Pristina (Kosovo), Belgrade (Serbia), Podgorica (Montenegro), Richard Zink from July 2002 to July 2007 The European Agency for Reconstruction (EAR) was created under the mandate of Chris Paten as Europe's Commissioner for External Relations: “the first big test of our ability to run things competently and we passed it, was speeding up delivery by cutting corners where we could, setting up the European Agency for Reconstruction and giving it delegated authority and political cover” (Chris Patten, “Not Quite the Diplomat” ).
The 2000 work programme for the reconstruction of Kosovo approved by the Commission and the Governing Board concentrated the bulk of the resources available in 2000 on five areas: energy, housing, transport, environment and economic development/agriculture.
Considering that progress in energy, housing, transport and agriculture was season-sensitive, the Agency wanted to launch the projects in these areas quickly and accordingly set very ambitious objectives, to be reached before the winter 2000-2001.
As a result of consultations with UNMIK and other donors, the intervention of the Agency focused on the newer of the two power stations (Kosovo B).
As an integral part of the overall effort in the sector, the Agency had also to support the rehabilitation of the lignite coal mines that feed the two power stations.
The overall objective of the programme amounting to 55 million euro was to support the Kosovars in reconstructing some 8 000 war damaged houses in the year 2000.
Reconstruction work on the houses was normally to be undertaken by the beneficiaries on a ‘self-help’ basis, with quality control and any necessary technical support coming from the NGO implementing partners.
Where it was deemed necessary to supplement the self-help approach, a beneficiary could also be allocated labour support, or a works contractor for the most vulnerable, especially in the case of completely destroyed homes.
Of the combined target of 12000 houses to be reconstructed with 74 million euro of funding, a total of 8170 homes had already been completed by the Agency during the year 2000.
The main task for the Agency in this sector was to ensure the availability of 37500 tonnes of fertiliser, or 40% of overall requirements, for the winter wheat and spring cropping season, benefiting at least 30000 farmers, or 40% of all farm households.
The objectives were to ensure increases in the production and yields of major crops for the domestic market by restoring soil fertility.
To strengthen the involvement of private sector wholesalers, distributors and retailers in the distribution and sale of farm inputs, in particular fertiliser, it was proposed to provide dealer credit.
It initiated competition, while at the same time contributing to sustained growth by enabling the private sector to resume the primary role in the supply of fertilisers as well as other agri-inputs.
In general, the Agency followed the principles of competitive tendering aimed at securing the economically most favourable terms and conditions in its procurement.
It was often compelled by the special circumstances to reduce the standard period between the date of publication of the tender notice and the deadline for the receipt of bids.
According to data collected by the Court the average house reconstruction costs of the Agency appear to be lower than those of other donors in Kosovo.
According to the Commission, the reconstruction programmes had a positive impact on the economy of neighbouring countries that suffered from the embargo imposed on the Federal Republic of Yugoslavia during the previous years.
Although the ambitious objectives had largely been achieved at the end of 2000, there are some major risks as regards the sustainability of the investments made in the various sectors, mainly because of a lack of medium and long-term strategy for the province.
The main question in the energy sector is whether the Kosovo power station will one day be able to work without the help of external donors.
In October 1999, UNMIK imposed a set of customs duties and sales taxes collected at the border at a combined rate of 26,5 %.
The Agency organises meetings with UNMIK, the Member States represented in Pristina and other main donors on a weekly basis and more often if necessary.
At the end of 2000 the EIB, which is also represented on the Governing Board, and the EBRD had not yet started to implement projects in Kosovo, mainly because of the lack of a legal framework.
When contracting with NGOs in the framework of the housing programme the Agency applied the same fee rates as ECHO in order to avoid competition between the two sources of EU funding.
The efficiency of the Agency’s administration is high, although the low ratio of the number of employees to the total value of aid managed could also be considered to be a risk factor affecting sustainability.
Moreover, as regards programme implementation the Agency managed to achieve most of its ambitious objectives set for the year 2000 in the fields of energy, housing, transport and agriculture.
The favourable average cost of reconstruction of houses funded through the Agency compared with other donors is a good indicator that not only efficiency considerations but also those of economy were taken into account.
This contributed to reducing the reconstruction costs and to stimulating the recovery of the economy in the Balkan countries which have been severely affected by the conflicts in the region during the last decade.
The outstanding performance of the Agency is also due to the fact that in 2000 it focused its human and financial resources on a limited number of priority areas.
The Agency was headquartered in Thessaloniki, Greece, with operational centres in Pristina (Kosovo), Belgrade (Serbia), Podgorica (Montenegro) and Skopje (Republic of Macedonia).
In 2007, a report of the European Court of Auditors to the region stated that “as of November 2006, the EAR has in Kosovo managed over 1 100 million euro on behalf of the Commission, some 91 % of that money has been contracted and some 86 % disbursed.