Turkey was included in the EU “Enlargement Strategy” developed for candidate countries following Turkey’s recognition as a candidate country by the European Council. Enlargement Strategy sets out the framework of the financial assistance to candidate countries aiming to enhance their harmonisation with the EU acquis and administrative capacities prior to their accession through Accession Partnership Documents prepared for candidate countries, National Programmes adopted by candidate countries, Progress Reports, and other complementary reports.

 

 

When Turkey was included in the EU Enlargement Strategy, financial assistance conducted through Financial Protocols prior to Turkey’s candidacy was replaced by a new financial system aiming to encourage structural reforms for Turkey’s EU membership based on the priorities indicated in the Accession Partnership Document and the National Programme.

EU financial assistance is granted to Turkey on an annual basis by the European Commission similar to financial assistance to other candidate countries and it provides funding for projects and programmes agreed by the European Commission and Turkish authorities.

THE PERIOD PRIOR TO TURKEY’S CANDIDACY (1964-1999)

Turkey-EU financial cooperation was implemented under Financial Protocols following the signature of the Ankara Agreement in 1963 through which a partnership started between Turkey and the European Community until the completion of Customs Union in 1996. During this period, four Financial Protocols were signed and the financial assistance consisted of grants, loans funded by either the European Investment Bank or the Community. In 32 years, Turkey was able to receive 830 million Euros out of the total allocated funds of 1.4 billion Euros.

Between 1996 and 1999, Turkey-EU financial cooperation determined according to the needs stemmed from the completion of the Customs Union. During this period, Turkey received grants and loans under the framework of Community’s programme applied to Mediterranean countries. Yet, Turkey could receive 52 million Euros of grants and loans under Budget Support, MEDA, and Administrative Cooperation Fund which were 768 million Euros in total due to Greece veto.

THE PERIOD AFTER TURKEY’S CANDIDACY (2000-2006)

A new phase in Turkey-EU relations started with the recognition of Turkey as a candidate country at the 1999 Helsinki Summit. Following this decision, the structure and amount of financial assistance to Turkey has changed. In this regard, Turkey started to receive financial assistance under the framework of the Regulation Concerning Pre-Accession Financial Assistance for Turkey which was adopted in December 2001. Although the level of annual assistance allocated for Turkey was, on average, 177 million Euros, it has increased to 250 million Euros according to Turkey’s needs.

In this period, several decisions were taken to implement projects in line with the priorities outlined in the Accession Partnership Document and National Programme; to build an institutional structure in Turkey similar to other candidate countries by using the same terminology; and to establish “Decentralised Implementation System” to strengthen the relations among candidate countries and EU Member States. Turkey established “Decentralised Implementation System” in 2001.

INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPA)

OVERVIEW

The financial assistance programmes of the EU, such as PHARE, ISPA, SAPARD, Pre-Accession Assistance for Turkey, CARDS, are consolidated into a new single instrument in January 2007 and named as Instrument for Pre-Accession Assistance (IPA). The IPA is considered as a flexible instrument and therefore provides assistance which depends on the progress made by the beneficiary countries and their needs as shown in the Commission’s evaluations and strategy papers. IPA beneficiary countries are divided into two categories, depending on their status as either candidate countries under the accession process or potential candidate countries under the stabilisation and association process. Therefore, beneficiaries include Turkey, Iceland, the Former Yugoslav Republic of Macedonia, Montenegro and Serbia as candidate countries and Albania, Bosnia-Herzegovina and Kosovo as potential candidate countries.

IPA I (2007-2013)

First period of IPA (IPA I) was implemented between 2007 and 2013. IPA Framework Agreement between Turkey and the EU entered into force on the 24^th December 2008 with its publication on the Official Journal of the Republic of Turkey. In this period, 4.87 billion Euros was allocated for Turkey under the five components of IPA I which covered priorities defined according to the needs of Turkey with the aim of ensuring targeted, effective and coherent action.

The priorities for EU financial assistance to support Turkey on its path to accession are defined in the “Multi-Annual Indicative Planning Document” (MIPD). MIPD sets out the priorities for EU financial assistance for the respective periods to support beneficiaries on its path to accession. It uses the political priorities determined in the enlargement policy framework to identify key areas where financial assistance is the most needed and considered to be the most useful in helping the candidate and potential candidate countries to meet the accession criteria.

Along with MIPD, the European Commission publishes Country Strategy Papers for each beneficiary country. Indicative Strategy Paper for Turkey (2007-2013) defined five components under which Turkey received IPA I funds. These components are:

• Support for Transition and Institution Building
• Cross-border Cooperation
• Regional Development
• Human Resources Development
• Rural Development

According to priorities defined in MIPD and Indicative Strategy Paper for Turkey for 2007-2013 period, the amount of financial assistance received by Turkey with regard to five components is as follows:

Table 1: Financial Assistance Received by Turkey with Regard to IPA I Components (2007-2013) (million Euros)

IPA I COMPONENT	2007	2008	2009	2010	2011	2012	2013	TOTAL
Support for Transition and Institution Building	256,7	256,1	239,6	217,8	231,3	227,5	238,5	1.667,5
Cross-border Cooperation	2,1	2,9	3,0	3,1	5,1	2,2	2,2	20,6
Regional Development	167,5	173,8	182,7	238,1	293,4	356,1	366,9	1.778,4
Human Resources Development	50,2	52,9	55,6	63,4	77,6	83,2	91,2	474,1
Rural Development	20,7	53,0	85,5	131,3	172,5	187,4	204,2	854,6
TOTAL	497,2	538,7	566,4	653,7	779,9	856,3	903,0	4.795,2

                   Source: Ministry for EU Affairs website

IPA II (2014-2020)

In the IPA II period that covers the period from 2014 to 2020, priorities and policy areas are determined in line with the components of the framework of IPA I financial assistance. Accordingly, several sectorial and sub-sectorial have been identified and Ministry for EU Affairs and respective Ministries in Turkey are assigned to coordinate the project activities under the framework of identified sectors.

An important aspect of IPA II is its strategic focus. To that end, the European Commission published Country Strategy Papers which are specific strategic planning documents made for each beneficiary for the 7-year period. Indicative Strategy Paper for Turkey was adopted by the European Commission on the 26^th August 2014.

Indicative Strategy Paper for Turkey (2014-2020) identifies specific objectives under which Turkey will receive financial assistance under IPA II such as (a) support for political reforms; (b) support for economic, social and territorial development; (c) strengthening the ability of the beneficiary country to fulfil the (future) obligations stemming from membership in the EU by supporting progressive alignment with the Union acquis; (d) strengthening regional integration and territorial cooperation.

In this regard, similar to the IPA I, the Eropean authorities identified five components under which Turkey will receive IPA II funding:

• Reforms in preparation for Union membership and related institution and capacity-building
• Socio-economic and regional development
• Employment, social policies, education, promotion of gender equality, and human resources development
• Agriculture and rural development
• Regional and territorial cooperation

As identified in the Strategy Paper for Turkey, Turkey’s investment needs in order to carry out reforms are far greater than the IPA II resources available. Therefore, prioritising areas of assistance is essential. In this regard, two pillars are identified by the European Commission for financial assistance to Turkey in this period based on the European Commission’s 2013/2014 Enlargement Strategy. These two pillars and emphasised areas with respect to these two pillars are as follows:

• Democracy and Rule of Law (reforms in judiciary, fundamental rights, home affairs, civil society, anti-corruption measures)
• Competitiveness and Growth (education, employment and social policies sector, environment and climate action, energy, transport, competitiveness and innovation sectors)

In this period, the total amount of financial assistance allocated for beneficiary countries is 11.7 billion Euros where the allocated amount for Turkey is almost 4.5 billion Euros. The indicative allocations for defined areas which Turkey receives financial assistance in IPA II period is as follows:

                       Table 2: Indicative Allocations for Turkey per Policy Areas and Sectors (million Euros)

IPA II COMPONENTS	2014	2015	2016	2017	Total  2018-2020	Total 2014-2020
a. Reforms in preparation for Union membership	355.1	196.6	240.3	137.2	652.2	1,581.4
Democracy and governance	540.2				416.3	956.5
Rule of law and fundamental rights	388.9				236.0	624.9
b. Socio-economic and regional development	155.8	265.8	247.0	261.4	595.3	1,525.3
Environment and climate action	297.1				347.5	644.6
Transport	386.0				56.8	442.8
Energy	59.0				34.4	93.5
Competitiveness and innovation	187.8				156.6	344.4
c. Employment, social policies, education, promotion of gender equality, and human resources development	37.4	62.9	65.9	68.9	199.9	435.0
Education, employment and social policies	235.1				199.9	435.0
d. Agriculture and rural development	72.0	100.9	77.0	158.1	504.2	912.2
Agriculture and rural development	408.0				504.2	912.2
TOTAL	620.4	626.4	630.8	636.4	1,940.0	4,453.9

Source: Indicative Strategy Paper for Turkey (2014-2020)

IPA III (2021-2027): More Strategic and More Focused

With the IPA funds provided as a grant by the European Union, it is aimed to develop the ability of candidate countries for harmonisation and implementation of the EU acquis and to build their capacities for economic and social cohesion. The two former financial instruments, namely, IPA I and IPA II have supported the implementation of the enlargement policy in a more robust framework and that these instruments have assisted the candidate countries to adhere to their determination on the EU path. Differently, for the IPA III period, it is envisaged that annual allocations will be made for the determined 5 thematic windows instead of the country-based IPA budget allocation. The five thematic windows are as follows;

Window 1: Rule of Law, Fundamental Rights and Democracy

Under Window 1 thematic priorities are focused on strengthening the rule of law, democracy, the respect of human rights, fundamental rights and international law, civil society and security as well as improving migration management along with border management.

Window 2: Good Governance, Acquis Alignment, Strategic Communication and Good Neighbourly Relations

Under Window 2 thematic priorities are designated to focus on reinforcing the effectiveness of public administration and supporting structural reforms and good governance at all levels. Moreover, forming the rules, standards, policies and practices of the beneficiaries in harmony to those of the Union and reinforcing reconciliation and good neighbourly relations, as well as people to people contacts and communication are the main goals embedded in the second window.

Window 3: Green Agenda and Sustainable Connectivity

Under Window 3 thematic priorities will focus on reinforcing environmental protection, increasing resilience to climate change, accelerating the shift towards a low-carbon economy and developing the digital economy and society. 

Window 4: Competitiveness and Inclusive Growth

Thematic priorities of Window 4 are depicted as follows: consolidating the economic and social development including connectivity and regional development, agriculture and rural development and social and employment policies.

Window 5: Territorial and Cross-Border Cooperation

Under these 5 thematic windows, all candidate countries will prepare their proposals and the projects deemed appropriate by the Commission to be selected within the scope of IPA III. According to the new regulation, not every theme will provide the same financial aid, so an indicative budget will be determined for each window. The proposals coming from candidate countries for financial assistance are the centre of the determination process. It is envisaged that, determining which beneficiary country the proposals address, is practical and efficient for the beneficiary and provider parties. In this direction, there are two important criteria for the beneficiaries in the implementation of the proposals; relevance and maturity. Another important criterion is the fair sharing principle. Thanks to this principle, the possibility of only one country receiving the majority of the assistance is prevented. The financial envelope for the implementation of IPA III for the period 2021-2027 is determined to be 14,5 billion euros meaning a significant increase comparing to IPA II and IPA I. 

IPA III puts performance at the core of the instrument and provides greater guidance in overall funding allocations which will demonstrate commitments and progress of the reforms. The use of performance indicators will contribute to the evaluation of IPA III. In this direction, the IPA programming framework is constructed to be based on evolving needs to provide a balance between predictability and performance-based funding.

Under IPA III, the Commission has proposed ten specific composite indicators to observe implementation and progress towards the achievement of the themes. The composite indicators are on;

     1.  The readiness of the candidate countries and potential candidates on fundamental areas of the political accession criteria including democracy, human rights, rule of law, judiciary, fight against corruption and organised crimes;

   2. The readiness of the candidate countries and potential candidates on public administration reform; 

    3.  The readiness of the candidate countries and potential candidates to the EU acquis;

     4.  The readiness of the candidate countries and potential candidates on fundamental areas of the economic criteria i.e. functioning market economy and competitiveness; 

     5.  The readiness of the candidate countries and potential candidates on public social security expenditure; 

    6.  The readiness of the candidate countries and potential candidates on digital gap between the beneficiaries and the EU average; 

     7.  The readiness of the candidate countries and potential candidates on distance to frontier score; 

    8.  The readiness of the candidate countries and potential candidates on energy intensity measured in terms of primary energy and GDP;

      9.   The readiness of the candidate countries and potential candidates on greenhouse gas emissions reduced or avoided with the EU support;

    10. The readiness of the candidate countries and potential candidates on a number of cross-border cooperation programmes concluded among IPA beneficiaries and IPA/EU. 

Briefly, an important novelty of IPA III is that financial allocations per country will not anymore be done on the basis of national envelopes, but on the premises of performance-based principle. Furthermore, the Commission’s goal to allocate 16% of the overall financial envelope to climate objectives is also remarkable within the IPA III.

APPLICATION AND IMPLEMENTATION PROCEDURE OF IPA PROGRAMMES

Following the identification of annual objectives and programmes under the framework of IPA, calls for tenders and/or calls for proposals are published. The IPA funding is used by Turkey in the form of business, materials and services tenders. The financial assistance that is regarded as tenders in the EU external assistance system, despite not being a tender, is announced to the public through various calls. For further information, please see.

In application process, it is important to take the European Commission general evaluation criteria into account since the programme evaluation, tendering and contracting process are subject to preview of the European Commission. The proposals for programmes are made to the respective institution that is specified in the call.

INSTITUTIONAL STRUCTURE OF IPA

Decentralised Implementation System (DIS) was established in 2001 with the aim of decentralising the implementation of the EU funded programmes through delegating implementing and monitoring authorities from the European Commission to the partner countries.

New arrangements about DIS were set out with the Prime Ministry Circular 2001/42. According to Prime Ministry Circular, it is agreed that financial assistance in the scope of the enlargement strategy is provided for the projects with regard to the order of priority identified in the Accession Partnership Documents and National Programmes. In addition, the Circular indicates the decentralised implementation actors as follows:

• Competent Accrediting Officer
• National IPA Coordinator
• National Authorising Officer (NAO)
• Strategic Coordinator
• National Fund
• National Authorizing Officer Support Department
• Operating Structure
• Central Finance and Contracting Unit (CFCU)
• Programme Authorizing Officer (PAO)
• Senior Programme Officer (SPO)
• Agriculture and Rural Development Support Institution
• Audit Authority
• National Authority
• Internal Auditing Unit

In order to use financial assistance under the framework of IPA, beneficiary countries have to establish necessary administrative structures which are determined in IPA Implementing Regulation in detail. Beneficiary countries have to delegate implementing and monitoring responsibilities among those administrative units and authorities. When those units and authorities are established and started to function, beneficiary countries obtain the authority over EU financial assistance.

With the aim of adjusting this new framework of financial assistance, “Framework Agreement between the Republic of Turkey and European Commission Concerning IPA” was signed in 2008. According to this Agreement, Prime Ministry Circular 2011/15 was published to re-adjust of Decentralised Implementations in accordance with IPA structure.

The cycle of EU funding under the framework of IPA implementations includes several steps explained below:

• Budgetary decision
• Allocation of funds into national programmes
• National Programme
• Contracting of funds
• Disbursement of funds
• Beneficiaries of Pre-Accession Assistance

BENEFICIARIES OF IPA

All real and/or legal persons from EU Member States and candidate countries can apply to IPA programmes. Applications for IPA funds are not only limited to the Turkish government or public institutions. Rather, local authorities, private sector representative institutions, small and medium sized enterprises (SMEs), unions, associations, foundations, NGOs can also apply for IPA funds. The eligibility criteria are specified in the calls for proposals and/or tenders.