MANAGING THE EU PRE-ACCESSION ASSISTANCE PROGRAMMES
IN SLOVENIA

This paper originated within the EU’s Fifth Framework Programme project 'Organising for EU Enlargement: A Challenge for the Member States and Candidate Countries' (HPSE-CT-2001-00083). 

Damjan Lajh

ABSTRACT: Simultaneously to the negotiating process the EU has also provided the pre-accession financial assistance to the EU candidate-countries. In this respect, every candidate-country with an ambitious goal of reaching a high development level for all of its regions and hoping to receive support from the structural funds must put a lot of effort into creating an efficient institutional framework that allows the successful management of future EU funding. Namely, the future institutional (full EU membership) ability of managing EU structural and cohesion funds is largely influenced by the capacity to manage the pre-accession assistance programmes. 
This paper focuses on the institutional challenge of establishing competent authorities at Slovenian national level with responsibility for co-ordination and management of EU regional issues. Accordingly, the main aim of this paper is to analyse the processes of managing the EU pre-accession assistance programmes in Slovenia.

KEY WORDS:Europeanisation, EU regional policy, EU pre-accession aid programmes, Slovenia.

INTRODUCTION

Today’s European Union (EU) regional policy has its origins in 1975, when the European Regional Development Fund (ERDF) was established. Until then, the common European Community (EC) regional policy was very fragmented and of very limited extent (Armstrong, 2001). It has developed mostly on three lines: the co-ordination of national regional policy measures to ensure their conformity to the treaties; the development of Community funds for regional development; and a slow series of moves towards a positive Community regional policy (Keating, 2001: 17). When ERDF was introduced it’s main aim became to correct regional imbalances within the EC by funding up to 50 per cent of the costs of economic development projects in less favoured regions (Bache, 1999: 30). However, the emerged policy was one firmly controlled by member governments and not supranational institutions, where the Commission’s role was limited to approving projects submitted by national governments (ibid). Therefore, although ERDF became apparently the EC’s own regional policy financial instrument, it was effectively structured in such a way that individual member-states exerted very strong influence over how the money was spent and who received the assistance. In addition, the assistance was circumscribed largely to grants for infrastructure investments and for investments in industrial and service-sector schemes (Armstrong, 2001: 35-38). 

EC regional policy as set in 1975 later on underwent some reforms, with its main renaissance in 1988. Namely, the 1988 reform meant a radical shift in EC regional policy: it imposed a strongly uniform regulatory framework on extremely diverse national contexts (Hooghe, 1996b), and the ‘partnership principle’ was officially introduced (Hooghe, 1996a; Bache, 1999; Thielemann, 2000). In this way, a series of measures were adopted, above all to improve relations and co-ordination between supranational, national and subnational level authorities in their efforts to promote regional development. More specifically, Hooghe (1996b: 2) describes the partnership principle as “a set of rules and procedures which prescribe that the European Commission, national authorities, and subnational authorities collaborate closely and continually in the design and implementation of EU-funded programmes”. Hence, in order to achieve broad support for policy goals and comprehensive information on regional development, public and private actors were included in the decision-making processes (Benz and Eberlein, 1999: 335). The partnership principle was reaffirmed and widened by subsequent reforms in 1993 and 1999 (for more detail see Sutcliffe, 2000; Thielemann, 2000; Armstrong, 2001; De Rynck and McAleavey, 2001; Bailey and De Propris, 2002). 

According to Hooghe (1996b: 6) the EU regional policy is the only redistributive policy of importance in an almost exclusively regulatory project of European integration. It is not just one among many policies but is a special combination of a variety of sectoral policies (ibid: 10). Hence, other EU policies also have an uneven regional impact (Keating, 2001: 6), each of which is organized in accordance with particular boundary and decision rules. In this way the aim of regional policy is to select and co-ordinate sectoral policy initiatives that are beneficial in developing a given territorial space (Hooghe, 1996b: 10). In terms of financial viewpoint, regional policy is a system of side-payments from governments in richer EU countries to those in less-developed EU countries (Marks, 1996: 391). From humble beginnings, EU regional policy has grown to become the second most important spending policy of the EU (only to the Common Agricultural Policy) and it now absorbs approximately one-third of the EU annual expenditure. 

Although in last decades the EU regional policy went through some substantial changes, its basic aim has remained actually the same: the reduction of regional disparities and strengthening of economic and social cohesion throughout the EU. The main instrument of achieving this aim is made up of the four Structural Funds and the Cohesion Fund.1 The Structural Funds, frequently called also ‘the instruments of solidarity’, are the following:
•The European Regional Development Fund, established to finance infrastructure, job-creating investments, local development projects and aid for small firms;
•The European Social Fund, established to promote the return of the unemployed and disadvantaged groups to the work force, mainly by financing training measures and systems of recruitment assistance;
•The Financial Instrument for Fisheries Guidance, established to help adapt and modernise the fishing industry;
•The "Guidance" Section of the European Agricultural Guidance and Guarantee Fund, established to finance rural development measures and assistance for farmers, mainly in regions lagging in development.

The Structural Funds thereby concentrate on clearly defined priorities: firstly, to help regions whose development is lagging behind (Objective 1); secondly, to assist economic and social conversion in areas experiencing structural difficulties (Objective 2); and thirdly, to promote the modernisation of training systems and the creation of employment (Objective 3). In addition to these four Structural Funds, a special Cohesion Fund has been introduced. This Fund provides direct finance for individual projects to improve the environment and develop transport networks in Greece, Ireland, Portugal and Spain.

Yet, the ‘instruments of solidarity’ are not limited to EU member-states only. Namely, simultaneous to the negotiating process the EU has also provided the pre-accession financial assistance to the EU candidate-countries. On this basis, the following paper is focusing on the institutional challenge of establishing competent authorities at Slovenian national level with responsibility for co-ordination and management of EU regional issues. In this respect, the main aim of this paper is to analyse the processes of managing the EU pre-accession assistance programmes in Slovenia.

Paper is divided in four sections. The EU pre-accession assistance programmes are examined in Section 1. In Section 2, pattern of past developments in regional policy and main features of regional disparities in Slovenia are observed. The style of managing the EU pre-accession assistance programmes in Sloveniais analysed in Section 3. Section 4 synthesises the main findings.  

THE EU PRE-ACCESSION ASSISTANCE PROGRAMMES

To help the candidate-countries suitably prepare for membership, the EU has provided for them the pre-accession financial assistance. Before their full EU membership and their full inclusion within the EU’s structural and cohesion policy, candidate-countries have been receiving assistance through three main financial instruments: PHARE, ISPA and SAPARD. The first EU pre-accession assistance instrument was the PHARE Programme, while the ISPA and SAPARD were introduced within the framework of Agenda 2000, which set the EU’s strategic and financial directions in the 2000-2006 period. All three instruments are intended to help candidate-countries in realising the initial institutional reforms and to support and simplify adoption of the acquis. The EU wishes to level out disparities in development among its member-states and regions, and devotes much attention to helping them overcome economic and social problems through the structural and cohesion funds. As such, the three instruments also seek to prepare candidate-countries for future participation in the EU’s structural and cohesion policy. 

The most important instrument through which assistance has been channelled is the PHARE Programme. The PHARE Programme helps candidate-countries in adopting and harmonising the acquis, as well as preparing them for the competitive internal market of the EU, while also helping them in investments in the areas of economic and social cohesion. The PHARE Programme has the same role as Objective 1 in the system of the EU’s structural funds, and as such acquaints future member states with the ways of implementing structural policy (for candidate-countries this programme serves as an introduction to structural fund expenditures). PHARE programme assistance can be divided into three phases. At the outset, PHARE was mainly used to support privatisation and enterprise restructuring, banking sector reforms and to boost research and development capacity. This was the first phase of the PHARE programme, which embraced the transitional period from 1992 to 1995. Since most countries that are recipients of PHARE assistance had formally submitted an application to join the EU, in the second phase PHARE’s emphasis was subsequently shifted to assist candidate-countries prepare to join the EU. In other words, assistance has focused on the priority areas defined in two key documents: the Accession Partnership and the National Programme for Adoption of the Acquis. This was the pre-accession period from 1996 to 1999. Finally, the third phase of pre-accession assistance involves the period from 2000 to 2006. This is the so-called accession period, in which the PHARE programme has again been re-oriented while two new pre-accession instruments have been introduced: ISPA and SAPARD. However, PHARE has remained the most important instrument. It focuses on two priorities: institution-building (around 30%), and the necessary investment related to the acquis and economic and social cohesion (70%). 

The ISPA programme was established following the Cohesion Fund model and is designed for the co-financing of large-scale infrastructure projects in the fields of environmental protection and transport infrastructure. The SAPARD programme supports projects involving agriculture and the development of rural areas, and is earmarked to help candidate-countries in their preparations for membership in the EU’s Common Agriculture Policy. 

Figure 1: Pre-Accession Assistance Programming Framework

Source:, April 2003

The pre-accession assistance is based on the so-called ‘programming framework of pre-accession assistance’. The programming framework for setting the priorities of pre-accession assistance is determined by two strategic documents: the Accession Partnership and the National Programme for Adoption of the Acquis. The main priority tasks of the Accession Partnership relate to meeting the key criteria for EU membership as set out at the European Council in Copenhagen in 1993. These are: 1) the achievement of stability of institutions guaranteeing democracy, the rule of law, human rights, and respect for and the protection of minorities; 2) the existence of a functioning market economy as well as the capacity to cope with the competitive pressure and market forces within the EU; and 3) the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union. The National Programme for Adoption of the Acquis defines development-strategic directions and objectives in a particular candidate-country as well as measures for their accomplishment in the period before full EU membership. The National Programme thereby covers: 1) the acquis; 2) the capacity of the government (state administration) to implement the acquis; and 3) the candidate-state’s capacity to ensure the necessary domestic funds, including the funds required to co-finance assistance programmes in the (pre)accession period (Kavaš, 2001: 16). These two strategic documents (the Accession Partnership and the National Programme for Adoption of the Acquis) form the framework for the multi-annual programming of the three pre-accession assistance instruments. 

REGIONAL POLICY IN SLOVENIA: CHARACTERISTICS AND PECULIARITIES

Notwithstanding its territorial smallness and low number of inhabitants, Slovenia’s special features include its extreme natural, cultural and socio-economic diversity. Slovenia is located at the crossroads of four European geographical areas: the Alps, the Pannonian plain, the Dinaric Alps and the Adriatic Sea. Consequently, it is characterised by a large number of natural regions, naturally formed borders, the variety of its terrain, great bio-diversity, border regions, national minorities, dispersed settlement and, at the same time, the great vulnerability of its landscape. The result of all these factors is the limited access to some areas, challenging settlement conditions and the difficult organisation of economic activities (The Negotiating Positions, 2000: 226). Socio-economic diversities between regions in Slovenia are thus fairly significant, although they are the smallest of all the EU accession-countries. 

At the start of the twentieth century the differences between particular regions of the present day Slovenia were especially large. Due to the centralist orientation of the administration after the Second World War, these disparities continued to grow up until 1971 when the special Law on the Promotion of Balanced Regional Development was adopted. That law was based on the concept of polycentric development and marked the start of regional policy and the special measures for promoting the growth of less-developed regions (Strategy of the Regional Development in Slovenia, 2001: 19). The measures were based on the principles of forming more equal living and working conditions in different parts of the country. Later, in the early 1990s the Law on Promoting the Development of Demographically Endangered Regions was adopted, which defined endangered regions through two demographic indicators only: the level of population growth and the ageing index (Regional Policy and the EU, 1999). This system did not turn out to be the most appropriate one because Slovenia’s demographic picture did not essentially improve.

As a result, the need has arisen for new approaches to regional policy, especially those that encompass the structural changes that affected particular parts of Slovenia during the transition to a market economic system. The most affected were those areas where heavy industry, mining, and the textile and alimentary industries predominated. After their obsolete production programmes and activities were abandoned, the unemployment rate drastically increased and in some parts even exceeded 20 percent. The disparities between larger cities and urbanised areas on one side, and ‘pushed-away’ rural districts on the other, were increasing while economic regression and population falls were perceived especially in the many unattractive border and hilly areas. 

The concentration of economic activities and people in just a few parts of the country has led to very different living and working conditions in Slovenia (i.e. great differences in the distribution of jobs, unemployment rates, education structures), inadequate transport links between regions and uneven access to social infrastructure within regions. These problems have been particularly pressing in the structurally less developed, economically weaker and predominantly agrarian regions, demographically endangered areas, areas with low income per capita, economically and socially unstable areas with an obsolete industrial structure and high unemployment rate, and in border regions. With the transition to a market economy in the 1990s, these structural problems became even more obvious and, in some areas, even deepened. 

Shortly after independence the implementation of a balanced regional policy was not seen as a priority because developmental problems were managed separately and not regionally (i.e. as regional developmental problems). Despite some positive shifts, resulting from more balanced regional development in the pre-1990 period (for example, infrastructure improved, the economy’s structure became more heterogeneous, employment was expanding at higher rates), at the same time certain problems were also growing (especially the absence of jobs for highly educated workers, forcing young people to leave for other regions after completing schooling). Since in the initial years after Slovenia’s independence there was a high centralisation of resources and arbitrary decision-making at the national level (on top of the political agenda were the tasks of establishing the political and administrative structure of the state and the macroeconomic dilemmas in the process of economic transition), regional development was placed on the back burner. 

Developmental disparities between regions2 in Slovenia are thereby not a new phenomenon. The main socio-economic indicators show that the fundamental disparities can be identified at the NUTS-2 level,3 i.e. between the Ljubljana urban region (the capital, including its hinterland) and the Rest of Slovenia. On one hand, there is the urbanised, densely populated flat area around the capital which has most of the conditions necessary for the development of economic activities and has already achieved a level of economic development that is almost on a par with the less-developed EU member-states. The Ljubljana urban region embraces just 12.5 percent of Slovenia’s territory and one-quarter of its population with an average density of 192 inhabitants per km2, which essentially exceeds national average. 

On the other hand, some marginal rural-urban areas are lagging behind or stagnating in terms of economic development. The main problems in these areas concern depopulation, high unemployment rates and a general lagging behind in development. The Rest of Slovenia encompasses 87.5 percent of Slovenia’s territory and approximately 1.5 million inhabitants (three-quarters of Slovenia’s total population) with an average density of 85 inhabitants per km2. However, it is important to emphasise that this is not a single region but is very heterogeneous and involves large regional differences at the NUTS-3 level. The economic-geographical evaluation of Slovenia also shows that in the area of the Rest of Slovenia three different structures of regional development can be identified: urban-industrial, rural-agrarian and the mixed structure, which represents the transit stage between urban and rural types, and is also the most widespread one. 

Nevertheless, regional policy in Slovenia applies to the whole of the country and mainly aims to reduce the abovementioned regional disparities. In line with the Strategy of Regional Development in Slovenia regional policy should be particularly intensive in the following preferred regions:
•regions with the lowest development levels (i.e. regions with very low levels of GDP per capita, deviating most from the national average);
•regions with special development problems (i.e. economically weak regions, regions with structural problems and high unemployment rates, and development restricted border regions and regions with restricted development factors);
•border regions;
•regions where the Italian and Hungarian national minorities, and the Roma ethnic community, live.

The modernisation of regional policy in Slovenia is thus a complex task, involving four intertwining levels: 1) the European level (structural and cohesion policy of the EU); 2) the national level (economic and social development of the state in connection with the EU’s structural and cohesion policy and Slovenia’s internal policy of promoting balanced regional development); 3) the regional level (regional policy as part of the national economics policy in connection with the structural and cohesion policy of the EU); and 4) the local level (Slovenia’s internal policy of promoting balanced regional development) (Strategy of Regional Development in Slovenia, 2001: 16-17). The reform of regional policy is a constituent part of the broader public administrative reform and one of the most important structural reforms in Slovenia. In particular, this reform is highly determined with the European dimension of regional policy. After all, the modernisation of regional policy, and primarily the harmonisation of sectoral policies, is also demanded by integration with the EU. Here, particularly visible role has so far played EU’s pre-accession assistance programmes.

MANAGING THE EU PRE-ACCESSION ASSISTANCE PROGRAMMES IN SLOVENIA

Slovenia has been receiving assistance from the EU since 1992, and one could claim that the story of relations between Slovenia and the EU started in practice with the PHARE programme. Immediately after Slovenia’s international recognition and establishing of initial contacts with the EU, the Slovenian Government started preparing itself for implementation of the PHARE programme. In December 1991 the Government thereby had already established the so-called ‘Inter-ministerial Co-ordination for Foreign Technical Aid’ and its direction entrusted to the then Ministry of Science and Technology. Within this Ministry, the Department for Foreign Technical Aid was also established with the main task to service and co-ordinate the activities of different assistance programmes from abroad. Slovenia signed the first Financial Memorandum with the EU on 15 September 1992 in Brussels. By signing this Financial Memorandum funds for realisation of the I. Indicative PHARE programme for 1992 were released. The sum for this first year was EUR 9 million. Just a few weeks later (7 October 1992) a Skeleton Agreement was also signed in Brussels by the Slovenian Government and the Commission about the realisation of measures for financial, technical and other forms of co-operation. By signing the agreement and its later ratification meant full satisfaction of the conditions for the tranquil implementation of the agreement and numerous projects of technical and financial assistance. Financial assistance in the first (transitional) period of 1992-1995 in Slovenia was above all oriented to the restructuring of Slovenia’s economy. At this time, Slovenia directed the funds from the PHARE programme to the following sectors:
•privatisation, public finances and banking business (20%);
•infrastructure (20%);
•the TEMPUS Programme and education (20%);4 and
•science and technology, the environment, energetic and tourism (20%).

Later (after the conclusion of the first phase/transitional period), financial pre-accession assistance was reoriented to implementation of the pre-accession strategy, harmonisation of legislation, reform of the public administration, and social development (Genorio, 2002). The basis of this ‘reorientation’ was represented by the signing of a second Financial Memorandum between the Slovenian Government and the Commission on 5 June 1995 in Ljubljana, and the Multi-annual Indicative Programme (signed on 3 July 1996), in which the core medium-term orientation and strategy of PHARE assistance up until the end of the 1990s was agreed. In this period, special intention was focused on: 1) strengthening the public administration for the efficient co-ordination of EU affairs; 2) informing the public about EU matters and Slovenia’s accession to the EU; and 3) supporting the National Assembly in its pre-accession activities. 

In addition, besides the PHARE National Programme Slovenia also qualified for funds from Cross-border Co-operation Assistance. In Slovenia, around 50 percent of its territory can be classified as falling within range of over-border influences. This position dictates Slovenia’s orientation to cross-border co-operation between the border regions. Co-operation with over-border regions in Austria, Italy and Hungary gives border regions in Slovenia an opportunity to efficiently resolve development barriers (resulting from the border’s existence) and alleviate the border’s impacts, promote co-operation and use other advantages such co-operation attracts. PHARE Programme Cross-Border Co-operation with Italy started in 1994, while in 1995 it expanded to Austria and Hungary. In 1995 three Multi-Annual Indicative Programmes were elaborated with Austria, Italy and Hungary for the 1995-1999 period,5 while for the 2000-2006 period Slovenia, together with all of its over-border partners prepared the Joint Programming Document for the PHARE Programme’s Cross-Border Co-operation with Austria, Italy and Hungary (EU Programmes, 2002). 

For Slovenia, the 2000-2006 period is the third phase of pre-accession assistance or the so-called accession period. Based on the adopted acquis and objective criteria, overall assistance during the 2000-2006 period allocated to Slovenia is around 2% of the funds earmarked for all candidate-countries (i.e. EUR 3.120 million per year), meaning around EUR 60 million per year, divided up as follows: 
•EUR 25 million from the PHARE Programme, including EUR 7 million for the PHARE Programme Cross-Border Co-operation with Italy, Austria and Hungary;
•EUR 8-10 million for horizontal inter-state programmes; 
•EUR 10-21 million from ISPA; and
•EUR 6.4 million from SAPARD.

So far, in the 1992-2002 period for the PHARE National Programme and Cross-border Co-operation Programmes Slovenia has on average received EUR approximately 33.6 million in financial assistance annually or, altogether in a ten-year period, around EUR 336 million. In addition, within the framework of the ISPA programme in the 2000-2002 period Slovenia received around EUR 71 million, while in the framework of the SAPARD Programme in the same 2000-2002 period around EUR 19.4 million in financial assistance. The total of financial aid Slovenia has received in the last decade from all three EU pre-accession assistance programmes is thereby EUR 426.4 million.

Simultaneous with the process of EU pre-accession assistance, the institutional structure for managing the pre-accession aid programmes in Slovenia was established. 

How (did) the Pre-accession Assistance in Slovenia Work in Practice?

Every candidate-country with an ambitious goal of reaching a high development level for all of its regions and hoping to receive support from the structural funds must put a lot of effort into creating an efficient institutional framework that allows the successful management of future EU funding. The future institutional (full EU membership) ability of managing EU structural and cohesion funds is largely influenced by the capacity to manage the pre-accession assistance programmes. 

Figure 2:Outline of the project’s path 

Source:, April 2003

The scope and overall level of funds from pre-accession assistance has been agreed with the European Commission every year. In order to receive assistance, like other candidate-countries Slovenia has had to fulfil certain criteria. In this way, Slovenia firstly submitted several strategic documents (i.e. the 2000-2002 Preliminary Development Plan for PHARE, the 2000-2006 ISPA Strategy of Environmental and Transport Investments, the SAPARD-related Seven-year Rural Development Plan and National Development Plan for 2001-2006, which encompasses the three strategic documents). Only those projects falling into one of the measures defined in the strategies can compete for assistance. In addition, projects needed to be in line with the commitments Slovenia made in the negotiating process. Following the submission of these strategic documents, within the so-called PHARE Managing Committee all details were harmonised and the Financial Memorandum signed. On the basis of the Financial Memorandum the European Commission has ensured the agreed amount of funding. Particular projects were then implemented at the (sub)national level either directly from a particular sectoral ministry or by other (implementing) agencies at the national, regional or local levels. Smooth implementation of the programme and projects, and control over their quality, has been additionally ensured through monitoring and evaluation processes. 

Figure 3: Implementation of pre-accession assistance in Slovenia

Source:, April 2003

Institutional Structure for Managing the EU Pre-accession Aid Programmes

The main aim in establishing the national institutional structure for managing the EU’s financial assistance to Slovenia was to ensure the transparency of activities and prevent the dispersion of funds. In addition, this structure should also reflect the design of the future institutional structure in the circumstances of full EU membership (the coherent structure necessary for receiving assistance from EU structural and cohesion funds). In this way, the national co-ordinator of assistance in Slovenia was established. This role of co-ordinating national aid was in the first period entrusted to the Department for Foreign Technical Aid, established within the Ministry of the Science and Technology. Later on, after establishment of the Government Office for European Affairs as a kind of “European ministry” (however, without portfolio) in 1998,6 this role of the national co-ordinator formally shifted from the Ministry of the Science and Technology to the newly established Foreign Aid Division established within the Government Office for European Affairs. The Foreign Aid Division was responsible for carrying out expert and technical operational tasks within the framework of national co-ordination assistance. In this context, the Foreign Aid Division 1) provided timely information to the public administration on possibilities and orientations relating to EU assistance; 2) gathered and distributed information on trends relating to the drafting and modification of EU financial instruments (ISPA, SAPARD, PHARE); 3) provided timely information to the public administration on PHARE-related procedures; and 4) kept the Slovenian Government regularly informed of the effects of the EU’s assistance programmes (Fink Hafner and Lajh, 2003: 96). The Foreign Aid Division worked in the areas of programming, implementation, monitoring and assessing of the national co-ordination of EU assistance. 

Only recently, in February 2003, the newly established Government Office for Structural Policy and Regional Development took over the personnel and unfinished tasks from the Foreign Aid Division. The Office is responsible for leading the preparation of the national development programme, monitoring its realisation and harmonising the developmental policies of various ministries in realisation of the programme. It also leading the negotiations with the EU, drafting and realising the agreements (pre-accession financial memoranda, the single programming document, programme supplement to the single programming document) and co-ordinating the activities of the joint bodies founded on the basis of these agreements in the area of pre-accession aid, structural funds and the cohesion fund. The role of the national co-ordinator of pre-accession assistance thus again moved from one Governmental Office to the other. 

The funds already allocated to Slovenia through the aforementioned assistance programmes have been managed by the National Fund, set up within the jurisdiction of the Ministry of Finance. As such, the National Fund controls the inflow of assistance. At the same time, this structure also enables the co-ordination of EU funds with domestic funds. Within the same Ministry of Finance, the Central Financial Contracting Unit has been established. The Central Financial Contracting Unit has been responsible for the financial management of EU financial assistance. Its main task has been to carry out public tenders and make contracts with implementing agencies, while responsibility for the selection of projects and monitoring of their implementation has lied with sectoral ministries and the final beneficiaries of assistance. Sectoral ministries have been responsible for the actual implementation of projects that benefit many partners at the regional and local levels as well. In addition, for managing the SAPARD Programme and receiving the funds from it Slovenia established the Agency for Agricultural Markets and Rural Development. In the future, this Agency will be responsible for EU agricultural funds. Finally, in accordance with the Memorandum on Establishment of the National Fund and regulations of the increased decentralisation of the implementation of pre-accession assistance, the Slovenian Government nominated the so-called PHARE Joint Management Committee, consisting of the National Co-ordinator of the assistance, particular holders of implementation of the project, and Commission representatives. 

After Slovenia’s integration with the EU7 the newly established Government Office for Structural Policy and Regional Development will be responsible for co-ordination of structural policy in the Republic of Slovenia and the policy of the EU in this area as a whole. Via the account of the Ministry of Finance, the EU’s structural assistance will be allocated directly to the accredited implementation organisations responsible for financing the development programmes of the ministries. The Ministry of Labour, Family and Social Affairs will be responsible for leading the policy on the European Social Fund and the EQUAL Community Initiatives. The Ministry of Agriculture, Forestry and Food will be responsible for the policy on the European Agriculture Guidance and Guarantee Fund, the Financial Instruments for Fisheries Guidance and the LEADER Community Initiatives. The Ministry of the Economy will be responsible for the policy on the European Regional Development Fund, the European Cohesion Fund and the INTERREG III A and C Community initiatives. The Ministry of the Environment and Spatial Planning will be responsible for the environmental component and the Ministry of Transport for the transport component within the European Cohesion Fund. Finally, the Ministry of the Environment and Spatial Planning will also be responsible for the policy on the URBAN and INTERREG III B Community initiatives. 

Looking Ahead: Outcome of the Negotiations on Chapter 21 – Regional Policy and the Co-Ordination of Structural Instruments

In the area covered by the negotiating chapter on regional policy and co-ordination of structural instruments, Slovenia endeavoured to meet two main goals: 1) to increase the amount of funds earmarked by the EU for Slovenia in the 2004-2006 period; and 2) to reach an agreement whereby the least developed parts of Slovenia will preserve the status of an Objective 1 region (regions with the widest possible access to EU structural funds) in the next financial period. 

Table 1:Funds from the EU Structural Funds and the Cohesion Fund devoted to Slovenia from its entry to the EU till the end of 2006

	%	2004-2006
(EUR million)	2004
(EUR million)	2005
(EUR million)	2006
(EUR million)	
Structural Funds	58.4	236.8	58.7	79.3	98.9	
Objective 1
Objective 2
Objective 3
INTERREG
EQUAL	88.7
-
-
8.9
2.4	210.1
-
-
21.0
5.7	52.1
-
-
5.2
1.4	70.4
-
-
7.0
1.9	87.6
-
-
8.8
2.4	
Cohesion Fund	41.6	168.6	57.7	47.5	63.4	
Altogether	100	405.4	116.4	126.8	162.2	

Source:Kezunovič, ed., 2003: 100

In the negotiations Slovenia agreed to receive in the 2004-20068 period altogether EUR 405.4 million from EU structural instruments, of which EUR 236.8 million would be from Structural Funds and EUR 168.6 million from the Cohesion Fund. The final decision on the regionalisation of Slovenia for the needs of cohesion policy (regionalisation at the NUTS-2 level) should be taken by the end of 2006. 

CONCLUSIONS 

Regional development has been one of the most complex issues in Slovenia’s negotiations with the EU. This is a result of Slovenia’s internal situation where the process of political-administrative regionalisation of the country has still not been completed. It should be borne in mind that although Slovenia is a small country in geographical terms, it is at the same time a country with extreme natural and cultural diversity. As a result, Slovenia's regions are characterised by large disparities in terms of the achieved level of their socio-economic development. Regional policy in Slovenia has particularly been labelled with the European dimension of regional policy, since the modernisation of regional policy, and primarily the harmonisation of sectoral policies, has also been demanded by integration with the EU. At this point, especially visible role has played EU’s pre-accession assistance programmes.

Slovenia has been receiving assistance from the EU since 1992. One could say that the story of relations between Slovenia and the EU started in practice with the PHARE programme. Total financial assistance Slovenia has received in the last decade from all three EU pre-accession assistance programmes (PHARE, ISPA and SAPARD) adds up to approximately EUR 426.4 million. Slovenia agreed in its negotiations with the EU to receive in the 2004-2006 period altogether EUR 405.4 million from EU structural instruments, of which EUR 236.8 million would come from Structural Funds and EUR 168.6 million from the Cohesion Fund. 

One of the most important factors and biggest challenges in the process of implementing the EU’s structural policy (as well as pre-accession assistance) is the state’s absorption capacity and matching finance. In its approximation to the EU Slovenia has achieved a very high level of absorption capacity of assistance. At this point, however, it is important to emphasize that the amount of allocated pre-accession assistance to Slovenia has been relatively small, actually placing Slovenia at the very end of the recipients’ list. Still, despite Slovenia’s high absorption capacity, the analysis demonstrated there might occur some potential absorption bottlenecks. Here, the key concerns in particular include 1) the stability of the institutional and political environment for regional development (repeated shifting of the national co-ordinator of assistance), 2) the (limited) availability of national co-finance for regional development from the sectoral line ministries, and 3) the limited experiences in implementing projects, particularly within a programme context.

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Web Sites
- Government Office for European Affairs
http://www.gov si/svez/
- Ministry of the Economy
http://www2.gov.si/mg/mgslo.nsf
- National Agency for Regional Development
 
- Ministry of Finance
http://www.gov.si/mf/
- Evropska unija, predpristopna pomoč
 
- European Commission, Regional Policy
 
- Activities of the European Union, Regional Policy

NOTES: