Poor paperwork, management limits Croatia's use of EU funds

27/03/2008

Brussels has earmarked 750m euros to assist with reforms in Croatia. But officials say little of the money is actually being used because authorities are not taking the application process seriously.

By Natasa Radic for Southeast European Times in Zagreb -- 27/03/08

Prime Minister Ivo Sanader says he is aware of the problem. [Getty Images]

Brussels is blocking 5m euros in EU funds for Croatia until the end of this month, in a symbolic move meant to draw attention to inadequate management by authorities in Zagreb.

"We want to see improvement" in the way the funds are being handled, the European Commission's embassy in Zagreb said in a press release.

In all, 750m euros have been earmarked by Brussels for various programmes in Croatia. While the money -- provided under the Instrument for Pre-accession Assistance (IPA) programme for candidate countries -- is meant to facilitate reforms, EU officials say poor preparation and management have resulted in wasted potential.

For example, Croatia has failed to take advantage of money from a fund for environment and infrastructure protection. The country has so far proposed projects that amount to 0.5% of the 35m-euro fund.

EU financial assistance is available for a variety of key reform tasks, including boosting democratisation, strengthening institutions, fighting corruption, improving regional co-operation, and economic reform. Each project to be funded under the IPA must submit valid documentation and be assessed by EU officials.

Croatia received an initial warning in November 2007 about the way it is handling the EU assistance. According to a progress report at the time, "the issue of handling EU funds must be addressed immediately because the administration in Zagreb shows some serious setbacks."

According to Brussels, the most serious problem is poorly prepared documentation, submitted without the necessary explanations and projections. As a result of such shoddy work, officials say, most projects do not make it through the verification phase.

"You can almost feel the indifference … it is like they really do not care if the project will receive the money or not," Novi List quoted one foreign diplomat as saying.

Prime Minister Ivo Sanader has acknowledged the problem. "We will handle everything and will put the process in fifth gear," he pledged after winning a second term in the November 2007 elections.

Gaining access to EU funds is no simple task. The verification process has tough criteria and requires programme proposals to be detailed and professionally written. Out of all EU applicants throughout the years, Ireland was the most successful in this area, managing to gain 75% of the financial aid earmarked for it. On average, countries have about a 35% chance of success.