensively facilitate the strengthening of local communities and NGOs and encourage these actors to engage in cross-border partnerships. People-to-people actions will also be financed under the two other measures above. Synergies between the three measures will be particularly looked at. Actions under this measure will eventually aim to bring people, local communities and civil society organisations of the border region closer to each other, supporting the exposure and promotion of local heritage through local exhibitions, support to craftsmanship and traditional production, development of culinary or aesthetic propensity, valorisation and recognition of the old traditions, etc. The following table provides a summary of indicative activities and potential beneficiaries to be supported under this measure, as well as beneficiaries and monitoring indicators.

17 Indicators are calculated only for the period of 2007-2009 for which the level of financing is already defined

31

PRIORITY AXIS I Promotion of regional cohesion and competitiveness through an approach that integrates economic, environmental and social activities

MEASURE I.3 Enhancing social cohesions through people-to-people actions


• Actions to improve the flow of information and communication between border regions; • Local cultural exchanges; • Support to non government organisations active in social inclusion activities • Support of joint programmes based on utilization of multiethnic assets; • Education and training initiatives; • Support of joint health protection related activities • Youth exchange activities from both sides of the borders • Organization of local exhibitions or fairs; • Promotional events for cultural heritage or natural attractions; • Bilateral actions for the joint solution of common social problems. • Support introduction of EU practices and models for promoting health in schools and building

sustainable health protection awareness system in particular for vulnerable and roma groups.

o Local Government Units (Regions, Municipalities and Communes)

o Professional associations, o Chambers of commerce; o National and local agencies; o Public institutions at national

and local level o Universities and research

institutions; o VET institutions o Cultural and sport associations o NGOs

INDICATORS18

Number of developed and implemented programmes (32) Number of joint programmes on social inclusion supported (7) Number of joint programmes based on utilization of multiethnic assets (4) Number of joint cultural events and activities supported (11) Number of project and activities related to health protections organised (4)


Number of project and activities supporting R&D institutions and local government (7)

Cross border territory covered by the joint management of protected areas New networks established Level of exchange between institutions and NGOs Cross border territory covered by monitoring system

Result Indicators

Increased awareness of population on the environmental issues

Improvement in the level of cooperation of the bordering area increased Enhanced level of information on common and individual traditions of the localities in the bordering areas Social cohesion in the bordering area increased

Impact Indicators

Improved level of cooperation between the local communities


Procedural progress indicators



Project selection criteria:

In general, the eligible actions within each measure must fulfil the following criteria: • includes partners from both side of the border • establish contacts and links between local communities in the programming area • support links between relevant institutions/ organisations form both side of the border • encourage equal participation by women and marginalized groups • are environmentally sustainable

18 Indicators are calculated only for the period of 2007-2009 for which the level of financing is already defined.

32

3.2. PRIORITY AXIS II: Technical assistance for an effective programme management and information flow

Provisions for technical assistance are made under this programme to ensure an effective programme management and information flow. Specific objectives of this priority are to:

improve the capacity of national and joint structures to manage cross-border programme, prepare and disseminate programme information to national authorities, the general public

and programme beneficiaries and improve the capacity of potential beneficiaries to prepare and subsequently implement high quality projects, and

provide technical expertise for external programme evaluations Technical assistance will be used to support the work of the two national Operating Structures (OS) and the Joint Monitoring Committee (JMC) ensuring the efficient and effective implementation, monitoring, control and evaluation of the programme. This will be achieved, inter alia, through the establishment and operation of a Joint Technical Secretariat (JTS) in Albania and its antenna in Montenegro. The JTS will be in charge of the day-to-day management of the programme and will be responsible to the Operating Structures and the JMC. The technical assistance will support actions which ensure the preparation and selection of high quality programme operations and the dissemination of information on programme activities and achievements. The technical assistance will cover staffing and operational costs of the JTS and its antenna (with the exception of the salaries of public officials) required for an effective and efficient implementation of the programme. The technical assistance budget will also cover costs dealing with provision of information and publicity to potential beneficiaries and wider population of the eligible area. If deemed necessary the technical assistance will also cover costs of technical expertise for external programme evaluations. A potential concern, which is commonly related to this type of assistance programs, can be the lack of absorption capacity especially in terms of project generation from local actors and stakeholders who will benefit from the programme. This will be addressed with outreaching activities such as awareness raising and information, training of local stakeholders, promoting results to be achieved and aims pursued. The Technical Assistance component will account for maximum up to 10% of the total financial allocation. This priority will be implemented through two measures.

Nr. Measure

Measure II.1 Programme administration, monitoring and evaluation

Measure II.2 Programme Information and Publicity

33

Technical assistance will be implemented through individual direct grant agreements without call for proposals to be established between the European Commission's Delegations and the respective national authorities (CBC coordinators or Operating Structures). The implementation of the Measures may require subcontracting by the national authorities for the provisions of services or supplies. The direct grant agreements can be signed as soon as the Financing Agreements are concluded. 3.2.1. MEASURE II.1 - Programme administration, monitoring and evaluation

The specific objective of this measure is the creation of the conditions for effective and efficient Programme execution to guarantee the optimal and efficient use of resources. Operating Structures and the Joint Management Committee will be supported through this measure. The following table provides a summary of indicative activities and potential beneficiaries to be supported under this measure, as well as beneficiaries and monitoring indicators.


Measure II.1 Programme Administration , Implementation and Monitoring


• Appropriate staffing of the JTS and its antenna • Support to national Operating Structures in carrying out their responsibilities during the

programme management process • Support to the JMC in carrying out its responsibilities in project selection and programme

monitoring • Provide logistical and technical support for JMC meetings. • Provide training for staff in national Operating Structures • Support to potential final beneficiaries in the preparation of projects • Provision of appropriate technical expertise in the assessment of project applications • Support to final beneficiaries in project implementation • Establishment of project monitoring and control systems • On-the-spot visits to programme operations • Preparation of project monitoring reports and programme implementation reports

o Operational Structures o Joint Monitoring Committee o Local Government Units

(Regions, Municipalities and Communes)

o Professional association, o National agencies; o Educational institutions; o NGOs

INDICATORS

Number of JTS staff recruited Number of JMC meetings organised Number of training events for potential final beneficiaries Number of beneficiaries assisted Number of project proposals assessed Number of on-the-spot visits carried out


Number of monitoring reports drafted

JTS and its antenna established Publicity of notices and activities Actions of assistance to the beneficiaries in the preparation of projects

Result Indicators

Publication of studies and analyses

Increased capacity of staff in Operating Structures Increased effectiveness of the programme Decreased % of non-eligible costs claimed by final beneficiaries Increased overall quality of the project proposals Increased overall number of project submitted by final beneficiaries over the year

Impact Indicators

Increased efficiency, effectiveness and visibility of interventions

Financial indicators Ratio (%) of payments / planned versus resources

34

Ratio (%) of payments / committed versus resources Ratio (%) of funds used versus of funds allocated

3.2.2. MEASURE II.2 - Programme Information and Publicity

The specific objective of this measure is to ensure programme awareness amongst national, regional and local communities and in general among the population in the programming area. It also supports awareness raising activities, at the country scale in order to inform citizens in both countries about the programme. The following table provides a summary of indicative activities and potential beneficiaries to be supported under this measure, as well as beneficiaries and monitoring indicators.


Measure II..2 The specific objective of this measure is to ensure programme awareness amongst national, regional and local communities and in general among the population in the programming area.


• Website development and operation • Organisation of awareness raising events (meetings, seminars, press

conferences, TV /radio broadcasts) • Development of info material and other promotional documents; • Partner search forums; • Regular production and dissemination of news letters

o Operational Structures o Joint Monitoring Committee o Local Government Units (Regions,

Municipalities and Communes) o Professional association, o National agencies; o Educational institutions; o NGOs

INDICATORS

Number of events organised Website developed Number of information distributed Number of news letters issued


Number of users visiting the website

Publicity of notices and activities Publication of best practices

Result Indicators

Publication of studies and analyses

Efficiency and effectiveness of communication system Increased awareness of the general public about the programme itself and its intervention Increased transparency of the programme operations and results amongst the potential beneficiaries

Impact Indicators

Ratio (%) of funds used versus of funds allocated

4. Coherence with other programmes Albania In Albania the cross-border programme is defined within the framework of the Multi-annual Indicative Planning Document (MIPD). It also complies with the following strategic documents: o The National Strategy for Social Economic Development (NSSED), which provides an overall

strategic framework for development of the country. It also puts emphasis on sectors that are compatible with areas considered by this programme, such as economic development, environmental infrastructures, urban and rural development in particular in the poorest and most remote areas, development and diversification of tourism industry, etc.

35

o The Decentralization Strategy which establish the bases for enhancing the role of the local

government units in relation to socio- economic development activities and especially regional development.

o The Regional Development Strategy – Millennium Development Goals 2003, for the Region of Shkodra and the document Promoting Local Development though the MDGs 2003 – Region of Kukesi. Both documents emphasize the cross border cooperation as a tool for supporting economic and social development of the regions. They put high emphasis on environmental issues, health situation and other social issues, labour market prospects, social integration.

Montenegro In Montenegro the cross-border programme is defined within the framework of the National Strategy of Sustainable Development of Montenegro – NSSD. It complies with the following objectives of the NSSD aiming to:

- Accelerate economic growth and development, and reduce regional development disparities; - Reduce poverty; ensure equitable access to services and resources; - Ensure efficient pollution control and reduction, and sustainable management of natural

resources; - Improve governance system and public participation; mobilise all stakeholders, and build

capacities at all levels; - Preserve cultural diversity and identities

Other important documents include: o The Master Plan for Tourism Development. The Master Plan reflects the sustainability

requirements at the level of tourism development plans, as well as at the level of individual projects. Securing sufficient quantity of good quality drinking water and necessary legal and institutional changes and improvements in the quality control and monitoring of waters according to EU standards and WFD provisions present the main orientations of the Master plan for water supplying and institutional and legal reforms in this area according to EU accession process.

o Spatial Plan of the Republic of Montenegro which is currently in draft version and Coastal Area Spatial Plan which is in the process of Parliament adoption. Both documents define use of space for the purpose of planned development up to 2020. This is of special importance in coastal area where there is evident high pressure of urbanisation on the natural sources protection and there is valorisation for the purpose of sustainable tourism.

o Strategic Action Plan for Shkodra/Skadar Lake of March 2007, established between the

Ministry of Tourism and Environment of Montenegro and the Ministry of Environment, Forests and Water Administration of Albania. The aim of Strategic Action Plan is to assist the government institutions and other interested groups/institutions in Montenegro and Albania to define actions and projects at local, national or bilateral level, aiming to improve the environmental management and supporting sustainable economic use of the natural resources of Shkodra/Skadar Lake and its surrounding areas. The Strategic Action Plan also aims to facilitate the provision of information and its exchange among the stakeholders, to create a broad-based framework for future cross-border and cross-sectoral actions for the management of the Lake and to define the initiatives and procedures that should be taken for accomplishment of these objectives.

36

This cross-border programme is also coherent with other IPA interventions such as the IPA Adriatic Programme and ERDF European Territorial Co-operation transnational programmes.

37

Section III. Financial Provisions 1. Financial Allocation Plan 2007-2009 The financial allocation plan is based on the MIPD. The EU and national co-financing amounts proposed for the IPA Cross-border Programme Albania – Montenegro is shown in the Table below. The Community contribution has been calculated in relation to the eligible expenditure, which for this cross–border programme is based on the total expenditure, as agreed by the participating countries and laid down in the cross–border programme.

ALBANIA MONTENEGRO

Community funding

National funding

Total funding

Rate of Community contribution

Community funding

National funding

Total funding


PRIORITY AXIS

(a) (b) (c) = (a)+(b) (d)= (a)/(c) (a) (b) (c) = (a)+(b) (d) = (a)/(c)

1:Promotion of regional cohesion and competitiveness

767,700 135,476 903,176 85% 540,000 95,294 635,294 85%

2 -Technical Assistance 85,300 15,053 100,353 85% 60,000 10,588 70,588 85% 2007

TOTAL 853,000

150,529

1,003,529 85% 600,000 105,882 705,882 85%


675,000 119,118 794,118 85% 540,000 95,294 635,294 85%


TOTAL 750,000 132,353 882,353 85% 600,000 105,882 705,882 85%


765,000 135,000 900,000 85% 540,000 95,294 635,294 85%


TOTAL 850,000 150,000 1,000,000 85% 600,000 105,882 705,882 85%

GRAND TOTAL 2,453,000 432,882 2,885,882 85% 1,800,000 317,646 2,117,646 85%

Section IV Implementing Provisions The implementing provisions for the Albania – Montenegro IPA Cross–border programme are in accordance with Commission Regulation (EC) No 718/2007 (hereinafter referred to as the 'IPA Implementing Regulation'), implementing Council Regulation (EC) No 1085/2006 establishing an instrument for pre–accession assistance. In line with Article 10(2) IPA Implementing Regulation, both countries will be managing the programme according to the centralised management model, where the respective Delegations of the European Commission will be the Contracting Authorities. 1. Programme Structures

1.1. Organisational structures at the national level

In accordance with Art. 32(2) IPA Implementing Regulation, in each country the National IPA Co-ordinators has designated an IPA–Component II Co-ordinator: In Albania: The Ministry of European Integration (MEI) is the National IPA Co-ordinator. Within the MEI, the Directorate for Institutional Support and Integration Process, Unit for Regional Cooperation, coordinates the activities under IPA Component II. In Montenegro: Person responsible for IPA Coordination (National IPA Coordinator) in Montenegro is Deputy Prime Minister for European Integration. Secretariat for European Integration is the IPA–Component II Co–ordinator. Person responsible is Secretary of the Secretariat for European Integration.

1.2. Operating Structures at Programme level The implementation of the cross-border programme will operate through an Operating Structure (OS) (Art. 139 IPA Implementing Regulation) that will be appointed in each country. These are:

Albania Montenegro

Unit for Regional Cooperation under the Directorate for Institutional Support and Integration Process in the Ministry of European Integration - institution responsible for coordination of the Instrument for Pre-Accession Assistance (IPA 2007-2013)

Secretariat for European Integration - institution responsible for coordination of the Instrument for Pre-Accession Assistance (IPA 2007-2013)

The OS of each country will co-operate closely in the programming and implementation of the relevant cross-border programmes establishing common co-ordination mechanisms.

38

The OSs are responsible for the implementation of the programme in their respective country. The Operating Structures are, inter alia, responsible for:

• Preparing the cross-border programme in accordance with Article 91 IPA Implementing Regulation;

• Preparing the programme amendments to be discussed in the Joint Monitoring Committee (JMC);

• Nominate their representatives to the JMC; • Setting up of the Joint Technical Secretariat (JTS) (Art. 139.4 IPA Implementing

Regulation) and guiding its work; • Preparing and implementing the strategic decisions of the JMC, where necessary with

the support of the Joint Technical Secretariat; • Reporting to the respective NIPAC/IPA–Component II co-ordinators on all aspects

concerning the implementation of the programme; • Establish a system, assisted by the JTS, for gathering reliable information on the

programme’s implementation and provide data to the JMC, the IPA–Component II coordinator and the Commission;

• Ensuring the quality of the implementation of the cross-border programme together with the Joint Monitoring Committee;

• Ensuring the monitoring of commitments and payments at programme level; • Ensuring that grant beneficiaries make adequate provisions for financial reporting

(monitoring) and sound financial management (control); • Sending to the Commission and the respective national IPA co-ordinators the annual

report and the final report on the implementation of the cross-border programme after examination by the Joint Monitoring Committee;

• Guiding the work of the Joint Technical Secretariat in information and publicity actions;

• Promoting information and publicity-actions [cf. amended version of Art. 62 IPA IR];

1.3. Contracting Authorities (art. 139.6)

In both countries the European Commission will be the Contracting Authority (CA)

Albania Montenegro

Delegation of the European Commission to Montenegro

Delegation of the European Commission to Albania

Rruga e Durresit No. 127-1

81000 Podgorica Tirana, Albania

Montenegro

(EC Delegation to be established soon) Tel.: +355-4-228 320

Fax: +355-4-230 752

39

In both countries, in line with Article 140(1) of the IPA Implementing Regulation, the European Commission retains overall responsibility for ex-ante evaluation on calls for proposal and for awarding grants, tendering, contracting and payment functions. The Contracting Authorities’ responsibilities are, inter alia, the following:

• Approving calls for proposals documentation; • Approving composition of joint Steering committees; • Approving the evaluation reports and list of projects; • Sitting in the joint monitoring committee in an advisory capacity; • Signing contracts with grant beneficiaries, including budget revisions (with support

provided as appropriate by OSs and JTS);

1.4. Joint Monitoring Committee

Within three months after the entry into force of the first financing agreement relating to the programme, the beneficiary countries will establish a Joint Monitoring Committee (JMC) under Article 142 of the IPA Implementing Regulation.

The JMC is the Cross-border Programme’s decision making authority, and is made up of representatives at national, regional and local level of the beneficiary countries, including representatives of the Operating Structures and of socio–economic stakeholders in the eligible area. The European Commission shall participate in the work of the JMC in an advisory capacity.

The Joint Monitoring Committee shall meet at least twice a year, at the initiative of the participating countries or of the Commission and is chaired by a representative of one of the participating countries on a rotating basis. At its first meeting, the joint monitoring committee shall draw up its rules of procedure, and adopt them in order to exercise its missions pursuant to the IPA Implementing Regulation

1.4.1. Responsibilities of the Joint Monitoring Committee The responsibilities of the Joint Monitoring Committee are, inter alia, as follows: • Oversees the programming and effective implementation of the Programme; • Considers and approve the criteria for selecting the operations financed by the cross–

border programme and approve any revision of those criteria in accordance with programming needs;

• It shall periodically review progress made towards achieving the specific (and quantified) objectives of the programme on the basis of documents submitted by the Operating structures.

• It shall examine the results of implementation, particularly achievement of the targets set for each priority axis and the evaluations referred to in Article 57(4) and Article 141 IPA Implementing Regulation;

• It shall examine the annual and final implementation reports prior to their transmission, by the OSs, to the respective NIPAC and to the Commission (Art 144 IPA Implementing Regulation);

• It shall be responsible for selecting operations. To this aim, as appropriate (and on a case–by–case basis), it may delegate this function to a Steering Committee (to perform the role of an evaluation committee) whose members should be designated by the OSs. The composition of the Steering Committee shall be endorsed by EC Delegations;

40

• It may propose any revision or examination of the cross-border programme likely to make possible the attainment of the objectives referred to in Article 86(2) IPA Implementing Regulation or to improve its management, including its financial management;

• It shall consider and approve any proposal to amend the content of the cross-border programme;

• It shall approve the framework for the Joint Technical Secretariat’s tasks.

1.5. Joint Technical Secretariat According to Article 139(4) of the IPA Implementing Regulation, the Operating Structures shall set up a Joint Technical Secretariat (JTS) to assist the JMC and the Operating Structures in carrying out their responsibilities. Job descriptions of the JTS members, as well as detailed Rules of Procedures for JTS will be developed conjunctly by the OSs. JTS is jointly managed by both OSs. The Joint Technical Secretariat is the administrative body of the programme responsible for its the day-to-day management and for administrative its arrangements. The costs of the Joint Technical Secretariat and its antenna are co-financed under the programme’s Technical Assistance budget provided they relate to tasks eligible for co-financing according to EU rules. The JTS will be located in Shkodra, Albania and will have an antenna in Podgorica, Montenegro. The JTS will consist of employees from both sides of the border thus providing different, versatile, language skills, and specific/targeted background knowledge. The staff should be contracted by the respective Operating Structures.

1.5.1. Responsibilities of the JTS and its antenna

The JTS will be responsible, inter alia, for the following tasks: It will assist the JMC and the OS in carrying out their duties, including the drafting of all

monitoring and evaluation reports and the annual and final report.

It will organise JMC meetings and will plan and organise information campaigns and other activities related to raising public awareness on the programme.

It shall assist potential beneficiaries in partner research and project definition.

It shall manage the Call for Proposals process, including receiving and registering project applications, carrying out the initial assessment (e.g. examination of the application documents for completeness, and meeting eligibility criteria) and preparing documentation for the evaluation process.

It shall assist the JMC or the Steering Committee in the evaluation and selection of projects.

It shall prepare standardized forms for project application, assessment, contracting, and implementation, monitoring and reporting based as much as possible on templates and models included in the PRAG.

It will organise and manage an ad-hoc data base of the programme, on the basis of the information direct collected during the call for proposal process and those transferred regularly by the OSs;

It will plan it activities according to a work plan annually approved by the JMC.

41

The JTS in co-operation with the JMC will develop an overall strategy for the information and publicity for the implementation of the programme and to develop an overall system for the public relations related to the programme; To develop and maintain the internet site;

To maintain necessary public relations and media communications;

To develop information and publicity materials;

To organize joint project development seminars and conferences;

To involve representatives of the European Commission in the information and publicity,

To appoint a person responsible for the information and publicity.

1.6. Programme Beneficiaries

Definition of lead beneficiaries and other beneficiaries According to Article 96(3) of the IPA Implementing Regulation, if there are several final beneficiaries of an operation in each participating country, they shall appoint a lead beneficiary among themselves prior to the submission of the proposal for an operation. The lead beneficiary shall assume the responsibilities set out below regarding the implementation of the operation. Responsibilities of Lead Beneficiaries and other Beneficiaries

Responsibilities of lead beneficiaries According to the provisions of Article 96(3) of the IPA Implementing Regulation, the lead beneficiary shall assume the following responsibilities for the part of the operation taking place in the respective country :

• It shall lay down the arrangements for its relations with the final beneficiaries participating in the part of the operation taking place in the respective country in an agreement comprising, inter alia, provisions guaranteeing the sound financial management of the funds allocated to the operation, including the arrangements for recovering amounts unduly paid;

• It shall be responsible for ensuring the implementation of the part of operation taking place in the respective country;

• It shall be responsible for transferring the Community contribution to the final beneficiaries participating in the part of operation taking place in the respective country;

• It shall ensure that the expenditure presented by the final beneficiaries participating in the part of operation taking place in the respective country has been paid for the purpose of implementing the operation and corresponds to the activities agreed between the final beneficiaries participating in the operation.

The lead beneficiaries from the participating countries shall ensure a close co-ordination among them in the implementation of the operation.

Responsibilities of other beneficiaries Each beneficiary participating in the operation shall:

42

• Participate in the operation;

• Be responsible for ensuring the implementation of the operations under its responsibility according to the project plan and the agreement signed with the lead beneficiary;

• Co-operate with the other partner beneficiaries in the implementation of the operation, the reporting for monitoring;

• Provide the information requested for audit by the audit bodies responsible for it;

• Assume responsibility in the event of any irregularity in the expenditure which was declared, including eventual repayment to the Commission;

• Be responsible for information and communication measures for the public.

Functional Lead Partner In case of joint projects (where Lead Beneficiaries from both sides are participating and are separately contracted by the Contracting Authorities of AL and of MNE) the 2 Lead Beneficiaries shall appoint among themselves a Functional Lead Partner prior to the submission of the project proposal.

The Functional Lead Partner is:

• Responsible for the overall coordination of the project activities on both side of the border;

• Responsible for organising joint meetings of project partners;

• Responsible for reporting to the JTS on the overall progress of the joint project.

2. Implementing Rules

2.1. Basic Implementation Rules This Cross-border Programme shall finance joint operations which have been jointly selected by the participating countries through a single call for proposals covering the whole eligible area.

Operations selected shall include final beneficiaries from both countries which shall co–operate in at least one of the following ways: joint development, joint implementation, joint staffing and joint financing (Art. 95 IPA Implementing regulation).

The JMC is responsible for selecting the projects.

The Contracting Authority is responsible for issuing the grant contracts as well as ex-ante control of the grant award process.

2.2. Call for proposal Grant award procedures shall be compliant with provisions of the IPA Implementing Regulation (e.g. Articles 95, 96, 140, 145, etc.) Where appropriate, PRAG procedures and standard templates and models should be followed unless the provisions of the IPA Implementing Regulation and/or the joint nature of calls request adaptations. a) Preparation of the Application Package

1. The JTS, under the supervision of the JMC, drafts the single Call for proposals, the Guidelines for applicants and the Application form and other documents related to the implementation of the grant schemes, explaining the rules regarding eligibility of applicants and partners, the types of actions and costs, which are

43

eligible for financing and the evaluation criteria, following as close as possible the formats foreseen in the PRAG;

2. The Application Form should cover both parts of the project (on Albanian/Montenegrin sides of the border, i.e. joint application), but with clear separation of the activities and costs on each side of the border. The elements contained in the Application Pack (eligibility and evaluation criteria, etc.) must be fully consistent with the relevant Financing Agreement.

3. Once approved by the JMC, the respective OS submit the Call for proposals, the Guidelines for applicants and its annexes to the respective EC Delegations for endorsement;

b) Publication of the single Call for Proposals 4. When launching the Call for Proposals, the OSs, with the assistance of the JTS,

take all appropriate measures to ensure that the nationally and regionally publicised call for proposals reaches the target groups in line with the requirements of the Practical Guide. The Application pack is made available on the programme website and the websites of the EC Delegations (Contracting Authority) and in paper copy;

5. The JTS is responsible for information campaign and answering questions of potential applicants. JTS provides advice to potential project applicants in understanding and formulating correct application forms.

6. FAQs should be available on both the Programme and ECDs websites 2.3. Selection of projects following a call for proposals As provided by the IPA Implementing Regulation, the submitted project proposals will undergo a joint selection process. The project evaluation should follow PRAG rules (Chapter 6.4.) as amended by the provisions of the IPA Implementing Regulation (e.g. Article 140 on the role of the Commission in the selection of operations)19. A joint Steering Committee, designated by the JMC, will evaluate projects against the criteria set in the Application Pack and will establish a ranking list according to PRAG. On that basis, the Joint Monitoring Committee will then bring the final decision on the projects to be recommended for financing to the Contracting Authorities (EC Delegations). The main steps of the procedure should be as follows: Incoming project proposals are collected and registered by the JTS. The JMC is responsible for evaluating project proposals according to the eligibility

criteria, however, when deemed necessary, it can designate a Joint Steering Committee for the assessment of administrative compliance, eligibility and assessment of technical and financial quality of proposals.

• Members of the Joint Steering Committee are designated exclusively on the basis of technical and professional expertise in the relevant area. The EC Delegations endorse the composition the Joint Steering Committee. An observer designated by the EC Delegation (the contracting authority) may participate in its proceedings.

• Both OS may propose the same number of external assessors to be financed from the respective TA allocations.

19 IPA Implementing Regulation for Component II provides, inter alia, a certain degree of decentralisation in

the evaluation and selection process, namely in beneficiary countries where IPA funds are managed under a centralised approach (e.g. where the evaluation committee is nominated by the national authorities sitting in the JMC, not by the Commission i.e. the Contracting Authority).

44

• The Steering Committee assesses the projects against the conditions and criteria established in the Call for proposal–Application Pack and according to PRAG procedures.

• The JMC receives from the Steering Committee the Evaluation Report and the ranking list of projects and votes on accepting the proposed ranking list. The members of the Steering Committee are present at the JMC meeting to present the evaluation process. The JMC has the possibility to:

o accept the Evaluation Report and recommend the contracting authorities to contract the projects selected;

o request one round of re-examination of the project proposals if a qualified majority of its voting members vote for such a process and under the condition that there is a clearly stated technical reason affecting the quality of the Evaluation Report i.e. it is not clear how the projects were assessed and ranked;

o reject the Evaluation Report and the list of project, if there is a justified reason to suspect the objectivity or the qualifications of the Steering Committee;

o Under no circumstances is the JMC entitled to change the Steering Committee’s scores or recommendation and must not alter the evaluation grids completed by the evaluators.

• EC Delegations (Contracting Authorities) approve the evaluation report on the selection process and the final list of grants to be awarded. If required, the EC Delegations may request clarifications from the JMC.

• The JTS notifies each applicant in writing of the result of the selection process. • EC Delegations in each country issue the grant contract to the respective lead

beneficiary of each selected project. 3. Information, Publicity and Consulting The beneficiary countries and the national IPA Co-ordinators shall provide information and publicise the programme and operations with the assistance of the JTS, as appropriate.

In accordance with Article 90 of Regulation (EC, Euratom) No 1605/2002, the Commission shall publish the relevant information on the contracts. The Commission shall publish the results of the tender procedure in the Official Journal of the European Union, on the EuropeAid website and in any other appropriate media, in accordance with the applicable contract procedures for Community external actions. The information and publicity measures are presented in the form of a communication plan whereby the implementation shall be the responsibility of the respective OSs and IPA–Component II Co–ordinators. Such detailed information and publicity plan will be presented in a structured form to the JMC by the JTS (see below), clearly setting out the aims and target groups, the content and strategy of the measures and an indicative budget funded under the Technical Assistance budget of the CBC programme. The particular measures of information and publicity will focus mainly on: • Ensuring a wider diffusion of the cross–border programme (translated in the local

language) among the stakeholders and potential beneficiaries

• Providing publicity materials, organising seminars and conferences, media briefings and operating a programme web site to raise awareness, interest and to encourage participation;

• Providing the best possible publicity for the Calls for proposal.

45

• Publishing the list of the final beneficiaries.

4. Monitoring and Evaluation 4.1. Monitoring on Project Level

4.1.1. Contractual obligations

Lead Beneficiaries send narrative and financial Interim and Final Reports to their respective Contracting Authorities according to the standard terms of their grant contracts.

4.1.2. Cross-border project level reporting

In addition, where relevant, the Functional Lead Partner of the project submits Project Progress Reports to the JTS, giving an overview of the project activities and achievements on both sides of the border and their coordination according to the indicators defined in the joint project proposal.

4.2. Monitoring on Programme Level Based on the project progress reports collected, the JTS drafts the Joint Implementation Report and submit it for the examination of the Joint Monitoring Committee. The Operating Structures of the beneficiary countries shall send the Commission and the respective national IPA co-ordinators an annual report and a final report on the implementation of the cross-border programme after examination by the JMC. The annual report shall be submitted by 30 June each year and for the first time in the second year following the adoption of the cross-border programme. The final report shall be submitted at the latest 6 months after the closure of the cross-border programme. The content of reports shall be in line with the requirements of Article 144. of the IPA Implementing Regulations.

4.3. Programme Evaluation

Evaluations shall take place in compliance with Article 141 of the IPA Implementing Regulation. The evaluation shall aim to improve the quality, effectiveness and consistency of the assistance from the Community funds and the strategy and implementation of cross-border programmes while taking account the objective of sustainable development and the relevant Community legislation concerning environmental impact. An ex-ante evaluation has not been carried out in line with the provisions of Article 141 in the light of the proportionality principle. During the programming period, participating countries and/or the European Commission shall carry out evaluations linked to the monitoring of the cross-border programme in particular where that monitoring reveals a significant departure from the goals initially set or where proposals are made for the revision of cross-border programme. The results shall be sent to the joint monitoring committee for the cross-border programme and to the Commission. Evaluations shall be carried out by experts or bodies, internal or external. The results shall be published according to the applicable rules on access to documents. Evaluation shall be financed from the technical assistance budget of the programme. 5. Financial Management

46

Under centralised management, the European Commission will handle all tendering, contracting and payment functions, on the basis of documents provided by beneficiaries, and in accordance with the contracting and procurement rules set out in the EC’s Practical Guide to Contracting (PRAG). The Joint Monitoring Committee will ensure that reliable computerised accounting; monitoring and financial reporting is in place, that will provide an adequate audit trail; The European Commission and national auditing authorities will have power of audit over the Cross-border Programme.

47

ANNEX B FRAMEWORK AGREEMENT BETWEEN THE COMMISSION OF THE EUROPEAN COMMUNITIES AND THE GOVERNMENT OF MONTENEGRO, DATED 15/11/2007 ON THE RULES FOR CO-OPERATION CONCERNING EC-FINANCIAL ASSISTANCE TO MONTENEGRO IN THE FRAMEWORK OF THE IMPLEMENTATION OF THE ASSISTANCE UNDER THE INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA)

48

ANNEX C REPORTING

(1) The operating structures of the beneficiary countries participating in a cross-border programme shall send the Commission and the respective national IPA co-ordinators an annual report and a final report on the implementation of the cross-border programme after examination by the joint monitoring committee.

The annual report shall be submitted by 30 June each year and for the first time in the second year following the adoption of the cross-border programme.

The final report shall be submitted at the latest 6 months after the closure of the cross-border programme.

(2) The reports referred to in paragraph 1 shall include the following information:

(a) the progress made in implementing the cross-border programme and priorities in relation to their specific, verifiable targets, with a quantification, wherever and whenever they lend themselves to quantification, using the indicators referred to in Article 94(1)(d) of the IPA Implementing Regulation at the level of the priority axis;

(b) the steps taken by the operating structures and/or the joint monitoring committee to ensure the quality and effectiveness of implementation, in particular:

- monitoring and evaluation measures, including data collection arrangements,

- a summary of any significant problems encountered in implementing the cross-border programme and any measures taken;

- the use made of technical assistance;

(c) the measures taken to provide information on and publicise the cross-border programme.

Where appropriate, the information referred to in points (a) to (c) of this paragraph may be provided in summary form.

Information referred to in point (b) need not be included if there has been no significant modification since the previous report.

49


IPA CBC

Bosnia and Herzegovina –

Montenegro

Date: 10.09.2007

TABLE OF CONTENT

GLOSSARY OF ACRONYMS .................................................................... 4

SECTION I. DESCRIPTION AND ANALYSES OF THE ELIGIBLE AREAS ................ 5

1. Summary of Programme and Programming Process......................................5 1.1 Summary of Programme................................................................................5 1.2 Summary of the Programming Process .........................................................6

2. The map and the description of the eligible area.............................................7 3. Current situation in eligible area .....................................................................11

3.1 History..........................................................................................................11 3.2 Demography ................................................................................................11 3.3 Ethnic Minorities ..........................................................................................11 3.4 Geographical Description.............................................................................12 3.5 Infrastructure................................................................................................12

3.5.1 Road infrastructure ................................................................................................ 12 3.5.2 Railways ................................................................................................................ 13 3.5.3 Border crossings.................................................................................................... 13 3.5.4 Airports .................................................................................................................. 13 3.5.5 Ports ...................................................................................................................... 13 3.5.6 Telecommunications.............................................................................................. 13 3.5.7 Water supply, waste water, heating, waste disposal ............................................. 13 3.5.8 Energy, electricity .................................................................................................. 14

3.6 Economy......................................................................................................15 3.6.1 GDP....................................................................................................................... 15 3.6.2 Agriculture and Rural Development....................................................................... 15 3.6.3 Industry .................................................................................................................. 16 3.6.4 SME Sector............................................................................................................ 16 3.6.5 Services................................................................................................................. 17 3.6.6 Regional and Local Development.......................................................................... 17 3.6.7 Tourism.................................................................................................................. 18

3.7 Human Resources .......................................................................................18 3.7.1 Education, Research, and Development ............................................................... 18 3.7.2 Labour Market (employment and unemployment) ................................................. 19

3.8 Environment and Nature ..............................................................................19 3.9 Culture .........................................................................................................20 3.10 Summary indicating gaps, disparities, and potentials for development........20 3.11 SWOT Analyses of eligible area ..................................................................22

SECTION II. PROGRAMME STRATEGY......................................................... 26

1. Experience with cross border activities..........................................................26 1.1 Lessons Learned .........................................................................................26

2. Co-operation Strategy ......................................................................................27 2.1 Summary of conclusions from description of the area .................................28 2.2 Overall Strategic Objective of the Cross Border Programme.......................29 2.3 Specific Objectives ......................................................................................29

3. Priority and Measures ......................................................................................30 3.1 Priority I........................................................................................................30

3.1.1 Measure I.1............................................................................................................ 30

Page 2 of 55

3.1.2 Measure I.2............................................................................................................ 31 3.1.3 Measure I.3............................................................................................................ 32

3.2 Priority II.......................................................................................................33 3.3 Output and Results Indicators......................................................................34

3.3.1 Indicators for priority level...................................................................................... 34 3.3.2 Output indicators at measure level ........................................................................ 37

4. Coherence with other programmes....................................................................39 4.1 BiH Programmes .........................................................................................39 4.2 Montenegrin Programmes ...........................................................................40

SECTION III. FINANCIAL PROVISIONS .......................................................... 42

1. Financing plan for cross-border programme 2007 – 2009 ............................42

SECTION IV. MPLEMENTING PROVISIONS ..................................................... 43

1. Programme Structures .....................................................................................43 1.1 Organisational structures at national level ...................................................43 1.2 Operating Structures at Programme level....................................................43 1.3 Contracting Authorities.................................................................................44 1.4 Joint Monitoring Committee .........................................................................45 1.5 Joint Technical Secretariat...........................................................................46 1.6 Programme Beneficiaries.............................................................................47

2. Implementing Rules..........................................................................................49 2.1 Basic Implementation Rules ........................................................................49 2.2 Call for proposal...........................................................................................49 2.3 Selection of projects following a call for proposals.......................................50

3. Information, Publicity and Consulting ............................................................51 4. Financial Management......................................................................................52 5. Monitoring and Evaluation...............................................................................52

5.1 Monitoring on Project Level .........................................................................52 5.1.1. Contractual obligations ......................................................................................... 52 5.1.2. Cross-border project level reporting ..................................................................... 52

5.2 Programme Monitoring ................................................................................52 5.3 Programme Evaluation ................................................................................52

Page 3 of 55

GLOSSARY OF ACRONYMS CBC Cross-border Cooperation


EU European Union









PRAG Practical Guide for Contract Procedures financed from the general budget

of the European Union in the context of external actions




EC European Commission

SEI Secretariat for European Integration DEI Directorate for European Integration

RDA Regional Development Agencies

EURED European Union Regional Economic Development

IT Information Technology

UNSECO United Nations Educational, Scientific, and Cultural Organization

CEFTA Central European Free Trade Agreement CA Contracting Authority

Page 4 of 55

SECTION I. DESCRIPTION AND ANALYSES OF THE ELIGIBLE AREAS

1. Summary of Programme and Programming Process

1.1 Summary of Programme This cross-border programme for the period 2007-2013 between the pre-accession countries of Bosnia and Herzegovina and the Republic of Montenegro will be implemented under the centralised management. The eligible area covers 25.457,98 km2 and has a population of 1.355.278 inhabitants. The Bosnia and Herzegovina part of the eligible area consists of 53 municipalities while there are 12 municipalities in the Montenegrin part. The eligible area is mainly mountainous and relatively inaccessible, with economic centres located in larger towns, at some distance from the border. The eligible area is characterised by a static or declining population, aging in rural parts, with a lack of employment opportunities. The existing industrial and agricultural base is in need of repair or modernisation and it is marginalised from expanding markets due to inadequate transport infrastructure. There are significant opportunities for the development of the tourist sector in the area. The Republic of Montenegro possesses a developed basis for the tourist sector. Bosnia and Herzegovina has equally developed mountains tourist infrastructure. The environment of the eligible area remains in good shape, despite some pollution hot spots and the over-burdened existing waste disposal services, which cannot cope with significant or uncontrolled growth in population or industrial activity. Mountains and forests, an important environmental asset of the area, are particularly vulnerable to increases in air and water pollution. Economic activities are mainly based on the natural resources, and are concentrated on agriculture, forestry and mineral extraction. Transport infrastructure is in need of modernisation and rehabilitation. There are three international airports in the area: Tivat, Mostar and Sarajevo. The main challenge for the programming area is how to better use its assets and resources in order to revitalise the economy. Achieving the objective of significant regional co-operation is helped by the absence of language barriers and a common heritage. Economic and social co-operation between the communities is an effective means of coming to terms with the turbulent past and the existence of new state borders. This is the thrust of the 2007-2013 cross-border programmes’ strategic approach. The overall strategic objective of the programme is:

To foster the joint sustainable development of the cross-border area and its economic, cultural, natural and human resources and potentials by

strengthening the capacities of human resources and joint institutional networks among local communities and local private and public actors.

Page 5 of 55

The programme will be implemented on the basis of one major priority axis:

To support the creation of a common socio-economic environment for people, communities and economies of the border area.

1.2 Summary of the Programming Process The cross-border programme between Bosnia and Herzegovina and the Republic of Montenegro will be implemented during the 2007-2013 period. This strategic document is based on a joint strategic planning effort between the two countries and is also the result of a large consultation process with the local stakeholders, potential beneficiaries and donors. The programme will be implemented in both countries under centralised management. The national authorities in the two countries are building capacities and working on the accreditation of the implementing structures in order to shift to decentralized management as soon as possible during the programming period. The programming process took place from December 2006 to May 2007. The national authorities and operational structures were assisted in the programming by the Cross Border Institution Building project (CBIB), a regional project funded by the European Union. The following bilateral meetings of the operational structures were held during the programming process: 06 February 2007, Mostar 1st Drafting Team meeting 06 March 2007, Belgrade 1st Joint Programming Committee meeting 20 March 2007, Podgorica 2nd Drafting Team meeting 13 April 2007, Sarajevo 3rd Drafting Team meeting 23 May 2007, Podgorica 2nd Joint Programming Committee meeting

In line with Article 20 of the IPA Regulation and Article 6 (3) of the IPA Implementing Regulation, the EC has asked the has asked the representatives of member States and local IFIs in Bosnia and Herzegovina and Montenegro to provide their comments regarding the draft cross-border programme submitted to the Commission.

Page 6 of 55

2. The map and the description of the eligible area The eligible area covers the border between Bosnia and Herzegovina and the Republic of Montenegro.

The required NUTS III classification is not yet officially accepted in either Bosnia and Herzegovina or Republic of Montenegro. Therefore, for the purposes of this cross-border programme, the existing classification has been redefined representing an equivalent interpretation. In Bosnia and Herzegovina the NUTS level 3 equivalent areas are the economic regions. The eligible economic areas are: the Sarajevo Economic Region and the Herzegovina Economic Region. All municipalities included in these two Regions are thus considered eligible The eligible area in Bosnia and Herzegovina covers 16.673.98 km2 and has 1.053.789 inhabitants in 53 municipalities. This represents 30.71 % of the territory of Bosnia and Herzegovina and 40.04 % of population.

Page 7 of 55

The eligible area in the Republic of Montenegro covers 8.784 km2 and has 301,489 inhabitants in 12 municipalities. This represents 63.60% of Montenegro territory and 48.6 % of population.

Page 8 of 55

Table 1: Programming areas for Bosnia and Herzegovina and Republic of Montenegro

Republic of Montenegro (Municipalities) Bosnia and Herzegovina (Municipalities) Eligible Population km2 Eligible Population km2

1. Pljevlja 2. Pluzine 3. Zabljak 4. Savnik 5. Niksic 6. Herceg Novi 7. Kotor 8. Tivat 9. Bijelo Polje 10. Mojkovac 11. Berane 12. Kolasin

39,806 4.272 4.204 2.947

75.282 33.034 22.947 13.630 50.284 10.066 35.068 9.949

1.346 854 445 553

2.065 235 335 46

924 367 717 897

1. Jablanica 2. Konjic 3. Trnovo 4. Trnovo RS 5. Pale 6. Pale Praca 7. Novo Gorazde 8. Gorazde 9. Cajnice 10. Foca Ustikolina 11. Kalinovik 12. Rudo 13. Visegrad 14. Rogatica 15. Foca 16. Gacko 17. Nevesinje 18. Mostar 19. Hadzici 20. Ist.Ilidza 21. Ilidza 22. Siroki Brijeg 23. Ljubuski 24. Capljina 25. Citluk 26. Stolac 27. Berkovici 28. Bileca 29. Ljubinje 30. Neum 31. Ravno 32. Istocni Mostar 33. Trebinje 34. Prozor/Rama 35. Kupres 36. Kupres (RS) 37. Tomislavgrad 38. Posušje 39. Grude 40. Livno 41. Sokolac 42. Istocno Novo

Sarajevo 43. Sarajevo-N.G. 44. Vogosca 45. Sarajevo-S.G. 46. Sarajevo-I.S.G 47. Ilijas 48. Vares 49. Breza 50. Visoko 51. Kiseljak 52. Fojnica 53. Kresevo

11.893 39.000 2.183 3.895

28.560 1.381 4.500

31.544 5.389 2.899 1.207

10.000 13.500 15.000 23.000 11.000 14.448

111.271 21.139 20.000 47.502 27.160 23.623 27.882 16.421 13.335 4.000

14.591 5.000 4.325 1.000 500

36.000 16.832 3.513 820

27.657 16.145 15.666 32.404 15.500 20.000

118.880 20.575 50.000 2.000

15.414 10.094 13.845 40.276 23.980 11.090 5.950

301 1.101 338,4 138 492 103 123

248,8 275 188

678,92 344 448 640

1.115 736 920

1.175 273 28 162 388

297,7 356 181 331 256 633 326 225 225 82 904 477

569,80 45

967,40 461.10 220,80

994 729 45

47,98 72 55 105 320 390 73 232 164 308 148

Total 301.489 8.784 Total 1.053.789 20.456,9Number of settlements 700 N/A

Total eligible area 29.240,90 km2

Total population 1.355.278.00

Page 9 of 55

Border length 249 km

Border crossings 7 Source: 1 Statistical Office of Montenegro, www.visit-montenegro.org/faq Source 2: Municipalities statistic Source 3: DGS Bosnia and Herzegovina

Page 10 of 55

http://www.visit-montenegro.org/faq

3. Current situation in eligible area

3.1 History Throughout history, the territories and peoples of the eligible area periodically belonged to the same states, but were often separated by borders and wars. That caused links between communities in the bordering area to be strong and interdependent. In the late 19th century, intellectuals in the area started to promote the idea of united Slavic nations which eventually resulted in the creation of the Kingdom of Serbs, Croats and Slovenians which eventually became the Kingdom of Yugoslavia, also known as first Yugoslavia. The Kingdom fell apart with the outbreak of the Second World War, and SFRY1 was created in 1945. The territories of today’s Bosnia and Herzegovina and Republic of Montenegro were defined, and these two entities became two of the six Yugoslav Republics. After the break up of the former SFRY, Bosnia and Herzegovina gained its independence in 1992, while Republic of Montenegro became an independent state after the referendum on independence in 20062.

3.2 Demography The total population of the eligible area for the cross-border programme between Bosnia and Herzegovina and Republic of Montenegro is 1.355.278. The demographic structure of the area has significantly changed due to the large migrations within and out of the region during the crisis in 1990’s. Migration of inhabitants between Bosnia and Herzegovina and the Republic of Montenegro took place on both sides of the border during the nineties. This caused changes that seem irreversible given the slow and difficult return of refugees. The decline in population is most visible in rural municipalities along the border. In the eligible area of the Republic of Montenegro, the population is mainly concentrated in urban centres offering main labour opportunities. The situation is similar in Bosnia and Herzegovina. On the Montenegrin side of the border, there has been a decrease of 1.1 % in the number of inhabitants since 1991 (according to the last census of 2002), while in Bosnia and Herzegovina this decrease in the same period amounted to 1.4%. In Montenegro, this decrease occurred mostly due to internal migration to southern and central parts due to more advantageous economic possibilities. In Bosnia and Herzegovina the situation is similar, with population migrating from smaller cities to the urban centres, particularly to Sarajevo. Even though the natural growth rate in the eligible area still remains positive, the age structure of the population indicates a very unfavourable demographic ageing process.

3.3 Ethnic Minorities Inhabitants of the programming area enjoy full national equality in both countries since their constitutions secure the rights of the minorities.

1 Socialist Federative Republic of Yugoslavia 2 On June 3rd, 2006, the Parliament of Montenegro declared the independence of Montenegro, formally confirming the

result of the referendum on independence. On June 28th, Montenegro became the 192nd member state of The United Nations.

Page 11 of 55

3.4 Geographical Description The eligible area is located in the south-eastern part of Bosnia and Herzegovina and the north-western part of the Republic of Montenegro. In Bosnia and Herzegovina, the eligible area extends over 16.673,98 km2 and covers 30, 71% of the national territory. In the Republic of Montenegro, the eligible area extends over 8.784 km2 or 62, 63% of the national territory. The terrain is mostly mountainous including some of the most rugged in Europe. The average elevation is above 2,000 metres. The rivers in the eligible area flow into either the Adriatic Sea or the Black Sea basin. In the mountains, the rivers flow along deep canyons such as the Tara River Canyon which is the deepest canyon in Montenegro and in Europe, at 78 km in length and 1,300 meters at its deepest point. There are around forty natural and seven artificial lakes in the area. This region is rich with water and forests that cover 32 % of the territory. The climate of the eligible area varies, but in general, the northern part is characterized with a continental climate, with cold winters and hot, humid summers with well distributed rainfall patterns and heavy inland snowfall, while the southern part enjoys a more Adriatic climate with hot, dry summers and autumns and cold winters. Differences in elevation and proximity to the Adriatic Sea, as well as the exposure to the winds, account for variations in climate. The Bosnia and Herzegovina part of the eligible area comprises of 53 municipalities. The Montenegrin side covers 12 municipalities in central and northern Montenegro with 700 settlements. The eligible area in Bosnia and Herzegovina includes 20 km of coast which is the only access of Bosnia and Herzegovina to the Adriatic Sea and is characterised by well preserved beaches and the Neum tourist centre. In Montenegro, 163.78 km of coast, out of a total of 288.21 km, are included in the programming area with a unique landscape characterised by beautiful bays and relevant tourist centres.

3.5 Infrastructure Infrastructure is an important pre-requisite for the economic and social development as it secures accessibility of goods and people to and from the eligible area. On the whole, the infrastructure in the eligible area is obsolete, having suffered greatly from lack of investments that were mostly confined to the more industrial areas of the country. In general, roads and railways are in very poor condition, and in urgent need of modernisation. Ports, airfields and dams are in a somewhat better condition. However, significant investments in all infrastructures of both countries (road and transport network, uninterrupted power supply, restoring and modernizing the water and sanitation systems) are necessary in order to fully profit from their potential and create a stable economy in which, above all, small and medium-sized enterprises would be able to thrive.

3.5.1 Road infrastructure A modern transportation network is one of the most important factors for enabling economic development and accessibility to the region, as well as for cross-border cooperation. Roads in the eligible area are generally in poor condition due to low level of investment in maintenance and expansion during the period of crisis, as well as due to the overall distance of the cross-border area from the strategic national axes and corridors of both countries.

Page 12 of 55

http://en.wikipedia.org/wiki/Climate

http://en.wikipedia.org/wiki/Adriatic_sea

No highway passes through the eligible area. The largest part of the road network consists of main, class 1 roads and local, class 2 roads. However, the transport infrastructure in the eligible area is in urgent need of repair and maintenance The main class 1 transport routes going through the programming area are the following: 1. Sarajevo -Foca – Niksic - Podgorica 2. Mostar - Trebinje - Niksic - Podgorica

3.5.2 Railways Railways make up an insignificant part of the overall transport infrastructure of the eligible area. There are no rail border-crossings between the two countries. The small BiH rail network is in poor condition. It is underdeveloped and is not fully electrified, limiting its potential for providing effective transport infrastructure. In the Montenegrin part of the eligible area, only one minor rail link, mainly used for cargo transport, stretches from Niksic outside the eligible area, towards Podgorica and Bar.

3.5.3 Border crossings Along the length of the border, there are seven border crossings. Only four of these are, however, considered international border crossings.

3.5.4 Airports There are three international airports in the eligible region – Tivat, Mostar and Sarajevo. One small airport for general aviation is located in Niksic.

3.5.5 Ports In the eligible area, the marina in Tivat offers services to small boats and medium-size yachts.

3.5.6 Telecommunications The telecommunication network in the eligible area is composed of several systems offering both fixed and mobile telephony. The fact that there are 643,681 (October 2006) cellular phones in Montenegro is impressive (more than 1 cellular phone per inhabitant) when compared to European levels. Services in mobile telephony are provided by three GSM operators (Telenor, T-mobile/com, M-tel). All providers have national coverage, and provide advanced services. The privatisation process of two of the three incumbent operators (BH Telekom and HT Mostar) is still in a preparatory phase. Telekom Srpske was largely privatised in 2006. The capacities of the fixed network are well developed, and the mobile network has good signal coverage, throughout the area. Internet is widely used in the eligible area with three providers on the Bosnian side of the border and four on the Montenegrin side. There are a large number of internet users in Montenegro (over 743,000 in 2006). In Bosnia and Herzegovina, 57 % of households possess a computer and 42 % are using internet regularly.

3.5.7 Water supply, waste water, heating, waste disposal In the eligible area, the population living around the municipality centres and larger settlements is covered by the water supply network. However, the water supply capacity and hygiene quality

Page 13 of 55

is a main concern of many rural areas. Alternative systems used in many rural areas, such as local springs, wells and cisterns, do not guarantee the adequate quality of water. In general, this situation requires a major effort to revitalize and repair the water supply systems, especially when considering the fact that the existing water supplies do not meet the needs of the population. On account of its age, the damage caused by the war, and leakage due to poor maintenance, between 35% and 70% of the capacity is lost. Water supplies throughout the eligible area are subject to frequent interruptions, especially in the dry summer season. This indicates the necessity of establishing larger water supply systems at municipal, inter-municipal and regional levels. In the eligible area, sewage networks are only available in the centres of larger municipalities. In many municipalities, the sewage system is not capable of processing the volume of waste water generated, which overflows as untreated sewage. In parts of the area direct discharging of untreated sewage into streams, tanks, and septic dumps occurs. Only two or three of the larger municipalities possess efficient waste water processing facilities. The treatment of solid waste is handled in a similar, unsatisfactory manner in the whole eligible area. The system of solid waste management is based on collection, transportation and disposal of solid waste by public utility companies at municipal level. Dump sites are poorly maintained, with minimal sanitary and hygienic conditions. Effective separation of solid waste is also minimal.

3.5.8 Energy, electricity Energy and electricity supply is well developed on both sides of the border. The geography of the area favours the set up of hydro power plants. The rivers of the eligible area carry 50% of the hydro-potential in both countries. In Bosnia and Herzegovina, there are five hydro power plants on the river Neretva and three more plants on the river Trebisnjica. There is only one thermal plant located in Gacko which supports the stability of the power system in the eligible area. The average annual power production in eight hydro power plants amounts to 4.918 GWh and the average annual production in the thermal power plant Gacko amounts to 2.153 GWh. This makes a substantial share of this kind of energy production in Bosnia and Herzegovina. Energy is the main economic priority of the Montenegrin government, so the Perucica hydropower plant, in the vicinity of Niksic, is being modernised - investments of 3.6 million euros, with a potential to provide the entire country with uninterrupted supply of power at the same time reducing the dependency on foreign supplies of power. However, there are large differences in the access to uninterrupted supply of energy/electricity between cities, towns and rural areas. In all, there are two large power plants, Piva and Perucica, which are complimented with additional five smaller ones. Furthermore, there is a thermal power plant in Pljevlja. In addition, the high-voltage transmission line in the eligible area is an important part of the Balkan network and represents a solid basis for further modernisation and development. The low-voltage (user) network in the eligible area is on a satisfactory level. After being destroyed during the war, it was reconstructed and modernized with the support of donations from the international community. No settlements without electric power have been identified. The above average opportunities for hydro-power generation and a strong potential for thermal energy are important strengths of the eligible area. Significant possibilities to use solar and wind energy should not be neglected as well.

Page 14 of 55

3.6 Economy Bosnia and Herzegovina and the Republic of Montenegro are members of the Central European Free Trade Agreement (CEFTA). CEFTA complements the EU Stabilization and Association Agreement for the countries of the Western Balkans, providing a good framework for economic development and regional co-operation. The economic development indicators of the cross-border area are relatively low compared to the national level The average GDP per capita Bosnia and Herzegovina national average was 2.100 € in 2006, while in Montenegro it amounts to 1.809.37€ in eligible area (total average for Montenegro in 2004 was 2.521€). The economy of the cross-border region is mainly agrarian or industrial-agrarian. The main economic sectors, having also the biggest potential in the cross-border region, are agriculture, tourism, light industry, and energy production.

3.6.1 GDP Most eligible municipalities within the eligible area are confronted with the grave consequences of the war and serious economic and financial difficulties. Evidence gathered from different sources shows widespread socio-economic disparities. On the Bosnia and Herzegovina side, it was very difficult to obtain coherent data on the actual economic situation and the related qualitative structure, status and performance. The overall level of economic development of the eligible area is very low compared with the respective national averages, as shown in the table below. The area is characterized by low GDP, the predominance of the agricultural sector and the lack of investments across all sectors. A number of factors have combined to bring about the area’s poor economic performance. These include a high degree of dependency on agriculturally-based employment and income, and a lack in the higher value added business sectors. The area has not seen the economic benefits of domestic investments to the same degree as other regions of the two countries. Table 3: GDP comparisons with EU and national level

Area (average)

Regional GDP per capita (EURO)

Regional GDP index Country=100

Regional GDP index EU (27)=100

BiH eligible area N/A N/A N/A

BiH national level 2.100 100 57.48

Montenegrin eligible area 1,809.37 71.77 8.41

Montenegrin national level 2 521 100 11.72 Reference: 2 Statistical Office of Montenegro; EU27 = 21,503 Source: 1 Statistical Yearbook of the Republic of Montenegro 2004 and Bosnia and Herzegovina statistical office. 2 Calculation based on GDP structure per municipality for the period 2002-2004. Data for 2001 and 202 are used for calculation of the GDP index

3.6.2 Agriculture and Rural Development Even though various natural conditions in the eligible area are suitable for diversified development of agriculture, the agricultural activities are limited due to poor soil quality and mountainous zones with distinctive relief. The largest part of the agricultural land, 88%, is covered by pastures and natural meadows. Agricultural production in the eligible area is based on small-scale family households due to existing natural conditions and property issues.

Page 15 of 55

The area has optimal conditions for vegetable production. In the northern part of the area, the largest percentage of the territory is comprised of grasslands, ideal as summer pasture for cattle. The coastal region is especially suitable for fruit (subtropical fruits and olives) and field crop production, and its hilly relief for breeding small cattle. This relief is also rich with honey plants and medical herbs, as well as wild fruit species (dog rose, fig). With regards to livestock, sheep and goats are predominant in the eligible area. Large cattle breeding and beekeeping are also important agricultural activities in this region.

3.6.3 Industry The industrial sector in the eligible area is based on electricity generation, coal mining, forestry and wood processing, textile and leather industry and significant capacities of construction industry. Both countries have a good basis for industrial processing of agricultural products: butcheries, grain mills with silos, dairy plants, bakeries, beer and juice factories, fruit processing factories, capacities for grape processing and wine making, processing of medical herbs and factories for production of confectionary products. Some of the Montenegro’s biggest companies are situated in the eligible area, including the foundry and the power production and supply company, as well as light industry in the northern part of the area.

3.6.4 SME Sector Due to improved business climate, an increase in the number of registered small and medium size companies is recorded in the eligible area. SMEs are usually more flexible to adjust to the market needs which provide diverse employment opportunities, sustainable development and positive contribution to export and trade. There are 34,236 small and medium enterprises in the eligible area. Table 5: Numbers of SMEs and SME Employment in the Programming Area

Area (average) Number of SMEs Number of Employed in SMEs

BiH eligible area 28,576 97,838

BiH national level 170,445 865,224

Montenegrin eligible area 5,660 N/A

Montenegrin national level 13,393 N/A

Total eligible area 34,236 - Source: Census 2003. MNE, Chamber of Commerce RS and Federation of BiH The majority of these SMEs are, however, very small and lack professional support and services to help them build up performance and strengthen their competitiveness. The internal problems of the SME sector are related to both the structure of the companies and the economic environment. Companies are characterised by lack of entrepreneurial experience (especially in sectors with considerable growth potential), non-profitability of the SME sector (the consequence of low productivity, quality of products, innovation and export orientation), and regional disparities in entrepreneurial activities (concentration in bigger regional centres).

Page 16 of 55

The constraints causing insufficient support to entrepreneurship are the following: administrative barriers in various phases of the life cycle of an enterprise, lack of business support institutions (business centres, business incubators, technological parks), inconsistency in implementation of education/training, lack of coordination between government policies in creation of a business-friendly environment, and lack of financial support to the needs of the SME sector. In the future, it is foreseen that the SME sector will play an important role in the economic development of the region. Recently renewed activities in the banking sector based on the market economy could boost the economic growth of both border areas.

3.6.5 Services Apart from tourism, services are currently not considered statistically as a separate sector of Bosnia and Herzegovina and Montenegro economies - figures are usually included with other sectors. A variety of services such as administration, banking, education, social and health care, are mainly available in urban areas, while the development of these sectors in the rural areas is lagging behind. Administrative services are related to legally define administrative units, i.e. municipalities, and thus located within them. The organizational structure of health institutions in the eligible area consists of three levels – primary, secondary and tertiary. The primary level of health institutions in the eligible area is consisting of 56 health centres; the secondary level includes 13 general hospitals and 5 specialization hospitals, while the tertiary level of Health institution includes the Clinical Centre of Montenegro and Institute for Public Health which is located in Podgorica –out of eligible area. Both countries recognise that the development of the service sector can contribute significantly to the positive economic development, creating jobs and adding value to existing industries and businesses.

3.6.6 Regional and Local Development The Bosnia and Herzegovina eligible area is covered by two Regional Development Agencies (RDAs). REDAH covers the Herzegovina economic region and SERDA covers the Sarajevo economic region. These are non-profit organizations, founded by the public, private, and non-governmental sectors, with a view to foster the overall economic development of the regions particularly with services supporting economic regeneration, job creation and human resources, as well as infrastructure development. REDAH has its headquarters in the eligible area, while SERDA is located in Sarajevo and its activities are covering the eligible area as well. Due to the fact that Montenegro is a small country with no regions and only 22 municipalities, there are no Regional Development Agencies, neither has the network of SME support institutions has been established. There is only one national chamber of commerce, located in Podgorica, and seven business centres. Also, there are four scientific research institutions which could serve as a basis for development of such support, which is in accordance with the EU accession process that Montenegro is currently undergoing. In the recent Strategy for SME development significant attention is given to this subject. On both sides of the border, there are a considerable number of NGOs and community initiatives to stimulate economic growth.

Page 17 of 55

These organizations will play their part in the cross-border programme since they can provide a direct link to potential beneficiaries, as well as people-to-people contact with the local population in the eligible area.

3.6.7 Tourism Tourism in Montenegro is in a phase of rapid expansion. In 2005, some 820,000 tourists visited Montenegro, out of which 272,000 were foreigners. This represents nearly a 17% increase over the previous year. Montenegro is considered one of the fastest-growing tourist destinations in Europe. Southern part of the eligible area is located on the Montenegro coastline, having a significant share in the above mentioned figures. Table 6: Number of visitors and tourist nights per county/municipality

Area (average) Visitors Tourist nights Tourist nights per inhabitant

BiH eligible area 328,745 1.351,944 0.61

BiH national level 856,932 2,332,539 1.62

Montenegrin eligible area 275,233 1,860,298 -

Montenegrin national level 820,457 5,211,847 8.40

Total eligible area 603,978 3,212,242 - Source: 1 BiH tourist association; Montenegro – tourist season 2005. On the other hand, the central and eastern continental parts of the eligible area have underdeveloped tourism. The mountainous areas of the area have a comparative advantage for skiing; hiking, cycling, especially on BiH side on Jahorina, Bjelasnica and Igman mountains. Cultural tourism can be developed in some urban centres given the rich cultural heritage and the great variety of cultural events organized throughout the year. The potential for agro-tourism and eco-tourism has not yet been explored. In addition, tourist resources, such as mineral water springs, salt lakes or mud offer the possibility of different forms of health/wellness tourism. The main obstacles to the development of tourism are poor tourism infrastructure primarily in non-coastal areas, low level of marketing, lack of information exchange within the tourism industry and low level of networking between tourism operators and other sectors (especially agriculture).

3.7 Human Resources

3.7.1 Education, Research, and Development The system of education in the eligible area is well developed with regard to primary and secondary schools, and faculty education. In majority of cities, less than 2% of the inhabitants are illiterate. Secondary schools are located in every city of this area. The educational systems of Bosnia and Herzegovina and Republic of Montenegro are similar, with compulsory primary education and non-obligatory secondary and high education, which is mainly performed in public schools. There are 244 primary and 137 secondary schools on the Bosnian side and 284 primary and 23 secondary schools on the Montenegro side of the eligible territory. Even though the primary and secondary education network is satisfactory, with an adequate number of public schools, the condition of the facilities, lack of qualified teaching staff (for example IT teachers) and high costs of transport for students especially from rural areas, influence the quality of education provided.

Page 18 of 55

Table 7: Levels of Education in the Programming Area

Area (average) Primary or less than primary Secondary University, MSc, PhD

BiH eligible area 89,75 % 88,92 % 5,56 %

BiH national level 91,21 % 78,62 % 9,64 %

Montenegrin eligible area 50,52 48,74 43,70

Montenegrin national level 42 % 46,99% 11,01%

Total eligible area 68,74% 66,58% 22,74% Source: Census 2003 in Montenegro There are Sarajevo and Istocno Sarajevo Universities in the eligible area; there are faculties in Niksic and Kotor. Also, there is a positive trend in the increase of the number of regional higher education institutions, as well as greater diversity of undergraduate curricula they offer. Links between educational institutions and the business sector are weak and result in low innovation and underdeveloped research and development sector.

3.7.2 Labour Market (employment and unemployment) The eligible area has significantly higher unemployment rates than the national average. Those figures reflect the economies lagging behind the national level in both countries, the dependence on public sector employment and the lack of entrepreneurial initiative. The distribution of unemployment throughout the eligible area is very uneven, with the highest unemployment rates in rural micro regions where it often causes serious social problems. Table 8: Employment and Unemployment in the Programming Area

Area (average) Total Number Employed Unemployment Rate Employment Rate

BiH eligible area 642.575 48.05 % 51.95 %

BiH national level 1.236.744 31.94 % 68.06 %

Montenegrin eligible area 79,930 N/A N/A

Montenegrin national level 171 325 15.05 % 84.95 %

Source: 1 Unemployment Bureau of RS and Federation of BiH, Monstat, Survey on labour October 2005. The highest rate of unemployment is among unskilled workers, the elderly, young and women. In Bosnia and Herzegovina, the employment structure changed a great deal due to structural reforms leading to the collapse of state-owned companies. Slow transition from the centralized to free market is also caused by the fact that parts of the eligible area along the border are some of the most remote regions of both countries and therefore unattractive for either domestic or direct foreign investments resulting in fewer employment opportunities. According to the Employment Agencies of Bosnia and Herzegovina and Republic of Montenegro, about 28% of non-residential labour force in Montenegro was engaged from Bosnia and Herzegovina during last year. This is mostly due to the seasonal opportunities on the Montenegrin coast and the absence of a visa regime.

3.8 Environment and Nature

Page 19 of 55

Bosnia and Herzegovina and Republic of Montenegro eligible area is fairly homogeneous from a natural, geographic and environmental point of view and characterised by well preserved natural environment with low pollution levels. On the other hand, the area has some "pollution hot spots", which create serious problems. There are three National Parks (Durmitor, Biogradska Gora and Sutjeska) and five protected areas in this territory. The natural resources are mostly preserved but there are some locations which are polluted. The biggest polluters in this region are the coal power plant in Pljevlja and the foundry in Niksic. The coal mine in Pljevlja and the red bauxite mine in Niksic cause waste and groundwater problems. Both sides of the border face similar challenges to ensure a balanced path towards socio-economic development, while preserving the outstanding natural and cultural heritage and meeting the EU environmental requirements. There is a lack of integrated and co-ordinated interventions on both sides of the border to protect the environment and promote sustainable development. Efforts should be directed towards development and upgrading of special protected areas, special areas of conservation, visitor information systems, exchange programmes, development of information systems and implementation of public-private partnerships in nature protection. The process of establishing Government Environmental Protection Agency in Montenegro and Bosnia and Herzegovina is underway. As a consequence of war, there are still suspected mine fields in the eligible area. The total suspected mine area covers 1.844 km2 with approximately 305.000 mines.

3.9 Culture Diverse historical and cultural influences prevailing in the region in various periods of history left trace in many localities in the area. Protection of cultural heritage was given a solid legal basis and assumed by a specialized organization, Institute for Protection of Cultural Monuments, in both countries. Based on the Law on Protection of Cultural Monuments from 1991, in terms of protection of cultural heritage, municipalities are obliged to look after, maintain and use, and protect monuments from damaging impact of nature and human activities, to make them publicly available, and support the costs of regular maintenance. Broken ties with the neighbours, lack of co-operation with relevant institutions abroad and, finally, lack of financial resources in the recent period, paralyzed the possibilities of exchange of experience, opportunities for knowledge dissemination and adequate specialization, which is of outmost importance for the activities related to the protection of cultural heritage. Cultural cooperation has been and still is a very important link for communities on each side of the border. The programming area shares very similar traditions, customs, language and cultural heritage. There are a large number of cultural, minority associations and clubs the purpose of which is to preserve local tradition. In addition to cooperation of small cultural associations, there is untapped potential for the celebration of cultural heritage in the programming area and linking it to the tourist offer.

3.10 Summary indicating gaps, disparities, and potentials for development On the basis of the previous analysis, it can be concluded that two main characteristics describe the eligible area in both countries: a predominantly rural economy and a culture with the absence of barriers.

Page 20 of 55

These two characteristics present both the internal factors that can support the sustainable development of the area and the factors that can hamper it. The rural economy is favoured by the morphology of the terrain, which is mostly mountainous and the geographical location of the area, distant from the main economic centres and the main commercial and economic axes. In the past, this has been only partially exploited as a developing factor. The dependence on low-wage agricultural and unskilled manual activities resulted in poor living standard with relevant effects on the migration of skilled workforce in other more developed regions and countries. The production is mainly confined to essential food processing and other agriculture-based industries with scarce and fragmented industrial activities. The high tourism potentials could be the cornerstone of the entire economy attracting investments which could benefit other economic sectors as well (construction, agriculture, services). The setting up of common development strategies could improve the economic development of the area. The well preserved natural environment and intact cultural heritage, the presence of nature parks and tourism attractions, together with low pollution levels could be the basis for a sustainable development of the area. The sustainable development could also be fostered by the absence of cultural barriers in the eligible area that could favour the establishment of both economic and cultural links.

Page 21 of 55

3.11 SWOT Analyses of eligible area STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

GEO

GR

APH

ICA

L FE

ATU

RES

Mountainous area with abundance of forests and water resources (lakes, clean rivers, mineral and thermal springs); Easily accessible coastal region

with good quality beaches; Temperate continental climate

with different influences and fertile soils;

Peripheral geographic and transport location within the Balkan area; Remote position of the border areas within

their national territories and from the major economic centres; Morphology of the region hampers transport

infrastructure; Some areas remain closed due to presence of

land mines.

Adoption of EU acquis will benefit and preserve the ecological environment, and protect geographical features.

The eligible area retains its peripheral position.

DEM

OG

RA

PHY

Historical links provide a solid basis for cultural understanding, confidence-building and cross-border cooperation; Cultural similarities and absence

of language barriers; Good neighbouring relations.

Negative population growth leads to unfavourable demographic trends; Internal economic migration of young people

and skilled and productive workforce to urban centres and emigration abroad deplete the labour force of the eligible area; Low living standards and aging rural

population.

Cultural/historic tourism and education activities could contribute to promoting the region as a multi-ethnic European location; Enhanced tendency towards and

potential for major cross-border cooperation activities.

Renewed instability in the region; Increasing of depopulation trends; Ageing of the population; Total depopulation of some rural

settlements.

INFR

AST

RU

CTU

RE

Presence of basic transport infrastructure (1st class roads); Presence of three international

airports as main gateways to Europe; Well developed energy

production and supply network; Well developed

telecommunications network; Adequate number of border

crossings.

Low quality of transport infrastructure in general and poor planning and maintenance of road network; Secondary and tertiary roads insufficiently

developed and maintained; Inadequate communal infrastructure and

public utility management, especially in smaller settlements;(water, sewerage, solid waste); Lack of solid waste dumps and re-cycling

plants Insufficient quality and capacity of existing

border crossings.

Reconstruction, extension and integration of road infrastructure; Improvement of waste and sewage

disposal services will increase the economic potential of the area; Presence of river transport facilities and

of local water routes for domestic shipping; Exploration of the possibilities for the use

of alternative energy sources; Increasing the number of internet

connections; More efficient border crossing points to

cope with increased traffic flows.

Legal and political obstacles continue to hinder the implementation of regional plans; Delay in the implementation of big

transport projects; Increased transport costs

because of the underdeveloped transport infrastructure; Bypassing the region due to bad

transport infrastructure; Poor wastewater, sewage and

solid waste disposal facilities could endanger public health, and contribute to slow economic development of rural areas.

Page 22 of 55

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS EC

ON

OM

Y

Central European Free Trade Agreement - CEFTA signed Economic complementarily of the

border areas and similarities in the trade market; Growing SME sector by number

and turnover; Existing industrial base (e.g.

textile, chemical industry, energy production and supply, metal and food processing) is undergoing restructuring towards a more competitive future; Well developed craft industry; Suitable eco climate for wine-

making, fruit, vegetables, tobacco, medical plants and herbs; Tradition in the processing of

certain agricultural products recognized in foreign markets; Favourable natural and cultural

conditions for tourism; Existence of business support

structures.

Low level and lack of policy framework for local economic development; Limited market information flow; Low level of cooperation between SMEs; Low share of modern technologies utilized in

agriculture and industry; Low level of added value in the processing

industry; Insufficient national/local, as well as direct

foreign investments, which inhibits modernisation and restructuring of border areas’ obsolete and uncompetitive industrial and agricultural resources; Insufficient development of business

infrastructure; Imbalanced development of institutional

structures and management capacity for tourism; Insufficient arable land and fixed assets for

agriculture are; Economy in rural parts of the eligible area is

often segmented, mono-sector and marginal; Lack of research institutions and consultancy

services.

Exploiting benefits of Central European Free Trade Agreement - CEFTA- to increase export potential; Developing and exploiting networking

links between local economic sectors in order to profit from supply chains and clusters so as to improve competitiveness and further economic growth; Improvement of entrepreneurship and

product quality through cross-border initiatives; Market potential for creation of economic

co-operation leading to processing of bio products; Increasing of cross-border cooperation

between business support structures in industry and service sectors; Branding regional products; Well developed and growing banking

sector that could support local development; Available industrial premises and

facilities; Develop potential renewable energy

sources.

Increased exposure to global markets and increased competition within the region; Eligible area continuously

perceived as peripheral and low value-added economy; Grey economy and the perceived

threat of corruption; Lack of financial capacity and

interest for cooperation among local businesses; Further fragmentation of rural

economy and closing of industries (tobacco, mining); Slow restructuring process of

state owned industries.

ENVI

RO

NM

ENT

AN

D N

ATU

RE Diverse and well preserved

nature with natural parks and protected areas; Rich and diversified natural

resources (mineral waters, rivers, lakes, canyons, arable land, forests); Rich biodiversity, including

valuable medicinal plants and herbs; Favourable conditions for

diversified tourism and agriculture.

Natural potentials and resources are insufficiently exploited; Depopulation of countryside damages arable

land Lack of joint cross-border facilities for

monitoring the environment and prevention of natural disasters.

Joint sustainable use of environmentally friendly services and technologies to maintain unpolluted natural resources; Expansion of alternative forms of tourism

and organic farming; International recognition of natural parks

and protected areas; Exploring the use of renewable energy

sources.

Infrastructure investments potentially adversely affecting the environment; Unsustainable economic

development may bring problems to air, water and soil quality; Increasing the uncontrolled

pollution and cutting down of forests; Further fragmentation and

abandoning the cultivation of arable land.

Page 23 of 55

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS LA

BO

UR

MA

RK

ET A

ND

ED

UC

ATI

ON

Well developed primary and secondary education systems; Increased level of employment in

the private sector; Presence of University and

centres for higher education; Presence of research institutions.

‘Brain drain’ and migration; Growing trend of a relatively high

unemployment rate in the rural areas; Low income and standard of living among the

majority of the population; Low mobility of the labour force; Academic and business environment

insufficiently connected; Shortage of modern vocational and education

services.

Increased focus on education and training programmes adapted to the needs of the labour market, making a strong link between education and economy; Increasing the number of employees in

the private sector; Increased mobility and adjustment of

labour force to new economic demands.

National and regional human resources and labour policies not responding to changing economic and labour market situation; Slow transition of secondary

education systems will increase the gap between labour market supply and demand; No changes in the vicious circle of

poverty, lack of education and poor unemployment opportunities marginalises border areas and hinders economic development; Isolation of the general education

system and closing of schools.

CU

LTU

RE

AN

D T

OU

RIS

M

Rich cultural heritage (history, architecture, tradition and folklore); Partially developed tourism

infrastructure; Cultural similarity and coherence.

Absence of coherent policies and programmes for development; Low integration of cultural heritage with the

development of the tourism offer; Limited cross-border experience; Inefficient utilisation of culture and leisure

facilities; Lack of coordination and information centres

apart from big urban centres; Seasonally conditioned development of

tourism.

Respond to the increasing demand for wellness and eco-tourism; Development of specialised tourist

programmes focused on new “active” type of holidays; Joint tourist offers with joint products and

marketing; Exploring the tourist potential of cultural

facilities;

Global tourist market potential; Global climate change might

influence tourism; Lack of sufficient resources for

continuous maintenance of the natural, cultural and historical heritage; Increased social exclusion in the

region.

Page 24 of 55

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS IN

STIT

UTI

ON

AL

SYST

EM

Good bilateral relationships and existence of cooperation agreements; Experience in implementation of

common programmes; On-going decentralisation

process; Legislation on local-self

government favourable for cross-border cooperation;

Different levels of administration reform process; Limited administrative and absorption capacity

at local level; Limited partnership in programming and

implementation of regional development policy; Insufficient amount of public funds and

financial autonomy on local level; Obsolete facilities and equipment in the sector

of public services and lack of sufficient financial resources.

Harmonisation of administration on both sides by implementation of the acquis; Development of mechanisms for

provision of cross-border institutional assistance and know-how; Possible partnership of civil society and

public administration in decision making processes and services.

Lack of sustainability in political commitment on the central and local level; Different speed in the EU

accession process and in acquiring the acquis might lead to compatibility issues; High turnover of administration

staff due to political changes.

Page 25 of 55

SECTION II. PROGRAMME STRATEGY

1. Experience with cross border activities This IPA cross-border programme is the latest initiative to extend the EU policy to promote cooperation between countries in border regions of Central and South Eastern Europe and adjacent regions of the Community and other applicant countries of Central and South Eastern Europe. From 2007, as a single integrated Instrument for Pre-Accession, IPA replaces the former instruments: Phare, ISPA, SAPARD, the Turkey Pre-Accession Instruments and CARDS. As Component II of IPA, Cross-border Co-operation is intended to prepare Candidate and Potential Candidate Countries for the future management of EU Structural Funds. Accordingly, this component will be implemented by means of the Multi-Annual Cross-Border Programme.

Having been a part of the State Union of Serbia and Montenegro, the Republic of Montenegro had limited experience with cross-border cooperation, i.e. four programmes with Bulgaria, Romania, Hungary and Italy, as well as with transnational programming – CADSES. Bosnia has limited experience having participated in the programme with Italy and CADSES. This programming document is coherent with the above mentioned EU programmes and national strategies, as mentioned in the section four.

1.1 Lessons Learned Experience with border region cooperation so far indicates that a solid preparatory phase is of utmost importance prior to the launching of specific activities. In order for the cross-border cooperation to be effective, it is crucial that there is a good understanding of the rules and procedures, adequate capacity and functioning management bodies. The results of the thematic evaluation of the Phare Cross-Border Cooperation Programmes 1999-2003 will be duly taken into account. Experience has shown that the preconditions for effective implementation include, besides close co-ordination between participating countries at political and operational levels: - cross-border cooperation between line ministries and effective working relationships

between related organisations; - functioning regional development authorities and local authorities, with appropriate staff

in a stable environment; - close working relationships between regional institutions and the respective Commission

Delegations; - functioning cross-border cooperation between respective organisations of the private

sector, such as chambers of commerce, company associations and NGOs. - In the period by 2004, BiH stakeholders participated in 17 projects within the INTERREG III A programme with “in kind” contribution mainly. Most of them were only formally included in the CBC projects with Italian lead partners, but experience gained in that period and connections established with partners from Italy represented a good basis for the subsequent cooperation.

The first real experience with CBC and transnational Co-operation projects was gained through the last Call for Proposals of the two New Neighbourhood Programmes, in which BiH participated in the period 2004-2006: INTERREG III A Adriatic NNP and INTERREG III B CADSES transnational programme. The last Call for Proposals of the CADSES Programme resulted in two projects including BiH partners with financial request from the Regional CARDS funds 2004-2006, while out of 93 projects approved within the Adriatic NNP, 28 projects included BiH partners with such request.

Page 26 of 55

Number of projects submitted proved that there was significant interest of BiH partners in this kind of Programmes. However, understanding of requirements related to NNP modalities, quality and size of projects implying level of activities to be implemented in BiH remained low.

In terms of cross-border cooperation on internal borders, given the initial stage of this programmes, it is too early to identify lessons learned, but it is worth noticing that interest, even certain initiatives to start cooperation across the border, do exist at local level. On the other side, the relatively higher grant allocation, available under IPA CBC Programmes, will represent a real challenge for many stakeholders whose financial capacity remain small. Montenegro until 2006 was a part of Union of States with Serbia and therefore all experience regarding cross border and transnational cooperation was mainly related to programmes where these two countries participated as one country. First experience of Montenegro was participation within INTERREG III A Adriatic Programme and INTERREG III B CADSES transnational programme. The last Call for Proposals of the Adriatic NNP resulted in 93 approved projects where 12 projects included Montenegrin partners, while within CADSES Programme Montenegrin partners participated in two projects financed from the Regional CARDS funds 2004-2006. Through those initial cross border and transnational projects Montenegrin partners gained opportunity to start increasing awareness of cross border and transnational programmes and start achieving the knowledge and skills from their partners. However, there is still low capacity in project preparation of final beneficiaries (particularly in the northern part where almost no activities have been carried out). Having this in mind it is important to stress that specific trainings of potential applicants will be essential for this programme. Furthermore, it is important to mention that several municipalities and civil society organizations, located in south and central part, have been partners in implementation of projects within the programme. Although awareness was reached it is necessary to continue with creation of adequate structures, intensive communication and provision of information in order to provide establishment of operational and sustainable partnerships. Therefore, very important issue is providing trainings for writing and implementation of projects relating to programme.

2. Co-operation Strategy The situation analysis of the eligible area was conducted by collecting data from the relevant institutions in both countries and consulting the main national, regional and local stakeholders. It was based on: - Primary data provided by the Bosnia and Herzegovina Statistical Office and the National

Statistical Office of Montenegro, Ministries of Tourism and State Agencies of Employment, State Border Department, and Municipal authorities;

- Data and analysis included in existing national and regional planning documents; - Interviews with local stakeholders conducted in both countries during February-March

2007. Based on an ad hoc questionnaire, about 72 interviews were conducted in both countries (municipal authorities, entrepreneurs, NGOs, chambers of commerce, local higher education facilities);

- suggestions and comments provided by the members of the Drafting Teams at a workshop held in Podgorica in March 2007 and by the Operating Structures of both countries during meetings held in Sarajevo on April 13th 2007.

Initially, separate unilateral SWOT analyses have been conducted in both countries in parallel. These two analyses have subsequently been merged into a joint SWOT and agreed by the Operating Structures, summarizing the main strengths, weaknesses, opportunities and threats.

Page 27 of 55

The following table summarizes the eligible area as reported in the SWOT analysis:

ELEMENTS OF THE SWOT ANALYSIS

STRENGTH/OPPORTUNITIES WEAKNESSES/THREATS

Language and cultural similarities; Diverse and well preserved nature; Economic complementarities of the border areas; Favourable conditions in agriculture; Growing number of SMEs in trade, industry and

services sectors; Considerable potential for new forms of business

especially related to tourism and rural development;

Good national educational systems.

Peripheral location for transports and logistics; Inadequate infrastructure, particularly road network and

sewage/waste water treatment; Unexplored potential of natural resources; Depopulation and migration trends; Insufficient development of business infrastructure; Lack of capital, limited competitiveness of the industry

and SME sector; Persistent unemployment; Absence of co-ordination, information and support

services; Limited local administrative and absorption capacity.

According to the joint analysis, Strategy, Priorities and Measures of this IPA cross-border programme between Bosnia and Herzegovina and the Republic of Montenegro were conceived on the basis of a joint vision of development perspectives, focusing on the problems to be resolved and on the opportunities to be explored.

2.1 Summary of conclusions from description of the area The analysis describes the situation in the eligible area, although some of the description is applicable to both countries as a whole. Most of the eligible area is unpopulated owing to is geographic position, and suffers poor living standards owing to a dependence on low-wage agricultural and unskilled manual activities. Its industrial base is very fragmented, and apart from a major steel foundry and some textile factories, is mainly confined to food processing, wine making and other agriculture-based industries. High unemployment has led to the migration of much of the remaining skilled workforce to cities and abroad, leaving behind an aging and largely unskilled labour pool that is difficult to employ without retraining. The area also has structural problems related to its transport infrastructure. The absence the modern road and rail systems linking the border area to key corridors contribute to the marginalisation of the area as an economic resource. The area’s existing resources are insufficiently used owing to both its isolation and slow response to the challenges of modernisation and restructuring. On the other hand, the eligible area is characterised by a homogenous cultural background and the absence of significant language barriers. This provides opportunities for continuous cooperation which brings about an increase in economic activity, achieving better living standards and employment. In addition, natural resources of the eligible area, currently insufficiently exploited, can serve as a basis for economic development. The southern part’s proximity to the sea is particularly attractive to visitors, and the more isolated northern part offers opportunities for more specialized forms of tourism. The main priority is to accelerate the economic development of the eligible areas by creating employment opportunities in the relatively short term period (3-5 years). However, to achieve this, it is important to use the potential of cross-border cooperation to develop institutional links and networks that can mobilise the available regional and national resources.

Page 28 of 55

2.2 Overall Strategic Objective of the Cross Border Programme Therefore, the overall objective of this IPA cross-border programme is:

OOvveerraallll OObbjjeeccttiivvee:: To foster the joint sustainable development of the cross-

border area, its economic, cultural, natural and human, resources and potentials by strengthening the capacities of human resources and joint institutional networks among local communities and local private and public actors.

2.3 Specific Objectives The strategic framework to support this overall objective consists of three specific objectives:

SSppeecciiffiicc OObbjjeeccttiivvee 11:: To support the establishment of joint actions and strategies aiming at protecting and valorising the environmental resources of the area.

SSppeecciiffiicc OObbjjeeccttiivvee 22:: To promote sustainable development of the border area so

as to stimulate the economy and reduce the relative isolation.

SSppeecciiffiicc OObbjjeeccttiivvee 33:: To re-establish cross border cooperation through

strengthening previous cross border economic and cultural contacts.

The three specific objectives of the programme are directly connected to three relevant areas of intervention that have been jointly selected as targets for this IPA cross-border programme. The first is the environment. The selective exploitation of natural resources and the promotion of sustainable activities will support the use of the environment as a valuable and effective tool for development. The second area of intervention is economy. Interventions in this field are aimed at creating a more favourable business environment, especially for tourism and agriculture through improving joint services, transfer of know-how, and stimulating the start up of new business ventures. The third area is social cohesion. The programme is aimed at connecting people, administrative bodies, and other local actors for the purpose of accelerating local economic and cultural development and removing formal and informal barriers to cross-border cooperation, by joint identification and elaboration of common strategies to promote the area.

Page 29 of 55

The Programme will also take into account the following basic principles: - Equal opportunities - widening the range of development opportunities in favour of

categories of people that have limited access to them: women, young people, under privileged, minority groups;

- Environmental and economic sustainability - promoting interventions based on the principles of environmental protection, preservation and sustainability, fostering the interrelation between ecology and economy;

- Self-sustainability - promoting operations with sustainable benefits. Special attention will be paid to setting up a strong network among local partners and stakeholders in order to increase the long term benefits.

3. Priority and Measures

The priorities and measures defined in this cross-border programme are structured in such a manner so as to respect and provide for the implementation of the specific objectives. In particular, one priority has been identified for the cross-border cooperation interventions. Priority II is focused on technical assistance, ensuring the effective management and implementation of the programme. The activities foreseen under this programme have been designed on the basis of the SWOT (Strengths, Weaknesses, Opportunities and Threats) and taking into account the limited financial allocations. The co-financing guarantees that the EU principle of additionality will be respected.

3.1 Priority I

To support the creation of a common socio-economic environment for people, communities and economies of the eligible area

Taking into consideration the scale of the interventions and the three specific objectives, the Priority I will be implemented through three different measures. Each of them is specifically targeted on the particular area of intervention identified above.

3.1.1 Measure I.1

Cross-border economic development initiatives with an emphasis on tourism and rural development.

Rationale: An increase in the economic development of the eligible area requires, as demonstrated in the SWOT, the setting up of coordinated activities fostering human resources collaboration in all sectors and the creation of basic mechanisms and facilities promoting investments and fostering economic development. Most of the interventions enhancing economic cooperation will be related to the tourism, agricultural, and environmental sector and will be aimed at exploiting local cross-border opportunities. In addition, the overall interventions will have effect also on the increase of the employment potentials in the private sector and the mobility of labour force. This has to be sustained by an increased capacity of both private and public entities that will be involved in the analysis of the local situation during the elaboration of new strategies and also in the decision making process.

Page 30 of 55

Finally, the economic development has to be sustained by small scale investments improving the existing infrastructure that would have a concrete impact on services, tourism, business, trade and transport in the eligible area. The following is a tentative list of the interventions that could be eligible under this measure: - Creating business networks and know-how transfer mechanisms mainly in the tourism

and agricultural sector; - Development of new tourist products/services with clear cross-border identity; - Development of business information strategies, services and supporting activities (such

as data bases, internet sites) addressed to the entrepreneurs active in the eligible area; - Development of consultancy services in business start up, business planning, technology

transfer, patents, certifications, legal affairs, finances and marketing strategies (e.g. new products, labelling and quality);

- Development of appropriate and sustainable forms of tourism and environment-friendly agriculture;

- Identification and development of alternative economic activities (ecological production, traditional crafts);

- Establishment and maintenance of mutual traineeship programmes through training sessions, conferences and seminars and development of joint curricula and training standards;

- Improvement of regional labour skills and vocational qualification services relevant to the economic development of the border region;

- Development of small scale infrastructure for modernising and outfitting marketplaces, premises and facilities for setting up small businesses;

- Networking of SMEs and establishment of cross-border clusters; - Development of small scale infrastructure improving the accessibility to the area; - Improvement of public utilities supporting the tourism sector; - Transfer of know-how and integration of institutional/capacity building mainly on social

and economic issues; - Development of joint strategies, cross-border transport plans, studies and concepts

serving as the basis for large investments. Potential beneficiaries of this measure could be: - local governments and their institutions; - associations of municipalities; - development agencies; - local business support organisations; - cultural associations; - non-governmental organisations; - public and private bodies supporting the work force; - SMEs; - vocational and technical training institutions.

The measure will be implemented through grant schemes.

3.1.2 Measure I.2

Environmental development initiatives mainly for protection, promotion and management of natural resources.

Page 31 of 55

Rationale: As underlined in the analysis, the eligible are is well-known for its rich, diverse and well-preserved nature that is not yet sufficiently exploited. The aim of this measure is to sustain joint interventions for the protection of natural resources and the improvement of the environment with a view to ensure sustainable development of the entire eligible area. These activities will be closely linked with the development of tourism as an alternative economic activity. A non-exhaustive list of tentative eligible actions is the following: - Joint research projects, studies, concepts and awareness raising/training activities

related to the protection, promotion and management of natural resources; - Education and transfer of know-how in environment protection; - Conservation and enhancement of natural and cultural heritage; - Improvement of the joint management and supporting facilities in water and waste

management; - Development of pollution prevention plans for the border area and effective monitoring

systems for air, water and soil quality; - Develop and increase capacities for the prevention of potential natural disasters

(including fires and floods); - Design and implementation of the policy for the utilization of renewable energy sources. Potential beneficiaries of this measure could be: - national authorities/institutions with operations in the eligible area; - local governments and their institutions; - development agencies; - tourism and cultural organisations/associations; - organisations (including NGOs) for nature protection; - public bodies responsible for water management; - fire/emergency services; - SMEs. The measure will be implemented through grant schemes. During the implementation, special care will be taken to ensure complementarity and exclude overlaps with other EU co financed programmes.

3.1.3 Measure I.3

Social cohesion and cultural exchange through institutional and people-to-people interventions.

Rationale: The goal of this measure is to get communities closer through long term partnerships and networking between civil society organizations, professional associations, local authorities and institutions like schools, faculties and research centres. The measure will contribute to the creation of contacts at different levels and sectors of activities encouraging the cross-border cooperation in the fields of economy, culture, education and sports. The following list is just a summary tentatively indicating the main eligible activities:

Page 32 of 55

- actions supporting the social and cultural flow of information and communication

between the communities in the eligible area; - cultural exchanges among young people, artist, sports activities, folk events and similar

actions; - education and training initiatives, including a wide range of actions, such as promoting

the mobility of citizens, academic networks innovative education projects, promoting life-long learning for all citizens as well;

- promotional events in social and economic fields like fairs and exhibitions; - other actions promoting social inclusion, including exchange of information, joint studies,

and researches. Potential beneficiaries of this measure could be: - local governments and their institutions; - development agencies; - local business support organisations; - cultural associations, - non-governmental organisations; - public and private entities supporting the work force; - schools; - colleges; - universities, including vocational and technical training institutions. The measure will be implemented through grant schemes. For all measures under Priority I, the detailed selection and award criteria for the award of grants will be laid down in the Call for proposals–Application Pack (Guidelines for applicants). It is foreseen that the calls for proposals, will be launched in the fourth quarter of 2008.

3.2 Priority II

Technical assistance to increase administrative capacity in the management and implementation of the CBC programme.

The three measures will be supported by a Technical Assistance component that will account for up to 10% of the financial allocation. The aim of the TA priority is to ensure efficient, effective and transparent management of the cross-border programme. Measure II.1 Programme administration, monitoring and evaluation Technical assistance will be used to support the work of the national Operating Structures (OSs) and of the Joint Monitoring Committee (JMC), ensuring the efficient management and implementation of the programme, participation in meetings related to the programme; as well as other optimal uses of resources. This will be achieved through the establishment and operation of a Joint Technical Secretariat (JTS) in Bosnia and Herzegovina and a JTS antenna in Montenegro (including staff remuneration costs, excluding of public officials). The JTS will be in charge of the day-to-day management of the programme and will be responsible to the OSs and the JMC. The JTS should, inter alia, draft the calls for proposals' Guidelines for applicants under the supervision of the Joint Monitoring Committee (JMC). An indicative list of eligible activities under this measure can include:

Page 33 of 55

• Support to Operating Structures, Joint Monitoring Committee, Joint Technical Secretariats

and any other structure (e.g. Steering Committee) involved in the management and implementation of the programme

• Establishment and functioning of Joint Technical Secretariat and its antenna, including staff remuneration costs (with the exclusion of salaries of public officials)

• Expenses for participation in different meetings related to the implementation of the programme

• Administrative and operational costs related to the implementation of the programme, including the costs of preparation and monitoring of the programme, appraisal and selection of operations, organisation of meetings of monitoring committee, etc.

• Assistance to potential beneficiaries in the preparation of project applications and to beneficiaries in project implementation and reporting

Measure II.2 Programme Information and Publicity The specific objective of this measure is to ensure programme awareness amongst national, regional and local communities and in general among the population in the programming area. It also supports awareness-raising activities at the country level in order to inform citizens in both countries about the programme. It might also cover, inter alia, the preparation, translation and dissemination of programme related information and publicity material, including a website; organisation of events; monitoring and evaluation of the programme. An indicative list of eligible activities under this measure can include: • Preparation, translation and dissemination of programme related information and publicity

material, including programme website • Organisation of public events (conferences, seminars, workshops, etc.) • Awareness raising and training for potential beneficiaries, including partner search forums Indicative timetable and amounts for the implementation of the measures: Measures of Priority II will be implemented through an individual direct grant agreement without call for proposals to be signed by each of the EC Delegations and the national authorities (CBC coordinators or Operating structures) in accordance with article 168.1.(c) of the Implementing Rules of the Financial Regulation. It is foreseen that the IPA grants will be awarded in the second quarter of 2008.

For the purpose of an efficient use of TA funds, a close coordination between national authorities (Operating Structures, CBC coordinators) of the participating countries is required. The same time-table will be envisaged for both countries in order to ensure compatibility of advice provided and sound coordination vis-à-vis project implementation.

3.3 Output and Results Indicators The criteria used for selecting the indicators are the following: - Relevance to the identified priorities and objectives; - Clarity of definition; - Easy collection and incorporation in the monitoring system; - Quantification according to the set targets and, where appropriate, established

baselines.

i.3.3.1 Indicators for priority level

Page 34 of 55

PPRRIIOORRIITTYY II:: TToo ssuuppppoorrtt tthhee ccrreeaattiioonn ooff aa ccoommmmoonn ssoocciiooeeccoonnoommiicc

eennvviirroonnmmeenntt ffoorr ppeeooppllee,, ccoommmmuunniittiieess aanndd eeccoonnoommiieess ooff tthhee bboorrddeerr aarreeaa..

Typology Indicator Target

Improvement of marketing potentials Results Qualitative

Increased tourist potential Results Qualitative

Increased participatory planning approach through defined joint development strategies and tools for economic development

Results Qualitative

Improved of SME opportunities and links Results Qualitative

Reinforced cross-border labour market Results Qualitative

Promote sustainable development of the border area to stimulate the economy and reduce the relative isolation

Improved public utilities Results Qualitative

Awareness raising in the field of environmental protection 4

Increased participatory planning approach through defined joint natural protection and valorisation strategies

Results 2 Projects

Improved facilities for water and waste management Results Qualitative

Improved accessibility to natural and cultural resources Results Qualitative

Support the establishment of joint actions and strategies aiming at protecting and valorising the environmental resources of the area

Improvement management of natural resources Results Qualitative

Increase of mutual understanding Results Qualitative

Increasing the rate of population participating in the activities Results 4%

Improved cross-border relations among institution and private actors Results Qualitative

Re-established cross border collaborations strengthening previously cross border economic and cultural contacts

Increased participatory planning approach Results Qualitative

Page 35 of 55

PPRRIIOORRIITTYY IIII:: Technical assistance to increase administrative capacity in

the management and implementation of the CBC programme.


Number informative tools activated Outputs 3

Number of information events realised Outputs 10 % of the population covered by the information campaign Outputs 55%

Information campaign

Number of materials published / disseminated (brochures, CDs, posters, PR materials) Outputs N/A

Number of joint structures established Outputs 3

Number of people trained Outputs 10

Number of local municipalities involved Outputs 90%

Web site Outputs 1

Number of projects managed Outputs 53

Cross-border management

Success rate of the projects approved Outputs 75%

Page 36 of 55

ii.3.3.2 Output indicators at measure level MMeeaassuurree II..11:: CCrroossss bboorrddeerr eeccoonnoommiicc ddeevveellooppmmeenntt iinniittiiaattiivveess wwiitthh aann

eemmpphhaassiiss oonn ttoouurriissmm aanndd rruurraall ddeevveellooppmmeenntt rreellaatteedd aarreeaass..


Number of networks set Outputs 4

Number of institutions and bodies involved Outputs 20

Number of events organised Outputs 12

Setting up of cross border of business and institutional networks and know how transfer mechanisms

SMEs reached by the initiatives Outputs 20%

Number of interventions Outputs 3

Number of private and public actors involved Outputs 24

Joint research, studies, plans and policies for the CB economic development including studies and concepts serving as the basis for large investments

Number of SMEs targeted by the interventions Outputs 120


Number of SMEs benefiting from the interventions Outputs 170 Number of new business initiatives realised Outputs 25 Number of business associations involved 9

% of additional investments attracted Outputs 3%

Development of new economic cooperation activities

Percentage of SMEs concerned Outputs 5%

Number of interventions supporting business activities and the accessibility of the area Outputs 3

Number of SMEs benefiting from the interventions Outputs 220

Number of municipalities involved Outputs 15

Improvement of facilities for joint actions

% of additional investments attracted Outputs 3%

Number of trainings Outputs 4

Number of employed and unemployed people trained Outputs 90 Training and vocational

training interventions Number of partners and business providers involved Outputs 10

Page 37 of 55

MMeeaassuurree II..22:: EEnnvviirroonnmmeennttaall ddeevveellooppmmeenntt iinniittiiaattiivveess mmaaiinnllyy ffoorr pprrootteeccttiioonn,,

pprroommoottiioonn aanndd mmaannaaggeemmeenntt ooff nnaattuurraall rreessoouurrcceess..


Number of interventions in the field of nature protection Outputs 4


Number of other actors involved Outputs 15

Joint research, studies, plans and policies for the protection, promotion and management of natural resources

Percentage of the area covered Outputs 40%


Number of institutions involved Outputs 12 Know how transfer and training activity

Number of people trained Outputs 80


Percentage of the area covered Outputs 30%

Improvement of joint facilities for water and waste management and enhancing the accessibility of natural and cultural resources

Population concerned Outputs 40%



Development of joint environmental management systems

Number of partners involved Outputs 5

MMeeaassuurree II..33:: SSoocciiaall aanndd tteerrrriittoorriiaall ccoohheessiioonn aanndd ccuullttuurraall eexxcchhaannggee tthhrroouugghh

iinnssttiittuuttiioonnaall aanndd ppeeooppllee--ttoo--ppeeooppllee iinntteerrvveennttiioonnss..


Number of projects activated Outputs 12

Number of events organised Outputs 6

Number of people involved Outputs 5000

Number of beneficiaries involved Outputs 30

Number of partnerships developed Outputs 5 Number of new business initiatives launched Outputs 2

Social, cultural and economic initiatives

Number of new project ideas generated Outputs 7 Number of courses and other initiatives organised Outputs 7

Number of people trained Outputs 400 Education and training initiatives

Number of institutions involved Outputs 14

Page 38 of 55

4. Coherence with other programmes

4.1 BiH Programmes This Programme is in line with the main goals and areas of intervention of the following Bosnia and Herzegovina national strategic documents: - Integration Strategy of BiH is the main document that the entire EU accession process

will be based on. It indicates basic aims and avenues of action, and encompasses a set of general guidelines for work of state and entity institutions and other stakeholders involved in the integration process.

- IPA Multi-annual Indicative Planning Document (MIPD) is the key strategic document

for EC assistance to BiH under IPA, with the main strategic objective to support the country in the transition from potential candidate to a candidate country and through to membership of the EU. The main priority and the objective of the cross-border programme are in correspondence to the priorities and objectives defined under the CBC component of the MIPD 2007-2009.

- Strategy for Implementation of the Decentralised Implementation System in BiH –

The objective of the present paper is to assist DEI’s Aid Coordination Division and the Ministry of Finance and Treasury to develop Roadmap for implementation of the Decentralised Implementation System (DIS) in BiH.

- Medium-term Development Strategy (MTDS) (previously called Poverty Reduction

Strategy Paper - PRSP) for Bosnia and Herzegovina is the medium term document that covers period 2004 – 2007. The strategy is based on accomplishing three ultimate strategic goals: to create conditions for sustainable development, to reduce poverty and speed up the process of EU integrations in Bosnia. This strategy paper also contains a number of sectoral priorities and its corresponding measures. MTDS will be substituted by the NDP (National Development plan), expected to be in place by the beginning of 2008.

- National Environmental Action Plan (NEAP), which was prepared with support of the

World Bank in both entities in parallel, represents a strategic document for planning sustainable development. It includes list of priority projects in the field environment. In addition, many Local Environmental Action Plans are already in place.

Page 39 of 55

4.2 Montenegrin Programmes As the newest independent state among the Western Balkan countries, Montenegro is currently preparing national programmes, strategies and master plans for economic development, environmental protection, spatial planning and development of tourism. This cross-border programme is coherent with the following documents: - National Strategy of Sustainable Development of Montenegro, designed to meet the

challenges of environmental protection and management of natural resources, economic and social development;

- The Economic Reform Agenda, setting out a series of interconnected actions that will transform the Montenegrin economy;

- Master Plans for wastewater and solid waste management, providing direction for the efficient control and reduction of the existing water pollution;

- The Master Plan for the development of tourism, the main strategic document for tourism as a main development vehicle of the national economy;

- The Spatial Plan of the Republic of Montenegro, currently in draft version, that defines the use of space for the purpose of planned development up to 2020.

In addition, it will be duly consistent with the up-coming roadmap towards Implementation of the Decentralised Implementation System and its implementation.

Page 40 of 55

PROPOSED PRIORITY AND MEASURES

OOvveerraallll OObbjjeeccttiivvee To foster the joint sustainable development of the cross-border area, its economic, cultural,

natural and human, resources and potentials by strengthening the capacities of human resources and joint institutional networks among local communities and local private and public actors.

SSppeecciiffiicc OObbjjeeccttiivvee 11 To support the establishment of joint

actions and strategies aiming at protecting and valorising the

environmental resources of the area.

Technical assistance to increase administrative capacity in the management and implementation of the CBC programme

SSppeecciiffiicc OObbjjeeccttiivvee 22 To promote sustainable development of the border area so as to stimulate the economy and reduce the relative

isolation.

SSppeecciiffiicc OObbjjeeccttiivvee 33 To re-establish cross border

cooperation strengthening previous cross border economic and cultural

contacts.

IPA

R

egul

atio

n C

BC

Bos

nia

and

Her

zego

vina

and

M

onte

negr

o

Promoting good neighbourly relations, fostering stability, security and prosperity in the mutual interest of all countries concerned, and encouraging their harmonious, balanced and sustainable development

Promoting sustainable economic and social

development in the border areas

Address common challenges in fields such as environment, natural and cultural heritage,

public health and prevention and fight against organised crime

Ensuring efficient and

secure borders

Promoting joint small scale actions involving local actors from the border

regions

MMeeaassuurree II..22 Environmental development

initiatives mainly for protection, promotion and management of

natural resources.

MMeeaassuurree II..33 Social cohesion and cultural

exchange through institutional and people-to-people interventions.

PPRRIIOORRIITTYY IIII

MMeeaassuurree II..11 Cross-border economic development

initiatives with an emphasis on tourism and rural development related

areas..

To support the creation of a common socioeconomic environment for people, communities and economies of the border area

PPRRIIOORRIITTYY II

Page 41 of 55


1. Financing plan for cross-border programme 2007 – 2009 Bosnia and Herzegovina Montenegro

PRIORITIES Community funding

National funding

Total funding Rate of Community contribution

Community funding

National funding

Total funding


(a) (b) (c) = (a)+(b) (d) = (a)/(c) (a) (b) (c) = (a)+(b) (d) = (a)/(c) 1 -Economic & Social Development 450,000 79,411 529,411 85% 540,000 95,294 635,294 85% 2 -Technical Assistance 50,000 8,824 58,824 85% 60,000 10,588 70,588 85% 20

07

TOTAL 500,000 88,235 588,235 85.00% 600,000 105,882 705,882 85.00%

1 -Economic & Social Development 450,000 79,411 529,411 85% 540,000 95,294 635,294 85% 2 -Technical Assistance 50,000 8,824 58,824 85% 60,000 10,588 70,588 85% 20

08

TOTAL 500,000 88,235 588,235 85.00% 600,000 105,882 705,882 85.00%

1 -Economic & Social Development 450,000 79,411 529,411 85% 540,000 95,294 635,294 85% 2 -Technical Assistance 50,000 8,824 58,824 85% 60,000 10,588 70,588 85% 20

09

TOTAL 500,000 88,235 588,235 85.00% 600,000 105,882 705,882 85.00%

Grand total 1,500,000 264,705 1,764,705 1,800,000 317,646 2,117,646

The Community contribution has been calculated in relation to the eligible expenditure, which is based on the total expenditure, as agreed by the participating countries and laid down in the cross–border programme. The Community contribution at the level of priority axis shall not exceed the ceiling of 85% of the eligible expenditure. The co-financing under priority axis I will be provided by the final grant beneficiaries and it can be from public and private funds. Final grant beneficiaries should contribute with a minimum of 15% of the total eligible cost of the project, both for investment and institution building projects. The co-financing under priority axis II will be provided by the national authorities.

Page 42 of 55

SECTION IV. MPLEMENTING PROVISIONS The implementing provisions for the Bosnia and Herzegovina – Montenegro IPA Cross–border programme are in accordance with the Commission Regulation (EC) No 718/2007 (hereinafter referred to as the 'IPA Implementing Regulation'), implementing Council Regulation (EC) No 1085/2006 establishing an instrument for pre–accession assistance. In line with Article 10(2) IPA Implementing Regulation, both countries will be managing the programme according to the centralised management model, where the respective Delegations of the European Commission will be the Contracting Authorities.

1. Programme Structures

1.1 Organisational structures at national level In accordance with Art. 32(2) IPA Implementing Regulation, in each country the National IPA Co-ordinators (NIPAC) has designated an IPA–Component II Co-ordinator:

In Bosnia and Herzegovina: Directorate for European Integration.

In Montenegro: Secretariat for European Integration.

The IPA–Component II Co–ordinator is also the main liaison between the each beneficiary country and the European Commission for all issues related to participation of the respective country in all programmes under the IPA Cross–border Co–operation Component.

1.2 Operating Structures at Programme level The implementation of the cross-border programme will operate through an Operating Structure (OS) (Art 139 IPA Implementing Regulation) that will be appointed in each country. These are:

Bosnia and Herzegovina Republic of Montenegro Directorate for European Integration Council of Ministers Trg BiH 1 71000 Sarajevo

Secretariat for European Integration Stanka Dragojevica 2 81000 Podgorica

The OS of each country will co-operate closely in the programming and implementation of the relevant cross-border programmes establishing common co-ordination mechanisms. The OS are responsible for the implementation of the programme in their respective countries.

The Operating Structures are, inter–alia, responsible for: - Preparing the cross-border programme in accordance with Article 91 IPA

Implementing Regulation; - Preparing the programme amendments to be discussed in the Joint Monitoring

Committee (JMC); - Nominate their representatives to the JMC; - Setting up of the Joint Technical Secretariat (Art. 139.4 IPA Implementing Regulation)

and guiding its work; - Preparing and implementing the strategic decisions of the JMC, where necessary with

the support of the Joint Technical Secretariat; - Reporting to the respective NIPAC/IPA–Component II co-ordinators on all aspects

concerning the implementation of the programme;

Page 43 of 55

- Establish a system, assisted by the JTS, for gathering reliable information on the programme’s implementation and provide data to the JMC, the IPA–Component II coordinator and the Commission;

- Ensuring the quality of the implementation of the cross-border programme together with the Joint Monitoring Committee;

- Ensuring that grant beneficiaries make adequate provisions for project progress and financial reporting (monitoring) and sound financial management (control);

- Sending to the Commission and the respective national IPA co-ordinators the annual report and the final report on the implementation of the cross-border programme after examination by the JMC;

- Organising information and publicity-actions with a view to awareness raising of the opportunities provided by the Cross–border Programme, or mandating the JTS to support these or to carry them out;

- Carry out monitoring – where necessary with the support of the Joint Technical Secretariat – by reference to the indicators referred to in Article 94(1)(d) IPA Implementing Regulation;

1.3 Contracting Authorities In both countries the European Commission will be the Contracting Authority (CA)

Bosnia and Herzegovina Republic of Montenegro Delegation of the European Commission to Bosnia and Herzegovina Dubrovacka 6 71000 Sarajevo Tel: +387 33 254 731 Fax: +387 33 666 037

Delegation of the European Commission to Montenegro Podgorica

*Delegation of the European Commission to Montenegro which is expected to be established till end of 2007. In both countries, in line with Article 140(1) of the IPA Implementing Regulation, the European Commission retains overall responsibility for ex ante evaluation on calls for proposal and for awarding grants, tendering, contracting and payment functions. The Contracting Authorities’ responsibilities are, inter alia, the following: - Approving calls for proposals documentation; - Approving composition of joint Steering committees; - Approving the evaluation reports and list of projects; - Sitting in the joint monitoring committee in an advisory capacity; - Signing contracts with grant beneficiaries, including budget revisions (with support

provided as appropriate by OSs and JTS);

Page 44 of 55

1.4 Joint Monitoring Committee Within three months after the entry into force of the first financing agreement relating to the programme, the beneficiary countries will establish the Joint Monitoring Committee under Article 142 of the IPA Implementing Regulation.

The JMC is the cross-border programme’s decision making authority, and is made up of representatives at national, regional and local level of the beneficiary countries, including representatives of the OSs, and of socio–economic stakeholders in the eligible area. The European Commission shall participate in the work of the JMC in an advisory capacity.

The JMC shall meet at least twice a year, at the initiative of the participating countries or of the Commission and is chaired by a representative of one of the participating countries on a rotating basis.

At its first meeting, the joint monitoring committee shall draw up its rules of procedure, and adopt them in order to exercise its missions pursuant to the IPA Implementing Regulation.

The responsibilities of the Joint Monitoring Committee are, inter alia, as follows: - Oversees the programming and effective implementation of the Programme; - Considers and approve the criteria for selecting the operations financed by the cross-

border programme and approve any revision of those criteria in accordance with programming needs;

- It shall periodically review progress made towards achieving the specific (and quantified) objectives of the programme on the basis of documents submitted by the OSs;

- It shall examine the results of implementation, particularly achievement of the targets set for each priority axis and the evaluations referred to in Article 57(4) and Article 141 IPA Implementing Regulation;

- It shall examine the annual and final implementation reports prior to their transmission, by the OS, to the respective NIPAC and to the Commission (Art 144 IPA Implementing Regulation);

- It shall be responsible for selecting operations. To this aim, as appropriate (and on a case–by–case basis), it may delegate this function to a Steering Committee (to perform the role of an evaluation committee) whose member should be designated by the OSs. The composition of the Steering Committee shall be endorsed by EC Delegation;

- It may propose any revision or examination of the cross-border programme likely to make possible the attainment of the objectives referred to in Article 86(2) IPA Implementing Regulation or to improve its management, including its financial management;

- It shall consider and approve any proposal to amend the content of the cross-border programme;

- It shall approve the framework for the JTS tasks;

Page 45 of 55

1.5 Joint Technical Secretariat According to Article 139(4) of the IPA Implementing Regulation, the OS shall set up a Joint Technical Secretariat (JTS) to assist the JMC and the OSs in carrying out their responsibilities. Job descriptions of the JTS members, as well as detailed Rules of Procedures for JTS will be developed conjunctly by the OS.

JTS is jointly managed by both OSs.

The costs of the JTS and its antenna are co-financed under the programme’s Technical Assistance budget provided they relate to tasks eligible for co-financing according to EU rules.

The JTS is the administrative body of the programme responsible for it’s the day-to-day management and for administrative it’s arrangements.

The JTS is located in Sarajevo, Bosnia and Herzegovina and will have an Antenna in Niksic, Montenegro. The JTS will consist of employees from both sides of the border thus providing different, versatile, language skills, and specific/targeted background knowledge. The staff should be contracted by the respective OS.

Responsibilities of the JTS and its antenna: The JTS is the administrative body of the programme responsible for its day-to-day management. It will assist the JMC and the OSs in programme implementation. It will be responsible, inter alia, for the following tasks: - Perform secretariat function for the Operating Structures and the JMC, including the

preparation and mailing of documentation for meetings and the meeting minutes (in two or more languages if required);

- Set up, regular maintenance and updating of the monitoring system (data input at programme and project level);

- Prepare and make available all documents necessary for project implementation (general information at programme level, general information at project level, guidelines, criteria, application for collecting project ideas, application pack -guidelines, criteria for project selection, eligibility, reporting forms, contracts);

- Run info-campaigns, trainings, help-lines and web-based Q&A in order to support potential applicants in the preparation of project applications;

- It shall assist potential beneficiaries in partner research and project definition; - It shall manage the Call for Proposals process, including receiving and registering

project applications, carrying out the initial assessment (e.g. examination of the application documents for completeness, and meeting eligibility criteria) and preparing documentation for the evaluation process;

- Make sure that all the relevant documentation necessary for contracting is available to the EC Delegations on time;

- It shall prepare standardized forms for project application, assessment, contracting, implementation, monitoring and reporting based as much as possible on templates and models included in the PRAG;

- It will organise and manage an ad-hoc data base of the programme, on the basis of the information directly collected during the call for proposal process and those transferred regularly by the OSs;

- carry out joint information and publicity activities under the guidance of the JMC and OSs, including setting up and maintaining an official programme website;

- Prepare, conduct and report on monitoring visits projects; - Provide inputs to annual and final reports on the cross-border programme;

Page 46 of 55

- It will plan its activities according to a work plan annually approved by the JMC;

1.6 Programme Beneficiaries

Definition of lead beneficiaries and other beneficiaries According to Article 96(3) of the IPA Implementing Regulation, if there are several final beneficiaries of an operation in each participating country, they shall appoint a lead beneficiary among themselves prior to the submission of the proposal for an operation. The lead beneficiary shall assume the responsibilities set out below regarding the implementation of the operation. Responsibilities of Lead Beneficiaries and other Beneficiaries

Responsibilities of lead beneficiaries According to the provisions of Article 96(3) of the IPA Implementing Regulation, the lead beneficiary shall assume the following responsibilities for the part of the operation taking place in the respective country :

• It shall lay down the arrangements for its relations with the final beneficiaries participating in the part of the operation taking place in the respective country in an agreement comprising, inter alia, provisions guaranteeing the sound financial management of the funds allocated to the operation, including the arrangements for recovering amounts unduly paid;

• It shall be responsible for ensuring the implementation of the part of operation taking place in the respective country;

• It shall be responsible for transferring the Community contribution to the final beneficiaries participating in the part of operation taking place in the respective country;

• It shall ensure that the expenditure presented by the final beneficiaries participating in the part of operation taking place in the respective country has been paid for the purpose of implementing the operation and corresponds to the activities agreed between the final beneficiaries participating in the operation.

The lead beneficiaries from the participating countries shall ensure a close co-ordination among them in the implementation of the operation.

Responsibilities of other beneficiaries Each beneficiary participating in the operation shall: - Participate in the operation; - Be responsible for ensuring the implementation of the operations under its

responsibility according to the project plan and the agreement signed with the lead beneficiary;

- Co-operate with the other partner beneficiaries in the implementation of the operation, the reporting for monitoring;

- Provide the information requested for audit by the audit bodies responsible for it; - Assume responsibility in the event of any irregularity in the expenditure which was

declared, including eventual repayment to the Commission; - Be responsible for information and communication measures for the public.

Functional Lead Partner

Page 47 of 55

In case of joint projects (where Lead Beneficiaries from both sides are participating and are separately contracted by the Contracting Authorities of BiH and of MNE) the 2 Lead Beneficiaries shall appoint among themselves a Functional Lead Partner prior to the submission of the project proposal.


- Responsible for the overall coordination of the project activities on both side of the border;

- Responsible for organising joint meetings of project partners; - Responsible for reporting to the JTS on the overall progress of the joint project.

Page 48 of 55

2. Implementing Rules

2.1 Basic Implementation Rules This Cross-border Programme shall finance joint operations which have been jointly selected by the participating countries through a single call for proposals covering the whole eligible area.

Operations selected shall include final beneficiaries from both countries which shall co–operate in at least one of the following ways: joint development, joint implementation, joint staffing and joint financing (Art. 95 IPA Implementing regulation).

The JMC is responsible for selecting the projects.

The Contracting Authority is responsible for issuing the grant contracts as well as ex-ante control of the grant award process.

2.2 Call for proposal Grant award procedures shall be compliant with provisions of the IPA Implementing Regulation (e.g. Articles 95, 96, 140, 145, etc.) Where appropriate, PRAG procedures and standard templates and models should be followed unless the provisions of the IPA Implementing Regulation and/or the joint nature of calls require adaptations.

a) Preparation of the Application Pack

1. The JTS, under the supervision of the JMC, drafts the single Call for proposals, the Guidelines for applicants and the Application form and other documents related to the implementation of the grant schemes, explaining the rules regarding eligibility of applicants and partners, the types of actions and costs, which are eligible for financing and the evaluation criteria, following as close as possible the formats foreseen in the PRAG;

2. The Application Form should cover both parts of the project (on Bosnia and Herzegovina/Montenegro sides of the border, i.e. joint application), but with clear separation of the activities and costs on each side of the border. The elements contained in the Application Pack (eligibility and evaluation criteria, etc.) must be fully consistent with the relevant Financing Agreement;

3. Once approved by the JMC, the respective OS submit the Call for proposals, the Guidelines for applicants and its annexes to the respective EC Delegation for endorsement;

b) Publication of the single Call for Proposals

4. When launching the Call for Proposals, the OS, with the assistance of the JTS, take all appropriate measures to ensure that the nationally and regionally publicised call for proposals reaches the target groups in line with the requirements of the Practical Guide. The Application pack is made available on the programme website and the websites of the EC Delegations (Contracting Authority) and in paper copy ;

5. The JTS is responsible for information campaign and answering questions of potential applicants. JTS provides advice to potential project applicants in understanding and formulating correct application forms;

6. Q&As should be available on both the Programme and ECDs websites.

Page 49 of 55

2.3 Selection of projects following a call for proposals As provided by the IPA Implementing Regulation, the submitted project proposals will undergo a joint selection process. The project evaluation should follow the PRAG rules (Chapter 6.4.) as adapted by the provisions of the IPA Implementing Regulation (e.g. Article 140 on the role of the Commission in the selection of operations)3. A joint Steering Committee, designated by the JMC, will evaluate projects against the criteria set in the Application Pack and will establish a ranking list according to PRAG. On that basis, the Joint Monitoring Committee will then bring the final decision on the projects to be recommended for financing to the Contracting Authorities (EC Delegations in Bosnia and Herzegovina and in Montenegro). The main steps of the procedure should be as follows: - Incoming project proposals are collected and registered by the JTS; - The JMC is responsible for evaluating project proposals according to the eligibility

criteria. However, when deemed necessary, it can designate a Joint Steering Committee for the assessment of administrative compliance, eligibility and assessment of technical and financial quality of proposals;

- Members of the Joint Steering Committee are designated exclusively on the basis of technical and professional expertise in the relevant area. The EC Delegations endorse the composition the Joint Steering Committee. An observer designated by the EC Delegation (the contracting authority) may participate in its proceedings;

- Both OS may propose the same number of external assessors to be financed from the respective TA allocations;

- The Steering Committee assesses the projects against the conditions and criteria established in the Call for proposal–Application Pack and according to PRAG procedures;

- The JMC receives from the Steering Committee the Evaluation Report and the ranking list of projects and votes on accepting the proposed ranking list. The members of the Steering Committee are present at the JMC meeting to present the evaluation process. The JMC has the possibility to:

o Accept the Evaluation Report and recommend the contracting authorities to contract the projects selected;

o Request one round of re-examination of the project proposals if a qualified majority of its voting members vote for such a process and under the condition that there is a clearly stated technical reason affecting the quality of the Evaluation Report i.e. it is not clear how the projects were assessed and ranked;

o Reject the Evaluation Report and the list of project, if there is a justified reason to suspect the objectivity or the qualifications of the Steering Committee;

o Under no circumstances is the JMC entitled to change the Steering Committee’s scores or recommendations and must not alter the evaluation grids completed by the evaluators;

- EC Delegations (Contracting Authorities) approve the evaluation report on the selection process and the final list of grants to be awarded. If required the EC Delegations may request clarifications from the JMC;

- The JTS notifies each applicant in writing of the result of the selection process; - EC Delegations in each country issue the grant contract to the respective lead

beneficiary of each selected project.

3 IPA Implementing Regulation for Component II provides, inter alia, a certain degree of decentralisation in the evaluation and

selection process, namely in beneficiary countries where IPA funds are managed under a centralised approach (e.g. where the evaluation committee is nominated by the national authorities sitting in the JMC, not by the Commission i.e. the Contracting Authority).

Page 50 of 55

3. Information, Publicity and Consulting The beneficiary countries and the national IPA Co-ordinators shall provide information on and publicise the programme and operations with the assistance of the JTS, as appropriate.

In accordance with Article 90 of Regulation (EC, Euratom) No 1605/2002, the Commission shall publish the relevant information on the contracts. The Commission shall publish the results of the tender procedure in the Official Journal of the European Union, on the EuropeAid website and in any other appropriate media, in accordance with the applicable contract procedures for Community external actions.

The information and publicity measures are presented in the form of a communication plan whereby the implementation shall be the responsibility of the respective OSs. Such detailed information and publicity plan will be presented in a structured form to the JMC by the JTS (see below), clearly setting out the aims and target groups, the content and strategy of the measures and an indicative budget funded under the Technical Assistance budget of the CBC programme.

The particular measures of information and publicity will focus mainly on: - Ensuring a wider diffusion of the cross–border programme (translated in the local

language) among the stakeholders and potential beneficiaries; - Providing publicity materials, organising seminars and conferences, media briefings

and operating a programme web site to raise awareness, interest and to encourage participation;

- Providing the best possible publicity for the Calls for proposal; - Publishing the list of the final beneficiaries.

The JTS in co-operation with the JMC will develop an overall strategy for the information and publicity for the implementation of the programme and to develop an overall system for the public relations related to the programme: - To develop and maintain the internet site; - To maintain necessary public relations and media communications; - To develop information and publicity materials; - To organize joint project development seminars and conferences; - To involve representatives of the European Commission in the information and

publicity; - To appoint a person responsible for the information and publicity.

Page 51 of 55

4. Financial Management Under centralised management, the European Commission will handle all tendering, contracting and payment functions, on the basis of documents provided by beneficiaries, and in accordance with the contracting and procurement rules set out in the EC’s Practical Guide to Contracting (PRAG).

The JMC will ensure that reliable computerised accounting, monitoring and financial reporting are in place, that will provide an adequate audit trail.

The European Commission and national auditing authorities will have power of audit over the Cross-border Programme.

5. Monitoring and Evaluation

5.1 Monitoring on Project Level

5.1.1. Contractual obligations Lead Beneficiaries send narrative and financial Interim and Final Reports to their respective Contracting Authorities according to the standard terms of their grant contracts.

5.1.2. Cross-border project level reporting In addition, where relevant, the Functional Lead Partner of the project submits Project Progress Reports to the JTS, giving an overview of the project activities and achievements on both sides of the border and their coordination according to the indicators defined in the joint project proposal.

5.2 Programme Monitoring Based on the project progress reports collected, the JTS drafts the Joint Implementation Report and submit it for the examination of the JMC.

The Operating Structures of the beneficiary countries shall send the Commission and the respective national IPA Co-ordinators an annual report and a final report on the implementation of the cross-border programme after examination by the JMC.



The content of reports shall be in line with the requirements of Article 144 of the IPA Implementing Regulations.

5.3 Programme Evaluation Evaluations shall take place in compliance with Article 141 of the IPA Implementing Regulation. The evaluation shall aim to improve the quality, effectiveness and consistency of the assistance from the Community funds and the strategy and implementation of cross-border programmes while taking account the objective of sustainable development and the relevant Community legislation concerning environmental impact. An ex-ante evaluation has not been carried out in line with the provisions of Article 141 in the light of the proportionality principle.

Page 52 of 55

During the programming period, participating countries and/or the European Commission shall carry out evaluations linked to the monitoring of the cross-border programme in particular where that monitoring reveals a significant departure from the goals initially set or where proposals are made for the revision of cross-border programme. The results shall be sent to the JMC for the cross-border programme and to the Commission. Evaluations shall be carried out by experts or bodies, internal or external. The results shall be published according to the applicable rules on access to documents. Evaluation shall be financed from the technical assistance budget of the programme.

Page 53 of 55

ANNEX B FRAMEWORK AGREEMENT BETWEEN THE COMMISSION OF THE EUROPEAN COMMUNITIES AND THE GOVERNMENT OFMONTENEGRO, DATED 15/11/2007 ON THE RULES FOR CO-OPERATION CONCERNING EC-FINANCIAL ASSISTANCE TO MONTENEGRO IN THE FRAMEWORK OF THE IMPLEMENTATION OF THE ASSISTANCE UNDER THE INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA)

Page 54 of 55

ANNEX C REPORTING













Page 55 of 55

Instrument for Pre-Accession (IPA)

Cross-Border Programme Croatia – Montenegro

2007-2013

May, 2007

PROGRAM CONTENT

SECTION I.

INTRODUCTION AND SUMMARY................................................ 5

1.1 Introduction to the Cross-border Programme .................................... 5 1.2 The Programming Area ............................................................... 5 1.3 Experience in Cross-border Cooperation.................................. 6 1.4 Lessons learnt ............................................................................. 7 1.5 Summary of Joint Programming Process ................................. 8 1.6 Summary of the proposed Programme Strategy .................... 10

SECTION II.

ANALYSES FOR CROSS-BORDER PROGRAMMES................ 12

2. Description of the Programming Area ................................................. 12 2.1 Eligible and Adjacent Area........................................................ 12 2.2 Description and Analyses of The Border Region ................... 13

2.2.1 History .............................................................................................. 13 2.2.2 Demography ..................................................................................... 13 2.2.3 Ethnic Minorities .............................................................................. 13 2.2.4 Geographical Description ............................................................... 13

2.2.4.1 Mediterranean ............................................................................................................14 2.2.5 Infrastructure ................................................................................... 14

2.2.5.1 Energy ..........................................................................................................................14 2.2.5.2 Transport .....................................................................................................................15 2.2.5.3 Seaports ......................................................................................................................15 2.2.5.4 Airports ........................................................................................................................16 2.2.5.5 Telecommunications ................................................................................................16 2.2.5.6 Public utilities (water supply, waste water management, waste management) 16

2.2.6 Economic Description ..................................................................... 17 2.2.6.1 GDP...............................................................................................................................17 2.2.6.2 Agricultural and Rural Development ....................................................................17 2.2.6.3 Industry........................................................................................................................18 2.2.6.4 SMEs.............................................................................................................................18 2.2.6.5 Services .......................................................................................................................18 2.2.6.6 Regional and local development ...........................................................................18 2.2.6.7 Tourism........................................................................................................................18

2.2.7 Human resources ............................................................................ 19 2.2.7.1 Education ....................................................................................................................19 2.2.7.2 Employed and unemployed ....................................................................................20 2.2.7.3 Research and development ....................................................................................20

2.2.8 Environment and Nature ................................................................. 20 2.2.9 Culture in the Eligible and Flexibility/adjacent Areas .................. 22 2.2.10 SWOT ANALYSIS ......................................................................... 23

SECTION III....................................................................................................

PROGRAMME STRATEGY......................................................... 24

3.1. Overall Objective ....................................................................... 24 3.2. Correspondence with EU Programmes and National Programmes ......25 3.3. Compliance with other Community Policies ........................... 28 3.4. Description of Specific Priority Axes and Measures .............. 29

Page 2 of 78

3.4.1. Priority Axis 1................................................................................... 29 3.4.1.1. Background and Justification ................................................................................29 3.4.1.2. Measures .....................................................................................................................30

3.4.2. Priority 2 ........................................................................................... 37 3.4.2.1. Background and Justification ................................................................................37 3.4.2.2. Measures .....................................................................................................................38

3.5. Summary of priorities and measures....................................... 40 3.6. Indicators ................................................................................... 41 3.7. Financing Plan ........................................................................... 42 3.8. Eligibility of Expenditure........................................................... 44

SECTION IV ...................................................................................................

IMPLEMENTING PROVISIONS................................................... 44

4.1. Programme Structures and Authorities................................... 45 4.1.1. Operating Structures (OS) in Beneficiary Countries .................... 45

4.1.1.1. Croatia..........................................................................................................................45 4.1.1.2. Montenegro.................................................................................................................46 4.1.1.3. Responsibilities of the Operating Structures.....................................................46

4.1.2. Joint Monitoring Committee (JMC) ................................................ 47 4.1.3. Joint Technical Secretariat (JTS) ................................................... 49 4.1.4. Role of the Commission.................................................................. 50

4.2. Procedures for programming, selection and awarding of funds...........50 4.2.1. Joint Strategic Projects/ (Operations outside calls for proposals)50 4.2.2. Calls for Proposals .......................................................................... 51 4.2.3. Selection of projects following a call for proposals..................... 51

4.3. Procedures for financing and control ...................................... 53 4.3.1. Financing decision and contracting .............................................. 53

4.3.1.1. Croatia..........................................................................................................................53 4.3.1.2. Montenegro.................................................................................................................53

4.3.2. National Co-financing...................................................................... 53 4.3.3. Financial management, payments and control............................. 53

4.4. Project Implementation ............................................................. 53 4.4.1. Project............................................................................................... 53 4.4.2. Project Partners and their roles in the joint project implementation........... 54

4.5. Monitoring and Evaluation........................................................ 55 4.5.1. Monitoring on Project Level ........................................................... 55

4.5.1.1. Contractual obligations ..................................................................................................55 4.5.1.2. Cross-border project level reporting...........................................................................55

4.5.2. Programme Monitoring ................................................................... 55 4.5.3. Programme Evaluation.................................................................... 55

4.6. Information and Publicity.......................................................... 56

ANNEX I JOINT PROGRAMMING COMMITTEE, JOINT DRAFTING TEAM, PARTNERSHIP GROUP AND INTER-MINISTERIAL WORKING GROUP MEMBERS OF THE CROSS-BORDER PROGRAMME CROATIA-MONTENEGRO.............. 57

ANNEX II BILATERAL AGREEMENTS ............................................... 61

ANNEX III SITUATION ANALYSIS - TABLES..................................... 63

ANNEX IV TENTATIVE TIME TABLE AND INDICATIVE AMOUNTS OF THE CALL FOR PROPOSALS IN 2007................................................................. 75

Page 3 of 78

Abbreviations CADSES Central Adriatic Danube South European Space CARDS Community Assistance for Reconstruction, Development and Stabilisation CBC Cross-border cooperation CFCU Central Finance and Contracting Unit CODEF Central Office for Development Strategy and Coordination of EU Funds (Croatia)EAR European Agency for Reconstruction EC European Commission ECD European Commission Delegation ERDF European Regional Development Fund EU European Union FLP Functional Lead Partner GDP Gross Domestic Product GfA Guidelines for applicants GNI Gross National Income GAV Gross Added Value HROP Human Resources Operational Programme (Croatia) Ha Hectares HE Hydroelectric Power Plant ICT Information, Communications Technology IMWG Inter-ministerial working group (in Croatia) IPA Instrument for Pre-accession IUCN International Union for the Conservation of Nature and Natural Resources JDT Joint Drafting Team JMC Joint Monitoring Committee JPC Joint Programming Committee JSC Joint Steering Committee JTS Joint Technical Secretariat MIFF Multi-annual indicative financial framework MSTTD Ministry of Sea, Tourism, Transport and Development (Croatia) NAO National Authorising Officer NGOs Non Government Organisations NIPAC National IPA Coordinator NLB National Lead Beneficiary NUTS Nomenclature of Territorial Units for Statistics OS Operating Structure Phare Poland and Hungary Assistance for the Reconstruction of the Economy PCB Poly-chloride Biphenyl PRAG Practical guide to contract procedures for EC external actions R&D Research and Development RCOP Regional Competitiveness Operational Programme (Croatia) ROP Regional Operational Programme SFRJ Socialist Federative Republic of Yugoslavia SMEs Small and Medium Sized Enterprises SWOT Strengths, Weaknesses, Opportunities and Threats TA Technical Assistance UNESCO United Nations Educational, Scientific and Cultural Organization UNWTO United Nations World Tourism Organisation

Page 4 of 78

SECTION I. INTRODUCTION AND SUMMARY 1.1 Introduction to the Cross-border Programme This document describes the cross-border programme between Croatia and Montenegro which will be implemented over the period 2007-2013. This strategic document is based on a joint planning effort by the Croatian and Montenegrin parties. The programme is supported by component II (cross-border cooperation) of the EU ‘Instrument for Pre-Accession’ (IPA), under which 2,7 M€ have been allocated for its first 3 years. In addition, slightly over 0.5 M€ will be provided by the partner countries, mostly from the programme’s beneficiaries in the border region. The programme target area is the area of the common Croatian-Montenegrin border. The units concerned are the territorial units on the NUTS III level in Croatia and municipalities in case of Montenegro. The main challenges of the cross-border area are the impact of globalization on regional economy, the introduction of new quality and legal standards as a part of EU accession process, the need to develop competitive economy based on knowledge and new technologies without which regions and business sector are not competitive against bigger markets, environmental challenges and challenges in relation to reestablishment of social, cultural and economical connections between two countries which were destroyed because of war in the nineties. This programme addresses the need to re-establish and strengthen cross-border connections with the aim of promoting good neighbourly relations and the sustainable economic and social development of the border areas. This is in line with the objectives of the cross-border cooperation component of IPA (Article 86, IPA Implementing Regulation). 1.2 The Programming Area The programming area is made up of ‘eligible’ and ‘adjacent’ regions as defined by Articles 88 and 97 of the IPA Implementing Regulation. These regions, which were decided in a meeting of the Joint Programming Committee (see Section 1.4) held on 30/03/07 in Kotor, are listed below. Table 1.1: Eligible and Adjacent areas for Croatia and Montenegro

Croatia (NUTS III, Counties) Montenegro (Municipalities) Eligible area (Art. 88)

Adjacent area (Art. 97)

Eligible area (Art. 88)

Adjacent area (Art. 97)

Dubrovnik-Neretva County

Split-Dalmatia County

Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje

Nikšić Podgorica Danilovgrad

The Croatian eligible region is Dubrovnik-Neretva County which has land and marine border with Montenegro. The Montenegrin eligible regions are coastal municipalities of Herceg Novi, Kotor, Tivat, Budva, Bar, Ulcinj and municipality of Cetinje, the only municipality which is not situated on the coast but is included as an eligible municipality due to its close connections and gravitation toward the costal area.

Page 5 of 78

In addition the programming area extends to 1 Croatian county and 3 Montenegrin municipalities (see Table above). The reason for the extending the programme to these areas is that they provide to the eligible area services of outmost importance (e.g. health, educational, R&D services, as well as transport services in terms of connecting the eligible area in the national and international traffic systems) and have similarities with the eligible area in terms of demographic, economic and geographic characteristics. Additional, its inclusion in the Programming area ensures reciprocity regarding the size of population and surface area of the Programming area on each side of the border. 1.3 Experience in Cross-border Cooperation Previous experience of Croatia with cross-border and trans-national projects and programmes:

Projects carried out: CARDS 2001 'Strategy and Capacity Building for Border Region Co-operation'

(Identification of future projects on borders with Serbia, Montenegro, Bosnia & Herzegovina)

CARDS 2002 'Strategy and Capacity Building for Regional Development' (Institutional arrangements for management of CBC)

CARDS 2003 'Local Border Regional Development' (Grant scheme with Slovenia) CARDS 2003 'Technical Assistance for Management of Neighbourhood

Programmes' (Support to JTS for trilateral programme Croatia-Slovenia-Hungary) Projects currently under implementation: CARDS 2004 'Institution and Capacity Building for CBC' (Support for MSTTD1) CARDS 2004 'Border Region Co-operation' (Grant scheme with Bosnia & Herzegovina,

Serbia and Montenegro) Phare 2005 'Cross-Border Cooperation between Croatia, Slovenia and Hungary'

(Trilateral grant scheme) PHARE 2005 'Adriatic Cross-Border Cooperation between Croatia and Italy, Phare

CBC / INTERREG III A - Adriatic New Neighbourhood Programme' (Grant scheme) Phare 2006 'Cross-Border Cooperation between Croatia, Slovenia and Hungary'

(Grant scheme) Phare 2006 ''Adriatic Cross-Border Cooperation between Croatia and Italy, Phare

CBC / INTERREG III A - Adriatic New Neighbourhood Programme' (Grant scheme) Transnational Programme CADSES (Grant scheme) – (Croatian partners were included

into 9 projects) Previous experience of Montenegro with cross-border and trans-national projects and programmes:

o CARDS 2006 INTERREG IIIA Adriatic New Neighbourhood Programme (on the last Call for proposal under Adriatic programme the Steering Committee in L’Aquila on 25 January 2007 selected 12 projects in which Montenegrin partners took part)

o Transnational Programme CADSES (Montenegrin partners were included in 2 projects).

Joint Montenegro - Croatian projects: CARDS 2006 INTERREG IIIA Adriatic New Neighbourhood Programme

(Montenegro took part in 9 projects with Croatian partners within this multilateral Programme on the last Call for proposal)

CADSES

1 MSTTD: Ministry of Sea, Tourism, Transport and Development

Page 6 of 78

(Under the 4th Call for project proposals the project partners from Croatia and Montenegro participated and cooperated in the project PlanCoast – Spatial Planning in Coastal zones)

Whilst both countries have experience of EU funded cross-border cooperation (CBC) programmes with other countries, they have limited experience of such cooperation with each other. Over the period 2004-6 only the grant scheme 'Cross-Border Regions Co-operation with Serbia, Montenegro, Bosnia & Herzegovina' (funded from the Croatian CARDS 2004 allocation) was targeting cooperation between candidate countries and potential candidate countries. This grant scheme is still under evaluation and the exact number of grants to be awarded is still unknown. On the governmental level cooperation between two countries is enhancing, especially since Montenegro became an independent country. Until now several bilateral agreements have been signed (see Annex II, Table 1.2.). 1.4 Lessons learnt Croatian stakeholders had their first opportunity to participate in cross-border projects in 2003 under the cross-border cooperation programmes with Hungary, Slovenia and Italy. Thanks to those initial cross-border projects, Croatian partners gained knowledge and skills from their cross-border partners, and built capacities to independently prepare and implement CBC projects in the future. With the introduction of the New Neighbourhood Partnerships 2004-2006, funding available for Croatian partners increased, and therefore interest of many local stakeholders along the borders with Hungary, Slovenia and Italy increased as well. In the first calls for proposals under NP Slo/Hu/Cro and NP Adriatic, a number of municipalities and civil society organisations successfully engaged in cross-border cooperation with their partners demonstrating their capacity to prepare and implement EU funded projects. In the second round of calls for proposals under the two NPs, an even larger number of project proposals were submitted. However, only a small number of applications were of satisfactory quality. One can therefore conclude that interest and capacities exist to a certain extent in areas bordering Member States. However, the latter need to be strengthened especially having in mind the increased level of resources available under IPA cross-border programmes. On the other hand, Croatian stakeholders on eastern borders (with non-MS) have very limited experience in cross-border cooperation. Croatian counties bordering BiH, Serbia and Montenegro had their first opportunity to apply for small CBC projects in the second half of 2006. It is evident from this experience that there is a general lack of knowledge and capacity for project preparation and management, and local stakeholders found it difficult to find partners on the other side of the border. In can be concluded that counties bordering MSs have more capacities for and knowledge of CBC than counties bordering non-MSs whose experience is still minimal or non-existing. Under existing programmes, project beneficiaries mostly dealt with small size projects. The relatively higher grant allocation, which will be available under IPA cross-border programmes will represent a real challenge for many local stakeholders whose financial capacity remain small. In terms of capacity for cross-border project preparation and management, the situation in Montenegro is more-less similar to described situation in Croatia. Moreover, until 2006 Montenegro was a part of Union of States with Serbia and therefore all experience regarding cross border cooperation was mainly related to programmes where these two countries

Page 7 of 78

participated as one country. First experience of Montenegro was participation within INTERREG IIIA Adriatic Programme. Through those initial cross border projects Montenegrin partners gained opportunity to start increasing awareness of cross border programmes and start achieving the knowledge and skills from their cross-border partners. However, there is still low capacity in project preparation of final beneficiaries (particularly in the northern part where almost no activities have been carried out). Having this in mind it is important to stress that specific trainings of potential applicants will be essential for this programme. Furthermore, it is important to mention that several municipalities and civil society organizations, located in south and central part, have been partners in implementation of projects within the programme. Although awareness was reached it is necessary to continue with creation of cross border structures, intensive communication and provision of information in order to provide establishment of operational and sustainable cross-border partnerships. Therefore, very important issue is providing trainings for writing and implementation of projects relating to programme. 1.5 Summary of Joint Programming Process The programming process started on 19th of February 2007 with the first preparatory meeting of the national institutions responsible for the IPA component II, during which the process of programme elaboration was discussed and agreed between the two sides. The process was lead by two bodies established for that purpose and with specific responsibilities: the Joint Programming Committee (JPC) and the Joint Drafting Team (JDT). The first meeting of the Joint Programming Committee (JPC) was held on 1st of March 2007 in Zagreb when that Committee and Joint Drafting Team were officially established (the composition of the JPC, JDT and partnership groups is given in Annex I.) and during which their rules of procedure, mandate and membership were adopted. The 2 joint structures so created have the following descriptions and tasks: The Joint Programming Committee (JPC) is a joint decision-making body established at the beginning of the programming process, whose mandate lasts from the beginning of the programming process until final submission of the JPD to the European Commission. JPC consists of representatives from national authorities in charge of IPA component II and regional authorities from the bordering regions eligible for participation in the Programme. Members are nominated and authorised by respective institutions and were approved at 1st PC Joint Programming Committee Main tasks of JPC:

• Confirm members of the JPC once they are nominated by each country • Agree on working procedures of the JPC (adoption of Rules of Procedure) • Discuss and reach agreement an all phases of programme preparation • Give clear guidelines to the Joint Drafting Team on the preparation of the programme

and its annexes • Ensure timely preparation of all phases of the programme and relevant annexes

The Joint Drafting Team (JDT) is a joint technical body established by the JPC at the beginning of the programming process whose mandate lasts from the beginning of the programming process until adoption of the final programme by the JPC. The JDT is composed of representatives from the national institutions in charge of cross-border cooperation, contracted TA and representatives from regional authorities. The core JDT work (see below) was done by the representatives of the national institutions and TA. The regional representatives were responsible for ensuring the accuracy of regional data and its analysis. Main tasks:

• Compile all relevant data for the elaboration of the programme

Page 8 of 78

• Draft texts for all chapters and relevant annexes in accordance with JPC guidelines • Organise and conduct a consultation process with all relevant institutions from the

national, regional and local levels • Improve texts according to a partnership consultation process (see below) and inputs

from the JPC • Timely preparation of all relevant documents (draft texts) for JPC meetings

In addition to the representatives from local, regional and national government included in the memberships of the JPC and JDT, arrangements were made to consult with a wider partnership drawn from the public, civil and private sector by means of regional workshops and questionnaire surveys. In Croatia such representation was secured through involvement of Inter-ministerial working group (the composition of the Inter-ministerial working group-IMWG is given in Annex I) and representatives from Dubrovnik-Neretva County. Representatives from the County were mainly members of its County partnership, body that was established through process of drafting Regional Operational Program for Dubrovnik-Neretva County, and in which all main sectors from the County level (public, civil, business) have been represented. On Montenegrin side representatives of all municipalities from the eligible area have been involved in the process as well as respective line ministries, NGOs and other relevant stakeholders who have given necessary inputs, and have estimated draft of the programme having in mind their own responsibilities. The consultation process has been implemented through two types of procedures: written procedure and meetings/workshops implemented both on national levels (national consultation processes) and cross-border level. Joint cross-border consultation process has been processed through involvement of Drafting team members and representatives of national, regional and local stakeholders from both sides of the border and through the involvement of JPC members. The main meetings held during the preparation of the programme are shown below:

Meeting

Date and place Outcome

1. Bilateral meeting between CODEF2 and MSTTD3 and Secretariat for European Integration (Montenegro)

19th February 2007, Zagreb, Croatia

Jointly agreed timeframe for programme elaboration. Defined roles of institution and joint structures

2 1st JPC and JDT meetings

1st March 2007, Zagreb, Croatia

Rules of working procedures agreed Members of JDT and JPC confirmed Programming area discussed Agreements on next steps: Plan for compilation and processing of data for the Situation Analysis agreed

2 CODEF: Central Office for Development Strategy and Coordination of EU Funds, Zagreb 3 MSTTD: Ministry of Sea, Tourism, Transport and Development, Zagreb

Page 9 of 78

3 1st Croatian National consultation workshop

19th March 2007, Dubrovnik, Croatia

Presentation and collection of comments on Situation Analysis and on SWOT provided by the partners (local, regional and national level) from Croatian side

4 1st Montenegrin National consultation workshop

19th March 2007, Kotor, Montenegro

Presentation and discussion on Situation and SWOT Analysis to the potential beneficiaries

5 2nd JDT meeting 20th March, Dubrovnik, Croatia

Joint SWOT discussed and agreed Suggestions for priorities and measures of the programme

6 2nd JPC meeting 30th March, Kotor, Montenegro

Agreement and adoption of the Programming area Definition of the framework financial allocation for the Programme implementation

Presentation and discussion on the joint situation and SWOT analysis

Guidelines for elaboration of the Programme strategic part

7 JPC consultation -Written procedure

16th April 2007 Approval of Situation and SWOT analysis

8 2nd Croatian National consultation workshop

3rd May 2007, Dubrovnik

Priorities, measures and activities discussed and agreed Estimate of financial allocations per measure and delivery mechanisms

9 2nd Montenegrin National consultation workshop

3rd May 2007, Kotor, Montenegro

Presentation and discussion on priorities, measures and financial allocations for each measure

10 3rd JDT meeting 4th May 2007, Kotor, Montenegro

Priorities, measures and activities discussed and agreed Estimate of financial allocations per measure and delivery mechanisms

11 4th JPC meeting 16th May 2007, Zagreb, Croatia

Adoption of Strategic part of programme Presentation and discussion of main issues on the Implementing Provisions

Guidelines for further elaboration of the Implementing Provisions

12 JDT consultation: Written procedure

18th May 2007 Finalisation of Implementing Provisions

13 4th JPC meeting 28th May 2007. Zagreb, Croatia

Adoption of the Programme document final draft

Donor co-ordinationIn line with Article 20 of the IPA Regulation and Article 6 (3) of the IPA Implementing Regulations, the EC has asked the representatives of Members States and local International Financing Institutions in Croatia and Montenegro to provide their comments regarding the draft cross-border co-operation programmes submitted to the Commission. 1.6 Summary of the proposed Programme Strategy The vision of the programme has been defined as follows: Cross-border area between Croatia and Montenegro is recognized as a region for high quality of life and one of the most successful European tourist destinations because of its unique and preserved natural resources, cultural and historical heritage and high quality of services, as well as a region in which socio-economic partners are empowered to achieve and manage the optimal development potential of the area. The overall objective of the Programme is:

Improved quality of life in cross border area between Croatia and Montenegro This objective will be achieved through the implementation of actions under the following set of programme priorities and measures:

Page 10 of 78

Priority 1 Creation of favourable environmental and

socio-economic conditions in the programming area by improvement of the co-operation in the jointly selected sectors and

good neighbourly relations in the eligible area

Priority 2 Technical Assistance

Measure 1.1: Joint actions for environment, nature and cultural heritage protection

Measure 2.1: Programme Administration and Implementation

Measure 1.2: Joint tourism and cultural space

Measure 1.3: Small cross-border community development projects

Measure 2.2: Programme Information, Publicity and Evaluation

Horizontal Themes: Cross-Border Capacity Building Equal opportunities Gender equality and gender mainstreaming Sustainable development and environment protection

Page 11 of 78

SECTION II. ANALYSES FOR CROSS-BORDER PROGRAMMES 2. Description of the Programming Area 2.1 Eligible and Adjacent Area The programme target area is the area of the common Croatian-Montenegrin border. The units concerned are the territorial units at a level corresponding to NUTS III classification in Croatia and municipalities in the case of Montenegro. Eligible area covers 1 (NUTS III equivalent) region in Croatia and 7 municipalities in Montenegro while adjacent regions cover also one (NUTS III equivalent) region in Croatia and 3 Montenegrin’s municipalities. Table 2.1: Eligible and Adjacent areas for Croatia and Montenegro

Croatia (NUTS III, Counties) Montenegro (Municipalities) Eligible area Adjacent area Eligible area Adjacent area Dubrovnik-Neretva County Split-Dalmatia County Herceg Novi

Kotor Tivat Budva Bar Ulcinj Cetinje

Nikšić Podgorica Danilovgrad

Map 1: Eligible and adjacent area in Croatia and Montenegro

Page 12 of 78

2.2 Description and Analyses of The Border Region 2.2.1 History The biggest part of today’s Dubrovnik-Neretva County used to be a part of The Republic of Dubrovnik which has officially been abolished in 1808 and became a part of Croatia, Slavonia and Dalmatia State union and consequently of the Austro-Hungarian Monarchy. Montenegrin part of eligible area was a part of independent kingdom from the late Middle Ages until 1918. After the Second World War both countries were part of Socialist Federative Republic of Yugoslavia (SFRJ). In 1991 Croatia has become an independent country while Montenegro remained in federation with Serbia until 2006 when, on June 3rd, the Parliament of Montenegro declared the independence of Montenegro, formally confirming the result of the referendum on independence. After dissolution of SFRJ and at beginning of the Homeland War, Croatian part of the eligible area was exposed to serious bombing and has suffered sever direct and indirect war damages that are still visible and can be felt in different ways. 2.2.2 Demography In general, aging of population and concentration of population in urban and coastal areas as main labour centres are the main characteristics of the eligible area. In terms of demographic trends there are differences between Croatian and Montenegrin part of the eligible area. According to last Census (2003), number of inhabitants in Montenegrin part increased for 15% compared to situation in 1991 while in Dubrovnik-Neretva County the population decreased by 1,4% (making comparison between two censuses 1991-2001, see Annex III, Table 2.2). In that terms Dubrovnik-Neretva County follows the present trend of depopulation in Croatia but the rate of depopulation in the county is still lower than for the whole Croatia. In adjacent regions of the both countries the situation in terms of population change more-or-less follows the pattern of their parts of the eligible area. In Dubrovnik-Neretva County natural growth is not as significant as in Montenegrins municipalities and in last few years it slightly varies from decline to growth. In addition to natural decline (or very low natural growth) registered in last couple of year (see Annex III, Table 2.3), in Dubrovnik Neretva County, mainly due to the consequences of the war, there are parts of municipalities and cities that are practically abandoned. The consequences of the Homeland war speeded up negative demographic processes in some parts of the County (e.g. in the areas bordering Bosnia and Herzegovina) especially in the eastern part of the hinterland and on some islands (aging population). In both countries demographic processes reflect mostly differences in development of their areas.

2.2.3 Ethnic Minorities In terms of ethnic belonging, there is also a difference on both sides of the border. While in Dubrovnik-Neretva and Split–Dalmatia County high degree of ethnic homogeneity is visible, in Montenegrins municipalities heterogeneity is present. In Croatian part of the programming area the main ethnic minorities are Serbs and Bosnians and in Montenegrin part these are Serbs, Albanians, Croats and Moslems (see Annex III, Table 2.4) In the past in some of the coastal parts of Montenegro Croat population were significant and now days most of the Croats that live in Montenegro are settled in the coastal municipalities (e.g. Tivat, Kotor).

2.2.4 Geographical Description The programming area covers continental surface of 12.829km2 (6321km2 in Croatia and 6508km2 in Montenegro). Croatian part of the eligible area is located in the far south of the Republic of Croatia and it takes 3,15% of the continental territory and 22,56% of the sea territory of the Republic of Croatia. It is located predominantly alongside state continental or sea border. The continental part borders Bosnia-Herzegovina (majority of the territory) and

Page 13 of 78

Montenegro (in the municipality of Konavle). The state border on the territorial sea (sea border) touches Republic of Italy (island areas), Montenegro and Bosnia-Herzegovina (area around Neum). Montenegrin part of the eligible area located in the south-west of Montenegro and it takes 2501km2 of the territory of the Republic of Montenegro. The border line between Croatia and Montenegro is in length of 25km on land and 27km on sea4. There are two border crossings between Croatia and Montenegro. Montenegro has land border with Serbia, Bosnia-Herzegovina and Albania while sea border touches, apart form Croatia and Albania, Italy, as well.

2.2.4.1 Mediterranean The major part of the programming area belongs to Mediterranean geographical region (except Montenegrin part of adjacent region that belongs to Dinaric Mountains) and possesses all characteristics of Mediterranean climate. Summers are hot with periods of drought, while other periods are characterized by ample rain and moderate temperatures. Due to such climate conditions and specific Mediterranean vegetation, fires are very often during summer time. Since fire-fighting is not on the satisfactory level, fires cause major problems to people but also to vegetation and natural and cultural heritage. Montenegrin part of the eligible area is famed for its sandy beaches and abundant sub-tropical vegetation. It is divided from the rest of the country by the high Dinaric Mountains of Orjen, Lovćen and Rumija that rise steeply from the sea, forming a magnificent background to the coastal strip, but at the same time representing an obstacle to communications between the coastal and inland parts of Montenegro. Dubrovnik area can be divided into three main parts: islands, coastal part and hinterland. The coast is 1.024,63 km long, well-indented and varies from protected bays with sand beaches of exotic beauty to steep coast line with cliffs exposed to the open sea. Delta of Neretva (as a part of hinterland) is the most fertile soil surface in Adriatic part of Croatia. On island part the terrain is of great porosity due to Debris – Dolomits substance, thus there are no surface streams and fertility of soil surface is not so high. The landscape diversity is complemented by the biological diversity on the continent and sea, which puts the area among the unique ones in the Mediterranean. Natural conditions of the area are favourable for growing early vegetables, wine, fruit and flowers growing and mariculture. 2.2.5 Infrastructure General overview

The infrastructure within the programming area differs on both sides of the border. In Montenegrin part it is obsolete, due to lack of investment. Roads and railways are in very bad condition while port equipment, airstrips dams are in slightly better condition. Supply of drinking water is also inadequate in the Montenegrin part the eligible area. On the Croatian side infrastructure conditions are better but there is also room from improvement (e.g. road infrastructure, infrastructure related to waste and waste water management). Generally, communal and other supporting infrastructure within the programming area, as key factors in developing tourism as one of the main sectors in the area and creating a stable economic setting in which small and medium-sized enterprises are able to thrive, should be considered as priority area in terms of focusing development actions in the near future.

2.2.5.1 Energy The main source of electric power of Dubrovnik-Neretva County is the exploitation of the rivers and there are no major problems in power supply. The largest producer of power is HE

4 source: Central Bureau of Statistics RH, Statistical yearbook 2006

Page 14 of 78

“Dubrovnik”, high-pressure derivational power plant, which underground winding engine house is placed on the mere coast near the place Plat. Montenegrin part of the area, as well as the whole country, has a great potential for providing uninterrupted supplies of power thus reducing its dependence on foreign power supplies. Apart from the mentioned dependence, there is also a problem in consuming of more than half of disposable electric energy in Montenegro by Kombinat Aluminijuma Podgorica. 2.2.5.2 Transport A modern transport network is one of the most important factors enabling economic development and connections on all levels (local, regional and international), as well as cross-border cooperation. In terms of road transport system, roads in the whole programming area are mainly in a bad condition, primarily used for internal connections and almost all have bad transport-technical elements, and thus require reconstruction and modernization. Road transport network on the area of the Dubrovnik-Neretva County is comprised of 17 state roads, 31 county roads and 65 local roads5 (length of the roads in Croatian part of the Programming area can be seen in Annex III, Table 2.5). Road connection between the area and rest of Croatia (and beyond) is poor because there is no road, which would connect the utmost south of the Republic of Croatia and its capital Zagreb and other parts of the state in an optimal way. Traffic Development Strategy foresees that remaining 65 km of motorway from Ploče to Dubrovnik needs to be built in order to connect Dubrovnik with Split and rest of the Croatia. 6

Road network in Montenegro includes 850 km of highways, 950 km of regional roads and very extensive network of country roads (5,300 km) (data on length of roads are not available per municipalities). In recent years road connection between Podgorica and the coastal towns have improved significantly with the completion of Sozina tunnel, which shortened the journey from Podgorica to Bar to less than half an hour and made the trip significantly safer. The great opportunity for the programming area is construction of Adriatic –Ionian corridor which would open road communication between south-eastern Europe and middle Europe and connect south-west and south-eastern Europe The major road link between Croatia and Montenegro is E65/E80/Route 2. In terms of railway transport, in Dubrovnik-Neretva County there is only one railway line, which passes from Ploče through Metković towards Sarajevo and further to the Central Europe. It is a part of the Corridor Vc (Budapest–Osijek-Sarajevo-Mostar-Metković-Ploče) and as such of great importance as the nearest connection of the Central Europe and the Mediterranean Sea (length of the railways in Croatian part of the Programming area can be seen in Annex III, Table 2.6; information on length of railways per municipalities are not applicable for Montenegro). Important railway connections in Montenegrin part of the programming area are those which connect the Port of Bar with Podgorica and Podgorica with Niksic. The railway Podgorica–Nikšić is used only for freight, while railway Bar–Podgorica is used for both transport of passengers and freight. There is no railway connection between Croatia and Montenegro 2.2.5.3 Seaports Due to the geographical position of the eligible are, sea transport system is the important one. The two ports located in the Dubrovnik-Neretva County are of particular (international) importance for the Republic of Croatia: passenger port «Gruž» and freight port «Ploče».7 The catchments areas of Dubrovnik are reduced to a narrow hinterland area, which makes 5 Undertaken from ROP of Dubrovnik-Neretva County 6 Croatian Chamber of Economy, Transport and Communications Department, Report 2006, http://www2.hgk.hr/en/depts/transport/ceste_zeljeznice_zracni_2006.pdf 7 According to the Law on maritime good and seaports (Official gazette no.158/03) the ports of high (international) importance for the Republic of Croatia are Rijeka and Ploče (cargo transhipment), and Zadar, Split and Dubrovnik (passenger transport)

Page 15 of 78

them in regards to traffic only locally important. Dubrovnik is the only port that is not connected with the inland by rail. Dubrovnik Port will build a modern passenger terminal for scheduled passenger ships and cruise ships on the place of old cargo warehouses. Apart from that, there are a number of ports of county and local importance. Bar is the major seaport in Montenegrin part of the programming area and in Montenegro as a whole (it accounts for 95% of the total transportation of passengers and freight).

2.2.5.4 Airports The air transport system is the most important for the eligible area. There are three international airports (Dubrovnik, Podgorica and Tivat airports) but there is no direct line between Podgorica or Tivat and Dubrovnik. Dubrovnik airport has highest number of passengers after Zagreb airport and although this number is increasing every year it is still 35% lower then the pre-war figures.8

2.2.5.5 Telecommunications The telecommunication system within the eligible areas (especially telephone wire-line and wireless connection) can be appraised as satisfactory. The coverage is satisfactory and, in general, the sector is satisfactory developed in terms of technology and human resources as well. Mobile telephony and Internet services are, as well as in other countries, quite propulsive and on the satisfactory level of development. 2.2.5.6 Public utilities (water supply, waste water management, waste management) Water supply, waste water management and solid waste management are insufficiently developed in the whole programming area, especially having in mind their importance and relation towards tourism industry which is, as mentioned above, one of the key sectors there. In Dubrovnik-Neretva County inhabitants are supplied with water on the level of 83% (see Annex III, Table 2.7; there are no data for Montenegrin part related to water supply per inhabitant per municipality), but since water supply systems are connected just to cities, towns and larger settlements some parts of the County still don't have a water supply system. Water supply system of the significant part of the eligible area is based on pipeline that supplies Dubrovnik-Neretva County and Montenegrin municipality of Herceg Novi and its construction was co financed by citizens of Herceg Novi in a period of joint state of Yugoslavia. The part of pipeline which supplies Herceg Novi is managed by communal company of Croatian municipality Konavle and regulation of expenses and supply is based on contracts between those two municipalities, but there are still many unresolved issues which cause conflicts and sometimes irregular water supply of Herceg Novi area. Furthermore, large part of the area is not covered by sewage networks while the constructed sewage systems already in use is not connected to waste water treatment facilities. Connection to public drainage system in Dubrovnik-Neretva County is 41% which is below national average (see Annex III, Table 2.7; there are no data for Montenegrin part related to public drainage system per inhabitant per municipality). Namely, from the whole County, there is only one waste water treatment plant in Dubrovnik. Such situation causes endangerment of surface and ground waters, as well as the sea that are mainly endangered by uncontrolled sluicing of industrial and faecal waste water under the ground and into rivers. In terms of endangerment of surface and ground waters the same applies to Montenegrin part of the programming area. Situation regarding water supply system in the Montenegrin part of the Programming area is quite similar to Croatian part since 85% of households are connected to water supply systems. In terms of waste waters system in Montenegrin part there are 48 % of households connected to waste water system. In Croatian part of the Programming area, most of the occupied dwellings are connected with water supply system

8 Croatian Chamber of Economy, Report 2006

Page 16 of 78

installations, electricity installations and sewage system installations (see Annex III, Table 2.8) In regard to landfills within the eligible area there are 10 official landfills, out of which one is on the Montenegrin side of the border - “Lovanja” – which is the only regional sanitary landfill in Montenegro that was built in line with EU standards for waste managment. In Dubrovnik-Neretva County sanitary measures are undertaken only at the landfill of the City of Dubrovnik. Apart from the registered landfills, waste has been deposited in several dumps founded near settlements which often do not have organized collecting of waste (in Dubrovnik-Neretva County organized collecting and removing waste on the County level covers 75 % of inhabitants9) and they are not functioning as sanitary landfills. Besides communal waste, there is waste from technological processes in production and services processes which is also not properly treated. 2.2.6 Economic Description

2.2.6.1 GDP The programming area comprises counties and municipalities with very diverse economic characteristic. On one hand there are relatively developed urban areas and on the other relatively underdeveloped rural areas (e.g. there are significant development differences between City of Dubrovnik and Port Ploče and other areas of Dubrovnik-Neretva County) Compared to Croatian average, GDP per capita of Dubrovnik-Neretva County is below the national average. Data for 2004 show that regional GDP index was 84, 5% of national GDP per capita. However, taking into account this indicator the county is among the richest counties in Croatia and what is more important, according to the development potentials of the County there is a possibility for further growth. The Montenegrin part of eligible area has lower GDP than Croatian part butt it also has a big development potential (according to data form Central bank of Montenegro estimated GDP growth is around 9% un 2007) and it includes some of the richest municipalities in the country (see Annex III, Table 2.9). 2.2.6.2 Agricultural and Rural Development Intensive agriculture is characteristic of the area with the most favourable natural conditions. Natural conditions (favourable climate, land fertility, and existence of water this region) of the programming area give a possibility of breeding numerous sorts of agriculture cultures: fruits, vegetables, grape wine and olives. Citriculture, olive and wine growing, as well as mariculture are very important in the economic sector of the area. However, the space for better and more intensive exploiting of favourable agriculture conditions is still large. The problems related to agriculture production are small farms and average size of parcels. In that respect there is a possibility within the whole area of enlarging land and exploiting available surfaces by business subjects. One of the problems in relation to small agricultural and food producers is their segmentation, small number of quality certified products and lack of joint presentation on bigger markets which causes their low competitiveness. There is a need to combine agricultural and food production with tourism sector services through support to rural tourism development, integration of producers and service providers, integration into marketing activities of the regions, and quality certification procedures, specially those targeting geographical origin of the products. In Dubrovnik-Neretva County most intensive agricultural production is placed in Neretva basin but is being endangered by increased salinity of the Neretva River. Data on Agriculture population, households and utilized agriculture land can be seen in Annex III, Table 2.10.

9 Undertaken from ROP of Dubrovnik Neretva County

Page 17 of 78

2.2.6.3 Industry The eligible area has been mostly oriented towards the tourism industry and services in general. Shares in Gross Added Value index show that on the Croatian side of the eligible area highest share comes from sector H - Hotels and restaurants (see III, Table 2.11) On Montenegrin side the most important industries are shipbuilding and ship-repairing. The "Adriatic Shipyard Bijela" is the biggest ship-repairing yard in the Southern Adriatic which holds The International ISO 9001:2000 certificate. “Arsenal” from Tivat is a regional leader in ship-repairing business. However, in terms of employment structure by economic sector, services employ more population than industry in the whole eligible area (see Annex III, Table 2.14). 2.2.6.4 SMEs SME sector is of great importance for the eligible area; data for Dubrovnik-Neretva county show that in 2005 95,96% out of total number of entrepreneurs in the County were small entrepreneurs and they employed around 46% of all employed persons in the County10. On the Montenegrin side SMEs in the eligible area have 39,3% of all SMEs in the country. Total number of SMEs in the Croatian eligible area in 2004 was 2292 and 5265 in the Montenegrin part of eligible area in 2006 (see Annex III, Table 2.12) The geographical/territorial dispersion is uneven so the most of the SMEs are concentrated around City of Dubrovnik, Budva and Herceg Novi. Data on employment structure in entrepreneurship show that highest number of employees in the whole eligible area is in service sector(s) (see Annex III, Table 2.13). 2.2.6.5 Services Different kinds of services are mainly developed in the urban parts of the programming area. Administrative, banking, judiciary, education, social and health services are available in major cities. The level of development of different services varies across the eligible area. However, it is worthwhile mentioning that in the area there are universities and colleges, different kind of educational centres that provide variety of specific courses. Furthermore, only in Dubrovnik-Neretva County there are 5 health centres 1 General and 1 Special Hospital, 1 Institute of public health, 12 Polyclinics, 6 Care organisation, 2 Organisations for occupational health. Some of the services as educational and R&D are provided by the main urban centres within adjacent region, i.e. Split, Podgorica. The organizational structure of health institutions in Montenegro consists of three levels – primary, secondary and tertiary. The primary level of health institutions in the programming area is consisting of 10 health centres (7 in eligible and 3 in adjacent area), the secondary level includes 4 general hospitals (3 in eligible and 1 in adjacent area) and three specialization hospitals (2 in eligible and 1 in adjacent area), while the tertiary level institution includes the Clinical Centre of Montenegro and Institute for Public Health which are located in Podgorica. 2.2.6.6 Regional and local development Regional and local development is mainly being managed by regional and local self-government offices and Regional development agency in case of Dubrovnik-Neretva County. Important role in development activities is also in hands of the SME supporting institutions. Local economic development in Montenegro is highly decentralized with municipalities leading the process. However, many important institutions are still rather linked to the national level. Entrepreneurial activity and private sector development in Montenegro is the priority of the Government and is supported through both governmental and non-governmental institutions including business associations and consulting companies. All of them are however located in Podgorica. There are plans to open 2 business incubators one in Bar and the other one in Podgorica. 2.2.6.7 Tourism 10 Undertaken from Regional Operational Programme of Dubrovnik-Neretva County 2007-2013

Page 18 of 78

Due to extremely rich natural and cultural heritage, tourism is main economic activity in the Programming area. The area is attractive for cultural, sun-and-beach, rural and eco tourism. Problem that have been encountered in connection with the sector are water supply and tourism supporting infrastructure in general, as well as seasonality and lack of permanent and focused/specified education for labour force in tourism Number of tourist visits in 2005 in the eligible area reached 1 665 762 of guests (909 400 in Dubrovnik-Neretva County and 756 362 on Montenegrin side) and each year there is an increase in relation to the previous one (e.g. in Dubrovnik-Neretva County increase of 14,1% in relation to previous year but it is significant that there is constant decrease of visits from domestic tourists and increase of foreign tourists.11). Total number of overnight stays in 2005 was 9 534 292 (4 478 500 in Dubrovnik-Neretva County and 5 055 792 in eligible area on Montenegrin side) which is 33.1 guest night per inhabitant12 (see Annex III, Table 2.15). Dominant tourist centres are Dubrovnik, Korčula, Konavle, Orebić, Budva, Herceg Novi and Bar. Number of beds in the eligible area is 171 213 in total (55 388 in Dubrovnik-Neretva County13 and115 825 on Montenegrin side). In Dubrovnik-Neretva County tourism income has average of 15% in total economy of the county (Croatian chamber of economy). In relation to the total number of tourists and overnight stays in Croatia, Dubrovnik area has 9% of total number and is on the 4th place after Istra, Kvarner and Dalmatia. 14

Dubrovnik-Neretva county is leading region in relation to culture tourism, in 2005 the number of visitors of tourist attractions was 1.26 million (18% of visitors in Croatia) and second in rural tourism (after Istria). It has 75 registered tourist rural households (24% of total number of registered rural households in Croatia), but with significantly small number of beds - only 17 or 2% of he total number of beds in Croatian rural tourism industry which shows that further investment in rural tourism enterprises are needed. 15

2.2.7 Human resources 2.2.7.1 Education The system of education in Dubrovnik-Neretva County is satisfactory but very often educational institutions lack adequate investments which then results with poorly equipped premises and influences realization of requested pedagogic standard. For example just 4 out of 14 secondary schools have gyms. Education level of inhabitants in Dubrovnik-Neretva County is the following: 1,7% of inhabitants is without any formal education, 4% has up to 3 grades of primary school, 9,2 % has up to 7 grades of primary school and 19,3% has finished primary school. 30% of inhabitants has finished vocational schools lasting 1-3 years and schools for skilled and unskilled workers, 16,3 % has finished 4 year vocational school and 5,5 % has finished Grammar school.16 5,6% of inhabitants has finished Non-university colleges, I. (VI.) level of faculty or professional study and 7,7% has finished Faculties, art academies and university studies. 0,2 % of inhabitants has Master degree and 0,1% Doctorate (PhD).17 Education level of inhabitants in Montenegrin part of the Programming area is the following: there are between 6.81% (Budva) and 27.2% (Ulcinj) inhabitants without formal education; between 15.60% (Herceg Novi) and 25.55 (Cetinje) of inhabitants has finished primary school and between 37.86% (Ulcinj) and 59.52% (Tivat) of inhabitants

11 Regional Operational Programme of Dubrovnik-Neretva County 2007-2013. 12 Statistical Yearbook of the Republic of Montenegro 2006; Regional Operational Programme of Dubrovnik-Neretva County 2007-2013. 13 Statistical Yearbook 2003, Central Bureau of Statistics RH, http://www.dzs.hr/Hrv_Eng/ljetopis/2003/tabele/45_696_tab.pdf 14 Croatian Chamber of Economy, Tourism Department, Report 2006 15 Ibid. footnote 14 16Census 2001, Central Bureau of Statistics RH, www.dzs.hr 17 Regional Operational Programme of Dubrovnik-Neretva County 2007-2013.

Page 19 of 78

http://www.dzs.hr/

has finished secondary school. In terms of University education attainment, it goes from 9,37% of inhabitants (Danilovgrad) to 16.8% of inhabitants with such kind of education (Podgorica) (see Annex III, Table 2.16). Major University centres are Dubrovnik and Split and Podgorica (as parts of the adjacent area) but different faculties (e.g. Faculty of Electrical Engineering, Faculty of Mechanical Engineering, Faculty of Metallurgy and Technology, Faculty of Natural sciences and Mathematics, Faculty of Civil Engineering, Faculty of Architecture, Faculty of Economics, Faculty of Marine studies and Faculty Tourism and Hotel Management etc) are also located in Opuzen (RoC), Kotor, Cetinje and Nikšić (RoMN). In Dubrovnik-Neretva County there are 3 higher education and science institutions: University of Dubrovnik, (it offers several academic programs as for example, Aquaculture, Economy, Business economy, Electrical engineering etc.) American college of management and technology which is currently the only private educational institution granting both American and Croatian degrees in Croatia and Department of University of Split in Opuzen – Department for IT and SMEs. The American Colleague of management and technology attends significant number of Montenegrin’s students. 2.2.7.2 Employed and unemployed Analyzing the work capable citizens in the eligible area (men in the age 15-64 and women 15-59), it is noticeable that its share in the total population is around 59% in Dubrovnik–Neretva County and cca. 43% on Montenegrin side of eligible area. 52,9% of work capable citizens are employed in Dubrovnik-Neretva County and 67% on Montenegrin side of eligible area (see Annex IIII Table 2.19.). Percentage of unemployed in Dubrovnik–Neretva county was 18,3% in 2005 which is slightly higher than Croatian national average (Croatian national average in 2005 was 17,9%)18. Average percentage of unemployed in eligible area on Montenegrin side was 14,4% which is lower than the national average in both countries (Montenegrin national average is 15.05% ). Among the unemployed, the biggest share is within population with finished vocational school (70,8% in Dubrovnik-Neretva County, in total 5888 unemployed and cca. 70% in eligible area on the Montenegrin side (see Annex III, Table 2.18.). Share of women in unemployed population is 60,5% (see Annex III, Table 2.17.) in Dubrovnik-Neretva County. Unemployment is distributed unevenly since major towns employ more than peripheral small municipalities/towns. Very often, due to lack of adequate jobs for highly educated people in some parts of the area, these areas are losing their human resource potential. 2.2.7.3 Research and development In Croatia’s part of the Programming area, R&D is mainly concentrated in major urban areas outside the eligible area (e.g. Split). In Dubrovnik-Neretva County there are Research and Development Centre for Mariculture, placed in Zaton Doli (Bistrina Bay) and a branch of Institute of Oceanography and Fisheries. There are no specific R&D activities linked to any of particular institutions in Montenegro. However, on its way to EU, Montenegro is gradually taking a part in such projects. In the newly defined Strategy for SME development significant attention is given to this subject as well. 2.2.8 Environment and Nature In the Programming area there are 3 National Parks (National park Mljet, Skadar Lake; Lovćen); 1 Nature Park Lastovsko otočje and two localities under UNESCO protection (Boka Bay; and City of Dubrovnik). In Dubrovnik-Neretva County protected areas together with the belonging sea cover 25.468,5ha which is 12,42% of land and 3,01% of the sea of the County (see Annex III, Table 2.21). Also, ecological network as protected nature value covers 112.705,48ha of land (63%) and 392.265,07ha of sea (cca 50%). (see Annex III, Table 2.20). 18 Croatian Employment service, Yearbook 2005

Page 20 of 78

In eligible area of Montenegrin side there is 908 km2 of protected area in status of National park but there is no available data on other categories of protection. Damages to human natural environment along the sea belt are specially caused with the process of urbanization of larger places and dispersion of housing projects that were not accompanied by the construction of communal infrastructure. Main contamination of the sea and beaches is caused by waste waters due to lack of suitable sewage and purification system for waste waters. Biggest industrial contaminator is Aluminium Company in Podgorica which causes contamination of land and under soil waters with PCBs and fluorides. One of the biggest problems in the Programming are lack of monitoring system for air and soil contamination, lack joint cross-border actions and prevention systems in decreasing environmental damages from fires and environmental accidents on sea and land caused by transport of dangerous waste.

Page 21 of 78

2.2.9 Culture in the Eligible and Flexibility/adjacent Areas Programming area is rich in cultural heritage. There are lot of protected monuments and seaside localities with valuable historical urban communities (Dubrovnik, Korčula, Ston, Cavtat, Orebić, Slano, Lumbarda, Kotor bay with historical town of Kotor and surroundings, Budva, Ulcinj, Bar etc.). Valley of the river Neretva according to the value of the findings (from the Greek and Roman period) as well as the area of the old Dubrovnik Republic deserves the right of priority according to the importance of the locality. Special emphasis is put to the zone of the village Vid, for which it is presumed that it is the broad locality of the Roman metropolis Narona and the broad zone of the City of Dubrovnik, the jewel of construction and civilization of the European and Mediterranean cultural ring from the period of XV to XVII century. In Dubrovnik-Neretva County there are a total of 1 334 registered cultural heritage, 667 of them are immovable cultural goods, 241 of them are moveable cultural goods and 25 are cultural – historical sites. In Montenegrin part of the Programming area there are 24 monuments of the first category of protection and 104 monuments of the second category of protection. In Croatia, the protection of cultural goods (of a legal and expert character prescribed in the provisions of Law on the Protection and Preservation of Cultural Goods, and in accordance with the rules of the conservationist profession) in this County is under jurisdiction of Conservation Department in Dubrovnik. In Montenegro protection of cultural heritage was put on a solid legal basis and its care was given to the specialized organization Institute for Protection of Cultural Monuments. Based on the Law on Protection of Cultural Monuments from 1991, in terms of protection of cultural heritage, municipalities are obliged to take care, maintain and use, and protect monuments from damaging impact of nature and men activities, to make them publicly available, bear the costs of regular maintenance of cultural monuments.

Page 22 of 78

2.2.10 SWOT ANALYSIS

STRENGHTS

WEAKNESSES • Cultural and nature resources

suitable for accelerating economic development; 2 cities under UNESCO protection (Dubrovnik and Kotor ) and 3 National parks

• Long tradition and internationally recognized cultural events and festivals

• Three international airports • Improved development of tourism

infrastructure (tourist accommodation facilities, food and catering, sport activities);increase in quality of service

• World wide known tourist destination • Natural potential for agricultural

development and mariculture (specifically eco-agriculture)

• Implementation of internationally accredited education program especially at university level (Bologna declaration);

• Using almost the same language on both sides of the border

• Isolation due to bad road traffic infrastructure and isolation of islands

• Lack of proper waste water treatment and sewerage;

• Lack of solid waste dumps and recycling practices;

• Problems with water supply and waste water treatment especially during the summer season;

• Lack of joint protection programs and actions from dangerous merchandise transported trough the region (either by roads or see)

• Inadequate electrical infrastructure • Lack of cross-border cooperation and

proper equipment in fire fighting activities

• Lack of specialised educational programs in tourism

• Depopulation of old town centres • Underdeveloped civil society sector • Destroyed social connections

between neighbouring areas • Discrepancies between the regions

and municipalities in the area of social and economic development; high inequality in urban and rural development;

OPPORTUNITIES

THREATS • Accessible funds for Cross-border

cooperation programs and projects • Availability of pre-accession funds for

development initiatives and development of social services

• Corridor 5 and Adriatic –Ionian corridor development–development of road infrastructure which would open communication between south-eastern Europe and middle Europe and connect south-west and south-eastern Europe

• Opportunity to create and develop integrated tourism product including both coastal and mountain area of the country

• Negative migration trends • Further salinisation of rivers

endangering their bio-sustainability • Increased ecological risks due to new

road and sea corridors • Impact of pollution from

Mediterranean sea

Page 23 of 78

SECTION III PROGRAMME STRATEGY 3.1. Overall Objective The cross-border area between Croatia and Montenegro has quite the similar development preconditions characterized with enormous potential for tourism development and rich natural and cultural heritage that provide a solid base for cooperation.

Main challenges of the cross-border area are impact of globalization on regional economy, introduction of new quality and legal standards as a part of EU accession process, extremely competitive global economy based on knowledge and new technologies without which regions and business sector are not competitive on bigger markets, environmental challenges and challenges in relation to reestablishment of social and cultural connections between two countries which were destroyed because of war in 90is. Accordingly, the main impacts of the Programme would be related to establishment of links between the partner countries, development of common understanding of the CBC and its meaning in terms of sustainable economic development and improving capacities for stimulating and managing the development trajectories of the Programming area.

To maximise the level of cross-border cooperation and impact, within the Programme special attention will be given to projects that will:

a) Improve the collaboration and pooling of experience between local and regional stakeholders in order to increase cross-border co-operation;

b) Intensify and consolidate cross border dialogue and establish institutional relationships between local administrations and other relevant local or regional stakeholders.

c) Equip local and regional authorities’ actors with information and skills to develop, implement and manage cross-border projects.

All the mentioned challenges will be addressed through Programme’s strategic orientation to sustainable development which encompasses: economic development, human resources development, social justice and environmental protection, so that the following Vision can be reached:

Cross-border area between Croatia and Montenegro is recognized as a region for high quality of life and one of the most successful European tourist destinations because of its unique and preserved natural resources, cultural and historical heritage and high quality of services, as well as a region in which socio-economic partners are empowered to achieve and manage the optimal development potential of the area.

Accordingly, the overall objective of the Programme is: To improve quality of life in cross border area between Croatia and Montenegro, which is inline with understanding of development and prosperity stated in Croatian Strategic Development Framework for 2006-2013 ”...A rich Croatia is a country where people wish to live and work, and to which people come in order to live and work because it has preserved what perhaps more developed nations have lost on their way to wealth: a good quality of life, and a fine quality of nature and space. „

This objective is also recognized by Montenegrin strategic documents such as National Strategy for Sustainable Development and Development goals of Montenegro as ecological state where social well being and economic prosperity are put in a balanced manner with environmental protection and sustainable use of natural resources. The basic directions of Montenegrin Master plan for tourism development and Economic Reform Agenda, as a broader framework for economic development, are also based on improvement of life quality, including progress achievement in the cross border area between Croatia and Montenegro.

Page 24 of 78

According to the situation and SWOT analysis, the long-term opportunities for the programming area are competitive regional economies based on high quality service sector in tourism, efficient protection of the environment, natural and cultural heritage and sustainable use of nature resources, as well as high quality public and social services necessary for community development. On the other side, the problems detected are mainly related to the lack of cooperation and joint actions in the above mentioned areas. This is why Program will support projects which will establish cooperation of the institutions, authorities at local and national level and other eligible entities for common acting and interventions in the areas of tourism, environment, nature and cultural heritage protection and community development, and which at the same time will be focusing on the improvement of the capacities of concerned institutions/partners, in terms of performing cross-border development activities. It is important to note that the scope of the 2007-13 Cross-border Programme is limited by the availability of funding. This means that some of the issues identified in the situation and SWOT Analyses as being of significance for the development of the border region cannot be addressed by this programme (e.g. infrastructure related to transport).

The above objective will be achieved by means of two priorities that will be implemented by 5 separate measures (see 3.5. Summary of priorities and measures):

• Priority 1: Creation of favourable environmental and socio-economic conditions in the programming area by improvement of the co-operation in the jointly selected sectors and good neighbourly relations in the eligible areas

• Priority 2: Technical assistance

Cross-border capacity building has been envisaged as a horizontal theme that will be underpinning Priority 1 and 2 with so that local and regional stakeholders become as much as possible prepared for managing future cross-border programmes under the territorial cooperation objective of the Structural Funds. As such, cross-border capacity building represents and additional Programme’s objective and its achievement will be measured by means of the following programme indicators:

Number of organisations that establish cross-border cooperation agreements Number of cross-border networks established aimed at: improving public services; and/or carrying out joint operations, and/or developing common systems

Number of projects which are jointly implemented and/or jointly staffed

Implementation of Programme’s priorities will contribute to general objective by covering majority of areas which are used as life quality indicators: employment, education, social participation, environment and nature, leisure (culture and sports). 19

3.2. Correspondence with EU Programmes and National Programmes Council Regulation (EC) No 1085/2006 establishing an Instrument for Pre-accession Assistance – the IPA Regulation - provides the legal base for this programme and Commission Regulation (EC) No 718/2007 constitutes the IPA Implementing Regulation. Other EU regulations or documents that have been taken into account in the elaboration of the priorities and measures of this Programme: Council Regulation (EC) No 1083/2003 of 11 19 European Foundation for improvement of living and working conditions

Page 25 of 78

July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing regulation (EC) NO 1260/1999; Council and the European Parliament Regulation (EC) No 1080/2006 of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/1999; Council decision No 11807/06 of 18 August on Community strategic guidelines on cohesion; Council and the European Parliament Regulation (EC) No 1082/2006 of 5 July 2006 on a European grouping of territorial cooperation (EGTC). Multi-annual Indicative Financial Framework 2008-2010. The Multi-annual Indicative Planning Document for Croatia for the period 2007 – 2009 indicates that Cross-Border Cooperation, managed through Component II, will support Croatia in cross-border, and trans-national and interregional cooperation with EU and non-EU Member States. It will concentrate on improving the potentials for tourism, creating closer links between border regions and supporting joint environmental protection activities. The Multi-annual Indicative Planning Document for Montenegro for the period 2007-2009 indicates that IPA Component II will support cross-border co-operation programmes with neighbouring candidate and potential candidate countries and Member States. The present programme is consistent with the cross-border objectives expressed in the Multi-annual Indicative Planning Documents for both countries. National Programmes – Croatia The programme is in line with main goals and areas of intervention of the following National Programmes; Strategic Development Framework, which has its main strategic goal defined as: “growth and employment in a competitive market economy acting within a European welfare state of the 21st century“. This goal is to be achieved by simultaneous and harmonised action in 10 strategic areas of which 6 are relevant for this programme, these are:

‘knowledge and education’; ‘science and IT’; ‘entrepreneurial climate’ these issues are addressed by programme measure 1.1 (Economic Development)

‘environmental protection and balanced regional development’ are addressed by programme measures 1.1 and 1.2 (Environmental Protection)

‘people’; ‘social cohesion and justice’ are addressed by programme measure 1.3 (People-to-People’)

Joint Inclusion Memorandum, specifies policy priorities and measures related to social inclusion and fight against poverty. The issue of social exclusion in the programming area is dealt with in the People-to-People measure. Draft IPA Operational Programme Regional Competitiveness (RCOP) has 2 objectives: (i) to achieve higher competitiveness and balanced regional development by supporting SME competitiveness and improving economic conditions in Croatia’s lagging areas; (ii) to develop the capacity in Croatian institutions to programme and implement activities supported by the ERDF upon accession. This programme focuses on improvement in the Croatian border regions through economic diversification and complements the RCOP priority ‘Improving development potential of lagging areas’. It will also build institutional capacity for the future management of ERDF territorial cooperation programmes under objective 3 of the Structural Funds and is thus in line with both RCOP objectives. Draft IPA Operational Program Human Resource Development (HRDOP) has 3 priorities: Enhancing access to employment and sustainable inclusion in the labour market; Reinforcing social inclusion and integration of people at a disadvantage; Expanding and enhancing investment in human capital. These priorities are in line with this programme which will

Page 26 of 78

support actions which contribute toward increasing the employability of the border region population and improving access to social services. Draft IPA Operational Program Environment Protection (EPOP) has 2 priorities: Developing waste management infrastructure for establishing an integrated waste management system in Croatia; Protecting Croatia’s water resources through improved water supplies & wastewater integrated management systems. This programme will support small-scale infrastructure which is in line with both these priorities. It will also prepare larger scale projects which could be funded under the 2 EPOP measures: Establishment of new waste management centres at county/ regional levels; Construction of wastewater treatment plants for domestic and industrial wastewaters and build / upgrade the sewerage network. Regional Operational Program of Dubrovnik-Neretva County 2007- 2013 (ROP) recognizes the main development goals of the County that are connected with achievement of balanced development of the coast, islands and hinterland of the County; insurance of environmental, nature and culture protection and human resource development. With its orientation towards tourism development and increase in tourism income through development of new tourist products and improvement of tourism services, culture and nature heritage protection, environment protection and human resource development, this Programme is fully in line with the ROP ad as such will be contributing to achievement of the main development goals of Dubrovnik-Neretva County. Furthermore, Program is in line with main national strategies in Croatia ( e.g. National Employment Action Plan for the period of 2005 to 2008, Education Sector Development Plan 2005-2010, Adult Learning Strategy and Action Plan; Strategic Goals of Development of Croatian Tourism by 2010; National Environmental Strategy and National Environmental Action Plan, Waste Management Strategy of the Republic of Croatia; National Biodiversity and Landscape Strategy; draft National Strategy for Regional Development, Pre-Accession Economic Programme 2006-2008 etc) and the Government Programme 2003-2007 which states that the development of border regions is one of high national priorities, given that 18 out of 21 counties have external borders. It can be concluded that this Programme is complementary with the mainstream programmes and do not overlap with them due to its focus on strengthening first and foremost on those activities that are recognized as important for both partner countries. National Programmes – Montenegro Starting from the visions of sustainable development of Montenegro and identification of problems and challenges in the field of environmental protection and management of natural resources, economic and social development, the following general goals of National Strategy of Sustainable Development of Montenegro - NSSD Montenegro have been defined:

1. Accelerate economic growth and development, and reduce regional development disparities;

2. Reduce poverty; ensure equitable access to services and resources; 3. Ensure efficient pollution control and reduction, and sustainable management of

natural resources; 4. Improve governance system and public participation; mobilise all stakeholders, and

build capacities at all levels; 5. Preserve cultural diversity and identities

All of them are further elaborated through definition of the priority goals and measures in 24 areas for priority actions including the integrated coastal zone management, nature protection, sustainable use of water resources, macro-economic developments, regional development and employment, tourism and social protection.

Page 27 of 78

The goal of the Economic Reform Agenda is to set forth a series of discrete but interconnected tasks that will transform the Montenegrin economy. Expected outcomes of sixteen individual sections each dedicated to a particular aspect of economic reform. The Master Plan for tourism development, as the main strategic document for tourism as main development vehicle of national economy, projects a significant increase in the tourism facilities. A higher level of integration of sustainability requirements at the level of tourism development plans, as well as at the level of individual projects, is under process through the current revision of Master plan. The efficient control and reduction of the existing water pollution due to the low level of communal and industrial wastewater treatment and inadequate waste disposal present main directions of the Master Plans for wastewater and solid waste management. On the other hand securing sufficient quantity of good quality drinking water and necessary legal and institutional changes and improvements in the quality control and monitoring of waters according to EU standards and WFD provisions present the main orientations of the Master plan for water supplying and institutional and legal reforms in this area according to EU accession process.

Spatial Plan of Republic of Montenegro which is currently in draft version and Coastal Area Spatial Plan which is in the process of Parliament adoption defines use of space for the purpose of planned development up to 2020. This is of special importance in coastal area where is evident high pressure of urbanisation on the natural sources protection and there valorisation for the purpose of sustainable tourism.

In the scope of the complex legal and institutional reforms in the process of association and stabilization development of National Contingency Plan for sea pollution incidents is under preparation. NCP developed following IMO regulations is going to define institutional organization and implementation mechanism which will enable national authorities to provide efficient response on all types of pollution particularly those caused by unintended incidents at sea. In such a way developed NCP will be part of Sub-regional one currently implemented by Croatia, Slovenia and Italy. Strategy for fishery development defines sustainable use of sea products in a balance with sustainable management of marine eco system. 3.3. Compliance with other Community Policies By its nature and focus, the Program will encompass main EU policies: regional policy, environmental protection, equal opportunities and information society. The Programme is in line with the main EU objectives until 2010 set in the Lisbon strategy by improving economic competitiveness of the border area and better employability through investment in cooperation and networking in tourism sector (which is key driver of regional economies), human resource development, protection of natural and cultural heritage, as well as environment. Strengthening the competitiveness and economic and social integration of the cross-border area is inline with Community Strategic Guidelines for the cohesion policy in 2007-2013 (COM (2005)0299) on cross-border cooperation. In addition, the Program will also support the Goeteburg objectives with promotion of sustainable management of the environment through establishment of cooperation among institutions and implementation of joint actions for nature and environment protection.

The Program will support gender mainstreaming and equal opportunities policies through implementation of projects that will clearly demonstrate their efforts to create equal opportunities for genders, ethnicities and disabled according to the principles of European Union. In general, Implementation of horizontal principles will be guaranteed through

Page 28 of 78

definition of target groups, eligible actions under defined measures, evaluation procedures and indicators on the level of Priorities and measures. In addition, when awarding public contracts, Croatian and Montenegrin authorities will have to implement PRAG – Practical guide to contract procedures for EC external actions. 3.4. Description of Specific Priority Axes and Measures 3.4.1. Priority Axis 1 Creation of favourable environmental and socio-economic conditions in the programming area by improvement of the co-operation in the jointly selected sectors and good neighbourly relations in the eligible areas 3.4.1.1. Background and Justification The Situation and SWOT analyses have shown that, among others, weaknesses of the Programming area are connected with lack of cross border cooperation in ecological protection and interventions, lack of cooperation in nature and cultural heritage protection, undeveloped civil sector, lack of cooperation in the development and promotion of the Programming area as an integral tourist destination, lack of cooperation between local self government in joint solution of similar problem, as well as destroyed social and cultural connections between people in the bordering area. Main risks for the area are those in environmental area: pollution from the Mediterranean Sea and risks deriving from new road and sea corridors. Furthermore, there is a lack of specific/targeted educational programs for adults as well as targeted education programs for tourism workers.

On the other hand main strengths of the area are cultural and nature resources suitable for accelerating economic development. The whole area is a world wide known tourist destination containing 2 cities under UNESCO protection (Dubrovnik and Kotor) and 3 National parks. It is also considered as a part of the ecological network covering areas of national and international ecological importance for biodiversity conservation. The Situation Analysis shows that income generated from tourism and other related services have highest share in GDP of the regions. In recent years quality of services is rising and there is a clear strategic orientation for their further development. In addition, the area has natural potential for agricultural development, specially organic-agriculture, mariculture and high quality food production. These natural preconditions would be best used to network producers and tourist infrastructure (hotels, restaurants) and in the certification and branding of the products.

Among others, one of the main opportunities for the area is mainly connected with development of integrated tourism products including both coastal and mountain tourism offer. In addition, availability of IPA funds for both countries will enable local and regional level government to raise funds for economic and social development and IPA funds for cross-border programs will specifically enable regions to invest in actions recognized as joint priorities (i.e. actions in area of environmental protection, in development of joint tourist and cultural space and community development).

According to the above described strengths, weaknesses and opportunities on the one hand and very limited resources on the other hand, during the joint consultative process relevant stakeholders decided to define just one Priority plus TA priority and up to three measures per priority. Also, due to limited resources and lack of overall capacities to manage cross-border development activities, they decided not to address problems such as underdeveloped infrastructure, discrepancies between urban and rural areas, low employability of work force etc., but to focus rather on soft activities that can boost local development in general and enhance level of cooperation.

Page 29 of 78

Therefore and in order to cover as much as possible of jointly recognized problems and needs in selected areas of cooperation, Priority 1 is defined in the broadest possible sense rather than being focused on a limited number of specific issues: Priority 1: Creation of favourable environmental and socio-economic conditions in the programming area by improvement of the co-operation in the jointly selected sectors and good neighbourly relations in the eligible areas.

Specific objectives of Priority 1 are:

1. To establish cooperation between institutions in charge of environment protection, as well as natural and cultural heritage protection through implementation of joint programs, education, know-how transfer and awareness raising activities

2. To create recognizable tourist products based on the natural and cultural assets of the Programming area and re-establish social connections in cross-border area through supporting traditional and contemporary culture;

3. To increase and enhance cooperation between institutions, citizens and civic

organizations in the areas such are tourism, education, culture and other that are in line with Programme objective, in order to boost community development and improve neighbourhood relations

Following to the specific objectives, this priority will be implemented through three measures, one of which (c) will be specifically focused on bringing together people, local communities and civic organizations via people-to people actions , in order to establish a solid base for economic and social development of the Programming area: The 3 measures are:

a) Joint actions for environment, nature and cultural heritage protection

b) Joint tourism and cultural space

c) Small cross-border community development projects

3.4.1.2. Measures 3.4.1.2.1. Measure 1.1.: Joint actions for environment, nature and cultural heritage

protection Improvement of systems for environment, nature and cultural heritage protection in the Programming area has been identified by Program beneficiaries as a priority cooperation activity since environment and natural heritage are the main economic resource of the area. This measure is expected to establish sustainable cross-border networks for joint environmental, nature and cultural protection. It is intended to encourage cross-border cooperation in projects related to finding solutions to joint environmental problems. The development of waste management (solid waste and waste water management), land based and sea based pollution reduction, improvement of the monitoring and reporting on the state of marine and coastal eco-systems, taking into account importance of cross-border pollution reduction and control, fire protection systems and joint intervention systems in ecological threats at land and sea, including technical capacities building for realization of those measures are of utmost priority. The aim of cooperation under this measure is to stimulate development of other innovative measures and strategies for joint environmental, nature and cultural heritage protection and to educate and raise awareness of local population and local/regional government units on environmental protection and need for cooperation in that sector through public information and participation. In order to implement EU horizontal policies related to innovation and technology, this measure will support actions that will bring new innovative solutions and strategies for environmental and nature protection.

Page 30 of 78

Care will be taken to ensure that there is no operational or financial overlap with any of the measures incorporated in the Operational Programmes for Croatia under IPA Component III Regional Development.

Direct beneficiaries of this measure are non profit legal entities established by public or private law for the purposes of public interest or specific purpose of meeting needs of general interest, belonging to one of the following groups:

• Public companies in charge of communal infrastructure and waste management (Utility companies - Komunalna poduzeća)

• Emergency services

• Local and regional self-government units

• Agencies and other public bodies in charge of environmental and nature protection

• Educational and Research Public Institutes

• NGOs

• Regional/local development agencies, etc.

Types of activities eligible under this measure are:

• Joint planning and capacity building activities for solid waste management and waste water management systems

• Joint planning and capacity building activities for water supply, waste water and solid waste systems with cross border impacts

• Planning and establishment of networks for joint environmental interventions on land and sea (joint fire fighting schemes, joint interventions in case of sea pollution, purchase of equipment of joint interest/use, etc)

• Joint environmental programmes and initiatives (river catchments management, air pollution, sea pollution etc.)

• Identification and clean-up of uncontrolled waste disposal sites and development of prevention measures

• Cross-border studies and direct actions on applicability of renewable energy sources

• Cross-border studies on environmental impacts of human activities

• Awareness raising activities – public information and participation

• Education and know how transfer in environmental protection • Elaboration of cross-border regional plans and programs for interventions related to

environment protection

Page 31 of 78

• Elaboration of joint plans and programs for management of protected areas and NATURA 2000 sites

• Small-scale reconstruction of cultural/architectural heritage

• etc.

Achievement of the measure will be measured on the basis of the following indicators:

Output indicators: Number of joint programmes, strategies and measures in relation to environmental management created and implemented, number of joint awareness raising campaigns, number of studies, project documentations in terms of protection of nature and cultural heritage elaborated, number of joint networks for environmental interventions on land and sea, number of joint education programs for general population and experts (trainings, seminars etc.), number of new local initiatives for environmental and nature protection

Result indicators: Decrease in financial and environmental damage caused by unexpected pollutions, decrease in pollution emissions in the sea, permanent access to data on the state of the environment, increase in percentage of land/habitat protected, increased management of protected areas, increased capacities to deal with cross-border man-made and natural environmental risks, increased public awareness of cross-border environmental issues.

.

Page 32 of 78

3.4.1.2.1.1. Project selection criteria and delivery mechanisms In general, the eligible projects will be those which:

- encourage and improve joint protection and management of natural resources and prevent and manage environmental risks

- support links between relevant institutions/organizations from both side of the border

- have partners from both side of the border

- are environmentally sustainable.

The measure will be implemented through grants schemes and/or procurement contracts – service, works and supply (depending on the decision made by Joint Monitoring Committee).

The detailed selection and award criteria for the award of grants will be laid down in Call for proposals–Application Pack (Guidelines for applicants).

Minimum and maximum EU grant size (€) 50-300 000

Maximum size EU funding to total eligible costs(%)

85%

3.4.1.2.2. Measure 1.2. Joint tourism and cultural space Measure 1.2 is the main economic measure of this Program since tourism and tourism related services are main impetus for economic development of the area. As already mentioned these services have highest share in regional GDP. Tourism related services also employ the highest number of people in the force, therefore it is essential to broaden the spectra of services, prolong tourist season, offer higher quality of services based on authentic local products, tradition and culture. The measure is intended to enhance and improve cross-border cooperation between tourism and cultural institutions in the region.

Direct beneficiaries of this measure are non profit legal entities established by public or private law for the purposes of public interest or specific purpose of meeting needs of general interest, belonging to one of the following groups:

• Tourist associations /tourist boards

• Regional/local development agencies

• Local and regional self-government units

• NGOs

• Public and private educational and research institutes

• Chamber of commerce/crafts

• Tourism and agriculture clusters

• Institutions and associations in culture, etc

Types of actions eligible under this measure are:

Page 33 of 78

• Education schemes for SMEs and work force in tourism, particularly language training, hospitality training, researches;

• Promotion of the attractiveness of the region through tourist events

• Support to development of new tourism products (development of thematic routes, joint promotional events and materials, site exploitation etc)

• Establishment of cross border clusters in tourism

• Quality improvement schemes

• Quality Certification of local products and services

• Support to joint certification of local products

• Joint marketing initiatives

• Archaeological research in bordering areas

• Detection and documentation of common cultural heritage, scientific cave exploration

• Promotion of border region cultural heritage

• Promotion of the Programming area as an integral tourist destination

• IUCN zoning and mapping of natural locations

• IT for regional centres

• Development of UNWTO indicators using UNWTO Book of indicators

• etc.


Output indicators: Number of new tourist products developed or certified, number of joint marketing initiatives, number of quality improved schemes, number of new joint initiatives in culture etc.

Result indicators: Enriched/diversified tourist supply market due to new tourist products and higher quality of offered services, income increase from tourism services (per assisted facilities and per sector), and increased number of visitors for assisted facilities.


- promoting the integration of the tourism market and encourage cross-border contacts at regional and local level in order to improve quality of services

- encourage entrepreneurship in tourism

- support links between relevant institutions/organizations form both side of the border


- encourage equal participation by women and marginalized groups

Page 34 of 78


More detail project selection criteria will be defined later on within applicable GfA or/and calls for proposals.

The measure will be implemented through grants schemes and/or calls for proposal (depending on the decision made by Joint Monitoring Committee).


Minimum and maximum EU grant size (€) 50-300 000


85%

3.4.1.2.3. Measure 1.3. Small cross-border community development projects This measure aims at improving cooperation between people, educational institutions and civil society organizations from both sides of the border in order to boost community development and to improve neighbourhood relations. It will support people-to-people actions organized by different organizations in fields such as culture, tourism, education and others that are in line with the Programme’s objective, and will be particularly supporting marginalized groups, local democracy and the development of civil society.

Care will be taken to ensure that there is no operational or financial overlap with any of the measures incorporated in the Operational Programme for Croatia under IPA Component IV Human Resources Development.

Direct beneficiaries of this measure are non profit legal persons established under public or private law for the purposes of public interest or specific purpose of meeting needs of general interest, belonging to one of the following groups:

• Educational and research institutions

• NGOs

• Social service providers (Centres for social welfare, Health centres etc.)

• Local and regional self-government; local/municipal boards

• Local / regional Tourism Organizations

• Regional/local development agencies

Types of actions eligible under this measure are:

• Common cross-border educational programs between educational institutions

• Community building programs with emphasis on interethnic cooperation

• Cooperation between national minorities

Page 35 of 78

• Assistance to marginalised groups

• Local campaigns focused on raising awareness regarding the meaning of the CBC activities as a development instrument

• Implementation of national equality instruments on local and regional level (gender equality policies, youth policy, national minority policies etc.)

• Developing cross-border cooperation among organizations providing social and welfare services

• Actions supporting local democracy

• Small-scale collaborative projects and pilot actions between local self-governments

• Development of joint local development plans and strategies in areas of local governance

• Education schemes in culture

• Creation of cross border culture networks

• Development of cultural exchange programmes • Joint preservation of tradition

• Creation and implementation of sustainable joint culture programs (except one off events)

• Establishment of cooperation and joint implementation of programs in new media culture

• Establishment of youth cross border networks and joint culture production centres

• Capacity building of NGOs and support to intersector cooperation


Output indicators: Number of contact established through joint educational and cultural projects, number of joint education programmes, number of new joint programs for social service delivery, number of community building initiatives, number of cross-border culture networks etc.

Result indicators: Increased cross-border cooperation through joint initiatives/projects, accessibility rate of social services for local population, decrease in number of ethnic based incidents.


- promoting the sharing of human resources and facilities

- support links between relevant institutions/organizations form both side of the border


- encourage equal participation by women and marginalized groups

Page 36 of 78


More detail project selection criteria will be defined later on within applicable GfA or/and calls for proposals.

The measure will be implemented through grants schemes.


Minimum and maximum EU grant size (€) 10 000 -75 000


85%

3.4.2. Priority 2 Technical Assistance 3.4.2.1. Background and Justification The overall objective of priority 2 is to provide effective and efficient administration and implementation of the CBC programme. Technical assistance will be used to support the work of the 2 national Operating Structures and the Joint Monitoring Committee (JMC) ensuring the efficient and effective implementation, monitoring, control and evaluation of the programme. Principally this will be achieved through the establishment and operation of a Joint Technical Secretariat (JTS) and one national JTS antenna. The JTS will be in charge of the day-to-day management of the programme and will be responsible to the Operating Structures and the JMC. Technical assistance will support actions which ensure the preparation and selection of high quality programme operations and the dissemination of information on programme activities and achievements. Under the direction of the JMC the technical assistance budget will be used to carry out external programme evaluations (ad-hoc, mid-term and ex-post).

Specific objectives of the Priority 2 are: To improve the capacity of national and joint structures to manage cross-border

programmes To ensure the efficient operation of programme-relevant structures To provide and disseminate programme information to national authorities, the general

public and programme beneficiaries To improve the capacity of potential beneficiaries, particularly within the programming

area, to prepare and subsequently implement high quality programme operations To provide technical expertise for external programme evaluations

The main beneficiaries are:

Operating Structures Joint Monitoring Committee Joint Technical Secretariat (Main and JTS antenna) All other structures/bodies related to the development and implementation of

the CBC programme (e.g. Steering/selection Committee) Programme beneficiaries

In accordance to the scope of this priority, it will be implemented through two measures.

Considering that the relevant national authorities (Operating Structures in Croatia and Montenegro) enjoy a de facto monopoly situation (in the sense of Art. 168, paragraph 1, sub-paragraph c of the Implementing rules to the Financial Regulation) for the implementation of the cross-border programme, the relevant contracting authorities in both countries will

Page 37 of 78

establish an individual direct grant agreement without call for proposals with the Operating Structures for the amount provided under the TA Priority 2 in each country. Subcontracting by the Operating Structures of the activities covered by the direct agreement (e.g. TA, evaluation, publicity etc.) is allowed.

3.4.2.2. Measures 3.4.2.2.1. Measure 2.1: Programme Administration and Implementation This measure will provide support for the work of national Operating Structures, the Joint Monitoring Committee, the Joint Technical Secretariat and its antenna as well as any other structure (e.g. Steering committee) involved in the management of the programme. It will cover the administrative and operational costs related to the implementation of the programme, including the costs of preparation and monitoring of the programme, appraisal and selection of operations, organisation of meetings of monitoring committee, etc. It should be noted that the TA funds can cover the costs of staff of the Joint Technical Secretariat except salaries of seconded public officials. The measure will also ensure the provision of advice and support to final beneficiaries in project development and implementation.

Types of eligible activities:

Staffing and operation of the JTS and its antenna

Providing support to national Operating Structures in programme management

Providing support to the JMC in carrying out its responsibilities in project selection and programme monitoring

Providing logistical and technical support for JMC meetings

Programme awareness-raising and training for potential final beneficiaries

Providing assistance to potential final beneficiaries in the preparation of projects

Provision of appropriate technical expertise in the assessment of project applications

Providing support to final beneficiaries in project implementation

Establishment and support of project monitoring and control systems including first level controls

Carrying out on-the-spot visits to programme operations

Drafting of project monitoring reports and programme implementation reports

Achievement of the measure will be measured on the basis of the following indicators: Output indicators: number of JTS staff recruited, number of JMC meetings, number of staffing Operating structures trained, number of training events for potential final beneficiaries, number of project proposals assessed, number of on-the-spot visits carried out, number of monitoring reports drafted, number of relevant studies/survey carried out, number and quality of IT/office equipment. Result indicators: Increased capacity of staff in Operating Structures, increased quality of project proposals, % of IPA funding absorbed, decreased % of non-eligible costs claimed by final beneficiaries

Page 38 of 78

3.4.2.2.2. Measure 2.2: Programme Information, Publicity and Evaluation This measure will cover, inter alia, the preparation, translation and dissemination of programme related information and publicity material, including programme website. It will ensure programme awareness amongst local, regional and national decision-makers, funding authorities, the inhabitants of the programming area and the general public in Croatia and Montenegro. The measure will support the provision of expertise to the JMC for the planning and carrying out of external programme evaluations.

Types of eligible activities:

The preparation and dissemination of publicity materials (including press releases)

Establishment and management of a programme website

Organisation of promotional events (meetings, seminars, conferences, media events)

Regular production and dissemination of news letters

Carrying out regular programme evaluations


Output indicators: Number of publicity materials disseminated, number of events organized for the publicity and information of the programme, number of participants at the events organized for the publicity and information of the programme, number of visits to programme website, number of news letters produced, number of evaluations carried out

Result indicators: Increased awareness of the programme amongst the general public, increased awareness of the programme amongst the potential beneficiaries, improved programme implementation

Page 39 of 78

3.5. Summary of priorities and measures

VISION

Cross-border area between Croatia and Montenegro is recognised as a region for high quality of life and one of the most

successful European tourist destinations because of its unique and preserved natural resources, cultural and historical heritage and high quality of services, as well as a region in which socio-economic partners are empowered to achieve and manage the

optimal development potential of the area.

GENERAL OBJECTIVE Improved quality of life in cross border area between Croatia and Montenegro

Priority 1

Creation of favourable environmental and socio-economic conditions in the programming area by

improvement of the co-operation in the jointly selected sectors and good neighbourly relations in

the eligible areas.

Priority 2

Technical assistance

SPECIFIC OBJECTIVES

To establish cooperation between institutions in charge of environment, as well as nature and cultural heritage protection through implementation of joint programs, education, know-how transfer and awareness raising activities

To create recognizable tourist product based on the natural and cultural assets of the Programming area and re-establish social connections in cross-border area through supporting traditional and contemporary culture.

To increase and enhance cooperation between institutions, citizens and civic organizations in the areas such are tourism, education, culture and other that are in line with Programme objective, in order to boost community development and improve neighbourhood relations

To improve the capacity of national and joint structures to manage CBC programmes

To ensure the efficient operation of programme relevant structures

To provide and disseminate programme information to national authorities, the general public and programme beneficiaries

To improve the capacity of potential beneficiaries, particularly within the programming area, to prepare and subsequently implement high quality programme operations

To provide technical expertise for external programme evaluations

Measure 1.1. Joint actions for environment, nature and cultural heritage protection

Measure 2.1. Programme Administration and Implementation

Measure 1.2. Joint tourism and cultural space Measure 2.2. Programme Information, Publicity and Evaluation

Measure 1.3. Small cross-border community development projects

HORIZONTAL ISSUES: Cross-border capacity building

Equal opportunities Gender equality and gender mainstreaming

Sustainable development and environment protection

Page 40 of 78

3.6. Indicators

Priority 1 Creation of favourable environmental and socio-economic conditions in the programming area by improvement of the co-operation in the jointly selected sectors and good neighbourly relations in the eligible areas. Measures Indicators

Output

Number of joint programme, strategies and measures in relation to environmental management created and implemented,

Number of joint awareness raising campaigns,

Number of studies, project documentations elaborated,

Number of joint networks for environmental interventions on land and sea,

Number of joint education programs for general population and experts (trainings, seminars etc.),

Number of new local initiatives for environmental and nature protection

Measure 1.1. Joint actions environment, nature and cultural heritage protection

Result

Decrease in financial and environmental damage caused by unexpected pollutions,

Decrease in pollution emissions in the sea,

Permanent access to data on the state of the environment

Increase in percentage of land/habitat protected,

Increased rate of management of protected areas

Increased capacities to deal with man-made and natural cross-border environmental risks

Increased public awareness of cross-border environmental issues

Output

Number of new tourist products developed or certified,

Number of cross-border tourism zones,

Number of joint marketing initiatives,

Number of quality improved schemes,

Number of new joint initiatives in culture etc.

Measure 1.2 Joint tourism and cultural space

Enriched/diversified tourist supply market due to new tourist products and higher quality of offered services

Result Increased number of visitors

Income increase from tourism services (per assisted facilities and per sector)

Output

Number of joint education programmes,

Number of new programs for social service delivery,

Number of community building initiatives,

Number of contact established through joint educational and cultural projects

Number of cross-border culture networks etc.

Measure 1.3. Small cross-border community development projects

Result Increased cross-border cooperation through joint initiatives/projects

Accessibility rate of social services for local population,

Decrease in number of ethnic based incidents Priority 2 Technical Assistance

Measures Indicators

Page 41 of 78

Output

Number of JTS staff recruited, Number of JMC meetings, Number of staffing Operating structures trained, Number of training events for potential final beneficiaries, Number of project proposals assessed, Number of on-the-spot visits carried out, Number of monitoring reports drafted, Number of relevant studies/survey carried out,

Number and quality of IT/office equipment.

Measure 2.1. Programme Administration and Implementation

Result

Increased capacity of staff in Operating Structures,

Increased quality of project proposals,

% of IPA funding absorbed, decreased % of non-eligible costs claimed by final beneficiaries

Output

Number of publicity materials disseminated, Number of events organized for the publicity and information of the programme, Number of participants at the events organized for the publicity and information of the programme,

Number of visits to programme website, number of news letters produced, number of evaluations carried out

Measure 2.2. Programme Information, Publicity and Evaluation

Increased awareness of the programme amongst the general public,

Result Increased awareness of the programme amongst the potential beneficiaries,

Improved programme implementation

3.7. Financing Plan Based on the given allocations in MIFF and envisaged priorities the national and EU co-financing amounts are proposed for the IPA Cross-border Programme Croatia-Montenegro as shown in tables below. In addition, a tentative time table and indicative amount of the call for proposals in 2007 are given in Annex IV. The Community contribution has been calculated in relation to the eligible expenditure, which for the cross–border programme Croatia – Montenegro is based on the total expenditure, as agreed by the participating countries and laid down in the cross–border programme. The Community contribution at the level of priority axis shall not exceed the ceiling of 85% of the eligible expenditure. The Community contribution for each priority axis shall not be less than 20% of the eligible expenditures. The provisions of Article 90 of Commission Regulation (EC) No 718/2007 (OJ L170 29.06.2007) (IPA Implementing Regulation) apply

Page 42 of 78

Table 3.1 Allocation of IPA funds per year, in €, Croatia.

IPA CBC Croatia

National Co-fin Croatia

Total Croatia

IPA Co-fin rate Croatia

Priority 1To create favorable environmental and socio-economic conditions in the programming area 1.080.000 190.588

1.270.588

85%

2007 360.000 63.529 423.529 85% 2008 360.000 63.529 423.529 85% 2009 360.000 63.529 423.529 85% Priority 2 Technical assistance 120.000

70.000

190.000

63,2%

2007 40.000 30.000 70.000 57,0% 2008 40.000 20.000 60.000 66,6%

60.000 2009 20.000 66,6% 40.000

TOTAL

1.200.000

260.588 1.460.588 82,2%

Table 3.2. Allocation of IPA funds per year, in €, Montenegro

IPA CBC Montenegro

National Co-fin Montenegro

Total Montenegro

IPA Co-fin rate Montenegro

Priority 1To create favorable environmental and socio-economic conditions in the programming area

1.350.000 238.235

1.588.235

85%

2007 450.000 79.412 529.412 85%

2008 450.000 79.412 529.412 85%

2009 450.000 79.412 529.412 85%

Priority 2 Technical assistance

150.000

60.000

210.000 71,4%

2007 50.000 20,000 70,000 71,4% 2008 50.000 20,000 70,000 71,4% 2009 50.000 20,000 70,000 71,4%

TOTAL 1.500.000 298.235 1.798.235 83,4%

The IPA grant will be co-financed by a minimum of 15 % from state national budget and final beneficiaries co-financing. Croatia has allocated 400.000 EUR of IPA funds on yearly basis and Montenegro 500.000 EUR. As for national co-financing priority 2, Croatia has allocated 43% for the first year and 33,4% for the next two years. For priority 2, Montenegro has allocated 28,6% for all three years. This decision is linked to the fact that the Joint Technical Secretariat is placed in Kotor, Montenegro. The higher amount of allocated IPA funds from the Montenegrin side is related to enhancement of neighbourly relations, especially due to well known happenings in the programming area from the past decade. Furthermore, in terms of project activities, current capacities of the Montenegrin municipalities along the border with Croatia are significantly higher than the capacities of the municipalities along the borders with other Montenegrin neighbours. In addition, the municipalities neighbouring Croatia have already established certain cooperation with Dubrovnik-Neretva County (e.g. Kotor and City of

Page 43 of 78

Dubrovnik) and have expressed high interest for further continuation and strengthening of cooperation. In that respect, the above mentioned allocation is proposed by Montenegro. 3.8. Eligibility of Expenditure As laid down in Article 89 of IPA Implementing Regulation the following expenditure shall be considered as eligible:

(1) Expenditure incurred after the signature of the financing agreement. (2) By way of derogation from Article 34(3) of IPA Implementing Regulation, expenditure

related to: (a) value added taxes, if the following conditions are fulfilled:

(i) they are not recoverable by any means, (ii) it is established that they are borne by the final beneficiary, and (iii) they are clearly identified in the project proposal.

(b) charges for transnational financial transactions; (c) where the implementation of an operation requires a separate account or

accounts to be opened, the bank charges for opening and administering the accounts;

(d) legal consultancy fees, notaries fees, costs of technical or financial experts, and accountancy or audit costs, if they are directly linked to the co-financed operation and are necessary for its preparation or implementation;

(e) the cost of guarantees provided by a bank or other financial institutions, to the extent that the guarantees are required by national or Community legislation;

(f) overheads, provided they are based on real costs attributable to the implementation of the operation concerned. Flat-rates based on average costs may not exceed 25% of those direct costs of an operation that can affect the level of overheads. The calculation shall be properly documented and periodically reviewed.

(3) In addition to the technical assistance for the cross-border programme referred to Article 94 of IPA Implementing Regulation, the following expenditure paid by public authorities in the preparation or implementation of an operation: (a) the costs of professional services provided by a public authority other than the

final beneficiary in the preparation or implementation of an operation; (b) the costs of the provision of services relating to the preparation and

implementation of an operation provided by a public authority that is itself the final beneficiary and which is executing an operation for its own account without recourse to other outside service providers if they are additional costs and relate either to expenditure actually and directly paid for the co-financed operation.

The public authority concerned shall either invoice the costs referred to in point (a) of this paragraph to the final beneficiary or certify those costs on the basis of documents of equivalent probative value which permit the identification of real costs paid by that authority for that operation. The costs referred to in point (b) of this paragraph must be certified by means of documents which permit the identification of real costs paid by the public authority concerned for that operation.

SECTION IV IMPLEMENTING PROVISIONS The implementing provisions of this document are based on the provisions of Commission Regulation (EC) No 718/2007 (hereinafter referred to as the 'IPA Implementing Regulation'), in particular those for the cross-border co-operation component (Part II, Title II, Chapter III, Sections 1 and 3), as well as on the Financial Regulation (EC, Euratom) No 1605/2002, as amended by Council Regulation No 1995/2006, and in particular Articles 53, 53a, 53c, 54

Page 44 of 78

and 57 thereof, which lay down provisions for centralised and decentralised management of the EC funding. While Croatia will be managing the programme according to decentralised management, Montenegro will be managing the programme according to the centralised management model. 4.1. Programme Structures and Authorities The programme management structures are:

o National IPA and/or IPA–Component II Co-ordinators o Operating Structures o Joint Monitoring Committee (JMC) o Joint Technical Secretariat (JTS)

Each participating country has established an Operating Structure (OS) for the part of the programme concerned. The Operating Structures of each participating country shall cooperate closely in the programme management. The beneficiary countries have also set up a Joint Monitoring Committee, which shall ensure the effectiveness and quality of the implementation of the programme. In line with the IPA Implementing Regulation (Article 139), the Operating Structures have established a Joint Technical Secretariat to assist the OSs and the JMC with their respective duties. 4.1.1. Operating Structures (OS) in Beneficiary Countries

Croatia Montenegro • Ministry of the Sea, Tourism, Transport

and Development (MSTTD) - line ministry responsible for the management and implementation of the Component II of IPA

• Secretariat for European Integration - institution responsible for coordination of the Instrument for Pre-Accession Assistance (IPA 2007-2013)

• CFCU in the Ministry of Finance - Implementing Agency

The OS of each country cooperate closely in the programming and implementation of the cross-border programme establishing common coordination mechanisms. The OSs are responsible for the implementation of the programme in their respective countries. 4.1.1.1. Croatia The IPA–Component II Co–ordinator (within the meaning of Art. 22.2.b of the IPA Implementing Regulation) is the State Secretary in the Ministry of the Sea, Tourism, Transport and Development (MSTTD).

The Operating Structure in Croatia consists of the line ministry responsible for the management and implementation of the Component II of IPA: the Ministry of the Sea, Tourism, Transport and Development (MSTTD) and the Implementing Agency: the CFCU in the Ministry of Finance (The Programme Authorising Officer is the Head of CFCU Assistant Minister in the Ministry of Finance)20. The Operating Structure will be accredited by June 2008 at the latest in line with IPA Implementing Regulation (Art. 76 & 139).

20 Government Decision on the Nomination of the Responsible Persons for the Management of IPA(OG no 18/07)

Page 45 of 78

The Division of Responsibilities between the MSTTD as the responsible line ministry and the CFCU as the Implementing Agency is defined in the Government Decree on the Scope and Contents of the Responsibilities and Authorities of the Bodies Responsible for the Management of IPA (OG no. 18/07).

4.1.1.2. Montenegro The National IPA Co–ordinator (NIPAC) in Montenegro is the Deputy Prime Minister for European Integration. The IPA–Component II Co–ordinator is the Secretary of the Secretariat for European Integration The Operating Structure in Montenegro is the Secretariat for European Integration (which is the institution responsible for coordination of both Component I and II of the Instrument for Pre-Accession Assistance (IPA 2007-2013) which are available to Montenegro as a potential candidate country)

4.1.1.3. Responsibilities of the Operating Structures The Operating Structures are inter alia responsible for:

• jointly preparing the cross-border programme in accordance with Art. 91 of the IPA Implementing Regulation;

• jointly preparing programme amendments to be discussed in the Joint Monitoring Committee (JMC);

• participating in the Joint Monitoring Committee and guiding the work of the JMC in programme monitoring

• nominating the representatives of the Joint Steering Committee to be appointed by the JMC

• setting up the Joint Technical Secretariat;

• preparing and implementing the strategic decisions of the JMC;

• reporting to the NIPAC/ IPA–Component II Co–ordinator on all aspects concerning the implementation of the programme;

• establishing a system, assisted by the JTS, for gathering reliable information on the programme’s implementation and providing data to the JMC, NIPAC/ IPA–Component II Co–ordinator or the European Commission;

• ensuring the quality of the implementation of the cross-border programmes together with the JMC;

• sending to the Commission and NIPAC the annual report and the final report on the implementation of the cross-border programme after examination and approval by the JMC;

• ensuring reporting of irregularities;

Page 46 of 78

• guiding the work of the Joint Technical Secretariat;

• promoting information and publicity-actions;

In Croatia, where the programme is implemented under decentralised management, the Operating Struicture and the Implementing Agency are also in charge of:

• contracting the projects selected by the Joint Monitoring Committee;

• payments accounting and financial reporting aspects of the procurement of services, supplies, works and grants for the Croatian part of the Cross-border programme;

• ensuring that the operations are implemented according to the relevant public procurement provisions;

• ensuring that the final beneficiaries and other bodies involved in the implementation of operations maintain either a separate accounting system or an adequate accounting code for all transactions relating to the operation without prejudice to national accounting rules;

• ensuring the retention of all documents required to ensure an adequate audit trail;

• ensuring that the National Fund and National Authorising Officer receive all necessary information on the approved expenditure and the applied procedures;

• carrying out verifications to ensure that the expenditure declared has actually been incurred in accordance with applicable rules, the products or services have been delivered in accordance with the approval decision, and the payment requests by the final beneficiary are correct.

4.1.2. Joint Monitoring Committee (JMC)

The participating beneficiary countries shall set up a Joint Monitoring Committee for the programme within 3 months of entry into force of the first financial agreement relating to programme.

The Joint Monitoring Committee consists of representatives of the two Operating Structures and the national, regional and local authorities and socio-economic partnership representatives of both participating countries, equally represented. The Commission shall participate in the work of the Joint Monitoring Committee in an advisory capacity.

The JMC shall draw up its Rules of Procedures in order to exercise its mission in accordance with the IPA Implementing Regulation. It shall adopt them at its first meeting.

The Joint Monitoring Committee shall meet at least twice a year, at the initiative of the participating countries or of the Commission and is chaired by a representative of one of the countries on a rotating basis

The Joint Monitoring Committee shall satisfy itself as to the effectiveness and quality of the implementation of the cross-border programme, in accordance with the following provisions (according to the Article 142 of IPA Implementing Regulation):

o it shall consider and approve the criteria for selecting the operations financed by the cross-border programme and approve any revision of those criteria in accordance with programming needs;

Page 47 of 78

o it shall periodically review progress made towards achieving the specific targets of the cross-border programme on the basis of documents submitted by the Operating Structures of participating beneficiary countries;

o it shall examine the results of implementation, particularly achievement of the targets set for each priority axis and the evaluations referred to in Article 57(4) and Article 141 IPA Implementing Regulation;

o it shall examine the annual and final reports on implementation referred to in Article 144 IPA Implementing Regulation;

o it shall be informed, as applicable, of the annual audit activity report(s) referred to in Article 29 (2)(b) first indent IPA Implementing Regulation, and of any relevant comments the Commission may make after examining that report;

o it shall be responsible for selecting operations. The JMC may delegate the function to assess project proposals to a Joint Steering Committee appointed by the JMC;

o it may propose any revision or examination of the cross-border programme likely to make possible the attainment of the objectives referred to in Article 86(2) IPA Implementing Regulation or to improve its management, including its financial management;

o it shall consider and approve any proposal to amend the content of the cross-border programme;

o it shall approve the framework for the Joint Technical Secretariat’s tasks;

o it shall adopt an information and publicity plan drafted under the auspices of the Operating Structures;

Page 48 of 78

4.1.3. Joint Technical Secretariat (JTS) The Operating Structures have agreed to establish a Joint Technical Secretariat (JTS) to assist the Joint Monitoring Committee and the Operating Structures in carrying out their respective duties. The JTS is therefore the administrative body of the programme dealing with its day-to-day management. The Joint Technical Secretariat will be based in Kotor, Montenegro, with an antenna in Dubrovnik, Croatia. Having in mind institutional capacities of the MSTTD (Croatian OS) in terms of CBC management, OS in Zagreb will help the JTS staff in gaining specific knowledge and skills necessary for successful administration and implementation of the Programme, if such help will be needed. It will be done occasionally through on the job trainings and similar activities in MSTTD premises in Zagreb. It is composed of the representatives nominated by both Operating Structures. The Joint Technical Secretariat and its antenna perform their activities under the Operating Structure in Montenegro, in co-operation with the Operating Structure in Croatia.

The Joint Technical Secretariat is jointly managed by both Operating Structures.

The costs of the Joint Technical Secretariat and its antenna are co-financed under the programme’s Technical Assistance budget provided they relate to tasks eligible for co-financing under EU rules.

The Joint Technical Secretariat will be set up through two separate grant contracts directly awarded by the Contracting Authorities (CFCU in Croatia and EC Delegation in Montenegro21) to the respective Operating Structures.

Part of the JTS staff contracted in Croatia should be located in the JTS premises in Kotor (RoMN) and part in the antenna in Dubrovnik (RoC).

All Montenegrin representatives are located in the JTS premises in Kotor.

Tasks to be performed by the Joint Technical Secretariat: The tasks of the JTS and its antenna should include:

• support to the Operating Structures in the programme implementation; • perform secretariat function for the Operating Structures and the Joint Monitoring

Committee, including the preparation and mailing of documentation for meetings and the meeting minutes (in two or more languages if required);

• set up, regular maintenance and updating of the monitoring system (data input at programme and project level, on site visits);

• assist the OSs and the JMC in drawing up all the monitoring reports on the programme implementation;

• prepare and make available all documents necessary for project implementation (general information at programme level, general information at project level, guidelines, criteria, application for collecting project ideas, application pack -guidelines, criteria for project selection, eligibility, reporting forms, contracts);

• act as a first contact point for potential applicants; • run info-campaigns, trainings, help-lines and web-based Q&A in order to support

potential applicants in the preparation of project applications; • organise selection and evaluation of project proposals and check whether all

information for making a decision on project proposals are available; 21 EC Delegation in Podgorica should be operational by the end of 2007

Page 49 of 78

• provide a secretary of the Steering Committee and organise and administrate its work;

• make sure that all the relevant documentation necessary for contracting is available to the Contracting Authorities on time;

• assists the Contracting Authorities in the process of „Budgetary Clearing“ prior to contract signature;

• support final beneficiaries in project implementation, including the advice on secondary procurement procedures;

• organise bilateral events including “partner-search” forums; • develop and maintain a network of stakeholders; • create and update a database of potential applicants and participants in workshops

and other events; • carry out joint information and publicity activities under the guidance of the Operating

Structures, including setting up and maintaining an official programme website; • plan its activities according to a work plan annually approved by the JMC;

4.1.4. Role of the Commission Under decentralised management in Croatia, the Commission has a right to exercise ex-ante control of the selection of operations, as laid down in the Commission decision on conferral of management in accordance with Article 14(3) of the IPA Implementing Regulation. Under centralised management in Montenegro, in line with Article 140(1) of the IPA Implementing Regulation, the European Commission retains overall responsibility for ex–ante approval over the grant award process and, acting as Contracting authority, for awarding grants, tendering, contracting and payment functions. In addition to these standard roles, the Commission participates in an advisory capacity in the work of the Joint Monitoring Committee. 4.2. Procedures for programming, selection and awarding of funds 4.2.1. Joint Strategic Projects/ (Operations outside calls for proposals) Preference is given to implementation through single open calls for proposals. However, JMC has the possibility in some cases to identify 'Joint Strategic Projects' compliant with the provisions of Art. 95 IPA Implementing Regulation. Joint Strategic Projects are defined as those which have a significant cross–border impact throughout the Programming Area and which will, on their own or in combination with other Strategic Projects, achieve measure-level objectives.. The Terms of Reference (services) and/or Technical Specifications (supplies and works) are drafted by the Operating Structures with the assistance of JTS. The respective Contracting Authorities will tender and contract projects based on the standard PRAG procedures for the relevant types of contracts.

Page 50 of 78

4.2.2. Calls for Proposals The Cross-Border programme operates predominantly through grant schemes based on single calls for proposals and single selection process covering both sides of the border. Grant award procedures shall be compliant with provisions of the IPA Implementing Regulation (e.g. Articles 95, 96, 140, 145, etc.) Where appropriate, PRAG procedures and standard templates and models should be followed unless the provisions of the IPA Implementing regulation and/or the joint nature of calls require adaptation. a) Preparation of the Application Pack

• The JTS, under the supervision of the JMC, drafts the single call for proposals, the Guidelines for Applicants and the Application Form and other documents related to the implementation of the grant schemes, explaining the rules regarding eligibility of applicants and partners, the types of actions and costs, which are eligible for financing and the evaluation criteria, following as closely as possible the formats foreseen in PRAG;

• The Application Form should cover both parts of the project (on Croatia/Montenegro sides of the border, i.e. joint application), but with clear separation of the activities and costs on each side of the border. The elements contained in the Application Pack (eligibility and evaluation criteria, etc.) must be fully consistent with the relevant Financing Agreement.

• The drafts of the single calls for proposals, Guidelines for Applicants and the Application Form and other documents related to the implementation of the grant schemes are approved by the JMC.

• OSs submit the final version of the Application Pack to the respective EC Delegations for endorsement.

b) Publication of single Calls for Proposals

• The OSs, with the assistance of the JTS, take all appropriate measures to ensure that the nationally and regionally publicised Call for Proposals reaches the target groups in line with the requirements of the Practical Guide (see below Information and Publicity). The Application Pack is made available on the Programme website and the web-sites of the Contracting Authorities and in paper copy.

• The JTS is responsible for information campaign and answering questions of potential applicants. JTS provides advice to potential project applicants in understanding and formulating correct application forms.

• Q&As should be available on both the Programme and Contracting Authorities' websites.

4.2.3. Selection of projects following a call for proposals As provided by the IPA Implementing Regulation, the submitted project proposals will undergo a joint selection process. The project evaluation should follow the PRAG rules

Page 51 of 78

(Chapter 6.4.) as adapted by the provisions of the IPA Implementing Regulation (e.g. Article 140 on the role of the Commission in the selection of operations)22. A joint Steering Committee, designated by the JMC, will evaluate projects against the criteria set in the Application Pack and will establish a ranking list according to PRAG. On that basis, the Joint Monitoring Committee will then bring the final decision on the projects to be recommended for financing to the Contracting Authorities (Implementing Agency in Croatia, EC Delegation in Montenegro). The main steps of the procedure should be as follows:

o The JTS receives and registers the applications. o The JMC designates the joint Steering Committee and, if necessary, external

assessors, which will be provided through the TA allocation of the programme. o The Steering Committee is established with an equal representation of

representatives of the 2 countries. The voting members shall be proposed by the Operating Structures. Members of the Steering Committee are designated exclusively on the basis of technical and professional expertise in the relevant area. The JTS provides a secretariat to the Steering Committee.

o Both OSs may propose the same number of external assessors to be financed from the respective TA allocations.

o The EC Delegations in Croatia and in Montenegro should ex ante approve the composition of the Steering Committee and the external assessors.

o The Steering Committee assesses the projects against the conditions and criteria established in the Call for proposals–Application Pack and according to PRAG procedures.

o The JMC receives from the Steering Committee the Evaluation Report and the ranking list of projects and votes on accepting the proposed ranking list. The members of the Steering Committee are present at the JMC meeting to present the evaluation process. The JMC has the possibility to:

Accept the Evaluation Report and recommend the Contracting authorities to contract the projects selected.

Request one round of re-examination of the project proposals if a qualified majority of its voting members vote for such a process and under the condition that there is a clearly stated technical reason affecting the quality of the Evaluation Report i.e. it is not clear how the projects were assessed and ranked;

Reject the Evaluation Report and the list of project, if there is a justified reason to suspect the objectivity or the qualifications of the Steering Committee.

Under no circumstances is the JMC entitled to change the Steering Committee’s scores or recommendations and must not alter the evaluation grids completed by the evaluators.

o In Croatia, the ECD ex ante approves the decision of the JMC on the Projects Proposed for Financing and the Evaluation Report.

o In Montenegro the ECD approves the Evaluation Report and the list of projects selected.

o The JTS notifies each applicant in writing of the result of the selection process.

22 IPA Implementing Regulation for Component II provides, inter alia, a certain degree of decentralisation in

the evaluation and selection process, namely in beneficiary countries where IPA funds are managed under a centralised approach (e.g. where the evaluation committee is nominated by the national authorities sitting in the JMC, not by the Commission i.e. the Contracting Authority).

Page 52 of 78

o JTS shall send all the documentation necessary for contracting to both Contracting authorities within 2 weeks of the decision of the JMC.

4.3. Procedures for financing and control 4.3.1. Financing decision and contracting Financing decisions are taken by the respective Contracting Authority (CFCU in Croatia and ECD in Montenegro) based on the decision of the Joint Monitoring Committee and, in the case of Croatia, the ex ante approval of the EC Delegation. In doing so, they ascertain that the conditions for Community financing are met. Contracting Authorities and OSs may rely on the assistance of the JTS in communicating with potential grant beneficiaries during the „budgetary clearing“ process. 4.3.1.1. Croatia

• Contracting is the responsibility of the CFCU as the Implementing Agency for the Croatian part of the projects. The format of the grant contract is drafted according to the Practical Guide using the standard grant contract format and its annexes.

• The CFCU issues the grant contracts to the selected beneficiaries normally within 3 months of the decision of the Joint Monitoring Committee. If there are no derogations from the standard contract conditions annexed to the Guidelines for Applicants, the EC Delegation's approval of the Evaluation Report including the list of award proposals counts as global endorsement of the corresponding contracts.

4.3.1.2. Montenegro

• Contracting is the responsibility of the ECD as the Contracting authority for the Montenegro part of the project.

• The ECD issues the grant contract to the selected beneficiaries.

4.3.2. National Co-financing The European community contribution shall not exceed 85% of the eligible expenditure and shall not be less than 20% of the eligible expenditure. The national co-financing shall amount to a minimum of 15% and a maximum of 80% of the total eligible expenditure of the action. Contributions in kind are not eligible under the IPA regulation although they may be mentioned in project proposals as non-eligible funding Co-financing for the Technical Assistance Priority from the Croatian side will be 43% in the first year of the Programme implementation and 33,4% in the following two years. Co-financing for the Technical Assistance Priority from the Montenegrin side will be 28,6% for the first three years of the programme implementation. 4.3.3. Financial management, payments and control Financial management, payments and financial control are to be carried out by the responsible institutions on the basis of the Financial Regulation (EC, Euratom) 1605/2002 and the IPA Implementing Regulation. The procedures for financial management and control are defined in the Framework Agreements between the Beneficiary Countries and the European Commission. 4.4. Project Implementation 4.4.1. Project

Page 53 of 78

Operations selected for cross-border programmes shall include final beneficiaries from at least two participating countries which shall co-operate in at least one of the following ways for each operation: joint development, joint implementation, joint staffing and joint financing.

Individual calls for proposals will further detail the types of cooperation eligible for financing.

4.4.2. Project Partners and their roles in the joint project implementation .

1) If several partners from the same country are participating in the project, they shall appoint a National Lead Beneficiary (NLB) among themselves prior to the submission of the project proposal. The NLB:

o is responsible for implementing the part of the project on his side of the border;

o receives the grant from the Contracting authority and is responsible for transferring funds to the partners on his side of the border;

o is responsible for ensuring expenditures have been spent for the purpose of implementing the operation;

o closely cooperates with the Functional Lead Partner (see below) and provides him with all the relevant data on project implementation.

2) A Functional Lead Partner (FLP) is appointed in cases where partners from both

countries are participating in a project and are separately contracted by the Contracting Authorities of each country. In such cases, the 2 National Lead Beneficiaries shall appoint among themselves a Functional Lead Partner prior to the submission of the project proposal. The FLP is:

o responsible for the overall coordination of the project activities on both sides of the border;

o responsible for organising joint meetings of project partners, meetings and correspondence;

o responsible for reporting to the JTS on the overall project progress.

The FLP role will be detailed in the grant contract between the FLP and his Contracting authority.

The contractual and financial responsibilities of each of the NLB towards the respective Contracting authorities remain and are not to be transferred from the NLB onto the FLP. The NLBs also hold the contractual responsibilities also for the other partners and associates on their side of the border as contracted.

Page 54 of 78

4.5. Monitoring and Evaluation

4.5.1. Monitoring on Project Level 4.5.1.1. Contractual obligations National Lead Beneficiaries send narrative and financial Interim and Final Reports to their respective Contracting Authorities according to the standard terms of their grant contracts. 4.5.1.2. Cross-border project level reporting The Functional Lead Partner of the project submits Project Progress Reports to the JTS, giving an overview of the project activities and achievements on both sides of the border and their coordination according to the indicators defined in the joint project proposal. 4.5.2. Programme Monitoring Based on the project progress reports collected, the JTS drafts the Joint Implementation Report and submit it for the examination of the Joint Monitoring Committee.

The Operating Structures of the beneficiary countries shall send the Commission and the respective national IPA co-ordinators an annual report and a final report on the implementation of the cross-border programme after examination by the Joint Monitoring Committee.

The reports shall also be sent to the NAO in Croatia.



The content of reports shall be in line with the requirements of Article 144 of the IPA Implementing Regulations.

4.5.3. Programme Evaluation Evaluations shall take place in compliance with Article 141 of the IPA Implementing Regulation. The evaluation shall aim to improve the quality, effectiveness and consistency of the assistance from the Community funds and the strategy and implementation of cross-border programmes while taking account the objective of sustainable development and the relevant Community legislation concerning environmental impact. An ex-ante evaluation has not been carried out in line with the provisions of Article 141 in the light of the proportionality principle. During the programming period, participating countries and/or the European Commission shall carry out evaluations linked to the monitoring of the cross-border programme in particular where that monitoring reveals a significant departure from the goals initially set or where proposals are made for the revision of cross-border programme. The results shall be sent to the Joint Monitoring Committee for the cross-border programme and to the Commission. Evaluations shall be carried out by experts or bodies, internal or external. The results shall be published according to the applicable rules on access to documents. Evaluation shall be financed from the technical assistance budget of the programme.

Page 55 of 78

4.6. Information and Publicity The beneficiary countries and the national IPA co-ordinators shall provide information on and publicise programmes and operations with the assistance of the JTS as appropriate.

In Croatia,as well as in Montenegro, the Operating Structure shall be responsible for organising the publication of the list of the final beneficiaries, the names of the operations and the amount of Community funding allocated to operations. It shall ensure that the final beneficiary is informed that acceptance of funding is also an acceptance of their inclusion in the list of beneficiaries published. Any personal data included in this list shall be processed in accordance with the requirements of Regulation (EC) No 45/2001 of the European Parliament and of the Council23.

In accordance with Article 90 of Regulation (EC, Euratom) No 1605/2002, the Commission shall publish the relevant information on the contracts. The Commission shall publish the results of the tender procedure in the Official Journal of the European Union, on the EuropeAid website and in any other appropriate media, in accordance with the applicable contract procedures for Community external actions.

The information and publicity measures are presented in the form of a communication plan whereby the implementation shall be the responsibility of the respective OSs. Such detailed information and publicity plan will be presented in a structured form to the JMC by the JTS (see below), clearly setting out the aims and target groups, the content and strategy of the measures and an indicative budget funded under the Technical Assistance budget of the CBC programme. The particular measures of information and publicity will focus mainly on: • Ensuring a wider diffusion of the cross–border programme (translated in the local

language) among the stakeholders and potential beneficiaries

• Providing publicity materials, organising seminars and conferences, media briefings and operating a programme web site to raise awareness, interest and to encourage participation;

• Providing the best possible publicity for the Calls for proposal

• Publishing the list of the final beneficiaries.

23 OJ L 8, 12.1.2001, p. 1

Page 56 of 78

ANNEX I Joint Programming Committee, Joint Drafting Team, Partnership Group and Inter-ministerial Working Group members of the Cross-Border Programme Croatia-Montenegro

JPC members Name Institution Davor Čilić, Deputy State Secretary Central Office for Development Strategy

and Coordination of EU Funds

Franka Vojnović, Head of Department, Ministry of the Sea,

Tourism, Transport and Development

Mira Buconić County Prefect, Dubrovnik-Neretva

County

Ana Vukadinović Secretary, Secretariat for European

Integration

Siniša Stanković Assistant Minister, Ministry of Tourism

and Environment Protection

Žarko Đuranović Directorate for SME Development

Ljubinka Radulović Assistant Secretary, Association of

Municipalities

Deputy JPC members

Name Institution Jaminka Bratulić Central Office for Development Strategy

and Coordination of EU Funds

Helga Bubanović Head of Department, Ministry of the Sea,

Tourism, Transport and Development

Ivo Karamatić Deputy County Prefect, Dubrovnik-

Neretva County

Ivana GLišević Advisor, Secretariat for European

Integration

Jelena Knežević Advisor, Ministry of tourism and

environmental protection

Ana Šebek Directorate for SME Development

Vanja Starovlah Advisor for European integration,

Association of Municipalities

Page 57 of 78

DT members

Name Institution Helga Bubanović Devčić Head of Department, Ministry of the Sea,

Tourism, Transport and Development,

Mihaela Muselinović Associate, Ministry of the Sea, Tourism,

Transport and Development

Aida Cvjetković General Secretary/ Spokeswoman,


Ivana Glišević Advisor, Secretariat for European

Integration

Vanja Starovlah Advisor for European Integrations,

Association of Municipalities

Jelena Knežević Advisor, Ministry of Tourism and

Environment Protection

Ana Šebek Directorate for SME Development

Technical assistance:Name Institution Sandra Benčić „Institution and capacity building for cross-

border cooperation“, Razbor d.o.o., Croatia Boško Maravić CBIB project, independent consultant,

Montenegro Partnership group

Name Institution Croatian Chamber of Commerce, County

Chamber Dubrovnik Davorka Palinić

Branka Martinović-Vuković Dubrovnik-Neretva County

County Service for Spatial Planning,

Dubrovnik-Neretva County Barbara Savin

University of Dubrovnik, Sea and Coast

Institute Svjetlana Bobanović-Ćolić

Zdenko Medović City of Dubrovnik

Biserka Simanović City of Dubrovnik

Marko Kalauz City of Dubrovnik

Biserka Simatović City of Dubrovnik

Marijo Dabelić City of Dubrovnik

Ivo Urlić Croatian Employment Service

Tomislav Sopjanac County Roads Directorate

Page 58 of 78

Jany Hansal Desa Dubrovnik (NGO)

Ane Sindik Regional Development Agency

Sandra Belko Ministry of Culture

Miše Miloslavić Fire Department of Dubrovnik-Neretva

County

Nikolina Trojić Croatian Chamber of Commerce, County

Chamber Dubrovnik

Mato Begović Dubrovnik-Neretva County

Snežana M. Sanušar Advisor of the President, Montenegro

Ljiljana Jović Advisor for International Relations

Tijana Ljiljanić Secretariat for European Integrations

Ratka Sekulović Secretariat for European Integrations

Duška Baličević Secretariat SOKOSOR

Rafaela Lazarević Vice-president of the Municipality of

Kotor

Saša Ščekić Advisor for Local Self-government in the

Community of Municipalities of

Montenegro

Miloš Dževerdanović Advisor for Plans and Projects

Edward Kovačić K-Dir of the Municipality Fire Department

of Kotor

Dragana Vučurović Secretariat for Economy and Finances of

the Municipality of Nikšić

Ivana Jovović Secretariat for Economy and Finances of

the Municipality of Nikšić

Vesna Perović Advisor in the Secretariat for Culture

Slađana Petković Office for Prevention Vice-coordinator

Marija Nikolić Municipality Tivat

Danica Sijerković Municipality Nikšić

Miladin Mitrović Municipality Mojkovac

Andrija Popović Municipality Kotor

Inter-ministerial working group Name Institution Snježana Ivić Pavlovski Ministry of Economy, Labour and

Entrepreneurship

Ivana Podhraški Ministry of Finance

Anja Jelavić Ministry of Culture

Biserka Puc Ministry of Environmental Protection, Physical

Page 59 of 78

Planning and Construction

Jelena Letica Ministry of Science, Education and Sports

Mojca Lukšić Ministry of Agriculture, Forestry and Water

Management

Željko Ostojić Ministry of Agriculture, Forestry and Water

Management

Sanja Mesarov Croatian Employment Service

Šani Samardžić Ministry of Health and Social Welfare

Alenko Vrđuka Ministry of Interior

Marija Rajković Ministry of the Sea, Tourism, Transport and

Development

Zvonimir Nagy Ministry of the Sea, Tourism, Transport and

Development

Page 60 of 78

ANNEX II Bilateral agreements Table 1.2. Bilateral agreements

Name of treaty Date signed

Effective temporarily

Published in NN-MU

Date of effect

Publication of date of effect

Cessation

Protocol between the Government of the Republic of Croatia and the Federal Government of the Federal Republic of Yugoslavia on temporary border regime along the southern border between the two states

12/10/2002 12/10/2002

Memorandum on the agreement in realising and enhancing the mutual co-operation in fighting all forms of capital crime signed between the General Attorney’s Office of the Republic of Croatia and the Supreme State Prosecutor of the Republic of Montenegro

2/25/2005 2/25/2005

Memorandum between the Croatian Ministry of Agriculture, Forestry and Water Management and the Montenegrin Ministry of Agriculture, Forestry and Water Management

7/27/2005 7/27/2005

Agreement between the Government of the Republic of Croatia and the Government of the Republic of Montenegro on Co-operation in Plant Protection

10/18/2005

Agreement between the Government of the Republic of Croatia and the Government of the Republic of Montenegro on Co-operation in the Veterinary Field

10/18/2005 10/18/2005

Page 61 of 78

Agreement between the Croatian Ministry of Interior Affairs and the Montenegrin Ministry of Interior Affairs on police co-operation

11/22/2005 11/22/2005

Agreement between the Government of the Republic of Croatia and the Government of the Republic of Montenegro regarding Mutual Assistance in Customs matters

12/9/2005 2/2006

Establishment of Diplomatic Relations between the Republic of Croatia and the Republic of Montenegro

7/7/2006 7/7/2006

Agreement between the Public Prosecutor’s Office of the Republic of Croatia and the Supreme State Prosecutor of the Republic of Montenegro on co-operation and prosecution of the perpetrators of war crimes, crimes against humanity, and genocide

7/28/2006 7/28/2006

Page 62 of 78

ANNEX III Situation analysis - Tables Table 2.2: Change in the number of inhabitants and population density

Number of inhabitants1 Pop. Density (inhabitants per km2)2

Croatia

1991 2001 2001

Dubrovnik-Neretva County Split-Dalmatia County*

126.329

122.870

463.676

68,8

474.019 102,1

Counties Total 600.348 586.546 92,8 Croatia Total 4.784.265 4.437.460 78,2

Number of inhabitants3 Pop. Density (inhabitants per km2)4

Montenegro 1991 2003

2003

Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje ∑ eligible area Nikšić* Danilovgrad∗ Podgorica∗ ∑ adjacent region

27073 22137 11186 11547 34453 1986 20171

∑128 553

73983 14585

146121 ∑234 689

33034 22947 13630 15909 40037 20290 18482

∑164 329

75282 16523

169132 ∑ 260 937

141 69

296 130 67 80 20

37 33

117

Municipalities Total 363242 425266 99 Montenegro Total 615035 620145 45

Source:1,2 Census 1991, Census 2001, Central Bureau of Statistics RH, MSTTD data base; 3,4,Census 1991, Census 2003, Monstat, Statistical Yearbook of the Republic of Montenegro 2006; *adjacent regions

Table 2.3. : Natural population fluctuation and distribution of inhabitants by age (%)

Croatia 1 Live births 2005

Mortality2005

Natural growth 2005

Female population 15 –

49 2001

age 0-14 2001

age 15-64 2001

age >65 2001

Pop. Ageing

index (%) 2001

Dubrovnik-Neretva County Split-Dalmatia County*

1251

4970

1256

4536

-5

434

29634 (24,1%)

86,3 18,2

18,5

65,3

66,8

15,9

14,3 114465 (24,7%)

77,8

Counties Total 6221 5792 429 144099 (24,6%) 18,4 66,5 14,6 70,2 Croatia Total 42.492 51.790 -9298 1.080.121

(24,3%) 17,0 67,0 16,0 90,7

Montenegro (2003)2Live

births Mortality Natural growth

Female population 15 - 49 age

0-14 age

15-59 Age >60

Pop. Ageing

index (%)

Page 63 of 78

Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

352 252 133 219 501 240 167

931 182

2694

308 255 124 115 388 200 224

663 205

1388

44 -3 9

104 113 40 -57

268 -23

1306

8396 (25,4%) 5941 (25,9%) 3508 (25,7%) 4475 (28,1%)

10237 (25,6%) 4876 (24,0%) 4657 (25,2%)

18935 (25,2%) 3833 (23,2%)

45084 (26,7%)

17.50 17.96 18.33 19.66 19.56 21.65 17.63 20.01 20.57 21.41

62.81 62.70 64.41 65.18 61.79 59.89 62.85

62.04 59.39 63.66

19.69 19.34 17.26 15.15 18.65 18.46 19.52 17.94 20.04 14.93

83.53 79.37 68.79 55.66 70.39 61.51 83.40

65.96 72.58 50.11

Municipalities Total 5671 3870 1801 109942 19.4 62.5 18.1 69.1 Montenegro Total 8344 5704 2641 156786 17.74 67.10 15.16 62.53 EU average 4 16,8 66,9 16,3 96,7

Source: 1,Census 2001, Central Bureau of Statistics RH, MSTTD data base; 2Statistical Yearbook 2003, Institute for Public Health; *adjacent regions Table 2.4: Nationality structure of inhabitants (%) by selected nationalities

Croatia (2001)1 Croats Bosnians Montenegrins Serbs Dubrovnik-Neretva County Split-Dalmatia County*

93,3

96,3

1,43

0,19

0,3

0,13

1,96

1,19

Croatia Total 89,63 0,47 0,11 4,54 Montenegro (2003)2 Montenegrins Serbs Albanians Croats Moslems Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

28.60 46.81 29.95 45.33 47.25 11.93 90.67

62.64 67.84 56.96

52.88 30.91 35.19 40.87 27.68 7.44 4.62

26.74 25.51 26.27

0.08 0.33 1.06 0.35 7.61 72.14 0.23

0.35 0.18 1.36

2.42 7.68 19.54 1.12 0.65 0.38 0.27

0.18 0.28 2.60

0.67 0.46 1.14 1.28 6.43 3.36 0.12

0.92 0.35 5.50

Montenegro Total 43.2 32.0 5.0 1.1 4.0

Source;1 Census 2001, Central Bureau of Statistics RH; 2Statistical Office of Montenegro/Census 2003; *adjacent regions

Table 2.5: Information on the roadways in Croatian part of the programming area

Croatia Total road length

Length of national roads

Length of county roads

Length of local roads

Density of road network

2005. Km km km km m/km² Dubrovnik-Neretva County Split-Dalmatia County*

976

397

761

260

780

319 548

2.486 927 546 Croatia 28.344 7.425 10.544 10.375 501 Source: Statistical Year Book 2006 ; *adjacent regions

Page 64 of 78

Table 2.6: Information on railways in Croatian part of the programming area Croatia Length

km 2005. Dubrovnik-Neretva County Split-Dalmatia County*

22.7

45.6 Croatia 2.704 Source: MSTTD, Directorate for railways; *adjacent regions

Table 2.7: Rate of inhabitants supplied from public waterworks and connected to public drainage system in Croatia

Croatia Water supply Waste water

% % (2006) Dubrovnik-Neretva County Split-Dalmatia County.*

83

88

41

49 Total Average 85,5% 45% Montenegro Water supply1 Waste water2

(2005) Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

N/A N/A N/A N/A N/A N/A N/A

N/A N/A

N/A

Total Average Source: Croatian Water Resource Management (Hrvatske vode), Source: 1Ceed calculations using report from USAID HDP 2005

* adjacent regions

Table 2.8: Rate of occupied households/dwellings with installation in 2001 in Croatia and in 2005 in Montenegro

Croatia1 Dwellings with water supply

system

Dwellings with sewage disposal

system

Dwellings with electricity

Dwellings with central heating

2001 % % % % Dubrovnik-Neretva County

97,99

96,07

97,88

99,78

99,83

11,86

Split-Dalmatia County* 95,76 13,26 Croatia 93,65 92,75 99,48 36,18 Montenegro 2 Households with

water supply system

Households with waste water

system

Households with electricity

Households with central heating

2005 % % % % Herceg Novi Kotor Tivat Budva Bar Ulcinj

97 96 96 96 72 63

51 43 53 62 31 33

N/A N/A N/A N/A N/A N/A

NONE NONE NONE NONE NONE NONE

Page 65 of 78

Cetinje Nikšić* Danilovgrad* Podgorica*

85

91 81 74

64

60 24 60

N/A

N/A N/A N/A

NONE

NONE NONE NONE

85.1 48.1 Total Average Total Average

Source: 1 Central Bureau of Statistics, Census 2001, 2 Ceed calculations using report from USAID HDP 2005, NOTE: dwellings

*adjacent regions

Table 2.9: Gross Domestic Product

Croatia1 Regional GDP per capita (current

prices)

Regional GDP index % of national GDP3

(2004) (EUR*) Country=100 Country=100 % Dubrovnik-Neretva County

6.104

5.127

84.5

79.3

2.6

Split-Dalmatia County* 8.5

Croatia 6461 100.0 100.0 Montenegro2 Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

2,116.49 2,143.49 1,648.55 4,145.87 4,532.80 1,497.98 1,043.33

2,108.74 1,353.98 3,963.17

94.0 98.2

117.0 107.3 100.1 136.3 105.4

86.6

130.6 89.7

4.4 3.1 1.4 4.2

11.5 1.9 1.2

10.2 1.4

42.8

Montenegro 100.0

Source:1 Central Bureau of Statistics RH; 2Statistical Yearbook of the Republic of Montenegro 2004: Calculation based on GDP structure per municipalities for the period 2002-2004. Data for 2001 and 202 are used for calculation GDP index.; * adjacent regions

Page 66 of 78

Table 2.10: Agriculture population, households and utilized agriculture land, 2001, 2003

Utilised agriculture land (ha) Croatia Total agri population

Active agri population1

No of agri households**

No of agri business subjects

Total Utilized by agriculture households

Utilized by business subjects

2001 2001 2003 2003 2003 Dubrovnik-Neretva County Split-Dalmatia County*

4.773

8.092

2.741

5.184

9.723

31.953

20

7.243

20.738

7.120

20.054

124

62

684

Croatia 246.089 166.044 448.532 1.364 1.077.403,17 860.195,17 217.208,00 Ratio Dubrovnik-Neretva County/national

1,9 1,7 2,2 1,5 0,7 0,8 0,1

Ratio Split-Dalmatia County/national*

3,3 3,1 7,1 4,5 1,9 2,3 3,1

Montenegro2 2003 2003 NA 2003 NA NA NA Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

212 148 61 127 1184 1141 349 2081 772 5214

102 58 29 34 437 381 205 821 354 2001

10 7 2 2 4 6 5 33 13 50

Source: Census 2001, Agriculture census 2003;,, Central bureau for statistics, Republic of Croatia 1 Difference to “Total” refers to persons active outside their farm2, Census 2003 and Statistical Yearbook of the Republic of Montenegro 2006. * adjacent regions ** Number of agricultural households and number of agricultural business subjects are not available in Population Census 2001 but only in Agricultural census 2003 which defines agricultural household as: “…any family or other community of persons who live together and spend their income together for meeting the basic life needs, or any person living alone (single-person household), which engages in agricultural production, or has an agricultural holding, which has a single management, and uses jointly the means of production (machines, facilities, and land) and the work of the members of the household, regardless of whether its production is for personal needs alone or for sale.”

Table 2.11: Shares of the Counties in Gross Added Value (GAV) in certain sectors in the total GAV of the Republic of the Croatia, 2001, % Croatia1 2001 A B C D E F G H Dubrovnik-Neretva County Split-Dalmatia County *

2,4

3,5

2,2

19,2

0,6

5,1

0,6

6,3

5,8

14,9

2,2

7,5

1,5

8,3

6,2

9,7

2001 I J K L M N O P Total Dubrovnik-Neretva County Split-Dalmatia County *

4,3

9,2

2,8

6,3

2,7

10,6

3,5

8,2

2,8

2,6

9,5

2,9

8,2

3,6

25,3

2,5

10,8 7,9 Montenegro (YEAR) NA NA NA NA NA NA NA NA NA

Page 67 of 78

Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje

Nikšić* Danilovgrad* Podgorica*

A - Agriculture, hunting an forestry; B - Fishing; C - Mining and quarrying; D - Manufacturing; E - Electricity, gas and water

supply; F - Construction; G - Wholesale and retail trade; reparse of motor vehicles, motorcycle and household goods; H - Hotels and restaurants; I -Transport, storage and communication; J - Financial intermediation; K - Real estate, renting, business activities; L - Public administration and defence, compulsory social security; M - Education; N - Health and social work; O - Other community, social and personal service activities; P - Private household with employed persons.

Source: 1 Central Bureau of Statistics, 2001; *adjacent regions Table 2.12: Number of SMEs in regions/counties Croatia 1 SMEs SMEs County SMEs

contribution to total SMEs output

(County share in national SME

revenue)

SMEs contribution to overall GDP

2004 No. Total revenue % % 7.313.645.507

1,51% Dubrovnik-Neretva County N.a.

2.292

Split-Dalmatia County * 7.227 33.955.956.235 7,1% N.a. Total Montenegro2 SMEs SMEs SMEs contribution to

total SMEs output SMEs contribution to

overall GDP

2006 No. Turnover / year % % Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

1143 611 398

1155 1044 552 362

1101 258

4580


N/A N/A N/A


N/A N/A N/A


N/A N/A N/A

Total 11.204 Source: 1 FINA (Financial Agency) 2 Pension and Disability Fund October 2006.; *adjacent regions

Table 2.13: Entrepreneurs and Employed by Activities

Page 68 of 78

Croatia1 No. of Entrepreneurs

Rate of entrepreneurs in total number

of entrepreneurs (per activity)

No. of Employed

Rate of Employed in total number of employed (per activity)

2005 % %

Agriculture, Hunt and Forestry

53 2.1% 410 2,2%

Fishery 27 1.1% 64 0.3%

Mining and Extracting

11 0.4% 259 1.4%

Processing Industry 202 8.0% 1,979 10.5%

Power, gas and water supply

10 0.4% 356 1.9%

Construction 187 7.4% 2,586 13.7%

Retail sale and wholesale

805 31,9% 3,770 20.0%

Hotels and restaurants

318 12.6% 4,521 24.0%

Transport, storage and connections

194 7.7% 2,938 15.6%

Financial business 6 0.2% 23 0.1%

Real estates business, renting

584 23,2% 1,183 6.3%

Public administration and defence, obligatory social insurance

2 0.1% 20 0.1%

Education 13 0.5% 35 0.2%

Medical and social care

38 1.5% 114 0.6%


Other social, and private services

72 2.9% 599 2.9%

Montenegro2 NA NA NA NA 2005 Eligible area Agriculture, Hunt

and Forestry 1183

Fishery 65

Mining and Extracting

373

Processing Industry 4509

Power, gas and water supply

1275

Construction 1667

Retail sale and wholesale

8709

Hotels and restaurants

5212

Page 69 of 78

Transport, storage and connections

5542

Financial business 791

Real estates business, renting

1297

Public administration and defence, obligatory social insurance

5483

Education 2756

3805 Medical and social care

Other social, and private services

2995

Source: 1 FINA (The Financial Agency) 2 Statistical Yearbook of the Republic of Montenegro 2006. Table 2.14.: Employment structure by economic sectors (%) Croatia1 Agricultural Industry Services Others (2005) % % % % Dubrovnik-Neretva County

1,95

1,14

18,9

79,1

67,5

n.a.

31,28 n.a. Split-Dalmatia County * Montenegro2 Agricultural Industry Services Others 2006 % % % % Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

1.17 1.14 0.53 0.53 3.70 7.98 3.72

4.85 7.28 4.68

16.94 12.00 10.67 10.70 13.61 19.45 34.20

38.24 26.67 21.07

41.39 45.85 39.90 66.70 51.65 40.95 26.09

24.78

40.49 41.01 48.89 22.07 31.04 31.62

26.07 33.94

35.98

32.14 39.98 40.31

Source:, Source: Statistical Yearbook 2006, Central bureau for statistic Republic of Croatia, NOTE: data is compiled by authors on the basis of NCEA classification where Agricultural activity includes primary economic activities: Agriculture, hunting and forestry and Fishing, Industry includes economic activities of Mining and quarrying, Manufacturing , Electricity, gas and water supply ,and Construction, and Services include Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods, Hotels and restaurants, Transport, storage and communication, Financial intermediation, Real estate, renting and business activities, Public administration and defense; compulsory social security, Education, Health and social work and Other community, social and personal service activities, 2Statistical Yearbook of the Republic of Montenegro 2006. ; *adjacent regions

Table 2. 15. Visits and overnight stays Croatia Foreign

Guests/Arrivals Domestic

Guests/ArrivalsOverall Guest

nights Guest nights per

inhabitant (2005) No. No. No. Ratio No. Dubrovnik –Neretva County Split-Dalmatia County*

806 949 1 229 648

102 425

4 478 495 8 028 642

36,4

205 618 17,3

Montenegro Foreign

Guests Domestic Guests

Overall average Guest nights

Guest nights per inhabitant

Page 70 of 78

(2005) No. No. No. ratio % Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

43,270 19,086 15,607

124,394 25,420 16,858 1,749

1,787

85 14,826

106,007 37,722 21,609

194,824 77,600 65,337 6,879

3,008

35 14,993

1,176,977 306,378 280,655

2,048,852 746,407 462,991 33,532

11,525

121 53,886

3562.93 1335.15 2059.10

12878.57 1864.29 2281.87 181.43

15.31 0.73

31.86

Source: Statistical yearbook 2006, Central bureau for statistics Republic of Croatia, 1Statistical Yearbook of the Republic of Montenegro 2006. * adjacent regions

Table 2.16: Education attainment of inhabitants1 (%) Croatia24 < than primary Primary Secondary University, MSc, PhD 2001 % % % % Dubrovnik-Neretva county

1,7% 32,5 51,8 13,6

Split-Dalmatia County* 3,51% 30,23% 52,09% 13,49%

Montenegro2 < than primary Primary Secondary University, MSc, PhD 2003 % % % % Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

8.08 10.78 7.53 6.81 14.23 27.02 12.71

11.98 13.72 9.50

15.60 18.27 16.58 15.70 23.01 24.69 25.55

22.11 24.90 21.06

57.40 52.28 59.52 58.18 48.43 37.86 50.07

53.85

18.92 18.67 16.38 19.31 14.33 10.44 11.67

12.06

52.01 9.37 53.26 16.18

Source: 1 Census, 2001, percentages calculated by authors, 2Census 2003, book 4. ; *adjacent regions

Table 2.17: Unemployment structure by sex and age1

Age group Croatia1 Unemployment rate Male Female

15-24 25-49 +50 2005 % No./% No./% No./% No./% #/% Dubrovnik-Neretva county Split-Dalmatia county

18,3 %

22,3%

3288 (39,5%)

14976 (37,76)

5.026 (60,5%)

24677 (62,2%)

1291 (15,5%)

7609

5088 ((61,2%)

25037 (63,1%)

1935 (23,2%)

7007 (17,7%) (19,1)

Page 71 of 78

Montenegro2 Unemployment rate Male Female 15-24 25-49 50-64

2003 % No. No. No. No. No. Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

11.73 16.90 15.38 12.01 13.71 14.53 16.68

15.99 16.32 13.66

2,089 2,100 993 926

2,842 1,514 1,722

6273 1412

11554

1,786 1,778 1,103 985

2,646 1,334 1,361

5765 1285

11557

927 860 523 479

1,534 944 798

3429 775

6645

2,422 2,535 1,323 1,259 3,419 1,704 1,953

7933

476 467 237 157 463 173 313

1603 14445

584 293

1831 Source: 1Croatian Employment service, Yearbook 2005, www.hzz.hr, 2Census 2003, book no. 19 ; *adjacent regions

Table 2.18: Unemployment structure by education

Education Croatia1 Unemployment

rate < than primary Primary Secondary University, MSc, PhD 2005 % No. No. No. No. Dubrovnik-Neretva County Split-Dalmatia County *

18,3%

22,3%

186 (2,23%)

758 (1,9%)

1.347 (16,20%)

7.200 (18,1%)

5888 (70,8%)

27343 (68,9%)

893 (10,7%)

4352 (10,9%)

Montenegro2 Unemployment rate < than primary Primary Secondary University, MSc, PhD

2003 % No. No. No. No. Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

11.73 16.90 15.38 12.01 13.71 14.53 16.68

15.99 16.32 13.66

49 60 40 22 149 184 54

108 28 505

345 473 220 177

1070 554 694

1696 553

4222

2838 2650 1542 1363 3527 1615 2036

9111

598 647 270 272 604 220 227

1886 16143

966 105

1876 Source: 1Croatian Employment service, Yearbook 2005, www.hzz.hr 2Census 2003, book no.19. ; *adjacent regions

Table 2.19: Employment information by male / female population classification Croatia1 Work capable

citizens Work capable mail population age 15-

65

Work capable female population

age 15-59

Total number of employed in work capable citizens

2001 No. No. No. No. Dubrovnik-Neretva County

72450

274862

37006

35444

133455

38290

Split-Dalmatia County * 141407 136501 Montenegro2 Work capable

citizens Work capable mail population age 15-

64

Work capable female population

age 15-64

Total number of employed in work capable citizens

2003 No. No. No. No.

Page 72 of 78

http://www.hzz.hr/

http://www.hzz.hr/

Herceg Novi Kotor Tivat Budva Bar Ulcinj Cetinje Nikšić* Danilovgrad* Podgorica*

14280 9828 6068 7379 16914 7661 8483

32134 6889 75557

7619 5090 3260 3769 9535 4850 4534

18682 3986

41187

6508 4664 2776 3535 7116 2651 3877

13096

10405 5950 3972 5468

11426 4813 5400

20096

2787 4192 33604 52446

Source: 1Census 2001, table 14 , 2Census 2003, book no. 19., *adjacent regions

Table 2.20: Nature protection areas

Croatia1 Montenegro Dubrovnik-Neretva County NP - Mljet Special reserves in the sea - Malostonski bay Other special reserves: - Forest vegetation - islands Lokrum, Velika dolina - NP Mljet - zoogical-ornytological - islands Mrkan, Bobara and Supetar – Cavtat, Pod Gredom – Vid, Prud – Metković, Orepak - Kula Norinska - ichtyological-ornytological - southeast part of the delta of the river Neretva and small island Osinj Forest park - Velika and Mala Petka – Dubrovnik, Osmoliš – Brsečine, Trsteno – Brsečine, Donje Čelo – Koločep, Gornje

NP Lovćen protected area is 64km2 NP Skadar Lake protected area is 400km2 Planned protected areas: - Planned NP - Mountain Prokletije - Planned regional parks: Orjen, Ljubišnja,

Rumija (especially locality Lušinj), Komovi (especially localities Planinica, Maglić and Žijovo), Morača basin (especially localities Žurim and Captain’s Lake).

Important Bird Areas: Skadar Lake, Šasko Lake, Solana, Durmitor and Biogradska gora.

Page 73 of 78

Čelo – Koločep, city park Hober – Korčula, Predolac-Šibanica – Metković, small island Ošjak - Vela Luka bay, cyperus plantings “Pod Gospu“ - Orebić Protected area - Rijeka Dubrovačka, Saplunara – Mljet, Vučina bay with the seaside – the peninsula Pelješac, Prapratno bay – Pelješac, Konavoski dvori – Konavle, the island Badija – archipelago of the east Korčula, Modro oko and the lake Desne – the town Ploče, region “Kočje“ - Žrnovo on the island Korčula Nature monument: - geomorphological - Močiljska cave - Podbrežje Osojnik, the cave Šipun – Cavtat, the cave Gromačka – Gromača, the cave Rača– Lastovo, Vela spilja - Vela Luka - rare tree specimen - holly oak - Žrnovo on the island Korčula, juniper-tree group– Plat Park architecture monument: - arboretum - Trsteno - park - the park Foretić – Korčula - individual tree- plane 1 – Trsteno, plane 2 – Trsteno , cyperus - Čara on Korčula, caperus – Metković - tree group- cyperus group by the church Gospa od Karmela – Orebić, cyprus avenue by the church Velika Gospa – Orebić, cyprus avenue – Korčula

Source: 1Environmental plan of the Dubrovačko – neretvanska County, County Bureau for Environmental Planning in Dubrovnik, 2003, page 307

Page 74 of 78

Table 2.21: Rate of the protected areas in the region/counties

Craotia1 Protected areas 2003 ha Dubrovnik-Neretva County

25.468,5*

Montenegro Protected areas (YEAR) km2

Herceg Novi Kotor Tivat

N/A N/A N/A

Budva N/A Bar N/A Ulcinj N/A Cetinje

N/A

Source: 1Environmental plan of the Dubrovnik – Neretva County, County Bureau for Environmental Planning in Dubrovnik, 2003, page 143, * Relates to land and the sea

ANNEX IV Tentative time table and indicative amounts of the

call for proposals in 2007 Tentative Timetable and indicative amount of the call for proposals for Priority 1: Creation of favourable environmental and socio-economic conditions in the programming area by improvement of the co-operation in the jointly selected sectors and good neighbourly relations in the eligible areas. For the budget 2007, the proposition is to launch one call for proposals. All three measures will be included into the first call, covering both: “big” (value of €50-300,000) and small (value of €10-75,000) grants.

Country Call for proposal (priority

1)

Launch date

Signature of

contracts

Project completion

Indicative amount

IPA

Indicative amount National

Indicative amount TOTAL

Croatia

360,000

63,259

423,529

Montenegro

CfP 1: (all three measures; value of grants €50-300,000 and small grants €10-75,000)

September2008

May 2009

August 2010

450,000 79,412 529,412

TOTAL 810,000 142,671 952,941

Page 75 of 78

Tentative Timetable and indicative amount of assistance under Priority 2: Technical Assistance It has been envisaged that the Priority 2 Technical Assistance will be implemented through separate grant contracts directly awarded to the Operating Structures. The same time-table is envisaged for both countries in order to ensure compatibility of advice provided and sound coordination vis-à-vis project implementation. Country Request

for grant award

Signature of contract

Subcontracting Project completion

Indicative amount IPA

Indicative amount National

Indicative amount TOTAL

Croatia March 2008

April 2008

July 2008 September 2010 40,000 30,000 70,000

Montenegro March 2008

April 2008

July 2008 September 2010 50,000 20,000 70.000

TOTAL 90,000 5,000 140,000

Page 76 of 78

ANNEX B FRAMEWORK AGREEMENT BETWEEN THE COMMISSION OF THE EUROPEAN COMMUNITIES AND THE GOVERNMENT OFMONTENEGRO, DATED 15/11/2007 ON THE RULES FOR CO-OPERATION CONCERNING EC-FINANCIAL ASSISTANCE TO MONTENEGRO IN THE FRAMEWORK OF THE IMPLEMENTATION OF THE ASSISTANCE UNDER THE INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA)

Page 77 of 78

ANNEX C REPORTING













Page 78 of 78


IPA CBC

Serbia – Montenegro

Date: 30.05.2007

Republic of Serbia Ministry of Finance

Republic of Montenegro

Secretariat for European Integration

Cross-border Programme

Page 2 of 49

TABLE OF CONTENT

GLOSSARY OF ACRONYMS 4

SECTION I. DESCRIPTION AND ANALYSES OF THE ELIGIBLE AREAS ..................... 5

1. Summary of Programme and Programming Process .....................................5 1.1 Summary of Programme ...............................................................................5 1.2 Summary of the Programming Process ........................................................61.3 National CBC Committees ............................................................................6

2. The map and the description of the eligible area ............................................7 3. Current situation in eligible area ......................................................................8

3.1 History ...........................................................................................................8 3.2 Demography .................................................................................................8 3.3 Ethnic Minorities ...........................................................................................9 3.4 Geographical Description ............................................................................10 3.5 Infrastructure ...............................................................................................10 3.6 Economy ..........................................................................................................13 3.7 Human Resources ...........................................................................................18 3.8 Environment and Nature ..................................................................................19 3.9 Culture .............................................................................................................20 3.10 Summary indicating gaps, disparities, and potentials for development .........20 3.11 SWOT Analyses of eligible area ....................................................................22

SECTION II. PROGRAMME STRATEGY ............................................................ 26

1. Experience with cross border activities ............................................................26 1.1 Lessons Learned .............................................................................................26

2. Co-operation Strategy .....................................................................................26 2.1 Summary conclusions from description of area ...............................................26 2.2 Overall Strategic Objective of the Cross Border Programme........................... 27 2.3 Specific Objectives ..........................................................................................27

3. Priority and Measures ..................................................................................... 28 3.1 Priority I ..........................................................................................................28 3.2 Priority II ..........................................................................................................30 3.3 Output and Results Indicators .........................................................................32

4. Coherence with other programmes................................................................... 33 4.1 Serbian Programmes .......................................................................................33 4.2 Montenegro Programmes ................................................................................33

SECTION III. FINANCIAL PROVISIONS ............................................................. 36

1. Financing plan for cross-border programme 2007 – 2009 ...........................36

SECTION IV. IMPLEMENTING PROVISIONS ...................................................... 37

1. Programme Structures .......................................................................................37 1.1 National IPA Co-ordinator ................................................................................37 1.2 Operating Structures .......................................................................................37 1.3 Joint Monitoring Committee .............................................................................39


Page 3 of 49

1.4 Joint Technical Secretariat ..............................................................................41 1.5 Contracting Authorities .................................................................................... 43 1.6 Programme Beneficiaries ................................................................................43

2. Project Generation ..............................................................................................44 3. Project Selection .................................................................................................45

3.1 Types of projects .............................................................................................45 4. Financial Management ........................................................................................45 5. Programme Monitoring and Evaluation ............................................................45 6. Programme Publicity ..........................................................................................46


Page 4 of 49

GLOSSARY OF ACRONYMS CBC Cross-border Cooperation


EU European Union









PRAG Practical Guide for Contract Procedures financed from the general budget

of the European Union in the context of external actions




UNSCR United Nations Security Council Resolution

EC European Commission

SFRY Socialist Federal Republic of Yugoslavia

MoF Ministry of Finance

SEI Secretariat for European Integration

SEETO South East European Transport Observatory

GSM Global Service Providers

FDI Foreign Direct Investments

LED Local Economic Development

UNESCO United Nations Educational, Scientific, and Cultural Organization

SAA Stabilization and Association Agreement

CEFTA Central European Free Trade Agreement

CA Contracting Authority


Page 5 of 49

SECTION I. DESCRIPTION AND ANALYSES OF THE ELIGIBLE AREAS

1. Summary of Programme and Programming Process

1.1 Summary of Programme As component II of the European Union’s new financial Instrument for Pre-accession Assistance (IPA), this is the first cross-border programme on the border between the pre-accession countries of the Republic of Serbia (hereafter described as Serbia) and Republic of Montenegro (hereafter described as Montenegro), for the period 2007-2013. It will be implemented under centralised management.

The total surface of the eligible area is 19,432 km2 with a total of 874,787 inhabitants. The total border length between the two countries is 203 km. The eligible area covers 10,063 km2 on the Serbian side (11 % of its territory), with 604,626 inhabitants, and 9,369 km2 on the Montenegrin side (68 % of its territory), with 270,161 inhabitants.

The actual border area is mainly mountainous and relatively inaccessible, with the economic centres located in the larger towns, at some distance from the border.

Demographic trends are negative, with declining and aging populations in the rural areas and migration and emigration of the working age population to towns and cities outside of the eligible area or abroad.

Economic activities are mainly based on the natural resources, and are concentrated on agriculture, forestry and mineral extraction. However, a significant textile industry is located on the Serbian side of the eligible area.

The transport infrastructure is in need of modernisation and rehabilitation, although the rail corridor between the port of Bar and Belgrade is the principle economic artery of the area. Podgorica international airport is the nearest to the area, some three hours’ drive by road.

SME development is slow and requires additional incentives to become a significant economic factor of economic growth, particularly in rural areas.

There are significant opportunities for the development of the tourist sector in the area. On the Serbian side, there is a developed tourist base. However, in Montenegro, fewer and a less developed tourist infrastructure is present in spite of attractive scenery and natural resources. This is a consequence of the area’s relatively remote position, inadequate transport infrastructure and lack of investments.

The eligible area’s environment remains in good shape, despite some hot spots of pollution and the existing over-burdened waste disposal services that cannot cope with significant or uncontrolled growth in population or industrial activity. The mountains and forests, an important environmental asset of the area, are particularly vulnerable to unbalanced economic utilization, increases in air and water pollution initiated by unsustainable economic growth.

The main challenge for the area is to better utilize its considerable assets and resources to revitalise the economy. The objective of increasing regional co-operation is supported by the absence of language barriers and common historic heritage. Economic and social co-operation between the communities is an effective instrument of confidence building and overcoming conflicts from the past and the existence of new state borders. This is the core goal of the 2007-2013 cross-border programme’s strategic approach. The overall strategic goal of the Programme is:


Page 6 of 49

To bring together the people, communities and economies of the border area to jointly participate in the development of a cooperative area, using its human, natural, cultural

and economic resources and advantages.

The programme will be implemented on one Priority axis:

Social and economic cohesion through joint actions to improve physical, business, social and institutional infrastructure and capacity.

1.2 Summary of the Programming Process Following the introductory meeting between Serbia and Montenegro in Belgrade on February 1st and through a number of bilateral meetings the following process was adopted:

• Formation of a Joint Programming Committee/Drafting Team by both countries, representing the competent authorities and beneficiaries (Ministry of Finance, in case of Serbia, and Secretariat of European Integration in case of Montenegro);

• Submission of the proposals for eligible areas of both countries for approval by the EC;

• First draft of the SWOT analysis and description of each side of the eligible area prepared by CBIB on the basis of regional strategic documents and data collection through questionnaires and interviews (98 interviews conducted in total; 58 in Serbia eligible area and 40 in Montenegro eligible area); two SWOTs combined into one joint document;

• Presentation of the combined SWOT analysis and discussion by Drafting Teams at a meeting in Podgorica on April 5th, together with feedback for improvements;

• Ministry of Finance (Serbia) and Secretariat of European Integration (Montenegro) agree on financial allocation from IPA for cross-border programme;

• Final draft of the cross-border programme prepared and agreed on by both sides at the final meeting of the Joint Programming Committee;

• Joint submission of the cross-border programme to the European Commission by May 31st 2007.

01 February 2007, Belgrade First bilateral meeting 06 March 2007, Belgrade 1st Drafting Team meeting 06 March 2007, Belgrade 1st Joint Programming Committee meeting 05 April 2007, Podgorica 2nd Joint Programming Committee meeting 10 May 2007, Belgrade 3rd Joint Programming Committee meeting

As regards this cross-border programme, the EU Member States and IFIs have been consulted on the draft programmes during the programming process in order to identify complementarities between donors' assistance projects.


Page 7 of 49

1.3 National CBC Committees In the Republic of Serbia, the National CBC Committees are consultative bodies advising the IPA–Component II co–ordinator and will represent ministries, agencies, local governments and sectors of civil society. They are consulted as part of the programming process and also regularly during implementation, and will serve as a feedback mechanism to the IPA–Component II co-ordinators, but also as a multiplier regarding the opportunities that the Cross–border Programme offers to their respective stakeholders. The members are nominated by the IPA–Component II co-ordinator.

2. The map and the description of the eligible area The eligible area for this cross-border programme covers 10,063 km2 on the Serbian side (11 % of its territory), with 604,626 inhabitants, and 9,369 km2 on the Montenegrin side (68 % of its territory), with 270,161 inhabitants. The total surface of the eligible area is 19,432 km2 with a total of 874,787 inhabitants. The total border length between the two countries is 249.5 km. It is a land border that mostly runs through a mountainous area, while a minor part of it is a river border. Table 1: Map of the programming area

Montenegro Serbia Eligible km2 Eligible km2

Pljevlja Bijelo Polje

Berane Rozaje

Plav Andrijevica

Kolasin Mojkovac Zabljak Pluzine Savnik Niksic

1,346 924 717 432 486 283 897 367 445 854 553

2,065

Zlatiborski Raski

6,141 3,922 Total 9,369 Total 10,063 Adjacent km2

Podgorica Danilovgrad

Cetinje

1,441 501

910 Total eligible area 19,432 km2

Total population 874,787


Page 8 of 49

Green Border 244.9 km Blue Border 4.6 km Total Border 249.5 km Border crossings 2 (6)

Reference:1Statistical Office of the Republic of Serbia; 2 Statistical Office of Montenegro/Census 2003 The eligible area in Serbia are two counties, Raski and Zlatiborski, together comprised of 15 municipalities. In Montenegro, the programming area consists of 12 eligible and three adjacent municipalities. For the purposes of this cross-border programme, situation, SWOT, and statistical analyses were performed only on eligible areas. The NUTS III classification is not yet adopted in Serbia and in Montenegro. In Serbia, for the purpose of this programme, the counties have been considered as NUTS III equivalent areas. In Montenegro, there is no classification on a regional level. Therefore, for the purpose of this cross-border programme, the existing classification has been chosen in order to represent an equivalent interpretation of NUTS III classification, thus the eligible area consists of 12 municipalities: Pljevlja, Bijelo Polje, Berane, Rozaje, Plav, Andrijevica, Kolasin, Mojkovac, Zabljak, Pluzine, Savnik, Niksic. Adjacent areas, according to art 97 of the IPA Implementing Regulation are : Podgorica, Danilovgrad, Cetinje.

3. Current situation in eligible area

3.1 History Both republics existed in common state since the First World War. After the SFRY ceased to exist they formed the Federal Republic of Yugoslavia which existed from 1992 until 2002 when an agreement was achieved to redefine relations among the both republics. With the support of EU in 2002 Belgrade Declaration was signed. On the base of this declaration new Constitution was adopted establishing the State Union of Serbia and Montenegro. On May 21st 2006, Montenegro held a referendum seeking full independence. Final official results released on May 31st 2006 indicated that 55.5% of voters had opted for Montenegro’s independence. The State Union effectively came to an end after Montenegro's formal declaration of independence on June 3rd, 2006 (recognized on June 8th, 2006). On June 5th 2006, the National Parliament of Serbia declared Serbia the successor to the State Union. After the disintegration, Montenegro and Serbia have established the policy of good and open neighbourly relations.

3.2 Demography The total number of inhabitants in the programming area is 874,787, of which there are 604,626 inhabitants on the Serbian side, and 270,161 inhabitants on the Montenegrin side.

http://en.wikipedia.org/wiki/May_21

http://en.wikipedia.org/wiki/2006

http://en.wikipedia.org/wiki/Montenegrin_independence_referendum%2C_2006

http://en.wikipedia.org/wiki/May_31

http://en.wikipedia.org/wiki/June_3


http://en.wikipedia.org/wiki/June_5


http://en.wikipedia.org/wiki/National_Assembly_of_Serbia


Page 9 of 49

7,498,001

620,145 604,626 270,161 874,787

0

2,000,000

4,000,000

6,000,000

8,000,000

National Eligible territory Total Eligible territory

Population

Serbia Montenegro

The main demographical characteristics of the programming area are the following: sparse aging population, small size settlements, and few towns with underdeveloped local and regional economies. The Serbian part of the area has small population density - 60 inhabitants per km² which is below the average of 85 inhabitants per km2 in Serbia, while in Montenegro the average population density is even smaller - 33 inhabitants per km2 which is below the Montenegro average density of 45 inhabitants per km2. On the Montenegrin side of the border, there has been an increase in the number of inhabitants by 9.17% since 1991 (according to the last census of 2002). On the Serbian side of the border, the eligible area has seen a decrease of 3,4% in the number of inhabitants in the same period. In the Montenegrin part of the eligible area, the population is concentrated in the urban areas, as these are the main labour centres. It seems that the natural growth rate is positive as the mortality rates in these areas are lower than the birth rates, on both sides of the border. In Montenegro, the birth rates are higher than mortality rates in the municipalities from the southern and central parts of this region, while municipalities with negative natural growth are Zabljak, Pluzine, Savnik, Kolasin and Andrijevica in the north. The negative growth rate in these municipalities is the result of internal migrations occurring due to better economic possibilities in the southern and central parts of Montenegro. With regard to the age structure, the 2002 census data indicate that in the Serbian part of the programming area the population is younger than the national average - in particular the age group between 0-14 is higher than the national average. Such an age structure, on mid-term basis, could compensate potentially negative economic impacts due to the fact that current percentage of the active population is slightly below national average.

3.3 Ethnic Minorities Inhabitants of the eligible area enjoy full national equality in both countries since their constitutions secure the rights of the minorities. Table 2: Ethnic distribution in the eligible area


Page 10 of 49

Ethnic groups Serbs Montenegrins Bosniaks Muslims Albanians Romas Other

Eligible area-average % % % % % % %

Serbia1 74.00 0.54 22.19 1.38 0.05 0.29 1.55

Montenegro2 42.55 32.32 14.70 3.64 2.12 N/A 4.67

Programming area average 58.27 16.43 18.44 2.51 1.08 N/A

Reference:1Statistical Office of the Republic of Serbia; 2 Statistical Office of Montenegro/Census 2003

3.11

3.4 Geographical Description The eligible area is located in the south-west part of Serbia and the northern and central parts of Montenegro. On the Serbian side, it extends over an area of 10,063 km2 and covers 11% of the territory of Serbia. On the Montenegrin side, it extends over an area of 9,369 km or 68% of the territory of Montenegro. The area is predominantly a mountainous one and is divided right across the middle by a part of the Dinaric Alps - a mountain chain which connects Croatia, Bosnia-Herzegovina, Serbia and Montenegro. The mountains in this region include some of the most rugged terrain in Europe and they average more than 2,000 meters in elevation. The area is rich with canyons, fast mountain rivers, forests and rugged terrain. Its Western part in particular is a protected natural area. The climate of the eligible area varies, but in general, the north part is characterized with a continental climate, with cold winters and hot, humid summers with well distributed rainfall patterns, while there is a more Adriatic climate in the south with hot, dry summers and autumns and cold winters with heavy inland snowfall. Differences in elevation and proximity to the Adriatic Sea, as well as the exposure to the winds, account for climate variety. The Serbian part of the eligible area encompasses 2 counties, 15 municipalities and 797 settlements. The Montenegrin side covers 12 municipalities in central and northern Montenegro with 747 settlements. The main cities within the eligible area are Kraljevo, Uzice, Novi Pazar, Prijepolje, Priboj, Pozega and Sjenica on the Serbian side, and Pljevlja, Bijelo Polje, Niksic and Berane on the Montenegro side.

3.5 Infrastructure Infrastructure is an important pre-requisite for the economic and social development, as it secures accessibility of goods and people to and from the eligible area. In general, the transport infrastructure in the area is of poor quality. Significant investments are required in order to guarantee uninterrupted power supply, as well as to restore and modernize the water and sanitation systems.

3.5.1 Road infrastructure In the eligible area, there is a road network consisting of national, regional and local roads, but the extent of the network on both sides of the border is insufficient and the quality of the roads is to a large extent poor. The largest part of the road network consists of local roads – in the Serbian part of the eligible area even up to 70,74%, while only 11,42% of roads are of national and 17,83% are of regional character. Most of these roads are in bad condition..

http://en.wikipedia.org/wiki/Climate

http://en.wikipedia.org/wiki/Adriatic_sea


Page 11 of 49

In Montenegro, there is no official statistics on the classification of the roads. However, most roads in Montenegro are two-lane. In the north, the road from Podgorica to Kolasin through the Moraca canyon to Serbia is considered as one of the most dangerous routes in Europe, especially during winter. Preparatory works have started to bypass the canyon. This project is of strategic importance for Montenegro, as this corridor is currently the weak link in Montenegro's road network. There are two main transport routes going through the eligible area: 1. Pozega – Uzice – Prijepolje - Bijelo Polje – Mojkovac – Kolasin - Podgorica 2. Kraljevo – Raska - Novi Pazar – Rozaje – Berane – Andrijevica – Podgorica No highway which passes through the eligible area. There are plans in Montenegro to further develop the road network (such as a proposed route from the city of Podgorica to Gusinje).

3.5.2 Railways The most important railway which passes through the eligible area is Belgrade-Bar railway, which connects Serbia and Montenegro. The most important railway stations within the eligible area are: Kosjeric, Pozega, Uzice, Priboj, Prijepolje and Bijelo Polje. About one-third of the Montenegrin part of the railway runs through tunnels or on viaducts which makes it a unique construction in Europe. Apart from this corridor, there are a few minor railway links passing through eligible area, such as Kraljevo - Raska - Pec as well as Kraljevo - Cacak - Pozega. However, much of the railway infrastructure needs substantial modernisation and upgrading. Both countries are participating in the work of SEETO (South East Europe Transport Observatory) which coordinates development of core regional infrastructure network including roads, rails and ports.

3.5.3 Border crossings Along the length of the border, there is a total of six border crossings. Only two of these (Gostun and Jabuka) are recognized as multi-functional border crossings while the other four are mainly for passenger purposes.

3.5.4 Airports There is no international airport in this border area. However, the closest one is in Podgorica, in the adjacent area, and this airport is the main international entrance port for Montenegro. Still, due to the configuration of the terrain, regardless of the fact whether one is coming from Belgrade airport, Podgorica airport or, as alternatives, Tivat (Montenegro coast); Dubrovnik (Croatian coast) or Sarajevo (Bosnia and Herzegovina) airports, it takes a minimum three-hour drive to reach this area. There are initiatives on the Serbian side for the reconstruction of former army airports (Ponikve, Sjenica, Ladjevci), into airports for both freight and passengers. There are also small airports on the Montenegrin side in Berane, Zabljak and Niksic, however not equipped to handle larger aircraft. These initiatives will demand significant resources and, apart from sport flying, it is not envisaged to have those airports functional for large-scale traffic in the near future.

3.5.5 Ports There is one sea port - Bar - just outside of the eligible area. It was one of two major cargo ports in former Yugoslavia. It is capable of handling circa 5 million tons of cargo, and is a port for ferries to Bari and Ancona in Italy. It is directly connected to the Bar - Belgrade railway.

http://en.wikipedia.org/wiki/Kola%C5%A1in

http://en.wikipedia.org/wiki/Mora%C4%8Da

http://en.wikipedia.org/wiki/Bari

http://en.wikipedia.org/wiki/Ancona

http://en.wikipedia.org/wiki/Italy


Page 12 of 49

Although the port of Bar is not within the boundaries of the suggested eligible area, it is nevertheless an important factor for accessibility of people and goods to and from the area.

3.5.6 Telecommunications The telecommunication network in the eligible area is quite developed.The fact that there are 643,681 (October 2006) cellular phones in Montenegro is impressive (more than 1 cellular phone per inhabitant) when compared to European levels. Services in mobile telephony are provided by three GSM operators in each country. These providers have national coverage, and provide advanced services. The internet is widely used in the eligible area: 13 providers on the Serbian side of the border and 9 on the Montenegrin side. There is a large number of internet users in Montenegro (over 73,000 in 2006). In Serbia 46% of households posses a computer and 27% are using internet regularly.

3.5.7 Water supply, waste water, heating, waste disposal In general, the area has an abundance of natural water resources. However, there are insufficient waste water treatment facilities, as well as water resources management. Furthermore, the water supply and waste water systems have deteriorated gravely over the past years and are basically left without resources for maintenance and improvement. On the Serbian side of the border, 89% of the households are being supplied with clean, potable water through the existing waterworks infrastructure, while on the Montenegrin side, due to the fact that households are usually scattered far and wide in the settlements, the percentage of households connected to the water supply network is negligible. The treatment of household and industrial waste throughout the eligible area is below internationally acceptable standards. Municipal waste landfills are full - the legal landfills are overburdened and should be closed. In the rural areas in particular, there are many illegal, "wild" garbage dumps. On the Serbian side, an initiative has been taken to establish a regional landfill in Uzice. On the Serbian side, eight municipalities have central district heating systems, while only one has established a heating system using natural gas. A few municipalities are in the process of connecting to natural gas heating systems. On the contrary, on the Montenegrin side, there is no district heating.

3.5.8 Energy, electricity Energy and electricity supply is relatively well developed on both sides of the border. Energy is the main economic priority of the Montenegrin government, so the Perucica hydropower plant is being modernised (investments of 3.6 million euros) with a potential to provide the entire country with uninterrupted supply of power at the same time reducing the dependency on foreign supplies of power. Apart from HPP Perucica, there are the following electricity generating facilities in the Montenegrin part of the eligible area: coal-fired thermal power plan Pljevlja, HPP Piva and various small hydro-power plants. In the Serbian part of the eligible area, the energy production is quite a dominant feature of the local economy with a complex of Drinsko-Limske power plants in the Zlatiborski county, on the rivers Drina, Lim and West Morava (HPP Bajina Basta, HPP Uvac, HPP Potpec, HPP Kokin Brod, HPP Bistrica, HPP Zvornik, HPP Ovcar Banja and HPP Medjuvrsje). The Drinsko-Limske power plants have 1,083 MW available capacities which make up for 13% of the total electric potential of Serbia. However, there are large differences in the access to uninterrupted supply of energy/electricity between cities, towns and rural areas.


Page 13 of 49

3.6 Economy The overall economic development/activity of the eligible area is relatively low compared to the national averages. The average GDP per capita on the Serbian side of the eligible area is 1,720 euros (national average 4,000 euros in 2006), while on the Montenegrin it amounts to 1,294 euros (national average 2,521 euros). In both countries, privatisation and/or restructuring of the state-owned enterprises is almost completed. Fragmented land ownership, weak land registration systems, and unresolved property issues, coupled with the informal labour market, present an obstacle for attracting more investments. Recently, new legislation on land ownership and property issues have been introduced in both countries. Foreign direct investments are playing an important role in restructuring and boosting the economies of both countries. In Montenegrin economy, this is concentrated along the coast line and in Podgorica, which are outside of the eligible area. Also, a very small fraction of the foreign capital entering Serbia has been invested in the Serbian part of the eligible area.

3.6.1 GDP Even though reliable data for the eligible area are hard to find, it is clear from existing data that the average GDP and income per capita are lower in the eligible area on the Serbian side compared to the national average. Raska County - one of the two counties in the eligible area - is second to last when ranking Serbian counties according to the national income. There are, in general, large discrepancies between the different counties in all economic performance figures. In absolute values, the two eligible Serbian counties only contribute with 4.70% to the total national income. Table 3: GDP comparisons with EU and national index

Area Regional GDP per capita (EURO)

Regional GDP index Country=100

Regional GDP index EU (27)=100

Serbian eligible area (average) 1,720 43.00 7.99

Serbian national level (average) 4,000 100 18.60

Montenegrin eligible area (average) 1.591,80 63.14 7.40

Montenegrin national level (average) 2,521 100 11.72

Programming area average 1,655.9 - 7.69 Reference: 1Statistical Office of the Republic of Serbia; 2 Statistical Office of Montenegro; EU27 = 21,503 On the Montenegrin side of the eligible area, the local development in economic terms is lagging behind national levels, even though the picture is a bit more diverse compared to the Serbian side of the border (as the statistical units are smaller in Montenegro, this could account for some of the diversification). The higher GDP rates in Montenegrin municipalities of Pluzine and Pljevlja are due to presence of the hydro power plant and thermal power plant which have a big share in the GDP, on the one hand, and a small number of inhabitants, on the other hand. It is, however, important to note that there is a large difference in the level of income when comparing sectors. Across the whole eligible area for instance, up to 20% of farming households generate a monthly income totalling 100 Euro - this percentage is even higher in the mountain areas.

3.6.2 Agriculture and Rural Development In the eligible area on both sides of the border, there is agricultural land and traditional agricultural production. A large part of the land, however, consists of pasture and meadows, which is mainly used for animal feeding. Farms are relatively small - in Serbia 4 ha on average -


Page 14 of 49

and production is not large-scale, or industrialised. Potatoes, fruit (plums, apples), berries, vegetables, and cattle feed are mainly grown in the area. With regards to livestock, sheep and goats are predominant in the eligible area, on both sides of the border. There are slight differences in the two areas: breeding of large cattle makes up a relatively large percentage of livestock production in Montenegro, while on the Serbian side of the border sheep and pig breeding is predominant. The production of poultry is relatively insignificant on both sides.

3.6.3 Industry Industrial production in the eligible area is concentrated around a few larger towns and cities such as Kraljevo, Novi Pazar, Uzice and Niksic. The main economic centres are Prijepolje (Serbia) population 46,500, with textiles, chemicals and timber industries; Novi Pazar (Serbia), population 80,000, a significant producer of textiles, especially jeans; and Bijelo Polje (Montenegro), population 50,000, a significant agricultural centre of the area. There is both some light and heavy industrial production, but production levels are low in general. At the same time, the area is characterised by low investments (both actual and potential local investment base), low export orientation, low labour productivity, lack of innovation, lack of coherent strategies within and between local administrations and production units, lack of communication and cooperation between industries, low level of managerial and business know-how and a concentration of production in urban centres. In the rural areas in particular, there is light industrial production in sectors such as forestry and timber (wood processing, furniture), textile (fur and leather), agricultural light-industry (grain mills, bakeries, beer and fruit production). Larger-scale industry is found mainly in the urban centres mentioned above - and mainly consists of textile production, copper and aluminium production, wood processing, some construction industry, agricultural products (fruit processing, dairy), electric power supply and mining. The relatively few large-scale enterprises in the area are at the same time employing the largest part of the labour force - one example is from one of the urban centres, Uzice, which employs 1/3 of the labour force in the Serbian part of the eligible area. The positive aspect of the industrial production in the area is that it is mostly based on existing resources and integrated production chains of which mining/smelting is the most important. The existing resources could be the basis for a more developed processing industry.

3.6.4 SME Sector SMEs are usually less capital intensive than large-scale businesses and they are more consumer-oriented. Such enterprises are, therefore, suitable for the region as they create employment opportunities, promote a diversification of economic activity, support sustainable growth and contribute to export and trade. Over the past few years, the number of SMEs on both sides of the border has increased, although insufficiently so as to make a noticeable contribution to the overall economic development in the eligible area. Furthermore, in Montenegro, the number of SMEs in some municipalities has been decreasing recently. The private and service sectors as such are still underdeveloped in the eligible area.


Page 15 of 49

The relative importance of the SME sector has, however, increased. An important indicator of entrepreneurial activity in the SME sector (covering crafts, cooperatives and SMEs) is ‘company density’ as measured by the number of firms per capita. In 2005 the company density in Serbia was 31,8 per 1000 inhabitants. By contrast, this figure is 36,3 in Raska county and 32,7 in Zlatibor county. The average company density in the Serbian part of the eligible area is 34,4 which shows that entrepreneurial activity in this area is slightly higher than the national average. In the Montenegrin part of the eligible area, the number of SMEs is 3.692 which constitute 27.56% of registered SMEs in Montenegro. Most SMEs are based in Niksic, Bijelo Polje and Pljevlja on the Montenegrin side, while on the Serbian side of the border SMEs seem to be concentrated in Uzice; Novi Pazar, and Prijepolje. Table 4: Numbers of SMEs and SME Employment in the Programming Area

Area Number of SMEs Total Number of Employed Share of Employed

Serbian eligible area (average) 3.956 141.505 6.83%

Serbian national level 68.691 2.068.967 100 %

Montenegrin eligible area (average) 3.692 67.253 39.25%

Montenegrin national level 13.393 171.325 100 %

Programming area average 7.648 208.758 - Reference: 1Statistical Office of the Republic of Serbia; 2 Statistical Office of Montenegro; Despite the positive trends in the SMEs development, the dominant majority of businesses in the region are small in size, mainly characterised as family businesses, thus offering little opportunities for job generation. Generally, businesses are poorly organized and take no count of modern and up-to-date technologies or management techniques. They involve little investments without much long-term sustainability. In addition, the non-agricultural businesses struggle against the odds of poor infrastructure, shortages of electricity (Montenegrin side of the border), and the high running costs. Support structures surrounding SMEs, such as business incubators, business associations, Chambers of Commerce, relations between research institutions, education institutions and the business environment, economic free zones are important for the growth of SMEs. Also more advanced support structures such as technology parks, research and development institutions and innovation activities can be important for certain SMEs, but most likely not in the short-term in the eligible area. Innovation in terms of support for making it easier for small producers to forward ideas and get the necessary motivation to start new production is, however, necessary. There are business support institutions established on both sides of the eligible area. However, framework conditions and support structures for the development of a thriving and healthy SME sector with real impact on GDP and economic development are still insufficient. Entrepreneurial activity and private sector development in Montenegro is the priority of the Government and is mainly supported through different institutions, such as Montenegro Business Alliance; Directorate for development of small and medium sized enterprise; Centre for entrepreneurship and economic development; Institute for strategic studies and projections; Euro Info Correspondent Centre; Centre for Applied Research and Analysis. However, all of them are located in Podgorica. In Serbia, there is a network of SME support institutions: LED offices, Regional Chambers of Commerce in Kraljevo and Uzice, Regional Centre for development of SMEs – Kraljevo office, Agency for Economic Development of Sandzak (Novi Pazar) and several local SME support centres - in particular Uzice, with sub-offices in Kosjeric, Priboj and Prijepolje.


Page 16 of 49

Business zones in the eligible area, where the big state-owned enterprises functioned, are mainly old type, while modern industrial zones have been established in a couple of towns on the Serbian side of the border (Uzice and Prijepolje).

3.6.5 Services Apart from tourism, services are at this moment not considered statistically as a separate sector of Serbian and Montenegrin economies - figures are usually included with other sectors. A variety of services such as administration, banking, education, social and health care, are mainly available in urban areas, while the development of this sector in the rural areas is lagging behind. Administrative services are related to legally define administrative units, i.e. municipalities, towns and counties, and thus located within them. Both countries recognise that the development of the service sector can contribute significantly to the positive economic development, creating jobs and adding value to existing industries and businesses.

3.6.6 Regional and Local Development In general, both countries are characterised by an imbalanced regional development, with lower rate of development in the eligible area. There are large differences between urban centres and rural areas, between different geographical locations, as well as between the centre and periphery. This is in particular the case for Serbia - being a big country; the eligible area is periphery compared to the centre (Belgrade) and ranks very low in terms of economic indicators compared to the most of the regions in Serbia. Also, in Montenegro, the northern municipalities in the eligible area are considered - and are in real terms - as lagging behind the centre (Podgorica) and the municipalities situated along the Adriatic coast line. Traditionally, there has been no vertical cooperation between municipalities, but recently, new laws have made it possible in Serbia for municipalities to cooperate through their district boards. In Montenegro, municipalities are much more dependent on the Government and cooperate only on the unofficial basis. However, the Union of Municipalities exists in Montenegro with a key role to facilitate regional development initiatives. Regional development plans do not exist for the eligible area. There are local development plans (LED) developed and approved in 5 of the 15 municipalities in the eligible area on the Serbian side of the border. Furthermore, LEDs exist as drafts in 2 other municipalities. All the developed LEDs define agriculture, food processing and tourism as priorities. The local government development is expected to be a priority for the Serbian Government in the coming years and a large TA project has recently been tendered focusing on local government and fiscal decentralisation. This project will most likely have an impact on the visibility of the situation in local governments in Serbia - and could also put an emphasis on the necessary economic cooperation between municipalities, in particular in areas lagging behind in economic development terms. It is expected that large funds will, in the mid-term and long-term periods, be channelled to the eligible area - on both sides of the border - to level out the imbalances in regional development. It is also expected that the main problem in this regard will be the capacity of local key stakeholders to develop and agree on project ideas relevant for financing, how to link them with existing strategic operational plans and finally to implement the projects since there is practically no experience with such activities at present.


Page 17 of 49

There are several Agencies, NGOs and community initiatives in the eligible area, which already are or will become important vehicles for stimulating economic and social growth. Apart from these, the institutions already mentioned under the section on SMEs are involved in regional development activities and there are initiatives to upgrade some of them into Regional Development Agencies.

3.6.7 Tourism The eligible area has abundant natural resources such as vast forests, ski resorts, and a large number of spas. This makes it one of the most important tourist areas for Serbia, as well as an important inland tourist area in Montenegro - even if the latter has a more developed and focused tourism industry along the Adriatic coast line. The importance of the area as a tourist destination at present is, however, not fully utilised - only 9% of the total number of tourists visiting Montenegro are visiting the eligible area. On the Serbian side, figures show that the number of tourists visiting the part of the eligible area and staying overnight is slightly higher than the national average, but still very low. Table 5: Number of visitors and tourist nights per county/municipality

Country Visitors Tourist nights Tourist nights per inhabitant

Serbian eligible area1 439.138 1.964.410 3.24

Serbian national level1 1,971.683 6,642.623 2.95

Montenegrin eligible area2 39.746 102.648 0.38

Montenegrin national level2 820 457 5 211 847 8.40

Programming area 478.884 2.067.058 2.36 Reference: 1Statistical Office of the Republic of Serbia (Statistical Yearbook, Municipalities of Serbia 2005); 2 Statistical Yearbook of the Republic of Montenegro 2006. This area has great tourism potential as it is already a major Serbian tourist area with highlights such as the mountains Zlatibor, Kopaonik, Tara, Zlatar, Goc, Golija; spa centres: Vrnjacka Banja, Mataruska Banja, Bogutovacka Banja, Novopazarska Banja, Pribojska Banja; rivers: Drina, Lim, Uvac; lakes: Perucac, Zlatar, Potpec, Radonja, Zaovine, Ribnica, and historical and cultural monuments: Studenica, Zica, Stari Ras with Sopocani, Raca, etc. Apart from "traditional" - in particular, winter - tourism, the northern part of Zlatibor has a well-developed ethno-tourism industry, but also "medical/wellness tourism" with cardio-vascular and blood disease treatment centres etc. The major tourist centres on the Montenegrin side of the border are Kolasin, Zabljak, Mojkovac and Plav. Kolasin is an all-year-round vacation centre, because of the favourable climate. Of special interest to tourists is the Biogradsko Lake, which is located in the National park “Biogradska Gora”, one of three preserved virgin forests of Europe. Also Zabljak and Mojkovac represent attractive tourist destinations in this region. Mojkovac is located between the mountains Bjelasica and Sinjajevina. Zabljak is not only known for winter tourism, but for its natural beauty and it therefore attracts a large number of visitors during summer also. The main drawback of the area as a tourist destination is the lack of adequate infrastructure: accessibility via trains, busses, roads, adequate and modern hotels/accommodation, lack of labour force with necessary competences for modern tourism (management, marketing), all-year round tourist activities (the area is mainly developed for winter tourism), lack of information and awareness about the area as a tourist area. Modern-day tourists, who focus on "alternative" destinations and activities, could be the target for the areas of unique and untouched beauty. Particular focus on natural resources, favourable climate and ecological conditions, historical diversity and rich cultural heritage should be seen


Page 18 of 49

as a major opportunity for the eligible area. These advantages open the possibility for the area to further develop various types of tourism: ecological and cultural tourism, mountaineering, rural tourism, health and recreational tourism, excursions, hunting and fishing.

3.7 Human Resources

3.7.1 Education, Research, and Development Primary and secondary education institutions exist on both sides of the border. In particular, the standard of primary school education (teaching methods, facilities) is considered to be at the same level as the national standard, while secondary specialised education is of lower standard and has outdated facilities due to the lack of investments in the 90ies. There are no fully-fledged universities in the area, but there are faculties on both sides of the border. Given the growing importance of technology and knowledge–based economies, the levels of educational capacities are important for the development of not only national, but also local and regional economies. The link between the level of education (particularly tertiary education), on the one hand, and the labour market and economic growth, on the other hand, is described as very important. Table 6: Levels of Education in the Eligible Area

Primary or less than primary Secondary University, MSc, PhD Serbian eligible area1 52.92 % 39.18 % 7.84 %

Serbian national level1 24.02 % 41.07 % 11.02 %

Montenegrin eligible area2 48.86 % 43.15 % 7.99 %

Montenegrin national level2 42 % 46,99% 11.01%

Programming area average 50.89% 41.16 % Reference: 1Statistical Office of the Republic of Serbia (Statistical Yearbook, Municipalities of Serbia 2005); 2 Statistical Yearbook of the Republic of Montenegro 2006.

7.91 %

Table 6 shows that the level of education of the population in the eligible area is lower than the national level of both countries. Compared to the Serbian average educational structure, Raska and Zlatibor counties are clearly disadvantaged in terms of school attendance: figures show that half of the inhabitants in the two counties are either without primary school education or they only completed primary school education (59.92%). Compared to a Serbian average figure of 24.02%, this is clearly lower and it indicates that there are problems with school attendance already at primary school level. In Montenegro, this figure is much closer to the national level, but is still showing the problem with school attendance. The area is sparsely populated and towns and villages are scattered over a large mountainous area - the distance and difficult accessibility of schools could account for some of the differences between the national average and the regional levels for primary school attendance in the eligible area. At secondary level, the figures are levelled out - the percentage of people with secondary education in the eligible area is more or less equal to the national averages. Also for higher education this is the case on both sides of the border. There is no particular difference between the two sides of the border.

3.7.2 Labour Market (employment and unemployment)


Page 19 of 49

The transition to market economy, the closure of traditional state-owned enterprises, generally low level of education and the conflicts during the 90es, have led to high unemployment rates and migration of the work force from the area to other urban centres or abroad. In Serbia in general, the unemployment rate according to the Eurostat data for 2005 is 21.8 %. Unemployment rate of above 30% in the two counties in the eligible area (Zlatiborski 38.6 % and Raski 42.8 %, according to the data for 2005 of the Statistical Office of the Republic of Serbia) clearly shows that the unemployment rate is higher than the national average, which is already quite high. Also, the number of unemployed persons with higher education is larger than the Serbian average. On the other hand, the percentage of employment in different sectors more or less follows that of the Serbian average. On the Montenegrin side of the border, the average unemployment rate is 15.45 % and is a little higher than the country’s average of 15.05 %, according to the 2003 census. The level of employment is about 75 % on the national level. Looking at unemployment by educational levels, the segment of population in the Montenegro eligible area with secondary education has the largest percentage of unemployment (69%). Compared to age groups, the age group between 24-29 years has the largest percentage of unemployment, 63%. According to the Employment Agency of Montenegro, during last year, the majority of non-residential labour force was engaged from Serbia (about 51 %). These are mainly employed in Podgorica, which is one of the adjacent areas. One important reason for high unemployment is the reliance on agriculture, agricultural processing and traditional manufacturing industries on the Serbian side of the border. Table 10: Employment and Unemployment in the Programming Area

SERBIA Total Number Employed Economic Activity Rate Unemployment Rate Serbian eligible area1 141.502 50.40 % 40.70 %

Serbian national level2 2.068.964 65.20 % 21.80 %

Montenegrin eligible area3 67.253 41.27 % 15.45 %

Montenegrin national level2 171 325 50 % 30.30 % Programming area total 208,755 - -

Reference: 1Statistical Office of the Republic of Serbia and Republic Development Bureau; 2 Eurostat data for 2005; 3 Statistical Yearbook of the Republic of Montenegro 2006 (data according to the cesus of 2003).

3.8 Environment and Nature Most of the eligible area is characterised by well preserved natural environment with low pollution levels. On the other hand, the area has some "pollution hot spots", which create serious problems. In general, most of the border consists of mountains, which are sparsely populated, with poor transportation infrastructure and relatively little industry and tourism. The area is, therefore, relatively untouched with large forests, meadows/fields and nature parks. In Zlatiborski County, the Zlatibor mountain covers 300km2 at an altitude of approximately 1,000 meters with its highest peak of 1,496 meters. Tara, the largest Serbian national park covers 220 km2 and is covered by dense, supremely preserved forests of fir, spruce, beech, and pine trees, deemed some of the best preserved in Europe. On the Montenegrin side of the eligible area, there are four national parks (Biogradska Gora, Durmitor, Skadar Lake and Lovcen). The Durmitor National Park is under UNESCO protection. Town of Zabljak, located on Durmitor, is positioned at 1456 meters above sea level, which


Page 20 of 49

makes it a town lying on the highest altitude in the Balkans, and is surrounded by as many as twenty three peaks of more than 2300 meters. Montenegrin nature resources are mostly well preserved, but there are some locations which are polluted. By the end of 2007, the Montenegrin Government will adopt the Law on Environmental Protection which will create a legal basis for the establishment of the Environmental Protection Agency as a step toward better protection of natural recourses. Still, lack of systematic data collection on the quality of air, water and soil is quite a problem for Montenegro. The rivers in the region flow either to the Adriatic or to the Black Sea drainage basin. Mountain rivers have deep canyons such as the Tara River Canyon which is the deepest canyon in Montenegro and Europe, at 78 kilometres in length and 1,300 meters at its deepest. On the Piva River there is a hydropower plant. There are around forty natural and seven artificial lakes in the eligible area. The coal power plant in Pljevlja does not use filters, so that TSP (trisodium phosphate) causes severe air pollution. The foundry in Niksic operates without any filters. Coal mines in Pljevlja and Berane and the red bauxite mine in Niksic cause waste and groundwater problems.

3.9 Culture The eligible area between Serbia and Montenegro is marked by many different religious beliefs, traditions, cultures and is one of the most culturally diverse areas in Europe. The area is mixed ethnically (Serbs, Montenegrins, Bosniaks, Albanians, Muslims), but has at the same time been more closely connected throughout the history and due to the similarity of administrative and political systems – cross-border relations are therefore closer and the cultural unity higher than on many other borders of the former Yugoslavia. There are no linguistic barriers in the region.

3.10 Summary indicating gaps, disparities, and potentials for development The main characteristic of the eligible area is that the main economic centres are located at some distance from the actual border which is mainly rural, mountainous and sparsely populated. Similar negative demographic trends, such as a declining and aging population, migration to other areas are occurring here, and the dependence on largely agriculture, forestry and mineral extraction presents a low-wage economy with low standards of living. As the newest Western Balkan state, Montenegro is in a transition phase, but has nevertheless indicated the need to initiate activities to divert these negative trends. Since the area is endowed with many natural assets and resources, better utilisation of them to achieve positive growth is indicated. Significant cross-border opportunities can be found for the economic and social development of the eligible area by focussing on some of the following aspects:

• ensuring higher levels of accessibility for goods and people - in particular, the common planning of such accessibility;

• increasing possibilities for inclusion of disadvantaged groups such as ethnic minorities, but people with disabilities and children with development difficulties as well, etc;

• improving mutual confidence by establishing relations grounded in common traditions, culture, language, history;


Page 21 of 49

• providing support to alternative ways of production and reinforcing traditional production methods, in particular in agriculture – enabling branding of locally produced and traditional products for tourists in area;

• supporting development trends – on a small scale, but nevertheless existent - of increasing the number of SMEs in the area by creating quality and visible support structures and framework conditions adequate for the SMEs of that particular area;

• creating a sustainable tourism sector, based on alternative tourism opportunities (not-mass tourism), taking into consideration the unique characteristics of the area;

• ensuring that the natural resources of the area would remain mainly untouched in the future and preserve the status of unique natural beauty in Europe through environmental protection activities which would, at the same time, generate more jobs in the area.

Potential activities could be initiated to support priorities such as the national nature parks, road signalization, people-to-people projects at the local level etc. Initially, work should be concentrated on smaller projects which are easier to manage. It will be necessary to train people and prepare them for the implementation of projects.


3.11 SWOT Analyses of eligible area

Strengths Weaknesses

• Existence of Basic rail and roads network; • Rail link between Bar Port and Belgrade passes through the eligible area on both sides of the

border; • Basic skiing and other tourist infrastructure exists in eligible area; • Planned development and improvement of railway and road links to international corridors.

• Lack of fast highways through the area with most roads and railways in urgent need of modernisation or repair;

• Inadequate, poorly maintained local and regional road network; • Podgorica is the only airport, three hours distant from the eligible area; • Limited capacity of existing transport infrastructure.

Opportunities Threats

Tran

spor

t and

infr

astr

uctu

re

• Improving access to selected border crossing points to increase cross-border traffic and economic cooperation;

• Opportunities jointly to develop sustainable energy resources (e.g. solar, wind, hydro power); • Access to Podgorica international airport and Bar Port can become major regional

development assets for transportation of goods and people to and from the eligible area; • Opportunities to develop joint economic strategies for the border region could significantly

improve the basis for regional improvement of the infrastructure network.

• Absence of joint national strategic approaches to infrastructure investment will lead to further unbalanced regional development;

• Lack of spatial plans plus a new legal framework for construction and land ownership may delay start of infrastructure projects;

• Local communities do not have the capacity to manage assets and liabilities in an efficient way;

• Unfavourable mountainous terrain restricts infrastructure projects and adds to their cost;

• New border regime will increase the administrative procedures necessary to

Strengths Weaknesses • Historical and cultural links, and no linguistic barriers provide a solid basis for cultural and

cross-border cooperation; • Easy access to border crossing points can facilitate effective cross-border cooperation

between population; • Population is motivated to minimise the adverse effects of economic underdevelopment /

imbalanced regional development; • Cooperation already exists between cultural institutions in the border area.

• Unfavourable demographic trends on both sides of the border; • Low living standards and increasing age of population; • Economic migration from both sides of the border area to urban centres; • (E)migration deprives area of the young, educated - and fertile - part of the

population.


Popu

latio

n /C

ultu

re /S

ocie

ty

• Development of a positive regional image will encourage economic and social programmes to attract and keep young people in the area;

• The multi-ethnic population has potential for promoting intensive cultural and social links to build confidence amongst civil society groupings;

• Use the common language to develop local media networks and promote cross-border links.

• Continued lack of regional development programmes will lead to unfavourable demographic trends;

• Decline of population threatens to completely depopulate some rural settlements;

• Aggravation of the different demographic trends in the density of population on both sides of the border undermines the possibilities for cooperation;

• Further isolation and marginalization will undermine any positive development (economic, social and cultural) trends.

Page 22 of 49


cross the border and increase border crossing times.


• Traditional agriculture production with growth potential; • Basic tourist infrastructure in particular for winter tourism already exists; • Existing spa centres provide basis for local tourism development; • Six natural parks and rich historical heritage provide potential for tourism development; • Existing industrial base (wood and food processing, mining, quarrying and mineral extraction); • Rich natural resources (water, mineral wealth, mountains, etc.) to support economic

development; • Electricity production through thermal and hydro energy.

• Obsolete and dilapidated industrial and agricultural infrastructure; • Perception of area as low value added economy, with low levels of innovation,

and limited cooperation between faculties/local business; • Unfavourable isolated location adds to perception of high investment risk; • Inadequate management skills and business support to establish and support

SME development’ • Severe winter weather conditions adversely affect the accessibility of the area; • Limited range of business opportunities to attract investment.


Econ

omy

• Co-ordinated SME development and support, including training, networking, innovation, marketing and ICT;

• Training programmes on meeting EU standards of production targeted at SMEs; • Existing SME sector has dynamic potential for further development of small-scale businesses; • Intensified promotion and common "branding" of the cross border area’s unique products,

characteristics and services; • Diversification of production structures in the area; • Joint development of business clusters; • Support for motivating and promoting public-private cooperation and partnerships.

• Slow implementation of national and regional development strategies for the area;

• Lack of capacity of local stakeholders to plan, prepare and implement projects; • Lack of coordination and cooperation in the tourism sector (between services,

marketing, agriculture, public sector etc.) could restrict development of attractive tourist facilities and products;

• New border and EU regulations will further increase costs of free movement of goods and people (visas, transportation, different standards etc);

• Scarce availability of funds make municipalities highly vulnerable to allocation decisions made at national government level preventing effective joint cooperation;

• Potential to increase numbers of SMEs on both sides of the border in tourist and service sectors.

• Decentralisation (of tasks, funds, services) not adequately followed up by training and capacity building prevents fast development of the cross-border region;

• Continued dependence of local authorities on central level budgets and lack of tax incentives for the development of local communities;

• Environmental issues could effect growth of tourism economy.

a n Strengths Weaknesses

Page 23 of 49


• Poor education and qualification structure of the population – especially in rural areas;

• Vocational and teacher training faculties established in the cross border area; • Serbia has recently reformed the National employment services, which can function as a

vehicle for sharing experience and best practice transfer in the cross-border area; • Vocational education institutions exist in the area; • Existence of several institutions working to improve living standards of disabled people.

• Lack of sector-specific (i.e. tourism, agriculture) education facilities; • Lack of connection between education and needs of labour market; • High unemployment levels - in particular along the immediate border areas; • Limited access of the rural population to the formal educational system due to

long distances, and poor public transport. Opportunities Threats

• Possibility of piloting alternative learning and teaching methods (distance learning, new curricula development etc.) because of poor accessibility to education institutions;

• Increased usage of national and private employment services - and cooperation of such institutions - across the border;

• Continued isolation of the area will accelerate migration of educated or skilled young people;

• Increased inclusion of vulnerable groups (including women, ethnic minorities, disabled etc.) in education system and labour market through activities adapted to their special needs;

• Development and introduction of new curricula supporting technical (vocational) education: IT, traditional production methods, skills necessary to run small businesses (bookkeeping, management etc);

• Increased cross border cooperation between educational institutions, labour market services and other relevant public institutions;

• Common planning of education and employment services on both sides of the border; • Development of new/adapted curricula in vocational education institutions to support the

introduction of EU regulations affecting production, sales and exports of goods.

• National employment services not sufficiently developed and adapted to special conditions of the cross-border area;

• Vicious circle of poverty and poor education possibilities will hinder further economic development;

• Introduction of border controls, and EU regulations will impose further restrictions on the movement of goods and persons across the border.

Page 24 of 49



• Unspoiled natural environment with relatively low pollution; • Pollution hot-spots are threatening sustainable economic development in the areas of nature parks (and towns); • Awareness of the need for environmental protection increasing in both countries;

• Existence of several important and unique National Parks; • Large areas covered by forest in good condition; • Unpolluted water resources.

• Lack of solid waste, recycling, sewage and waste water treatment systems increase environmental pollution;

• Lack of communication and cooperation among different environmental and nature protection initiatives and between local authorities;

• Lack of spatial and town-planning regulations- in particular in tourist areas – lead to chaotic and non-sustainable development;

• Low level of implementation of EU environmental regulations in both public and private sectors.


Envi

ronm

ent

• Joint development of environmentally friendly strategies and services to protect the natural resources; • Joint management of National and Nature Parks; • Joint development of local and regional environmental action plans; • Joint development of activities to conserve and protect the rivers Drina and Tara; • Promotion and usage of renewable sources of energy (in particular in towns in the area); • Explore ideas to revitalize existing and constructing new modern solid waste disposal

• Slow investment in infrastructure to protect the environment may adversely impact natural attractiveness of the region;

• Slow implementation of national strategies, and lack of national investment resources to carry out necessary improvements;

• Slow implementation of national strategies for environmental protection and low investment capacities in the business sector;

• Waste management techniques are still undeveloped in the cross-border area; • Intensification of agriculture may cause further pollution of the environment;

and waste water treatment facilities; • Increases in tourism may cause intensified pollution of the area. • Exchange of environmental knowledge and best practice in the cross–border area to • Identify and control main polluters.

Page 25 of 49


SECTION II. PROGRAMME STRATEGY

1. Experience with cross border activities This IPA cross-border programme is the latest initiative to extend the EU policy to promote cooperation between countries in border regions of South-East Europe and adjacent regions of the Community and other applicant countries of Central and South-East Europe. As an extension of the Cross-border Co-operation policy, this programme is coherent within the framework of other EU programmes. Both countries have gained experience through the CBC Neighbourhood Programmes with Member States (SRB-HU, IT-Adriatic) and with candidate countries (SRB-RO, SRB-BG). However, specific CBC experience as such was not experienced by Montenegro since independency. In addition, experience was also gained with for example Strand B of INTERREG III which promotes territorial integration and social cohesion within large groups of European regions or other neighbouring countries, as well as CADSES (Central European Adriatic Danube South Eastern Space), an INTERREG IIIB programme, whose objective is to achieve greater territorial and economic integration and promoting more balanced and harmonious development of the European space. Working in four priority areas (social and economic development, transport, culture and heritage and environment), CADSES involves 18 countries, including all the Western Balkan nations and 9 Member States. From 2007, as a single integrated Instrument for Pre-Accession, IPA replaces the various former instruments like Phare, ISPA, SAPARD, the Turkey Pre-Accession Instruments and CARDS. As Component II of IPA, Cross-border Co-operation is intended to prepare Candidate and Potential Candidate Countries for the future management of EU Structural Funds. Accordingly, this component will be implemented by means of Multi-Annual Cross-Border Programmes. These programmes are coherent with both EU and national programmes.

1.1 Lessons Learned Experience with border region cooperation so far indicates that a solid preparatory phase is the most important prior to the launching of specific activities. In order for border region cooperation to be effective, it is crucial that there is good understanding of the rules and procedures, adequate capacity and functioning management bodies.

2. Co-operation Strategy

2.1 Summary conclusions from description of area Much of the analysis and description provided for the cross-border eligible areas in Serbia and Montenegro is typical for other areas throughout the entire Western Balkans. However, despite the relative success of a few urban localities, large parts of the eligible area are marginalised owing to their distance from, and inaccessibility to important markets, and their dependence on low wage agricultural activities, giving rise to low living standards. The lack of employment opportunities in rural and some industrial areas under restructuring has led to the migration of the workforce to cities and abroad, leaving behind an aging and largely unskilled labour pool that is difficult to employ without retraining. Nevertheless, the basic means of production, including raw materials and agriculture, are present, and the absence of significant language barriers is one of the key strengths of the area, offering the population opportunities of cooperating to achieve higher living standards and employment. In order to achieve this, however, all the key players must be guided in adjusting to the realities of the market economy. The cross-border programme can be an instrument to promote the cooperation of the main actors in the area and optimise these opportunities by sharing experiences and undertaking joint activities.

Page 26 of 49

Cross-border Programme The area has suffered major upheaval and disruption over the past two decades, leaving its economic output at much the same level as in 1991. The main conclusions concerning barriers to economic growth are: the poor state of the road and rail infrastructure, the obsolete industrial base, an unskilled workforce and the high additional costs of compliance to the regulatory framework for competing internationally. The area’s vast and largely unspoilt environment can be viewed as an economic resource that can be selectively exploited. However, the presence of inadequate waste and sewage disposal, an increase in uncontrolled building, the unchecked destruction of forests and unregulated extraction of raw materials will inevitably have a long-lasting negative impact on the environment and potentially diminish its economic role. The main priority is to accelerate the economic development of the eligible areas by creating employment opportunities in the relatively short term (3-5 years). Cross-border cooperation can assist this progress by joint efforts to stimulate economic growth by implementing the following strategic approach.

2.2 Overall Strategic Objective of the Cross Border Programme The overall strategic goal for the programme recognises the need to stimulate the economy by building on the human, natural and economic resources of the area in a spirit of intense cooperation.

STRATEGIC OBJECTIVE

To bring together the people, communities and economies of the border area to jointly participate in the development of a cooperative area, using its human, natural, cultural

and economic resources and advantages.

2.3 Specific Objectives The overall aim of the programme, with the core elements of the strategy derived from the SWOT analysis, have together led to the formulation of the following specific objectives, focussing on what needs to be achieved: 1. Strengthening the incentives for SME development in the border areas;

2. Development of tourism as a key sector of the border economy;

3. Promoting cross-border trade cooperation and accessibility to markets;

4. (Re-)Establishing cross border links between business and trade support organisations to promote joint cooperative initiatives;

5. Maintaining the high quality of the border area environment as an economic resource by cooperating in joint protection and exploitation initiatives;

6. Strengthening cross-border ‘people-to-people’ interaction to reinforce ethnic, educational and cultural and sporting links and to share in joint areas of common interest.

The above specific objectives focus on the establishment of a sound basis for the joint activities in the eligible areas. The programme will also take into account the following basic principles: • Equal opportunities for all; • Meeting particular needs of the disadvantaged, disabled or ethnic minorities; • Protection of the natural and built environment in order to support sustainable development; • Partnership and joint ownership of actions.

Page 27 of 49

Cross-border Programme 3. Priority and Measures The strategic and specific objectives are closely targeted to delivering results and favourable outcomes that address the specific needs of the eligible area. The activities foreseen under this programme have been designed on the basis of the SWOT (Strengths, Weaknesses, Opportunities and Threats) and taking into account the limited financial allocations. The co-financing guarantees that the EU principle of additionality will be respected.

The SWOT analysis indicates that the programme assistance should be concentrated on the following Priority.

3.1 Priority I

Socio - economic cohesion through joint actions to improve physical, business, social and institutional infrastructure and capacity.

The priority is purposely stated in general wording to permit beneficiaries to propose a wide ranging list of actions to achieve the overall objective. As the first cross-border programme between the two countries, it is recognised that the higher level objectives should not impose too many constraints at the lower level. This priority supports actions to meet all the Specific Objectives, and provides a logical context for the measures.

3.1.1 Measure I.1

Improving the productivity and competitiveness of the areas’ economic, rural, cultural and environmental resources.

This measure is specifically worded to promote joint efforts to achieve more effective use of the eligible area’s resources. Beneficiaries will include (this list is not exhaustive):

• Local governments and their institutions, including public utilities, hospitals, medical and emergency services;

• Schools, libraries, Institutes of culture, community centres, cultural, historic or sporting associations, etc;

• Non governmental, non profit organisations; • Business support organisations such as chambers of commerce, business centres, SME

associations, sectoral associations, local trade associations, etc • Regional Development and Local Development agencies; • Authorities responsible for nature protection or nature parks management and public

administrations; • Public - and private - entities supporting the work force (job creation centres, job

exchange services etc) • Schools, colleges and universities in the areas, including vocational and technical

training establishments; • Euroregions; • SMEs.

Rationale: The analysis of the eligible area revealed the need to stimulate economic activity in the border areas through more productive use of the resources. Although at national level, each country

Page 28 of 49

Cross-border Programme has its own priorities, and is pursuing different policies to achieve this objective, there exist a number of cooperation opportunities between neighbouring communities that will complement national actions.

Cooperation between local authorities to coordinate actions such as spatial planning, waste water and sewage disposal, emergency services and educational and adult training services could benefit communities on both sides of the border. Joint frameworks for cooperation could be established within the cross-border programme.

The success of small businesses is seen to be a key objective in both countries’ job creation initiatives. Cross-border cooperation between business support groups to work towards achieving a more advantageous business climate, and in developing a tourism support network to stimulate the growth of this sector, would have significant cross-border impact, and benefit both communities.

Further exploitation of the area’s natural resources is inevitable. However, cross border cooperation is appropriate in all aspects of environmental protection, as both communities share a common desire to achieve this aim, but without damage to the ecology and natural beauty of the diverse landscapes of the region.

Cooperation in matching educational programmes relevant for the needs of industry, agriculture and the business environment of the area (e.g. tourism development) can be achieved by cross-border institutions focussing on innovative joint curricula and programmes, and sharing experience and expertise.

The cross-border programme cannot directly address the repair and modernisation of the area’s transportation infrastructure; however, cross-border cooperation between authorities in establishing priorities in this field will assist and influence national programmes to benefit local communities and economies; this is part of the additionality principle.

3.1.2 Measure I.2

Cross-border initiatives targeting the exchange of people and ideas to enhance the professional and civic society cooperation.

This measure is designed to bring about a more intense cooperation between communities at municipality level in order to develop a common identity between both the inhabitants and professional groups. It will support smaller projects and people-to-people actions. This measure will benefit economic activities in the eligible area and also provide opportunities to celebrate their cultural, historic, ethnic, educational and sporting links. Beneficiaries will include (this list is not exhaustive):

• Local governments and their institutions, including public utilities, hospitals, medical and emergency services;

• Schools, libraries, Institutes of culture, community centres, cultural, historic or sporting associations, etc;

• Non governmental, non profit organisations; • Business support organisations such as chambers of commerce, business centres, SME

associations, sectoral associations, local trade associations, etc • Regional Development and Local Development agencies; • Authorities responsible for nature protection or nature parks management and public

administrations; • Public - and private - entities supporting the work force (job creation centres, job

exchange services etc)

Page 29 of 49


• Schools, colleges and universities in the areas, including vocational and technical training establishments;

• Euroregions; • SMEs.

Rationale: The concept of international borders between communities in the eligible area is new, and could serve to divide communities. This measure will help reduce the marginalisation implications and promote continuing cooperation to achieve greater economic strength in the eligible areas. The more obvious areas of cooperation are in preserving their cultural and historical connections; however, cooperation between local professional groups, looking for problem solving assistance at a local level, will help improve the productivity and competitiveness of local businesses. Cooperation between tourist support facilities to produce brochures, information, data bases etc. will generate additional business and improve the overall standard of services available. The establishment and promotion of cultural or sporting events between border communities will focus attention on people-to-people cooperation to maintain and celebrate the traditions and customs of the eligible area.

3.2 Priority II

Technical Assistance

The objective of this Priority axis is to provide effective and efficient administration and implementation of the cross–border programme. Measure II.1 Programme administration, monitoring and evaluation Technical assistance will be used to support the work of the national Operating Structures (OSs) and of the Joint Monitoring Committee (JMC), ensuring the efficient implementation, monitoring and evaluation of the programme, as well as an optimal use of resources. This will be achieved through the establishment and operation of a Joint Technical Secretariat (JTS) in Serbia and a JTS antenna in Montenegro. The JTS will be in charge of the day-to-day management of the programme and will be responsible to the OSs and the JMC. The JTS should, inter–alia, draft the calls for proposals' Guidelines for applicants under the supervision of the Joint Monitoring Committee (JMC). An indicative list of eligible activities under this measure can include: • Support to Operating Structures, Joint Monitoring Committee, Joint Technical Secretariats

and any other structure (e.g. Steering Committee) involved in the management and implementation of the programme

• Establishment and functioning of Joint Technical Secretariat and its antenna, including staff remuneration costs (with the exclusion of salaries of public officials)

• Expenses for participation in different meetings related to the implementation of the programme

• Administrative and operational costs related to the implementation of the programme, including the costs of preparation and monitoring of the programme, appraisal and selection of operations, organisation of meetings of monitoring committee, etc.

• Assistance to potential beneficiaries in the preparation of project applications and to beneficiaries in project implementation and reporting

Measure II.2 Programme Information and Publicity

Page 30 of 49

Cross-border Programme The specific objective of this measure is to ensure programme awareness amongst national, regional and local communities and in general among the population in the programming area. It also supports awareness-raising activities at the country level in order to inform citizens in both countries about the programme. It might also cover, inter alia, the preparation, translation and dissemination of programme related information and publicity material, including a website An indicative list of eligible activities under this measure can include: • Preparation, translation and dissemination of programme related information and publicity

material, including programme website • Organisation of public events (conferences, seminars, workshops, etc.) • Awareness raising and training for potential beneficiaries, including partner search forums Indicative timetable and amounts for the implementation of the measures: The Measures of Priority I will be implemented through grants schemes. The detailed selection and award criteria for the award of grants will be laid down in the Call for proposals–Application Pack (Guidelines for applicants). It is foreseen that the calls for proposals, will be launched in the fourth quarter of 2008. Measures of Priority II, consisting in technical assistance will be implemented through individual direct grant agreements without call for proposals to be concluded between the EC Delegations in Serbia and in Montenegro and the national authorities of both countries (CBC Coordinators, Operating Structures, as appropriate) in accordance with article 168.1.(c) of the Implementing Rules of the Financial Regulation. It is foreseen that the IPA grants will be awarded in the second quarter of 2008.

For the purpose of an efficient use of TA funds, a close coordination between national authorities (Operating Structures, CBC coordinators) of the participating countries is required. The same time-table will be envisaged for both countries in order to ensure compatibility of advice provided and sound coordination vis-à-vis project implementation.

Page 31 of 49


3.3 Output and Results Indicators

At Programme Level

Objectives Indicator Measurement

STRATEGIC OBJECTIVE To bring together the people, communities and economies of the border area to jointly participate in the development of a cooperative area, using its human, natural and economic resources and advantages.

By the end of 2013 cross-border programme, existence of 10 joint co-operation agreements between Montenegro and Serbian institutions functioning in support of long-term economic and social development of the border area.

Number and type of agreements

(quantitative and qualitative analysis)

Specific Objectives 1. Strengthening the incentives for SME development in the border areas;

2. Development of tourism as a key sector of the border economy;

3. Promoting cross border trade cooperation and accessibility to markets;

4. (Re-)Establishing cross border links between business and trade support organisations to promote joint cooperative initiatives;

5. Maintaining the high quality of the border area environment as an economic resource by cooperating in joint protection and exploitation initiatives.

6. Strengthening cross border people-to-people interaction to reinforce cultural and sporting links and to share in joint areas of common interest.

By the end of 2013 cross-border programme, existence of institutional co-operation between 10 Montenegro and Serbian public services to jointly address common challenges identified in cross-border cooperation projects.

Number and type of implemented cross-border projects; number and field of institutional partnerships

(quantitative and qualitative analysis)

People-to-people actions increase each year of the cross-border programme’s implementation period, demonstrating widening and deepening in the nature, frequency and scale of economic, social and cultural co-operation

Number of activities 2007, 2008, 2009

At Priority Level

Objective Indicator Measurement - By the end of 2013 cross-border programme, project Log frame Indicators average at least 75% overall achievement level;

Priority I: Socio - economic cohesion through joint actions to improve physical, business, social and institutional infrastructure and capacity. - By the end of 2013, 85% absorption

of cross-border programme financial allocation

Quantitative and qualitative analysis of cross-border programme reports.

Page 32 of 49

Cross-border Programme 4. Coherence with other programmes

4.1 Serbian Programmes This programme is in line with the main goals and areas of intervention of the following Serbian national programmes:

Multi – Beneficiary IPA Programme which amongst others addresses the following areas of intervention related to this programme: regional cooperation, infrastructure development, democratic stabilisation, education, youth and research and market economy.

National Employment Action Plan of the Republic of Serbia 2006-2008 (NEAP) which sets forth measures and activities for the realization of the National Employment Strategy for the period 2005-2010 with the aim to increase the level of employment, to reduce unemployment, and to overcome the labour market problems, which the Republic of Serbia is facing during the process of its transition to a market-based economy.

National Environmental Strategy of the Republic of Serbia (NES)- October 2005 which addresses the general causes of identified environmental problems. Its general policy objectives related to this programme are firstly to raise awareness on environmental problems through improving formal and informal education on environmental issues and secondly to strengthen institutional capacity for the development and enforcement of environmental policy as well as the development of emergency systems.

Agricultural Strategy of the Republic of Serbia (AS)- October 2004 which defines the following related objectives: • Sustainable and efficient agricultural sector that can compete on the world market,

contributing to increasing the national income; • To ensure support of life standards for people who depend on agriculture and are not

in condition to follow economic reforms with their development; • To preserve the environment from the destructive influences of agricultural production.

Poverty Reduction Strategy paper for Serbia which is a medium -term development framework directed at reducing key forms of poverty. The activities envisaged by the PRS are directed at dynamic development and economic growth, prevention of new poverty as a consequence of economic restructuring and care for the traditionally poor groups.

2005-2010 Tourism Development Strategy, Republic of Serbia, developed by the Ministry of Trade, Tourism and Services, Republic of Serbia, incorporates the first phase report, the competitiveness plan and a strategic marketing plan.

4.2 Montenegro Programmes As the newest of the Western Balkan countries, Montenegro is currently preparing national programmes, strategies and Master Plans for economic development, environmental protection, spatial planning and tourist development. The cross-border programme is coherent will all aforementioned. These are:

Page 33 of 49


National Strategy of Sustainable Development of Montenegro, designed to meet the challenges of environmental protection and management of natural resources, economic and social development;

The Economic Reform Agenda, setting out a series of discrete but interconnected actions that will transform the Montenegrin economy.

Master Plans for wastewater and solid waste management, providing direction for the efficient control and reduction of the existing water pollution.

The Master Plan for tourism development, as the main strategic document for tourism as a main development vehicle of the national economy.

The Spatial Plan of Republic of Montenegro, currently in draft version and which defines the use of space for the purpose of planned development up to 2020.

Page 34 of 49


PROPOSED PRIORITY AND MEASURES

Priority II: Technical Assistance

Measure I.1: Improving the productivity and competitiveness of the areas’ economic, rural, cultural and environmental resources.

Measure I.2: Cross-border initiatives targeting the exchange of people and ideas to enhance professional and civic society cooperation.

Priority I: Socio - economic cohesion through joint actions to improve physical, business,

social and institutional infrastructure and capacity

1. Strengthen the incentives for SME development in the border areas; 2. Development of tourism as a key sector of the border economy; 3. Promoting cross-border trade cooperation and accessibility to

markets; 4. (Re-)Establishing cross-border links between business and trade

support organisations to promote joint cooperative initiatives; 5. Maintaining the high quality of the border area environment as an

economic resource by cooperating in joint protection and exploitation initiatives.

6. Strengthening cross border people-to-people interaction to reinforce cultural, sporting and joint areas of common interest

Overall Objective: To stimulate the economies and reduce the relative isolation of the border area by increasing its accessibility to markets and

human resources

• Equality of opportunities for all; • Meeting the particular needs of the disadvantaged, disabled

or ethnic minorities; • The protection of the natural and built environment in order

to support sustainable development. • Partnership and joint actions.

SPECIFIC OBJECTIVES

BASIC PRINCIPLES

STRATEGY To bring together the people, communities and economies of the border area to jointly

participate in the development of a cooperative area, using its human, natural, cultural and economic resources and advantages.

Measure II.2 Information and Publicity Measure II.1 Administration, monitoring and evaluation

Page 35 of 49


1. Financing plan for cross-border programme 2007 – 2009

Serbia Montenegro

Community funding

National funding

Total funding


Community funding

National funding

Total funding


PRIORITIES

(a) (b) (c) = (a)+(b) (d) = (a)/(c) (a) (b) (c) = (a)+(b) (d) = (a)/(c) 1 -Economic & Social Development

79,411 529,411 85% 540,000 95,294 635,294 85.00% 450,000

2 -Technical Assistance 50,000 8,824 58,824 85% 60,000 10,588 70,588 85.00% 20

07

TOTAL 500,000 88,235 588,235 85.00% 600,000 105,882 705,882 85.00% 1 -Economic & Social Development

79,411 529,411 85% 540,000 95,294 635,294 85.00% 450,000


08

TOTAL 500,000 88,235 588,235 85.00% 600,000 105,882 705,882 85.00% 1 -Economic & Social Development

79,411 529,411 85% 540,000 95,294 635,294 85.00% 450,000


09

500,000 88,235 588,235 85.00% 600,000 105,882 705,882 85.00% TOTAL 1,500,000 264,705 1,764,705 1,800,000 317,646 2,117,646 GRAND TOTAL

The Community contribution has been calculated in relation to the eligible expenditure, which is based on the total expenditure, as agreed by the participating countries and laid down in the cross–border programme. The Community contribution at the level of priority axis shall not exceed the ceiling of 85% of the eligible expenditure. The co-financing under priority axis I will be provided by the final grant beneficiaries and it can be from public and private funds. Final grant beneficiaries should contribute with a minimum of 15% of the total eligible cost of the project, both for investment and institution building projects. The co-financing under priority axis II will be provided by the national authorities.

Page 36 of 49

SECTION IV. IMPLEMENTING PROVISIONS The Implementing provisions for the Serbia – Montenegro IPA Cross-border Co-operation Programme have been designed on the basis of Commission Regulation (EC) No 718/2007 (hereinafter referred to as the 'IPA Implementing Regulation') implementing Council Regulation (EC) No 1085/2006 establishing an instrument for pre-accession assistance (IPA).

1. Programme Structures The programme’s management structures are as follows:

National IPA and/or IPA–Component II Co-ordinators

Operating Structures (OS)

Joint Monitoring Committee (JMC)

Joint Technical Secretariat (JTS)

Contracting Authorities (European Commission Delegations)

In line with Article 10.2 IPA Implementing Regulation, at least during a preliminary period, the cross-border programme will be implemented in both countries under a centralised management system, where the respective Delegations of the European Commission will be the Contracting Authorities (CA) in charge of awarding grants, overseeing tendering, issuing contracts and effecting payments.

1.1 National IPA Co-ordinator The National IPA co-ordinators act as the representatives of the beneficiary countries vis-à-vis the Commission (Art 32 IPA Implementing regulation). S/he shall ensure that a close link is maintained between the Commission and the beneficiary country, with regard both to the general accession process and to EU pre-accession assistance under IPA. S/he may delegate tasks relating to the co–ordination of beneficiary country’s participation in cross-border programmes, both with member States and with other beneficiary countries, as well as in the trans-national, inter-regional or sea basins programmes under other Community instruments, to a cross-border co-operation co-ordinator (hereinafter referred to as the "IPA–Component II co-ordinator). The bodies and designated heads (IPA–Component II co-ordinators as per Art 32(2) IPA Implementing Regulation) appointed by the National IPA Co-ordinators for overseeing their country’s participation in IPA–Component II programmes are as follows:

Republic of Serbia Republic of Montenegro Ministry of Finance Secretariat for European Integration

department in charge of Programming and Management of EU funds and Development assistance

Stanka Dragojevica 2 Kneza Milosa 20 81000 Podgorica 11000 Belgrade

1.2 Operating Structures The operating structures of the beneficiary countries under the Serbia-Montenegro IPA Cross–border Programme are responsible for programming and technical implementation of

Page 37 of 49

the programme and are designated and put in place by the beneficiary countries as outlined below:

• For cross-border programme Serbia – Montenegro, each participating beneficiary country shall establish an operating structure for the part of the programme relating to the country concerned;

• The duties of the operating structures shall include the preparation of the cross-border programmes in accordance with Article 91 IPA Implementing Regulation;

• The operating structures of the participating beneficiary countries shall co-operate closely in the programming and implementation of the relevant cross-border programme;

• For each cross-border programme among beneficiary countries, the relevant operating structures shall set up a joint technical secretariat to assist the operating structures and the joint monitoring committee referred to in Article 142 IPA Implementing Regulation in carrying out their respective duties;

• In the event of centralised management, functions and responsibilities of the operating structures shall be defined in the relevant cross-border programmes, to the exclusion of tendering, contracting and payments, which are the responsibility of the Commission;

• Each participating country shall appoint its representatives, including representatives of the operating structure responsible for the programme, to sit on the joint monitoring committee. With regard to the composition of the joint monitoring committee, due account shall be taken of provisions of Article 87 IPA Implementing Regulation. The joint monitoring committee shall be chaired by a representative of one of the participating countries. (Article 142(3) IPA Implementing Regulation);

• The operating structures of the participating beneficiary countries and the joint monitoring committee shall ensure the quality of the implementation of the cross-border programme. They shall carry out monitoring by reference to the indicators referred to in Article 94(1)(d) IPA Implementing Regulation.

Functions of the Operating Structures The Operating Structures are, iter alia, responsible for:

• Preparing the cross-border programme in accordance with Art 91 IPA Implementing Regulation;

• Nominating their representative(s) to the joint monitoring committee;

• Establishing the Joint Technical Secretariat (JTS) and recruiting its staff;

• Preparing and implementing the strategic decisions of the JMC, where necessary with the support of the JTS;

• Establish a system, with support from the JTS, for gathering reliable information on the programme’s implementation and provide relevant information to the JMC, IPA–Component II co-ordinators and EU Commission;

Page 38 of 49

• Ensuring implementation quality of the cross–border programme, together with the JMC, inter alia by monitoring with reference to indicators as per Art 94 (1) (d) IPA Implementing Regulation;

• Timely submission of the annual and final reports as per Art 144 IPA Implementing Regulation to the national IPA co-ordinators and the Commission, following examination by the JMC;

• Ensuring the monitoring of commitments and payments at programme level;

• Ensuring that grant beneficiaries make adequate provisions for project progress and financial reporting (monitoring) as well as sound financial management (control);

• Supporting the Contracting Authorities, as appropriate (e.g. by providing models for tender documentation, reviewing grant project budgets, drafting contracts and related documentation to acquire consultancies, goods and services required for the pursuit of the activities of grant beneficiaries or under the TA priority axis for approval and further handling by ECD). This task may be delegated to the joint technical secretariat;

• Ensuring grant beneficiaries are supported in carrying out procurement procedures. This task may be delegated to the JTS;

• Organising information and publicity-actions with a view to awareness raising of the opportunities provided by the Cross–border Programme, or mandating the JTS to support these or to carry them out (including drafting an information and publicity plan for adoption by the JMC);

• If so mandated by the JMC, preparing revisions or examinations of the Cross–border programme likely to make possible the attainment of the objectives referred to in art 86(2) IPA Implementing Regulation or to improve its management.

1.3 Joint Monitoring Committee In accordance with Article 142 of the IPA Implementing Regulation, the beneficiary countries will set up a joint monitoring committee within three months starting from the date of the entry into force of the first financing agreement relating to the programme. Overall monitoring of the programme implementation lies within the competencies of the Joint Monitoring Committee (JMC). The composition of the JMC includes representatives of the two beneficiary countries, Serbia and Montenegro, who will have an equal status in the JMC.

Functions of the Joint Monitoring Committee Pursuant to Article 142(5) of the IPA Implementing Regulation, the Joint Monitoring Committee shall satisfy itself as to the effectiveness and quality of the implementation of the cross-border programme, in accordance with the following provisions:

a) It shall consider and approve the criteria for selecting the operations financed by the cross-border programme and approve any revision of those criteria in accordance with programming needs;

b) It shall periodically review progress made towards achieving the specific targets of the cross-border programme on the basis of documents submitted by the operating structures of participating beneficiary countries;

Page 39 of 49

c) It shall examine the results of implementation, particularly achievement of the targets set for each priority axis and the evaluations referred to in Article 57(4) and Article 141 IPA Implementing Regulation;

d) It shall examine the annual and final reports on implementation referred to in Article 144 IPA Implementing Regulation;

e) It shall be responsible for selecting operations, but may delegate this function to a steering committee;

f) It may propose any revision or examination of the cross-border programme likely to make possible the attainment of the objectives referred to in Article 86(2) IPA Implementing Regulation or to improve its management, including its financial management;

g) It shall consider and approve any proposal to amend the content of the cross-border programme.

Furthe ordance with Article 143 of the IPA Implementing Regulation, the opboto in A IPA Implementing Regulation.

professional organisations, economic and

The Joint Monitoring Committee will approve the JTS annual work plan.

Composition and procedures of the Joint Monitoring Committee neficiary countries in

accordance with Article 142 of the IPA Implementing Regulation and taking account of the toring Committee shall ives from both national

ating country shall chair the oint Monitoring Committee. Rotating chairpersonship between beneficiary countries should

ill be rovided in the Committee’s rules of procedure.

rmore, in accerating structures and the JMC shall ensure the quality of the implementation of the cross-rder programme, as well as carrying out monitoring by reference to the indicators referred

rticle 94(1)(d) The Joint Monitoring Committee will adopt an information and publicity plan to be implemented by the OS / JTS. This plan will include, among others, actions aiming at:

• The guidance of the potential beneficiaries, social partners, organisations for the promotion opportunities provided by the intervention;

• The awareness of the public regarding the role of the EU in favour of the intervention and its outcomes.

The composition of the Joint Monitoring Committee is decided by the be

provisions of Articles 87 and 139 of said regulation. The Joint Monihave a balanced representation and a limited number of representatand regional level and other economic, social and environmental partners of both states participating in the programme to ensure efficiency and broad representation. Representatives of the European Commission shall participate in the work of the Joint Monitoring Committee in an advisory capacity. Representatives of the operating structures shall take part at the meetings of the JMC having a voting right. The Joint Technical Secretariat shall assist the work of the Joint Monitoring Committee. A representative of the Operating Structure of one of the participJensure balance.. Details regarding the practical organisation of the JMC meetings wp

Page 40 of 49

Decisions taken by the Joint Monitoring Committee shall be made by consensus among the national delegations of both beneficiary countries (one vote per country). Decisions of the

ommittee may also be taken via written procedure.

he JMC is responsible for the joint selection of the projects in compliance with the selection d, to a large extent, nal actions”.

2(5)(f) A Implementing Regulation (which fulfils the role of the Evaluation Committee foreseen in

mittee and transmits them, with recommendations as ppropriate, to the EC Delegations (contracting authorities) through the OSs. If required, the

ld at least twice a year at the initiative tries or of the Commission, as it will be further specified in the Rules

g, the joint monitoring committee shall draw up its rules of procedure, and IPA Implementing Regulation.

Set up and organisation Acco plementing Regulation, the operating structures shall

ecretariat (JTS) to assist the operating structures and the JMC in ive duties. The JTS may have antennae established in each

the two co-ordinating authorities. Details will be set out in this greement.

between the Operating Structures.

C

Tasks of the Joint Monitoring Committee in grant project selection Tprocedure and criteria set out in chapter 3 of this section, which is baseon the “Practical Guide for contract procedures in the context of EC exter The JMC shall have the main tasks of selecting individual project applications on the basis of the assessment of projects done by a joint Steering Committees provided for by Art. 14IPSection 6.4 of the PRAG), and in coordination with other Community and national programmes and policies taking into consideration the project’s relevance for the objectives and priority axes of the Programme. The JMC reviews and formally approves the evaluation report and the award proposals prepared by the joint Steering ComaJMC may request clarifications from the joint Steering Committee. In case of disagreement with the conclusions of the evaluation report, or if the JMC wants to deviate from the results of the joint Steering Committee, it must outline its concerns in their recommendation/approval letter to be transmitted to the EC Delegation. However, under no circumstances is the JMC entitled to change the joint Steering Committee's scores or recommendation and must not alter the evaluation grids completed by the evaluators.

Convening a meeting Meetings of the Joint Monitoring Committee shall be heof the participating counof Procedures.

Rules of procedure of the Joint Monitoring Committee At its first meetinadopt them in order to exercise its missions pursuant to the

1.4 Joint Technical Secretariat

rding to Article 139(4) of the IPA Imset up a Joint Technical Scarrying out their respectparticipating country. In the IPA Cross–border Programme Serbia-Montenegro, the JTS will be established by joint agreement between a The JTS is responsible for the day-to-day implementation of the Programme. Also, the JTS will ensure the liaison The Joint Technical Secretariat is jointly managed by both Operating Structures.

Organisation and staffing of the joint technical secretariat

Page 41 of 49

The JTS shall be based in Prijepolje, Republic of Serbia. An antenna in Montenegro will

rin and Serbian nationals. The JTS is composed of staff appointed y both Operating Structures. The number and qualification of staff shall correspond to the

Technical Assistance Priority Axis. More detailed rules on e operation of the JTS shall be included in a bilateral agreement between the Operating

JTS o the

plementing agreement concluded between the Serbian and Montenegrin s and according to the provisions of national and EU legislation.

s:

ering

ng public awareness on the programme;

• mittees, including drafting of administrative compliance and eligibility

reports;

• Structures, standardised forms for project application, evaluation grids,

guidelines for applicants, implementation, monitoring and grant project reporting

• ion;

• Encouraging project applications and providing guidance to the applicants;

• Advising grant beneficiaries in project implementation, for example by organising

operate in Bijelo Polje. The JTS shall be lead by the Head of Secretariat. The JTS shall have international staff, including both Montenegbtasks defined below. Staff of the JTS shall cover the relevant languages – Montenegrin/Serbian and English. The operation of the JTS, including staffing costs (with the exception of salaries of public officials), shall be funded from the thStructures. Its activities will be carried out according to a work plan annually approved by the JMC.

asks of theTThe JTS is responsible for the day-to-day implementation of the programme pursuant tprovisions of the imOperating Structure The JTS will assist the Joint Monitoring Committee and the Operating Structures in carrying out their duties, and in particular it will be responsible, inter alia, for the following task

• Providing inputs to annual and final reports on the Cross–border programme;

• Organising meetings of the Joint Monitoring Committee and of the joint SteCommittee, including drafting and distribution of minutes;

• In close co-operation with the Operating Structures, planning and implementing information campaigns and other activities related to raisi

Receiving and registering project applications and organising the work of joint Steering Com

Preparing, under the guidance and with the support of the Contracting Authorities and Operating

(including financial reporting) based as much as possible on templates and models included in the PRAG;

Organising programmes of info days and workshops for potential applicants, ensuring a good coverage of the eligible reg

• Assisting potential applicants in partner search and project development;

procurement and monitoring workshops;

• Develop and maintain a network of stakeholders;

Page 42 of 49

• Create and update a database of potential applicants and participants in workshops and other events;

• nd report on monitoring visits to CBC projects;

me;

training events.

In both coun be the Contracting Authority.

Prepare, conduct a

• Prepare and publish publicity material on the cross-border program

• Design and maintain an up-to-date programme website;

• Attendance at regular Operating Structures’ meetings and

1.5 Contracting Authorities tries the European Commission will

Serbia Montenegro Delegation of the European Commission to Delegation of the European CSerbia

Belgrade 30 83 200

3 201

ommission to Montenegro

. Krunska 73 11 000

81000 Podgorica To be established Tel: +381 11

Fax: +381 11 30 8 T s’ responsibilities are, inter alia, the following:

ittees;

election, chapter 3);

isions (with support provided as appropriate by OSs and JTS);

1

Definition of lead beneficiaries and other beneficiaries ulation, if there are several final ntry, they shall appoint a lead

6(3) of the IPA Implementing Regulation, the lead eneficiary shall assume the following responsibilities for the part of the operation taking

taking place in the respective country in an agreement

he Contracting Authoritie

• Approving calls for proposals documentation;

• Approving composition of joint Steering comm

• Approving the evaluation reports (more under project s

• Sitting in the joint monitoring committee in an advisory capacity;

• Signing contracts with grant beneficiaries, including budget rev

.6 Programme Beneficiaries

According to Article 96(3) of the IPA Implementing Regbeneficiaries of an operation in each participating coubeneficiary among themselves prior to the submission of the proposal for an operation. The lead beneficiary shall assume the responsibilities set out below regarding the implementation of the operation. Responsibilities of Lead Beneficiaries and other Beneficiaries

Responsibilities of lead beneficiaries According to the provisions of Article 9bplace in the respective country :

• It shall lay down the arrangements for its relations with the final beneficiaries participating in the part of the operationcomprising, inter alia, provisions guaranteeing the sound financial management of the

Page 43 of 49

funds allocated to the operation, including the arrangements for recovering amounts unduly paid;

It shal• l be responsible for ensuring the implementation of the part of operation taking place in the respective country;

• transferring the Community contribution to the final beneficiaries participating in the part of operation taking place in the respective country;

• rticipating in the part of operation taking place in the respective country has been paid for the purpose of

It shall be responsible for

It shall ensure that the expenditure presented by the final beneficiaries pa

implementing the operation and corresponds to the activities agreed between the final beneficiaries participating in the operation.

The countries shall ensure a close co-ordination

mong them in the implementation of the operation.

tion shall:

ng the implementation of the operations under its responsibility according to the project plan and the agreement signed with the lead

• ith the other partner beneficiaries in the implementation of the operation, the reporting for monitoring;

• sted for audit by the audit bodies responsible for it;

was declared, including eventual repayment to the Commission;

• for the public.

Fun ihere Lead Beneficiaries from both sides are participating and are the Contracting Authorities of SRB and of MNE) the 2 Lead

erall coordination of the project activities on both side of the

f the joint project.

2. Pro tThe Joint Technical Secretariat will proactively support the Lead Beneficiaries and other beneficiaries throughout the life cycle of operations, i.e. during preparation starting from development of applications, and implementation of operations until complete finalisation of

lead beneficiaries from the participating a

Responsibilities of other beneficiaries Each beneficiary participating in the opera

• Participate in the operation;

• Be responsible for ensuri

beneficiary;

Co-operate w

Provide the information reque

• Assume responsibility in the event of any irregularity in the expenditure which

Be responsible for information and communication measures

ct onal Lead Partner In case of joint projects (wseparately contracted by Beneficiaries shall appoint among themselves a Functional Lead Partner prior to the submission of the project proposal.


• Responsible for the ovborder;

• Responsible for organising joint meetings of project partners;

• Responsible for reporting to the JTS on the overall progress o

jec Generation

Page 44 of 49

the respective operation. A comprehensive schedule of general info days (“road show”) will

a good-quality cross-border project.

cedures followed in the process will be in line with the contracting procedures applying to all EC external aid contracts financed from the

general budget as specified in the applicable version of “Practical

ctions, on the basis of documents provided by beneficiaries, and in accordance with the contracting and procurement rules set out in the EC’s Practical Guide

on and national auditing authorities will have power of audit over the

The contracting authority has overall responsibility for the correctness of management and ramme Serbia-Montenegro. The OSs are

responsible for putting in place the monitoring system of the programme. The monitoring the framework of ensuring an appropriate audit trail for the

g tools are as follows:

be organised to promote the Cross–border programme, followed by more focused info days, workshops and partner search events in the context of calls for proposals. This will be supported by appropriate publicity material, a regularly updated programme website and other events to ensure a stakeholder network is built and good practice experiences are shared. Please refer to the chapter on the JTS (1.4 in this section) for the list of measures to be provided by the JTS in support of the generation of operations. Furthermore, guidelines for applicants will provide an extensive list of recommendations for project applicants on how to

repare p

3. Project Selection Implementation of the IPA Cross–border Programme Serbia-Montenegro will be done on the basis of grant scheme mechanisms. The pro

European CommunitiesGuide to contract procedures for EC external actions” (PRAG) manual. In view of the nature of the projects (cross-border co-operation) and the IPA Implementing Regulation (art 95 and 140), minor adaptations of standard PRAG rules are required.

3.1 Types of projects Operations selected shall include final beneficiaries from both countries which shall co–operate in at least one of the following ways: joint development, joint implementation, joint staffing and joint financing.

4. Financial Management Under centralised management, the European Commission will handle all tendering, contracting and payment fun

to Contracting (PRAG). The Joint Monitoring Committee will ensure that reliable computerised accounting; monitoring and financial reporting is in place that will provide an adequate audit trail.

he European CommissiTCross-border Programme.

5. Programme Monitoring and Evaluation

rogramme monitoring P

implementation of the IPA Cross–border Prog

system is important in programme. The OSs and the joint monitoring committee will carry out the monitoring of the Programme by reference to the indicators specified in the Programme.

he monitorinT

Page 45 of 49

Annual report and final report on implementation: by 30 June each year and for the first time of the cross-border programme Serbia-

ontenegro, the OSs shall submit to the Commission and the respective national IPA co–

ort on the implementation of the programme t the latest six months after the closure of the cross-border programme.

lend themselves to quantification, using the indicators referred to in

b) lementation, in particular:

ii. A summary of any significant problems encountered in implementing the

c) The measures taken to provide information on and publicise the cross-border p am

As rep

ject fact sheets, are ubmitted by the OSs to the JMC twice annually, who decides on any possible action

e Evaluation ursuant to Article 141 of the IPA Implementing Regulation, under centralised management,

gramming period shall be carried out under the responsibility of the evaluation has not been carried out in line with the provisions of

nators shall provide information on and s with the assistance of the JTS as appropriate.

tors will appoint IPA–Component II co-ordinators (as per Art 32

ate this

in the second year, following the adoptionMordinators, an annual report on the implementation of the cross-border programme after examination by the Joint Monitoring Committee. After examination by the JMC, the OSs shall also submit to the Commission and the respective national IPA co–ordinators, a final repa Pursuant to article 144(2) of the IPA implementing regulation, the reports shall include the following information:

a) The progress made in implementing the cross-border programme and priorities in relation to their specific, verifiable targets, with a quantification, wherever and whenever theyarticle 94(1)(d) at the level of priority axis;

The steps taken by the operating structures and/or the joint monitoring committee to ensure the quality and effectiveness of imp

i. Monitoring and evaluation measures, including data collection arrangements;

cross-border programme and any measures taken;

iii. The use made of technical assistance.

rogr me.

a general principle, lead beneficiaries will send on a quarterly basis to the JTS written orts with information on project progress, including a financial report.

OSs ensure that data are entered into the monitoring system and arrange external monitoring visits to the grant projects. Status reports, including grant prosrequired.

ProgrammPevaluations during the proCommission. An ex-ante said Article in the light of the proportionality principle.

6. Programme Publicity The beneficiary countries and the national IPA co-ordipublicise programmes and operationAs the national IPA co-ordina(2) IPA Implementing Regulation), the responsibility for implementing programme information and publicity actions will lie with the IPA–Component II co–ordinators; they may delegtask, or parts thereof, to the JTS.

Page 46 of 49

The Joint Monitoring Committee will adopt an information and publicity plan drafted under the guidance of the IPA–Component II co-ordinators. It shall be implemented by the OSs and the TS. This plan will include, among others, actions aiming at:

• es.

J

• The guidance of the potential beneficiaries, professional organisations, economic and social partners, organisations for the promotion opportunities provided by the intervention;

The awareness of the public regarding the role of the EU in favour of the intervention and its outcom

Page 47 of 49

ANNEX B FRAMEWORK AGREEMENT BETWEEN THE COMMISSION OF THE EUROPEAN COMMUNITIES AND THE GOVERNMENT OFMONTENEGRO, DATED 15/11/2007

Page 48 of 49

ANNEX C REPORTING













Page 49 of 49