Legal provisions of COM(2018)460 - Neighbourhood, Development and International Cooperation Instrument

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dossier COM(2018)460 - Neighbourhood, Development and International Cooperation Instrument.
document COM(2018)460 EN
date June  9, 2021

Contents

TITLE I - GENERAL PROVISIONS


Article 1

Subject matter

This Regulation establishes the Neighbourhood, Development and International Cooperation Instrument – Global Europe (the ‘Instrument’), including the European Fund for Sustainable Development Plus (the ‘EFSD+’) and the External Action Guarantee, for the period of the 2021-2027 MFF.

It lays down the objectives of the Instrument, the budget for the period from 2021 to 2027, the forms of Union funding and the rules for providing such funding.

Article 2

Definitions

For the purposes of this Regulation, the following definitions apply:

(1)‘country indicative programme’ means an indicative programme covering one country;

(2)‘multi-country indicative programme’ means an indicative programme covering more than one country;

(3)‘regional indicative programme’ means a multi-country indicative programme covering more than one third country within the same geographic area as established in Article 4(2);

(4)‘trans-regional indicative programme’ means a multi-country indicative programme covering more than one third country from different geographic areas as established in Article 4(2);

(5)‘cross-border cooperation’ means cooperation between one or more Member States, and one or more third countries and territories along the external adjacent land and maritime borders of the Union and shall be understood to cover also transnational cooperation over larger transnational territories or around sea basins and interregional cooperation as laid down in a Regulation of the European Parliament and of the Council on specific provisions for the European territorial cooperation goal (Interreg) supported by the European Regional Development Fund and external financing instruments (the ‘Interreg Regulation’);

(6)‘legal entity’ means a natural person, or a legal person created and recognised as such under Union, national or international law, which has legal personality and the capacity to act in its own name, exercise rights and be subject to obligations, or an entity which does not have legal personality as referred to in point (c) of Article 197(2) of the Financial Regulation;

(7)‘civil society organisation’ means a wide range of actors with multiple roles and mandates, which may vary over time and across institutions and countries, and includes all non-State, not-for-profit independent and non-violent structures, through which people organise the pursuit of shared objectives and ideals, including political, cultural, religious, environmental, social or economic, and which operate at local, national, regional or international levels, and which comprise urban and rural, formal and informal organisations;

(8)‘local authority’ encompasses public institutions with legal personality, which are components of the State structure, below the level of central government, such as villages, municipalities, districts, counties, provinces or regions, which are accountable to citizens and usually composed of a deliberative or policy-making body, such as a council or assembly, and an executive body, such as a mayor or other executive officer, which are directly or indirectly elected or selected at local level;

(9)‘investment window’ means a targeted area for support by the External Action Guarantee under the EFSD+ to portfolios of investments in specific regions, countries or sectors;

(10)‘additionality’ means the principle based on Article 209(2) of the Financial Regulation, according to which, in the context of this Regulation and the IPA III Regulation, the External Action Guarantee support under the EFSD+ contributes to sustainable development by operations which could not have been carried out without that Guarantee, or which achieve positive results above and beyond what could have been achieved without it. The principle of additionality also means that the operations supported by the External Action Guarantee crowd in private sector funding and address market failures or sub-optimal investment situations as well as improve the quality, sustainability, impact or scale of an investment. The principle also ensures that External Action Guarantee operations do not replace the support of a Member State, private funding or another Union or international financial intervention, and avoid crowding out other public or private investments unless duly justified in accordance with the objectives and principles of the Instrument. Projects supported by the External Action Guarantee typically have a higher risk profile than the portfolio of investments supported by the eligible counterparts under their normal investment policies without the External Action Guarantee;

(11)‘operation with sovereign counterparts and non-commercial sub-sovereign counterparts’ means any operation where the counterpart is either directly a State or a public entity fully backed by an explicit guarantee of the State because it does not have the legal capacity or the financial autonomy or ability to benefit from necessary direct financing;

(12)‘operation with commercial sub-sovereign counterparts’ means any operation where the counterpart is a public entity which is not backed by an explicit guarantee of a State and that is financially able to borrow at its own risk and has the legal capacity to do so;

(13)‘contributor’ means an international finance institution, a Member State or a public institution of a Member State, a public agency or other public or private entity contributing to the common provisioning fund;

(14)‘partner country’ means a country or territory that may benefit from Union support under the Instrument pursuant to Article 4.

For the purposes of this Regulation, where reference is made to human rights, it shall be understood to include fundamental freedoms.

Article 3

Objectives of the Instrument

1. The general objectives of the Instrument are to:

(a)uphold and promote the Union’s values, principles and fundamental interests worldwide, in order to pursue the objectives and principles of the Union’s external action, as laid down in Article 3(5) and Articles 8 and 21 TEU, thus contributing to the reduction and, in the long term, the eradication of poverty, to consolidating, supporting and promoting democracy, the rule of law and respect for human rights, sustainable development and the fight against climate change and addressing irregular migration and forced displacement, including their root causes;

(b)contribute to the promotion of multilateralism, the achievement of the international commitments and objectives that the Union has agreed to, in particular the SDGs, the 2030 Agenda and the Paris Agreement;

(c)promote stronger partnerships with third countries, including with the European Neighbourhood Policy countries based on mutual interests and ownership with a view to fostering stabilisation, good governance and building resilience.

2. The specific objectives of the Instrument are:

(a)to support and foster dialogue and cooperation with third countries and regions in the Neighbourhood, in Sub-Saharan Africa, in Asia and the Pacific, and in the Americas and the Caribbean;

(b)to develop special strengthened partnerships and enhanced political cooperation with the European Neighbourhood Policy countries, founded on cooperation, peace and stability and a shared commitment to the universal values of democracy, the rule of law and respect for human rights, and aiming towards deep and sustainable democracy and progressive socio-economic integration as well as people-to-people contacts;

(c)at global level:

(i)to protect, promote and advance democracy, the rule of law, including accountability mechanisms, and human rights, including gender equality and the protection of human rights defenders, including in the most difficult circumstances and urgent situations;

(ii)to support civil society organisations;

(iii)to further stability and peace and prevent conflict, thereby contributing to the protection of civilians; and

(iv)to address other global challenges such as climate change, the protection of biodiversity and the environment, as well as migration and mobility;

(d)to respond rapidly to:

(i)situations of crisis, instability and conflict, including those which may result from migratory flows and forced displacement, and hybrid threats;

(ii)resilience challenges, including natural and man-made disasters, and linking of humanitarian aid and development action; and

(iii)Union foreign policy needs and priorities.

3. The achievement of the objectives referred to in paragraphs 1 and 2 of this Article shall be measured using relevant indicators as referred to in Article 41.

4. At least 93 % of the expenditure under the Instrument shall fulfil the criteria for ODA, established by the Development Assistance Committee of the OECD, thus contributing to ODA collective commitments, including towards LDCs. The specificity of the expenditure related to the partner countries and territories listed in Annex I shall be taken into account.

Article 4

Scope and structure

1. Union funding under the Instrument shall be implemented through:

(a)geographic programmes;

(b)thematic programmes;

(c)rapid response actions.

2. The geographic programmes shall encompass country and multi-country cooperation in the following areas:

(a)Neighbourhood;

(b)Sub-Saharan Africa;

(c)Asia and the Pacific;

(d)Americas and the Caribbean.

Geographic programmes may cover all third countries, except for candidates and potential candidates as defined in the IPA III Regulation and overseas countries and territories.

Geographic programmes of a continental or trans-regional scope may also be established, in particular a pan-African programme covering African countries under points (a) and (b) of the first subparagraph and a programme covering African, Caribbean and Pacific countries under points (b), (c) and (d) of the first subparagraph.

Geographic programmes in the Neighbourhood area may cover any country or territory listed in Annex I.

In order to attain the objectives of the Instrument, geographic programmes shall be based on the areas of cooperation set out in Annex II.

3. The thematic programmes shall encompass actions linked to the pursuit of the SDGs at global level, in the following areas:

(a)Human Rights and Democracy;

(b)Civil Society Organisations;

(c)Peace, Stability and Conflict Prevention;

(d)Global Challenges.

Thematic programmes may cover all third countries as well as overseas countries and territories.

In order to attain the objectives of the Instrument, thematic programmes shall be based on the areas of intervention set out in Annex III.

4. The rapid response actions shall enable early action to:

(a)contribute to peace, stability and conflict prevention in situations of urgency, emerging crisis, crisis and post-crisis, including those which may result from migratory flows and forced displacement;

(b)contribute to strengthening the resilience of states, societies, communities and individuals and to linking humanitarian aid and development action and, where relevant, peacebuilding;

(c)address Union foreign policy needs and priorities.

Rapid response actions may cover all third countries as well as overseas countries and territories.

In order to attain the objectives of the Instrument, rapid response actions shall be based on the areas of intervention set out in Annex IV.

5. Actions under the Instrument shall be implemented primarily through geographic programmes.

Actions implemented through thematic programmes shall be complementary to actions funded under geographic programmes and shall support global and trans-regional initiatives aimed towards achieving internationally agreed goals, in particular the SDGs and the Paris Agreement, as well as protecting global public goods or addressing global challenges. Actions implemented through thematic programmes may also be undertaken where:

(a)there is no geographic programme;

(b)the geographic programme has been suspended;

(c)there is no agreement on the action with the partner country concerned; or

(d)the action cannot be adequately addressed by geographic programmes.

Rapid response actions shall be complementary to geographic and thematic programmes. Rapid response actions shall be designed and implemented to enable, where relevant, their continuity under geographic or thematic programmes.

6. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend Annexes II, III and IV.

7. The Commission is empowered to adopt a delegated act in accordance with Article 44 by 31 December 2021, to supplement this Regulation with provisions setting out:

(a)specific objectives and priority areas of cooperation drawn from the areas of cooperation for the geographic programmes in Annex II, including a prioritisation, for the following sub-regions: Neighbourhood South, Neighbourhood East, West Africa, East and Central Africa, Southern Africa and Indian Ocean, Middle East, Central Asia, South Asia, North and South East Asia, the Pacific, the Americas and the Caribbean;

(b)indicative thematic targets for the geographic pillar; and

(c)indicative financial allocations for West Africa, East and Central Africa, Southern Africa and Indian Ocean sub-regions.

The delegated act referred to in the first subparagraph of this paragraph shall be reviewed at the mid-term evaluation referred to in Article 42(2).

Article 5

Consistency, coherence, synergies and complementarity

1. In implementing the Instrument, consistency, coherence, synergies and complementarity with all areas of Union external action, including other external financing instruments, and with other relevant Union policies and programmes, as well as policy coherence for development shall be ensured.

For that purpose, the Union shall take into account the impact of all internal and external policies on sustainable development and shall seek to promote increased synergies and complementarities in particular with trade policy, economic cooperation and other sectorial cooperation.

2. Actions falling within the scope of Regulation (EC) No 1257/96 shall not be funded under the Instrument.

3. Where appropriate, an action that has received a contribution under the Instrument may also receive a contribution from another Union programme, provided that the contributions do not cover the same costs. The Instrument may also contribute to measures established under other Union programmes, provided that the contributions do not cover the same costs. The rules of the relevant Union programme shall apply to the corresponding contribution to the action. The cumulative financing shall not exceed the total eligible costs of the action. The support from the different Union programmes may be calculated on a pro-rata basis in accordance with the documents setting out the conditions for support.

Article 6

Budget

1. The financial envelope for the implementation of the Instrument for the period from 1 January 2021 to 31 December 2027 shall be EUR 79 462 000 000 in current prices.

2. The financial envelope referred to in paragraph 1 shall be composed of:

(a)EUR 60 388 000 000 for geographic programmes:

—Neighbourhood: at least EUR 19 323 000 000,

—Sub-Saharan Africa: at least EUR 29 181 000 000,

—Asia and the Pacific: EUR 8 489 000 000,

—Americas and the Caribbean: EUR 3 395 000 000;

(b)EUR 6 358 000 000 for thematic programmes:

—Human Rights and Democracy: EUR 1 362 000 000,

—Civil Society Organisations: EUR 1 362 000 000,

—Peace, Stability and Conflict Prevention: EUR 908 000 000,

—Global Challenges: EUR 2 726 000 000;

(c)EUR 3 182 000 000 for rapid response actions.

3. The emerging challenges and priorities cushion of EUR 9 534 000 000 shall increase the amounts referred to in points (a), (b) and (c) of paragraph 2 of this Article in accordance with Article 17.

4. The financial envelope referred to in point (a) of paragraph 2 shall correspond to at least 75 % of the financial envelope referred to in paragraph 1.

5. Actions under Article 9 shall be financed up to the amount of EUR 270 000 000. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend that amount.

Article 7

Policy framework

The association agreements, partnership and cooperation agreements, multilateral agreements to which the Union is a party, and other agreements that establish a legally binding relationship between the Union and partner countries as well as European Council conclusions, Council conclusions, summit declarations or conclusions of meetings with partner countries at the level of heads of state or government or ministers, European Parliament resolutions, communications of the Commission and the High Representative of the Union for Foreign Affairs and Security Policy (the ‘High Representative’) shall constitute the overall policy framework for the implementation of the Instrument.

Article 8

General principles

1. The Union shall seek to promote, develop and consolidate the principles of democracy, good governance, the rule of law, respect for human rights, including their universality and indivisibility, and fundamental freedoms and respect for human dignity, the principles of equality and solidarity on which it is founded, through dialogue and cooperation with partner countries, regions and civil society, including through action in multilateral fora.

2. The Instrument shall apply a rights-based approach encompassing all human rights, whether civil and political or economic, social and cultural in order to integrate human rights principles, to support the right holders in claiming their rights, with a focus on poorer, marginalised and vulnerable people and groups, including persons with disabilities, and to assist partner countries in implementing their international human rights obligations. That approach shall be guided by the principles of ‘leaving no one behind’, equality and non-discrimination on any grounds.

3. The Instrument shall promote gender equality, women’s and girls’ rights and empowerment and non-discrimination on any grounds, through targeted and mainstreamed actions. It shall also give particular attention to the rights of the child and empowerment of youth.

4. The Instrument shall be implemented in full accordance with the Union commitment to the promotion, protection and fulfilment of all human rights and to the full and effective implementation of the Beijing Platform for Action and the Programme of Action of the ICPD and the outcomes of their review conferences and remains committed to sexual and reproductive health and rights, in this context. Having that in mind, the Instrument shall support the Union commitment to the promotion, protection and fulfilment of the right of every individual to have full control over, and decide freely and responsibly on matters related to their sexuality and sexual and reproductive health, free from discrimination, coercion and violence. It shall also support the need for universal access to quality and affordable comprehensive sexual and reproductive health information, education, including comprehensive sexuality education, and health-care services.

5. The Union shall support, as appropriate, the implementation of bilateral, regional and multilateral cooperation and dialogue, association and trade agreements, partnership agreements and triangular cooperation.

The Union shall promote a multilateral and rules-based and values-based approach to global goods and challenges and shall cooperate with Member States, partner countries, international organisations and other donors in that respect.

The Union shall promote effective multilateralism in fostering cooperation with international organisations and other donors.

The Union shall take into account and take up in the regular political dialogue with partner countries their track record in implementing obligations and commitments, including the 2030 Agenda, international human rights conventions, and other conventions, including those on nuclear safety standards, international agreements, in particular the Paris Agreement, and contractual relations with the Union, in particular association agreements, partnership and cooperation agreements and trade agreements.

6. Cooperation between the Union and the Member States, on the one hand, and partner countries, on the other, shall be based on and shall promote the development effectiveness principles, where applicable, across all modalities, namely: ownership of development priorities by partner countries, a focus on results, inclusive development partnerships, transparency and mutual accountability. The Union shall promote effective and efficient resource mobilisation and use.

In line with the principle of inclusive partnership and transparency, where appropriate, the Commission shall ensure that relevant stakeholders of partner countries, including civil society organisations and local authorities, are duly consulted and have timely access to relevant information allowing them to be adequately involved and play a meaningful role in the design, implementation and associated monitoring processes of programmes. Where appropriate, the Commission shall also ensure that an enhanced dialogue is pursued with the private sector.

In line with the principle of ownership, the Commission, where appropriate, shall favour the use of partner countries’ institutions and systems for the implementation of programmes.

7. In order to promote the complementarity and efficiency of their action and initiatives, the Union and the Member States shall ensure the coordination of their policies and shall regularly consult each other on their assistance programmes, including in international organisations and during international conferences.

The Union and the Member States shall coordinate their respective support programmes with the aim of increasing effectiveness and efficiency.

The Union shall foster inclusiveness in the implementation of the Instrument and collaboration with Member States, seeking to maximise added value and taking into account experience and capacities, thus reinforcing shared interests, values and common goals. The Union shall encourage the exchange of best practices and knowledge sharing among Member States’ bodies and experts.

8. Programmes and actions under the Instrument shall mainstream the fight against climate change, environmental protection, human rights, democracy, gender equality and, where relevant, disaster risk reduction, and shall address interlinkages between the SDGs, to promote integrated actions that can create co-benefits and meet multiple objectives in a coherent way. Those programmes and actions shall be based on a comprehensive multi-disciplinary analysis of context, capacities, risks and vulnerabilities, integrate a resilience approach and be conflict sensitive, taking into account conflict prevention and peacebuilding. They shall be guided by the principles of ‘do no harm’ and of ‘leaving no one behind’.

9. The Instrument shall promote the use of digitalisation as a powerful enabler for sustainable development and inclusive growth.

10. A more coordinated, holistic and structured approach to migration shall be pursued with partners, taking into account the importance of addressing the root causes of irregular migration and forced displacement. It shall maximise synergies and build comprehensive partnerships, while paying specific attention to countries of origin and transit. That approach shall combine all appropriate tools and the necessary leverage through a flexible incitative approach with, as appropriate within this context, possible changes in allocation of funding related to migration in accordance with the programming principles of the Instrument. It shall take into account effective cooperation and implementation of Union agreements and dialogues on migration. Those actions shall be implemented in full respect of international law, including international human rights and refugee law, Union and national competences. The effectiveness of that approach shall be assessed annually or as necessary. Migration-related actions pursuant to the Instrument shall be implemented in support of Union migration policy objectives through a flexible funding mechanism.

11. The Commission shall ensure that actions adopted under the Instrument in relation to the fight against terrorism and organised crime, cyber security and the fight against cybercrime, and capacity building of military actors in support of development and security for development are implemented in accordance with international law, including international human rights and humanitarian law. To that end, the Commission shall establish an appropriate risk assessment and monitoring framework. In that framework, the Commission shall develop operational guidance to ensure that human rights are taken into consideration in the design and implementation of those actions.

Such actions shall be based on regular and robust conflict analysis to ensure conflict sensitivity and to implement a security sector reform approach that contributes to democratic governance, accountability and human security, including benefits for the local population. Those measures shall be embedded, where relevant, in the context of longer term assistance aimed at reforming the security sector.

12. The Commission shall regularly inform the European Parliament and the Council and, at the initiative of any of those three institutions, have exchanges of views with them, including on the incentive-based approach responding to performance in key areas, referred to in Article 20. The European Parliament may hold regular exchanges of views with the Commission regarding its own assistance programmes, on matters such as capacity building, including related mediation and dialogue, and election observation.

13. The Commission shall exchange information on a regular basis with civil society.

14. Where appropriate, the Commission shall develop and follow risk management frameworks, including assessment and mitigation measures.

15. Union funding under the Instrument shall not be used to finance the procurement of arms or ammunition, or operations having military or defence implications.

Article 9

Capacity building of military actors in support of development and security for development

1. In order to contribute to sustainable development, which requires the achievement of stable, peaceful and inclusive societies, Union assistance under the Instrument may be used in the context of a wider security sector reform or to build the capacity of military actors in partner countries, under the exceptional circumstances set out in paragraph 3, to deliver development activities and security for development activities.

2. Assistance pursuant to this Article may cover in particular the provision of capacity building programmes in support of development and security for development, including training, mentoring and advice, as well as the provision of equipment, infrastructure improvements and services directly related to that assistance.

3. Assistance pursuant to this Article shall be provided only:

(a)where requirements cannot be met by recourse to non-military actors to adequately reach Union objectives under the Instrument and there is a threat to the existence of functioning State institutions or to the protection of human rights and fundamental freedoms and State institutions cannot cope with that threat; and

(b)where a consensus exists between the partner country concerned and the Union that military actors are key for preserving, establishing or re-establishing the conditions essential for sustainable development, including in crises and fragile or destabilised contexts and situations.

4. Union assistance pursuant to this Article shall not be used to finance capacity building of military actors for purposes other than the delivery of development activities and security for development activities. In particular, it shall not be used to finance any of the following:

(a)recurrent military expenditure;

(b)the procurement of arms and ammunition, or any other equipment designed to deliver lethal force;

(c)training which is designed to contribute specifically to the fighting capacity of the armed forces.

5. When designing and implementing measures pursuant to this Article, the Commission shall promote ownership by the partner country. It shall also develop the necessary elements and the good practices required to ensure sustainability and accountability in the medium and long term and shall promote the rule of law and established international law principles.

TITLE II - IMPLEMENTATION OF THE INSTRUMENT

CHAPTER I - Programming


Article 10

Scope of the geographic programmes

1. In order to attain the objectives of the Instrument geographic programmes shall be drawn up from the following areas of cooperation:

(a)good governance, democracy, the rule of law and human rights, including gender equality;

(b)eradicating poverty, fighting against inequalities and discrimination, and promoting human development;

(c)migration, forced displacement and mobility;

(d)environment and climate change;

(e)inclusive and sustainable economic growth and decent employment;

(f)peace, stability and conflict prevention;

(g)partnership.

2. Further details on each of the areas of cooperation referred to in paragraph 1 are set out in Annex II.

Article 11

Scope of the thematic programmes

1. In order to attain the objectives of the Instrument, thematic programmes shall cover the following areas of intervention:

(a)Human Rights and Democracy: advancing:

(i)the fundamental values of democracy;

(ii)the rule of law;

(iii)the universality, indivisibility and interdependence of human rights;

(iv)respect for human dignity;

(v)the principles of non-discrimination, equality and solidarity;

(vi)respect for the principles of the Charter of the UN and international human rights law;

(b)Civil Society Organisations:

(i)inclusive, participatory, empowered and independent civil society and democratic space in partner countries;

(ii)inclusive and open dialogue with and between civil society actors;

(iii)awareness, understanding, knowledge and engagement of European citizens regarding development issues;

(c)Peace, Stability and Conflict Prevention:

(i)assistance for conflict prevention, peacebuilding and crisis preparedness;

(ii)assistance in addressing global and trans-regional threats and emerging threats;

(d)Global Challenges:

(i)health;

(ii)education;

(iii)gender equality and women’s and girls’ empowerment;

(iv)children and youth;

(v)migration, forced displacement and mobility;

(vi)decent work, social protection, inequality and inclusion;

(vii)culture;

(viii)ensuring a healthy environment and tackling climate change;

(ix)sustainable energy;

(x)sustainable and inclusive growth, decent jobs and private sector engagement;

(xi)food and nutrition security;

(xii)strengthen the role of local authorities as actors of development;

(xiii)promote inclusive societies and multi-stakeholder initiatives, good economic governance, including fair and inclusive domestic revenue mobilisation;

(xiv)support the assessment and documentation of progress in implementing partnership and effectiveness principles.

2. Further details on each of the areas of cooperation referred to in paragraph 1 are set out in Annex III.

Article 12

General programming approach

1. Cooperation and interventions under the Instrument shall be programmed, except for rapid response actions referred to in Article 4(4).

2. On the basis of Article 7, programming under the Instrument shall be based on the following:

(a)programming documents shall provide a coherent framework for cooperation between the Union and partner countries or regions, consistent with the overall purpose and scope, objectives and principles set out in this Regulation;

(b)when drawing up the programming documents for partner countries and regions in situations of crisis, post-crisis or fragility and vulnerability a conflict analysis shall be conducted to ensure conflict sensitivity and due account shall be taken of the special needs and circumstances of the partner countries or regions concerned and of their population; where partner countries or regions are directly involved in, or affected by a situation of crisis, post-crisis or fragility, special emphasis shall be placed on stepping up coordination amongst all relevant actors to help with the transition from an emergency situation to sustainable development and stable peace, including the prevention of violence;

(c)the Union and the Member States shall ensure inclusive consultations with each other at an early stage of and throughout the programming process in order to promote coherence, complementarity and consistency among their cooperation activities; joint programming shall be the preferred approach for country programming and its implementation shall be flexible, inclusive and driven at country level. Joint programming shall be open to other relevant donors and actors if the Union and the Member States consider this to be relevant; in addition, the Union and the Member States shall, whenever appropriate, seek to support partner countries through joint implementation;

(d)the Union shall at an early stage of and throughout the programming process encourage a regular multi-stakeholder and inclusive dialogue with other donors and actors, including local authorities, representatives of civil society, foundations and the private sector, where relevant, in order to facilitate their respective contributions, as appropriate, and to ensure they play a meaningful role in the programming process;

(e)the Human Rights and Democracy thematic programme and the Civil Society Organisations thematic programme referred to in points (a) and (b) of Article 4(3), respectively, shall provide assistance independently of the consent of governments and other public authorities of the third countries concerned; these thematic programmes shall mainly support civil society actors at all levels, taking into account forms and methods of implementation, as referred to in Article 27(3).

The European Parliament and the Council shall be informed about the outcome of the consultations envisaged under points (c) and (d) of the first subparagraph.

3. Programming documents shall be results-based and include, wherever possible, clear targets and indicators. Indicators shall be based, where appropriate, on internationally agreed targets and indicators, in particular those set out for the SDGs, as well as country-level result frameworks, to assess and communicate the Union contribution to results, at the level of outputs, outcomes and impact.

Article 13

Programming principles for geographic programmes

1. Programming of geographic programmes shall be based on the following principles:

(a)without prejudice to paragraph 5, actions shall be based, to the extent possible, on an early, continuous and inclusive dialogue between the Union, Member States and the partner countries concerned, including national, regional and local authorities, involving civil society organisations, national, regional and local parliaments and other stakeholders, in order to enhance democratic ownership of the process and to encourage support for national and regional strategies;

(b)where appropriate, the programming period shall be synchronised and aligned with the strategy cycles of partner countries;

(c)programming may envisage cooperation activities funded from different allocations set out in Article 6(2) and from other Union programmes according to their basic acts.

2. Programming of geographic programmes shall provide a specific, tailor-made framework for cooperation based on:

(a)the partners’ needs, established on the basis of specific criteria, taking into account the population, poverty, inequality, human development, economic and environmental vulnerability, and state and societal resilience and the impact of protracted and recurrent crises;

(b)the partners’ capacity and commitment to promote shared values, principles and interests, including human rights, fundamental freedoms, democracy, the rule of law, good governance, fight against corruption, open civic space and gender equality and to support common goals and multilateral alliances and cooperation, a rules-based international system, as well as the advancement of Union priorities;

(c)the partners’ commitments, including those jointly agreed with the Union, and performance established on the basis of criteria such as political reform; and economic and social development, environmental sustainability, and the effective use of aid, taking into account the specificities and development level of partner countries;

(d)the potential impact of Union funding in partner countries and regions;

(e)the partners’ capacities to mobilise and make effective use of domestic resources as well as to access financial resources, to manage resources transparently in support of national development priorities and their absorption capacities.

3. The countries most in need, in particular the LDCs, low income countries, countries in a situation of crisis, post-crisis, or fragility and vulnerability, including small islands developing states and landlocked developing countries, shall be given priority in the resource allocation process.

4. In addition, the Union shall address the specific challenges of middle income countries and in particular countries that graduate from lower income status.

5. Cooperation with industrialised countries shall focus on the promotion of Union and mutual interests and values, as well as commonly agreed objectives and multilateralism.

6. The Instrument shall contribute to actions established under Regulation (EU) 2021/817. A single programming document shall be drawn up from this Regulation for seven years, including funds from the IPA III Regulation. Regulation (EU) 2021/817 shall apply to the use of those funds.

Article 14

Programming documents for geographic programmes

1. The implementation of the Instrument shall be carried out for geographic programmes through multiannual country and multi-country indicative programmes.

2. Multiannual indicative programmes shall set out the priority areas selected for Union financing, the specific objectives, the expected results, clear and specific performance indicators, and the indicative financial allocations, both overall and per priority area and, where applicable, the methods of implementation.

3. The multiannual indicative programmes shall be built on:

(a)a national or regional strategy in the form of a development plan or a similar document accepted by the Commission as a basis for the corresponding multiannual indicative programme, at the time of adoption of the latter document;

(b)a framework document laying down the Union policy towards the partner or partners concerned, including a joint document between the Union and Member States;

(c)a joint document between the Union and the partner or partners concerned setting out common priorities and mutual commitments.

4. To increase the impact of collective cooperation of the Union, where possible and appropriate, a joint programming document shall replace the Union’s and Member States programming documents. However, such a joint programming document shall only replace the Union’s multiannual indicative programme, provided it is approved in the implementing act adopted in accordance with Article 16, complies with Articles 12 and 13, contains the elements set out in paragraph 2 of this Article and sets out the division of labour between the Union and the Member States.

Article 15

Programming documents for thematic programmes

1. The implementation of the Instrument shall be carried out for thematic programmes through multiannual indicative programmes.

2. Multiannual indicative programmes for thematic programmes shall set out the Union’s strategy, the priorities selected for Union financing, the specific objectives, the expected results, clear and specific performance indicators, the international situation, and the activities of the main partners for the theme concerned.

Where applicable, resources and intervention priorities shall be laid down for participation in global initiatives.

3. Multiannual indicative programmes for thematic programmes shall set out the indicative financial allocation, overall, by area of cooperation and by priority. The indicative financial allocation may be given in the form of a range.

Article 16

Adoption and amendment of multiannual indicative programmes

1. The Commission shall adopt, by means of implementing acts, multiannual indicative programmes referred to in Articles 14 and 15. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 45(2). That procedure shall also apply to reviews referred to in paragraphs 3 and 4 of this Article, which have the effect of significantly modifying the content of the multiannual indicative programme.

2. When adopting joint multiannual programming documents referred to in Article 14, the Commission decision shall apply only to the Union’s contribution to the joint multiannual programming document.

3. Multiannual indicative programmes for geographic programmes shall be reviewed following the mid-term evaluation referred to in Article 42(2), as well as on an ad hoc basis as necessary for effective implementation, in particular where there are substantive changes in the policy framework referred to in Article 7 or following a situation of crisis or post-crisis.

4. Multiannual indicative programmes for thematic programmes shall be reviewed following the mid-term evaluation referred to in Article 42(2), as well as on an ad hoc basis as necessary for effective implementation, in particular where there are substantive changes in the policy framework referred to in Article 7.

5. On duly justified imperative grounds of urgency, such as crises or immediate threats to peace, democracy, the rule of law, human rights or fundamental freedoms, the Commission may amend multiannual indicative programmes referred to in Articles 14 and 15 by means of implementing acts. Those implementing acts shall be adopted in accordance with the urgency procedure referred to in Article 45(4).

Article 17

Emerging challenges and priorities cushion

1. The amount referred to in Article 6(3) shall be used where most needed and duly justified, inter alia:

(a)to ensure an appropriate response of the Union in the event of unforeseen circumstances;

(b)to address new needs or emerging challenges, such as those at the Union’s or its neighbours’ borders linked to crisis, whether natural or man-made, violent conflict and post-crisis situations or migratory pressure and forced displacement;

(c)to promote new Union led or international initiatives or priorities.

2. The use of those funds shall be decided in accordance with the procedures established in Articles 16 and 25.

CHAPTER II - Specific provisions for the Neighbourhood area


Article 18

Specific objectives for the Neighbourhood area

In accordance with Articles 3 and 4, the specific objectives of Union support under the Instrument for the Neighbourhood area are to:

(a)promote enhanced political cooperation and strengthen and consolidate deep and sustainable democracy, stability, good governance, the rule of law and the respect for human rights;

(b)support the implementation of association agreements or other existing and future agreements, and jointly agreed association agendas and partnership priorities or equivalent documents, including through institutional cooperation and capacity building;

(c)promote a strengthened partnership with societies between the Union and the partner countries, and among the partner countries, including through people-to-people contacts and a wide range of activities with a specific focus on youth;

(d)enhance regional and cross-border cooperation, in particular in the framework of the Eastern Partnership, the Union for the Mediterranean, European Neighbourhood-wide collaboration as well as Black Sea regional cooperation, Arctic cooperation, the Northern Dimension, including in the areas of energy and security;

(e)achieve progressive integration into the Union internal market and enhanced sectoral and cross-sectoral cooperation, including through legislative approximation and regulatory convergence towards Union and other relevant international norms and standards, and improved market access, including through deep and comprehensive free trade areas, related institution building and investment;

(f)strengthen partnerships on well-managed and safe migration and mobility and, where applicable and provided that conditions for well-managed and secure mobility are in place, support the implementation of existing visa-free regimes, in line with the revised visa suspension mechanism, visa liberalisation dialogues and bilateral or regional agreements and arrangements with third countries, including mobility partnerships;

(g)support confidence-building and other measures contributing to security, the prevention and settlement of conflicts, including support to affected populations and reconstruction.

Article 19

Programming documents and allocation criteria

1. For partner countries and territories listed in Annex I, priority areas for Union financing shall be selected mainly from those included in the association, partnership and cooperation agreements, jointly agreed association agendas and partnership priorities or other relevant, existing and future, jointly agreed documents referred to in point (c) of Article 14(3), between the Union and the partner countries in bilateral and multilateral formats, including, as relevant, within the Eastern Partnership and the southern dimension of the European Neighbourhood Policy, in accordance with the specific objectives laid down in Article 18 and the areas of cooperation for the geographic programmes set out in Annex II.

2. By way of derogation from Article 13(2) and (3), Union support under geographic programmes in the Neighbourhood area shall be differentiated in form and in amounts, taking into account the partner country’s:

(a)needs, using indicators such as population, inequalities and level of development;

(b)commitment to and progress in implementing jointly agreed political, economic, environmental and social reform objectives;

(c)commitment to and progress in building deep and sustainable democracy, the rule of law, good governance, human rights, and the fight against corruption;

(d)partnership with the Union, including the level of ambition for that partnership;

(e)absorption capacity and potential impact of Union support under the Instrument.

3. The Union support referred to in paragraph 2 of this Article shall be reflected in the programming documents for the geographic programmes referred to in Article 14.

Article 20

Incentive-based approach

1. Indicatively 10 % of the financial envelope set out in the first indent of point (a) of Article 6(2) to supplement the country indicative financial allocations referred to in Article 14 shall be allocated to the partner countries and territories listed in Annex I as an incentive towards reforms. Such allocations shall be decided on the basis of their performance and progress towards democracy, good governance and the rule of law including cooperation with civil society, human rights including gender equality, cooperation on migration, economic governance and reforms, in particular those reforms that have been jointly agreed. The progress of the partner countries shall be regularly assessed, in particular by means of progress reports which include trends as compared to previous years.

2. Paragraph 1 shall not apply to support to civil society, conflict prevention and peacebuilding, people-to-people contacts, including cooperation between local authorities, support for the improvement of human rights or crisis-related support measures. In the event of serious or persistent degradation of democracy, human rights or the rule of law, or an increased risk of conflict, support to those actions shall be increased, where possible and appropriate.

Article 21

Multi-country indicative programmes

Multi-country indicative programmes in the Neighbourhood area shall address challenges common to all or a number of partner countries, based on priorities of the Eastern Partnership and the southern dimension of the reviewed European Neighbourhood Policy and taking into account the work carried out in the context of the Union for the Mediterranean, and regional, trans-regional and sub-regional cooperation, primarily between two or more partner countries, including also within the framework of the Northern Dimension and Black Sea Synergy regional cooperation.

Article 22

Cross-border Cooperation

1. Cross-border cooperation, as defined in point (5) of the first paragraph of Article 2, shall cover cooperation along external adjacent land and maritime borders, transnational cooperation over larger transnational territories or around sea-basins, as well as interregional cooperation.

2. The Neighbourhood area shall contribute to cross-border cooperation programmes as referred to in paragraph 1 co-financed by the European Regional Development Fund in the framework of the Interreg Regulation. Up to 5 % of the financial envelope for the Neighbourhood area shall be indicatively allocated to support those programmes.

3. Contributions to cross-border cooperation programmes shall be determined and used pursuant to Article 10(3) of the Interreg Regulation.

4. The Union co-financing rate shall not be higher than 90 % of the eligible expenditure of a cross-border cooperation programme.

5. Pre-financing for cross-border cooperation programmes may exceed the percentage referred to in Article 51 of the Interreg Regulation. At the request of the managing authority, for each financial year, the pre-financing rate may be up to 80 % of annual commitments to the programme.

6. A multiannual strategy document for cross-border cooperation, setting out the elements referred to in Article 14(2) of this Regulation, shall be adopted in accordance with Article 10(1) of the Interreg Regulation.

7. Where cross-border cooperation programmes are discontinued in accordance with Article 12 of the Interreg Regulation, support from the financial envelope for the Neighbourhood area to the discontinued programme that remains available may primarily be used to finance other cross-border cooperation programmes or any other activity under that financial envelope as appropriate.

CHAPTER III - Action plans, measures and implementing methods


Article 23

Action plans and measures

1. The Commission shall adopt annual or multiannual action plans and measures. The measures may take the form of individual measures, special measures, support measures or exceptional assistance measures. Action plans and measures shall take into account the specific context and shall specify for each action the objectives pursued, the expected results and main activities, the methods of implementation, monitoring and evaluation as well as the budget and any associated support expenditures.

2. Action plans shall be based on programming documents, except for cases referred to in paragraphs 5 and 6. Action plans shall be prepared in an inclusive, transparent and timely manner. Whenever appropriate, action plans shall be discussed jointly with Member States in the context of ‘working better together’.

3. Where necessary, an action may be adopted as an individual measure before or after the adoption of action plans. Individual measures shall be based on programming documents, except for cases referred to in paragraph 5 and in other duly justified cases.

4. In the event of unforeseen needs or circumstances, and where funding is not possible from more appropriate sources, the Commission may adopt special measures not provided for in the programming documents.

5. Annual or multiannual action plans and individual measures may be used to implement rapid response actions referred to in points (b) and (c) of Article 4(4).

6. The Commission may adopt exceptional assistance measures for rapid response actions as referred to in point (a) of Article 4(4).

An exceptional assistance measure may have a duration of up to 18 months, which may be extended twice by a further period of up to six months, up to a total maximum duration of 30 months, in the event of objective and unforeseen obstacles to its implementation, provided that there is no increase in the financial amount of the measure.

In cases of protracted crisis and conflict, the Commission may adopt a second exceptional assistance measure of a duration of up to 18 months. In duly justified cases, further measures may be adopted where the continuity of the Union’s action is essential and cannot be ensured by other means.

Article 24

Support measures

1. Union financing may cover support expenditure for the implementation of the Instrument and for the achievement of its objectives, including administrative support associated with the preparation, follow-up, monitoring, control, audit and evaluation activities necessary for such implementation, as well as expenditure at headquarters and Union delegations for the administrative and coordination support needed for the Instrument, and to manage operations financed under the Instrument, including information and communication actions, and corporate information technology systems.

2. Where support expenditure is not included in the action plans or measures referred to in Article 23, the Commission shall adopt support measures, where applicable. Union financing under support measures may cover:

(a)studies, meetings, information, awareness-raising, training, preparation and exchange of lessons learnt and best practices, publication activities and any other administrative or technical assistance expenditure necessary for the programming and management of actions, including remunerated external experts;

(b)research and innovation activities and studies on relevant issues and the dissemination thereof;

(c)expenditure related to the provision of information and communication actions, including the development of communication strategies and corporate communication and visibility of the political priorities of the Union.

Article 25

Adoption of action plans and measures

1. Action plans and measures shall be adopted by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 45(2).

2. The procedure referred to in paragraph 1 shall not be required for:

(a)individual measures for which the Union’s funding does not exceed EUR 5 000 000;

(b)special and support measures as well as action plans adopted in order to implement rapid response actions for which the Union’s funding does not exceed EUR 10 000 000;

(c)exceptional assistance measures referred to in Article 23(4) for which the Union’s funding does not exceed EUR 20 000 000;

(d)technical amendments to action plans and measures, provided such amendments do not substantially affect the objectives of the action plan or measure concerned, such as:

(i)change of method of implementation;

(ii)extensions of the implementation period;

(iii)reassignments of funds between actions contained in an action plan;

(iv)increases or reductions of the budget of action plans and measures by not more than 20 % of the initial budget and not exceeding EUR 10 000 000.

In case of multiannual action plans and measures, the thresholds referred to in points (a), (b) and (c) and point (d)(iv) of the first subparagraph of paragraph 2 shall be applicable on a yearly basis.

When adopted in accordance with this paragraph, action plans and measures, except exceptional assistance measures, and technical amendments shall be communicated to the European Parliament and to the Member States through the relevant committee referred to in Article 45 within one month of their adoption.

3. Before the adoption or extension of exceptional assistance measures not exceeding EUR 20 000 000, the Commission shall inform the European Parliament and the Council of their nature and objectives and of the financial amounts envisaged. The Commission shall inform the European Parliament and the Council before making significant substantive changes to exceptional assistance measures already adopted. The Commission shall take account of the relevant policy approach for the planning and subsequent implementation of such measures, in the interest of consistency of the Union’s external action.

4. Where duly justified, imperative grounds of urgency, such as crises, including natural or man-made disasters, or immediate threats to democracy, the rule of law, human rights or fundamental freedoms so require, the Commission may adopt action plans and measures or amendments to existing action plans and measures, as immediately applicable implementing acts, in accordance with the procedure referred to in Article 45(4).

5. Appropriate environmental screening, including for climate change and biodiversity impacts, shall be undertaken at the level of actions, in accordance with the applicable legislative acts of the Union, including Directive 2011/92/EU of the European Parliament and of the Council (42) and Council Directive 85/337/EEC (43), comprising, where applicable, an environmental impact assessment, including the impact on climate change, ecosystems and biodiversity, for environmentally sensitive actions, in particular for major new infrastructure.

Other appropriate ex ante assessments which are proportionate to the objectives and amounts of the envisaged actions and measures shall be carried out, to determine the possible implications and risks of those actions and measures with regard to human rights, access to natural resources such as land, and social standards including in the form of impact assessments for major actions and measures that are expected to have a significant impact on those areas.

Where relevant, strategic environmental assessments, including the impact on climate change, shall be used in the implementation of sectoral programmes. The involvement of interested stakeholders in environmental assessments and public access to the results of such assessments shall be ensured.

Article 26

Methods of cooperation

1. As provided for by the Financial Regulation, the Commission shall implement financing under the Instrument - either directly by the Commission, by Union delegations or by executive agencies, or indirectly through any of the entities listed in point (c) of Article 62(1) of that Regulation.

2. Financing under the Instrument may also be provided through contributions to international, regional or national funds, such as those established or managed by the EIB, by Member States, by partner countries and regions, by international organisations or by other donors.

3. The entities listed in point (c) of Article 62(1) of the Financial Regulation and eligible counterparts referred to in Article 35(4) of this Regulation shall fulfil their reporting obligations under Article 155 of the Financial Regulation annually. The reporting requirements for any of those entities are laid down in the financial framework partnership agreement, the contribution agreement, the agreement on budgetary guarantees or the financing agreement.

4. Actions financed under the Instrument may be implemented by means of parallel or joint co-financing.

5. In the case of parallel co-financing, an action is split into a number of clearly identifiable components which are each financed by the different partners providing co-financing in such a way that the end-use of the financing can always be identified and duplication of financing is avoided.

6. In the case of joint co-financing, the total cost of an action shall be shared between the partners providing the co-financing and the resources are pooled in such a way that it is no longer possible to identify the source of financing for any given activity undertaken as part of the action.

7. Cooperation between the Union and its partners may take the form of, for example:

(a)triangular arrangements whereby the Union coordinates with third countries its assistance funding to a partner country or region;

(b)administrative and technical cooperation measures, as well as building capacity, including to share transitional or reform implementation experiences of Member States, such as decentralised cooperation through partnerships or twinning, between public institutions, including local authorities, public law bodies or private law entities entrusted with public service tasks of a Member State and those of a partner country or region, as well as cooperation measures involving public sector experts dispatched from the Member States and their regional and local authorities;

(c)contributions to the necessary costs of setting up and administering a public-private partnership, including those for their independent assessment and monitoring, where possible by civil society organisations;

(d)sector policy support programmes whereby the Union provides support to a partner country’s sector programme;

(e)contributions to the cost of the countries’ participation in Union programmes, and to actions implemented by Union agencies and bodies, as well as to bodies or persons entrusted with the implementation of specific actions in the Common Foreign and Security Policy pursuant to Title V TEU.

Article 27

Forms of Union funding

1. Union funding may be provided through the types of financing envisaged by the Financial Regulation and in particular:

(a)grants;

(b)procurement contracts for services, supplies or works;

(c)budget support;

(d)contributions to trust funds set up by the Commission, in accordance with Article 234 of the Financial Regulation;

(e)financial instruments;

(f)budgetary guarantees;

(g)blending operations;

(h)debt relief in the context of internationally agreed debt relief programme;

(i)financial assistance;

(j)remunerated external experts.

2. When working with stakeholders of partner countries such as civil society organisations and local authorities, the Commission shall take into account their specificities, including their needs and the relevant context, when defining the financing modalities, the type of contribution, the award modalities and the administrative provisions for the management of grants, with a view to reaching and best responding to the widest possible range of such stakeholders. Specific modalities shall be encouraged in accordance with the Financial Regulation, such as partnership agreements, authorisations of financial support to third parties, direct award or eligibility-restricted calls for proposals, or lump sums, unit costs and flat-rate financing as well as financing not linked to costs as envisaged in Article 125(1) of the Financial Regulation.

3. In addition to the cases referred to in Article 195 of the Financial Regulation, the direct award procedure may be used for:

(a)low-value grants to human rights defenders to finance urgent protection actions and needs, including through mechanisms for the protection of human rights defenders at risk, as well as to mediators and other civil society actors involved in crisis and armed conflict related dialogue, conflict resolution, reconciliation and peacebuilding, where appropriate without the need for co-financing;

(b)grants, where appropriate without the need for co-financing, to finance actions in the most difficult conditions where the publication of a call for proposals would be inappropriate, including situations where there is a serious lack of fundamental freedoms, including violation of human rights, threats to democratic institutions, escalation of crisis or armed conflict, where human security is most at risk or where human rights organisations and defenders, mediators and other civil society actors involved in crisis and armed conflict related dialogue, reconciliation and peacebuilding operate under the most difficult conditions; such grants shall not exceed EUR 1 000 000 and their duration shall not exceed 18 months, which may be extended by a further 12 months in the event of objective and unforeseen obstacles to their implementation;

(c)grants to the Office of the UN High Commissioner for Human Rights as well as to Global Campus of Human Rights, the European Inter-University Centre for Human Rights and Democratisation, providing a European Master’s Degree in Human Rights and Democratisation, and its associated network of universities delivering human rights postgraduate diplomas, including scholarships to students and human rights defenders from third countries;

(d)low value grants to civil society organisations using, to the extent possible, simplified forms of financing in accordance with Article 125 of the Financial Regulation.

Budget support, including through sector reform performance contracts, shall be based on country ownership, mutual accountability and the commitment of partner countries, taking into account their record and progress with regard to universal values, democracy, human rights and the rule of law, and aims to strengthen partnerships between the Union and partner countries. It shall include reinforced policy dialogue, capacity building and improved governance, complementing partners’ efforts to collect more and to spend better in order to support sustainable, inclusive growth and decent job creation, including for young people, poverty eradication, inequality reduction, and to build and consolidate democracies and peaceful societies. Budget support shall also contribute to gender equality.

Any decision to provide budget support shall be based on budget support policies agreed by the Union, a clear set of eligibility criteria and a careful assessment of the risks and benefits.

4. Budget support shall be differentiated in such a way as to respond better to the political, economic, social and environmental context of the partner country, taking into account situations of fragility.

When providing budget support in accordance with Article 236 of the Financial Regulation, the Commission shall clearly define and monitor criteria for budget support conditionality, including progress in reforms and transparency, and shall support the development of parliamentary control, national audit capacities and increased transparency and public access to information.

5. Disbursement of the budget support shall be based on indicators demonstrating satisfactory progress being made towards achieving the objectives agreed with the partner country.

6. In accordance with point (a) of the second subparagraph of Article 193(2) of the Financial Regulation, in duly justified cases specified in the financing decision, activities supported under the Instrument and the underlying costs incurred in 2021 may be considered eligible as of 1 January 2021, even if those activities were implemented and those costs were incurred before the grant application was submitted.

7. Financial instruments, budgetary guarantees and blending operations under the Instrument shall be implemented in accordance with the principles laid down in Article 209(1) of the Financial Regulation and whenever possible under the lead of the EIB, a multilateral European finance institution, such as the European Bank for Reconstruction and Development, or a bilateral European finance institution, such as development banks, possibly pooled with additional other forms of financial support, both from Member States and third parties.

Contributions to financial instruments under the Instrument may be made by Member States as well as any entity referred to in point (c) of Article 62(1) of the Financial Regulation.

8. Financial instruments referred to in paragraph 7 may be grouped into facilities for implementation and reporting purposes.

9. The Union funding shall not generate or activate the collection of specific taxes, duties or charges.

10. Taxes, duties and charges imposed by partner countries may be eligible for financing under the Instrument.

Article 28

Eligible persons and entities

1. Participation in procurement, grant and prize award procedures for actions financed under geographic programmes and under the Civil Society Organisations thematic programme and the Global Challenges thematic programme shall be open to international organisations and to all other legal entities, including civil society organisations, who are nationals of and, in the case of legal persons, who are also effectively established in, the following countries:

(a)Member States, beneficiaries listed in the relevant Annex to the IPA III Regulation and contracting parties to the Agreement on the European Economic Area;

(b)Neighbourhood partner countries and the Russian Federation when the relevant procedure takes place in the context of the programmes referred to in Annex I in which it participates;

(c)developing countries and territories, as included in the list of ODA recipients published by the OECD Development Assistance Committee, which are not members of the G-20 group, and overseas countries and territories;

(d)developing countries, as included in the list of ODA recipients, which are members of the G-20 group, and other countries and territories, when the relevant procedure takes place in the context of an action financed by the Union under the Instrument in which they participate;

(e)countries for which reciprocal access to external funding is established by the Commission; that access may be granted, for a limited period of at least one year, whenever a country grants eligibility on equal terms to entities from the Union and from countries eligible under the Instrument; the Commission shall decide on the reciprocal access and on its duration after consultation of the recipient country or countries concerned;

(f)member countries of the OECD, in the case of contracts implemented in a LDC or a highly indebted poor country, as included in the list of ODA recipients.

2. Without prejudice to the limitations inherent to the nature and objectives of the action, participation in procurement, grant and prize award procedures for actions financed under the Human Rights and Democracy thematic programme and the Peace, Stability and Conflict Prevention thematic programme as well as rapid response actions, shall be open without limitations.

3. All supplies and materials financed under the Instrument may originate from any country.

4. The eligibility rules laid down in this Article shall not apply to, and shall not create nationality restrictions for, natural persons employed or otherwise legally contracted by an eligible contractor or, where applicable, subcontractor.

5. For actions jointly co-financed by an entity, or implemented in direct or indirect management with entities as referred to in points (c)(ii) to (viii) of Article 62(1) of the Financial Regulation, the eligibility rules of those entities shall also apply.

6. Where donors provide financing to a trust fund established by the Commission or through external assigned revenues, the eligibility rules in the constitutive act of the trust fund or, in the case of external assigned revenues, in the agreement with the donor, shall apply.

7. In the case of actions financed under the Instrument and under another Union programme, eligible entities under any of those Union programmes shall be considered eligible.

8. In the case of multi-country actions, legal entities who are nationals of and, in the case of legal persons, who are also effectively established in, the countries and territories covered by the action may be considered eligible.

9. The eligibility rules laid down in this Article may be restricted with regard to the nationality, geographical location or nature of applicants, where such restrictions are required on account of the specific nature and the objectives of the action and where they are necessary for its effective implementation.

10. Tenderers, applicants and candidates from non-eligible countries may be accepted as eligible in the case of urgency or the unavailability of services in the markets of the countries or territories concerned, or in other duly substantiated cases where application of the eligibility rules would make the realisation of an action impossible or exceedingly difficult.

11. In order to promote local capacities, markets and purchases, where the Financial Regulation provides for an award on the basis of a single tender, priority shall be given to local and regional contractors. In all other cases, participation of local and regional contractors shall be promoted in accordance with the relevant provisions of that Regulation. Sustainability and due diligence criteria shall be promoted.

12. Under the Human Rights and Democracy thematic programme, any entity not covered under the definition of legal entity in point 6 of the first paragraph of Article 2 shall be eligible when this is necessary to pursue the areas of intervention of this programme.

Article 29

Excluded activities

Union funding under the Instrument shall not support actions or measures which:

(a)may result in the violation of human rights in partner countries;

(b)are incompatible with the recipient country’s Nationally Determined Contribution (NDC) under the Paris Agreement, or that promote investments in fossil fuels, or that, according to the environmental screening and impact assessment, cause significant adverse effects on the environment or the climate, unless such actions or measures are strictly necessary to achieve the objectives of the Instrument and they are accompanied with appropriate measures to avoid, prevent or reduce and, if possible, off-set these effects, including support to phase out environmentally harmful fossil fuel subsidies.

Article 30

Carry-overs, annual instalments, commitment appropriations, re-payments and revenue generated by financial instruments and budgetary guarantees

1. In addition to Article 12(4) of the Financial Regulation, unused commitment and payment appropriations under the Instrument shall be automatically carried-over and may be committed and used, respectively, up to 31 December of the following financial year. The amount carried over shall be used first in the following financial year.

The Commission shall inform the European Parliament and the Council of commitment appropriations carried-over in accordance with Article 12(6) of the Financial Regulation.

2. In addition to the rules laid down in Article 15 of the Financial Regulation on making appropriations available again, commitment appropriations corresponding to the amount of decommitments made as a result of total or partial non-implementation of an action under the Instrument shall be made available again to the benefit of the budget line of origin.

3. Budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments, in accordance with Article 112(2) of the Financial Regulation.

The third subparagraph of Article 114(2) of the Financial Regulation shall not apply to the multiannual actions referred to in the first subparagraph of this paragraph. The Commission shall automatically decommit any portion of a budgetary commitment for an action which, by 31 December of the fifth year following that of the budgetary commitment, has not been used for the purpose of pre-financing or making interim payments, or for which no certified statement of expenditure or any payment request has been submitted.

Paragraph 2 of this Article shall also apply to annual instalments.

4. By way of derogation from Article 209(3) of the Financial Regulation, repayments and revenues generated by a financial instrument and budgetary guarantees shall be assigned to the budget line of origin as internal assigned revenue after deduction of management costs and fees. Every five years, the Commission shall examine the contribution made to the achievement of Union objectives by, and the effectiveness of, existing financial instruments.

CHAPTER I - V


EFSD+, the External Action Guarantee, budgetary guarantees and financial assistance to third countries

Article 31

Scope and financing

1. The financial envelope referred to in point (a) of Article (6)(2) shall cover the European Fund for Sustainable Development Plus (EFSD+) and the External Action Guarantee.

2. The purpose of the EFSD+ as an integrated financial package supplying financial capacity in the form of grants, technical assistance, financial instruments, budgetary guarantees and blending operations referred to in Article 27(1) of this Regulation shall be to support investments and increase access to financing, as a means of contributing to the achievement of the objectives and general principles laid down in Articles 3 and 8 of this Regulation, and, where relevant, the objectives of the IPA III Regulation while maximising additionality and development impact and delivering innovative products, including to SMEs.

The EFSD+ shall in particular foster sustainable and inclusive economic, environmental and social development, transition into sustainable value-added economy and a stable investment environment. It shall also promote socio-economic and environmental resilience in partner countries with a particular focus on the eradication of poverty. The EFSD+ shall thus contribute to the reduction of socio-economic inequalities, sustainable and inclusive growth, climate change adaptation and mitigation, environmental protection and management, the creation of decent jobs on the basis of the core ILO labour standards, economic opportunities, skills and entrepreneurship, socio-economic sectors, including social enterprises and cooperatives, SMEs, sustainable connectivity, the support to vulnerable groups, the promotion of human rights, gender equality and the empowerment of women and young people, as well as addressing specific socio-economic root causes of irregular migration and root causes of forced displacement, in accordance with the priority areas outlined in Annex V and relevant indicative programming documents.

Special attention shall be given to countries identified as experiencing fragility or conflict, LDCs and heavily indebted poor countries, including by providing support for institutional capacity building, economic governance and technical assistance.

3. The External Action Guarantee shall support the EFSD+ operations covered by budgetary guarantees in accordance with Articles 32 to 39 of this Regulation. The External Action Guarantee shall also support macro-financial assistance and loans to third countries referred to in Article 10(2) of Regulation (Euratom) 2021/948.

4. Under the External Action Guarantee, the Union may guarantee operations, under Guarantee agreements signed between 1 January 2021 and 31 December 2027, up to EUR 53 449 000 000.

The Commission is empowered to adopt a delegated act in accordance with Article 44 to amend the maximum amount of the External Action Guarantee by up to 20 %.

5. The provisioning rate shall range between 9 % and 50 % depending on the type of operations.

A maximum amount of EUR 10 000 000 000 from the Union budget may be used to provision the External Action Guarantee. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend this maximum amount to ensure that the provisioning amount reflects the amount and the provisioning rates of the External Action Guarantee, taking into account the type of guaranteed operations.

The provisioning rate for the External Action Guarantee shall be 9 % for the Union’s macro-financial assistance and for budgetary guarantees covering sovereign risks associated with lending operations.

The provisioning rates shall be reviewed at least every three years from the date of application of this Regulation laid down in Article 51. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend the provisioning rates.

6. The External Action Guarantee shall be considered as a single guarantee in the common provisioning fund established by Article 212 of the Financial Regulation.

7. The EFSD+ and the External Action Guarantee may support financing and investment operations in partner countries in the geographical areas referred to in Article 4(2). The provisioning of the External Action Guarantee shall be financed from the budget of the relevant geographic programmes established by point (a) of Article 6(2) and shall be transferred into the common provisioning fund. The EFSD+ and the External Action Guarantee may also support operations in beneficiaries listed in the relevant Annex to the IPA III Regulation. The funding for those operations under the EFSD+ and for the provisioning of the External Action Guarantee shall be financed from the IPA III Regulation. The provisioning of the External Action Guarantee for loans to third countries referred to in Article 10(2) of Regulation (Euratom) 2021/948 shall be financed from that Regulation.

8. The provisioning referred to in Article 211(2) of the Financial Regulation shall be constituted on the basis of the Union’s total liabilities authorised under this Regulation. The annual amount of provisioning required may be constituted during a period not exceeding seven years. The provisioning of guarantees authorised under Regulation (EU) 2017/1601 and of guarantees, financial assistance and Euratom loans to third countries authorised under basic acts whose provisioning is governed by Regulation (EC, Euratom) No 480/2009 shall continue to follow the provisions of those Regulations.

9. The net assets on 31 July 2021 of the EFSD Guarantee Fund and of the Guarantee fund for external actions established by Regulation (EU) 2017/1601 and Regulation (EC, Euratom) No 480/2009, respectively, shall be transferred into the common provisioning fund for the purpose of provisioning the budgetary guarantees authorised under Regulation (EU) 2017/1601 and the guarantees, financial assistance and Euratom loans to third countries authorised under basic acts whose provisioning is governed by Regulation (EC, Euratom) No 480/2009.

Article 32

Structure of the EFSD+

1. The EFSD+ shall be composed of regional investment platforms within the regional areas laid down in Article 4(2) of this Regulation and in the IPA III Regulation and established on the basis of the working methods, procedures and structures of the existing external blending facilities of the Union, which may combine their blending operations and External Action Guarantee operations under the EFSD+.

2. The Commission shall ensure the management of the EFSD+.

Article 33

The EFSD+ strategic board

1. In ensuring the management of the EFSD+, the Commission shall be advised by a strategic board (the ‘EFSD+ strategic board’), except in the case of the operations covering the Western Balkans’ beneficiaries listed in the relevant Annex to the IPA III Regulation, which shall have its specific strategic board.

2. The EFSD+ strategic board shall advise the Commission on the strategic orientation and priorities of External Action Guarantee investments under the EFSD+, including for the investment windows referred to in Article 36, and contribute to their alignment with the guiding principles and objectives of the Union’s external action, development policy, European Neighbourhood Policy, as well as with the objectives set out in Article 3 and the purpose of the EFSD+ as set out in Article 31. The EFSD+ strategic board shall also support the Commission in setting overall investment goals as regards the use of the External Action Guarantee to support EFSD+ operations and monitor an appropriate and diversified geographical and thematic coverage for investment windows.

3. The EFSD+ strategic board shall also support overall coordination, complementarity, and coherence between the regional investment platforms, between the three pillars of the External Investment Plan, between the External Investment Plan and the Union’s other efforts on migration and on the implementation of the 2030 Agenda, including the fight against climate change, as well as with Union external programmes and financing instruments.

4. The EFSD+ strategic board shall be composed of representatives of the Commission and of the High Representative, of all Member States and of the EIB. The European Parliament shall have observer status. Contributors, eligible counterparts, partner countries, relevant regional organisations and other stakeholders may be given observer status, where appropriate. The EFSD+ strategic board shall be consulted prior to the inclusion of any new observer. The EFSD+ strategic board shall be co-chaired by the Commission and the High Representative.

5. The EFSD+ strategic board shall meet at least twice a year and, when possible, adopt opinions by consensus. Additional meetings may be organised at any time by the chair or at the request of one third of its members. Where consensus cannot be reached, the voting rights as agreed during the first meeting of the EFSD+ strategic board and laid down in its rules of procedure shall apply. The rules of procedure shall set out the framework regarding the role of observers. The minutes and agendas of the meetings of the EFSD+ strategic board shall, following their adoption, be made public.

6. The Commission shall report annually to the EFSD+ strategic board about the progress made in respect of the implementation of the EFSD+. The strategic board covering the Western Balkans shall inform on progress made on the implementation of the guarantee instrument for that region to complement the abovementioned reporting. The strategic boards shall examine the evaluation reports referred to in Article 42(5) and shall take them into account.

The EFSD+ strategic board shall regularly organise a consultation of relevant stakeholders on the strategic orientation and implementation of the EFSD+.

7. The existence of the EFSD+ strategic board and the strategic board covering the Western Balkans shall not influence the need to have a single, unified EFSD+ risk management framework.

8. The risk management function for guarantees under the EFSD+ shall take into account the objectives and principles of the Instrument. Risk assessment and remuneration methodologies under EFSD+ shall be consistently applied to all investment windows, including those referred to in Article 36. A technical risk assessment group shall be established by the Commission. The Commission shall ensure an independent, impartial and inclusive high-quality function of the technical risk assessment group. The Commission shall also ensure that information and analysis are shared in a timely, transparent and inclusive manner with all Member States, with due regard to confidentiality. The composition, rules of procedure and working methods of the technical risk assessment group shall be inclusive, open to experts from the EIB, other eligible counterparts and interested Member States, and shall be presented to the EFSD+ strategic board. The Commission shall disclose to the European Parliament and the Council the composition, terms of reference and rules of procedure of the technical risk assessment group and ensure the impartiality and absence of conflict of interest of its members.

9. During the application period of the EFSD+, the EFSD+ strategic board shall, as soon as possible, adopt and publish guidelines setting out how conformity of EFSD+ operations with the purpose, objectives and eligibility criteria set out in Articles 31 and 35 is to be ensured.

Article 34

Regional operational boards

The operational boards of regional investment platforms, taking into account the advice of the strategic board concerned and relevant risk assessments, shall support the Commission at the implementation level in defining regional and sectoral investment goals and regional, sectoral, and thematic investment windows and shall formulate opinions on blending operations and on the use of the External Action Guarantee covering EFSD+ proposed investment programmes.

Article 35

Eligibility and selection of operations and counterparts for the External Action Guarantee under the EFSD+

1. The financing and investment operations eligible for support through the External Action Guarantee shall be consistent and aligned with Union policies, the relevant programming documents, as well as with the partner countries’ strategies and policies. They shall in particular support the objectives, general principles and policy framework of the Instrument and, where relevant, the IPA III Regulation, with due regard to the priority areas laid down in Annex V to this Regulation.

2. The External Action Guarantee shall support financing and investment operations which comply with the conditions set out in points (a) to (e) of Article 209(2) of the Financial Regulation concerning in particular the need to achieve additionality, including by addressing market failures or sub-optimal investment situations, alignment of interest of the eligible counterparts, avoiding the distortion of competition, and, where appropriate, maximising private investment, and which:

(a)undergo, in line with Article 34 of the Financial Regulation, ex ante evaluations which shall be proportionate to the objectives and amounts of the envisaged operations to determine the possible implications and risks of these operations with regard to human rights, environmental, labour and social standards including in the form of impact assessments for major programmes that are expected to have a significant impact on these areas, in line with the purpose of the EFSD+ laid down in Article 31(2) of this Regulation and taking due account of the principle of free and prior informed consent of affected communities in land related investments;

(b)ensure complementarity within the different pillars of the External Investment Plan as well as with other initiatives;

(c)are economically and financially viable, with due regard to the possible support from, and co-financing by, private and public partners to the project, while taking into account the specific operating environment and capacities of countries identified as experiencing fragility or conflict, LDCs, small island developing states, landlocked developing countries and heavily indebted poor countries which may benefit from more concessional terms;

(d)are technically viable and are sustainable from an environmental and social point of view and maximise development impact;

(e)do not distort markets in partner countries and regions and do not compete unfairly with local actors;

(f)are implemented in accordance with the policy framework referred to in Article 7, applicable environmental, social and labour law obligations and standards and internationally agreed guidelines, principles and conventions on investments, in particular those adopted by the UN and the OECD, with full respect for international human rights law as well as in accordance with the objectives and general principles laid down in Articles 3 and 8.

3. The External Action Guarantee shall be used to cover the risks for the following instruments:

(a)loans, including local currency loans;

(b)guarantees;

(c)counter-guarantees;

(d)capital market instruments;

(e)any other form of funding or credit enhancement, insurance, and equity or quasi-equity participations.

4. The eligible counterparts for the purposes of the External Action Guarantee shall be those identified in Article 208(4) of the Financial Regulation, including those from partner countries and third countries contributing to the External Action Guarantee, subject to approval by the Commission in accordance with Article 37 of this Regulation. In addition, and by derogation from point (c) of Article 62(1) of the Financial Regulation, bodies governed by private law of a Member State, a partner country or a third country which has contributed to the External Action Guarantee in accordance with Article 37 of this Regulation, and which provide adequate assurance of their financial capacity shall be eligible for the purpose of the External Action Guarantee.

5. Eligible counterparts shall comply with the rules and conditions provided for in point (c) of Article 62(1) of the Financial Regulation. In the case of bodies governed by private law of a Member State, a partner country or a third country which have contributed to the External Action Guarantee in accordance with Article 37 of this Regulation, preference shall be given to those bodies that disclose information related to environment, social, tax and corporate governance criteria.

The Commission shall ensure the effective, efficient and fair use of available resources among eligible counterparts, including small and medium-sized counterparts, while promoting cooperation between them and taking due account of their capacities, added value and experience.

The Commission shall ensure fair treatment for all eligible counterparts, in accordance with Article 27(7), and shall ensure that conflicts of interest are avoided throughout the implementation period of the EFSD+. In order to ensure complementarity, the Commission may request any relevant information from eligible counterparts about their non-EFSD+ operations.

6. The condition set out in Article 219(4) of the Financial Regulation on contributions with own resources shall apply to each eligible counterpart allocated with a budgetary guarantee under the Instrument on a portfolio basis.

7. The Commission shall select the eligible counterparts in accordance with Article 154 of the Financial Regulation, taking due account of:

(a)the advice of the strategic and regional operational boards;

(b)the objectives of the investment window;

(c)the experience and risk management capacity of the eligible counterpart;

(d)the amount of own and additional resources, as well as private sector co-financing, that the eligible counterpart is ready to mobilise for the investment window taking in due account the size of the investment;

(e)the sectoral or geographic expertise of the eligible counterparts;

(f)the benefits of promoting collaboration between eligible counterparts.

8. On the basis of the multiannual indicative programmes and of the advice provided by the EFSD+ strategic board and the strategic board covering the Western Balkans, the Commission shall, after consulting the regional operational boards and informing the European Parliament and the Council, set up investment windows for regions or specific partner countries, or both, for specific sectors, or for specific projects or specific categories of final beneficiaries, or both, which are to be funded under the Instrument, to be covered by the External Action Guarantee up to a fixed amount. The Commission shall inform the European Parliament and the Council on how the investment windows comply with this Article and on their detailed funding priorities. All requests for financial support within investment windows shall be made to the Commission.

The choice of investment windows shall be duly justified by an analysis of the market failure or sub-optimal investment situations and an assessment of its alignment with the priorities of this Regulation and, where relevant, the IPA III Regulation. The Commission shall carry out that analysis in cooperation with potentially eligible counterparts and stakeholders.

Eligible counterparts may provide the instruments referred to in paragraph 3 under an investment window or individual project administered by an eligible counterpart. Those instruments may be provided for the benefit of partner countries, including countries experiencing fragility or conflict, or countries facing challenges in reconstruction and post-conflict recovery, for the benefit of those partner countries’ institutions, including their public national and private local banks and finance institutions, as well as for the benefit of private sector entities, including SMEs, of those partner countries. Those instruments shall not benefit companies controlled by the military or state security sector, except for duly justified cases.

9. The Commission shall assess the operations supported by the External Action Guarantee against the eligibility criteria set out in paragraphs 1, 2 and 3, where possible drawing on the existing result measurement systems of the Union and of eligible counterparts. The Commission shall establish a checklist of the eligibility criteria as set out in Article 31, Article 35(1) and (2) and shall assess and select all proposals to be supported by the External Action Guarantee against this checklist, on the basis of the information provided by the eligible counterparts. If necessary, the Commission shall ask the eligible counterparts to clarify or to amend the information provided. The Commission shall publish on an annual basis the checklists and the results of its assessment for each investment window broken down by country and sector.

10. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend the priority areas in Annex V.

Article 36

Role of the EIB

1. The EIB shall implement an exclusive dedicated investment window covering a comprehensive risk cover for operations with sovereign counterparts and non-commercial sub-sovereign counterparts with an indicative minimum amount of EUR 11 000 000 000 which shall be programmed in accordance with the procedures laid down in Chapters I and III of this Title.

The EIB shall have the exclusivity for operations with sovereign counterparts and non-commercial sub-sovereign counterparts under the exclusive dedicated investment window. Under the exclusive dedicated investment window, the own resources contribution shall be understood as the assumption of residual risk and the EU guarantee shall cover 65 % of the aggregate amount disbursed and guaranteed under EIB financing operations, less amounts reimbursed, plus all related amounts.

By way of derogation from the second subparagraph, if the EIB cannot carry out or decides not to carry out operations under the exclusive dedicated investment window, the implementation of these operations shall be open to other eligible counterparts, in accordance with conditions which shall be laid down in the relevant External Action Guarantee agreements, which shall take into account the conditions offered to the EIB for the same type of operations and the specific needs, circumstances and nature of the eligible counterpart implementing these operations.

2. The EIB shall be eligible for implementing operations with sub-sovereign counterparts not covered under the exclusive dedicated investment window referred to in paragraph 1 and operations with the private sector. The procedure referred to in Article 35 shall be used to entrust the EIB, if appropriate, with two additional dedicated investment windows covering:

(a)a non-exclusive comprehensive risk cover for operations with commercial sub-sovereign counterparts; and

(b)non-exclusive operations for the promotion of foreign direct investment, trade and the internationalisation of partner countries’ economies, providing a political risk cover for private sector operations.

3. The indicative amount for the dedicated investment windows referred to in paragraphs 1 and 2 shall be of EUR 26 725 000 000.

In implementing the dedicated investment windows referred to in paragraphs 1 and 2, the EIB shall comply with this Regulation, including its overall objectives and those of the EFSD+ and, where relevant, of the IPA III Regulation, as well as with the relevant programming documents and the reporting obligations.

4. In accordance with point (f) of Article 209(2) of the Financial Regulation, due to the nature and policy objective of the exclusive dedicated investment window referred to in paragraph 1, the relevant External Action Guarantee agreement may provide that the Union shall not be remunerated for operations under that investment window.

5. For the purpose of this Article, sub-sovereign operations shall be considered commercial unless otherwise duly justified by the EIB and confirmed by the Commission.

The operations under the dedicated investment window referred to in point (b) of paragraph 2 shall be coherent with those of the export credit agencies of Member States.

6. The EIB shall be subject to the opinion of the boards laid down in Articles 33 and 34, respectively.

For EIB operations falling under the investment windows referred to in this Article, the eligibility assessment laid down in Article 35(9) shall be satisfied within the framework of the procedure provided for in Article 19 of Protocol No 5 on the Statute of the European Investment Bank, annexed to the TFEU. The EIB shall, in a timely manner, provide all information required by the Commission for that purpose. The EIB financing operations falling under those investment windows shall not be covered by the EU guarantee where the Commission delivers an unfavourable opinion under the procedure provided for in Article 19 of Protocol No 5 on the Statute of the European Investment Bank, annexed to the TFEU. All further modalities applicable to the EIB shall be established in the relevant External Action Guarantee agreements.

7. The EIB shall be eligible for implementing activities under other investment windows established under Article 35(8).

8. In compliance with this Regulation, including its objectives and principles and the relevant programming documents, as well as, where relevant, the IPA III Regulation, the Commission and the EIB shall conclude dedicated External Action Guarantee agreements for the dedicated investment windows referred to in paragraphs 1 and 2.

Article 37

Contribution from other donors to the External Action Guarantee

1. Member States, third countries and other third parties may contribute to the External Action Guarantee.

By derogation from the second subparagraph of Article 218(2) of the Financial Regulation, the contracting parties to the Agreement on the European Economic Area may provide contributions either in the form of guarantees or cash.

Third countries other than the contracting parties to the Agreement on the European Economic Area and other third parties shall provide contributions in the form of cash and subject to the opinion of the EFSD+ strategic board and approval by the Commission.

Member States may request that their contributions be earmarked for the initiation of actions in specific regions, countries, sectors or existing investment windows. The Commission shall inform the European Parliament and the Council without delay of the contributions approved

2. Contributions in the form of a guarantee shall not exceed 50 % of the amount referred to in Article 31(4).

The contributions made by Member States and the contracting parties to the Agreement on the European Economic Area in the form of a guarantee may only be called for payments of guarantee calls after the funding from the general budget of the Union, increased by any other cash contributions, has been used on payments of guarantee calls.

Any contribution may be used to cover guarantee calls regardless of earmarking.

A contribution agreement shall be concluded between the Commission, on behalf of the Union, and the contributor, and shall contain, in particular, provisions concerning the payment conditions.

Article 38

Implementation of External Action Guarantee agreements

1. On behalf of the Union, the Commission shall conclude External Action Guarantee agreements with the eligible counterparts selected pursuant to Article 35. Those agreements may be concluded with a consortium of two or more eligible counterparts. In compliance with Article 219(1) of the Financial Regulation, budgetary guarantees shall be irrevocable, unconditional and on demand for the types of operations covered under the External Action Guarantee. When concluding External Action Guarantee agreements, the Commission shall take due account of the advice and guidance of the boards and of the technical risk assessment group.

2. One or more External Action Guarantee agreements shall be concluded for each investment window between the Commission and the eligible counterpart or eligible counterparts selected. In addition, in order to address specific needs, the External Action Guarantee may be granted for individual financing or investment operations.

The European Parliament and the Council shall be notified of the signature of all External Action Guarantee agreements. Upon their request, those agreements shall be made available to the European Parliament and the Council, taking into account the protection of confidential and commercially sensitive information.

3. External Action Guarantee agreements shall contain, in particular:

(a)detailed rules on the coverage, requirements, eligibility, eligible counterparts, and procedures;

(b)detailed rules on the provision of the External Action Guarantee, including its arrangements on the coverage and its defined coverage of portfolios and of projects of specific types of instruments, as well as a risk analysis of projects and project portfolios, including at sectoral, regional, and national levels;

(c)a reference to the objectives and purpose of the Instrument, an assessment of the needs and an indication of the expected results, taking into account the promotion of corporate social responsibility and responsible business conduct, including in particular by the respect of internationally agreed guidelines, principles and conventions on investment referred to in point (f) of Article 35(2);

(d)the remuneration of the External Action Guarantee, which is to reflect the risk level, and the possibility for the remuneration to be partly subsidised in order to give more concessional terms in duly justified cases; and, in particular to countries experiencing fragility or conflict, LDCs and heavily indebted poor countries;

(e)requirements for the use of the External Action Guarantee, including payment conditions, such as specific time frames, interest to be paid on due amounts, expenses and recovery costs and possibly necessary liquidity arrangements;

(f)claims procedures, including, but not limited to, triggering events and waiting periods, and procedures regarding the recovery of claims;

(g)monitoring, reporting, transparency and evaluation obligations;

(h)clear and accessible complaints procedures for third parties that could be affected by the implementation of projects supported by the External Action Guarantee.

4. The eligible counterpart shall approve financing and investment operations in accordance with its own rules and procedures and in compliance with the External Action Guarantee agreement.

5. The External Action Guarantee may cover:

(a)for debt instruments, the principal and all interests and amounts due to the selected eligible counterpart, but not received by it in accordance with the terms of the financing operations after an event of default has occurred;

(b)for equity investments, the amounts invested and their associated financing costs;

(c)for other financing and investment operations referred to in Article 35(2), the amounts used and their associated funding costs;

(d)all relevant expenses and recovery costs related to an event of default, unless deducted from recovery proceeds.

6. For the purposes of the Commission’s accounting and its reporting of the risks covered by the External Action Guarantee, and in accordance with Article 209(4) of the Financial Regulation, eligible counterparts with which an External Action Guarantee agreement has been concluded shall provide the Commission and the Court of Auditors annually with the financial reports on financing and investment operations covered by this Regulation, audited by an independent external auditor, containing, inter alia, information on:

(a)the risk assessment of financing and investment operations of the eligible counterparts, including information on Union liabilities measured in compliance with the accounting rules referred to in Article 80 of the Financial Regulation and International Public Sector Accounting Standards;

(b)the outstanding financial obligation for the Union arising from the EFSD+ operations provided to the eligible counterparts and their financing and investment operations, broken down by individual operation.

7. The eligible counterparts shall, upon request, provide the Commission with any additional information necessary to fulfil the Commission’s obligations pursuant to this Regulation, in particular with regard to the selection criteria set out in Article 35, including compliance with human rights, and social, labour and environment standards.

8. The Commission shall submit an annual report to the EFSD+ strategic board, to regional operational boards, to the European Parliament and to the Council on financial instruments, budgetary guarantees, including those implemented by the EIB, financial assistance in accordance with Article 41(4) and (5) and Articles 241 and 250 of the Financial Regulation. For that purpose, the eligible counterparts shall provide annually the information necessary to allow the Commission to comply with those reporting obligations.

Article 39

Grievance and redress mechanism and protection of Union’s financial interests

1. In view of possible grievances of third parties in partner countries, including communities and individuals affected by projects supported by the EFSD+ and the External Action Guarantee, the Commission and Union delegations shall publish on their websites direct references to the complaints mechanisms of the relevant counterparts that have concluded agreements with the Commission. The Commission shall also provide the possibility of directly receiving complaints related to the treatment of grievances by eligible counterparts. The Commission shall take that information into account in view of future cooperation with those counterparts.

2. Persons and entities implementing financial instruments and budgetary guarantees shall comply with applicable Union law and principles and agreed international and Union standards as laid down in Article 155(2) and (3) of the Financial Regulation. The Commission shall assess whether the systems, rules and procedures of those persons and entities ensure protection of the financial interests of the Union equivalent to that provided for where the Commission implements the Union budget, with due regard to the principle of proportionality, taking into account the nature of the action and the conditions under which this action is implemented.

Article 40

Capital participation in development finance institutions

The envelope for geographic programmes, referred to in point (a) of Article 6(2), may be used to contribute to the capital endowment of European and other development finance institutions.

CHAPTER V - Monitoring, reporting and evaluation


Article 41

Monitoring and reporting

1. Indicators to report on progress of the Instrument towards the achievement of the specific objectives laid down in Article 3(2) are set out in Annex VI. Those indicators, in line with the SDGs indicators, shall be used together with data from evaluations and other existing results reporting, as a basis for assessing the extent to which those specific objectives have been achieved.

2. The Commission shall continuously monitor its actions and, at least on an annual basis, review progress made towards delivering the targets established by this Regulation, as well as expected results, covering outputs and outcomes.

Progress regarding expected results shall be monitored in a transparent and timely manner, on the basis of relevant, measurable, qualitative and quantitative data including, but not limited to those set out in Annex VI. Whenever possible, indicators shall be disagregated by sex, age and other relevant factors.

3. Joint results frameworks included and agreed within joint programming documents that fulfil the criteria set out in Article 14(4) shall provide, where feasible, the basis for the joint monitoring by the Union and its Member States of their collective support to a partner country.

The performance reporting system shall ensure that data for monitoring programme implementation and results of the Instrument are collected efficiently, effectively, and in a timely manner. To that end, proportionate reporting requirements shall be imposed on recipients of Union funds.

4. The Commission shall examine the progress made in implementing the Instrument. Starting from 2022 onwards, the Commission shall, in a timely manner by 30 November each year, submit to the European Parliament and to the Council an annual report on progress towards the achievement of the objectives of the Instrument by means of indicators, including, but not limited to, those set in Annex VI, reporting on the ongoing activities, results delivered and the effectiveness of the Regulation. That report shall also be submitted to the European Economic and Social Committee and to the Committee of the Regions.

5. The annual report shall contain:

(a)information relating to the previous year on the measures financed;

(b)the results of monitoring and evaluation exercises;

(c)the involvement and level of cooperation of the relevant partners, broken down by type of entity as referred to in Article 62 of the Financial Regulation for both direct and indirect management;

(d)the budgetary commitments, including contracted amounts, and payment appropriations, broken down by country, region and cooperation sector;

(e)qualitative and quantitative information including on measures taken pursuant to Article 9, on the use of the emerging challenges and priorities cushion referred to in Article 17 and on the use of funds dedicated to the incentive-based approach responding to performance in key areas referred to in Article 20.

The annual report shall assess the results of the Union funding using, as far as possible, specific and measurable indicators to show progress towards the targets and objectives of the Instrument as well as the progress made towards mainstreaming issues referred to in Article 8(8). It shall also present a breakdown on the forms of Union funding as set out in Article 27. In the case of development cooperation, the report shall also assess, where possible and relevant, the adherence to development effectiveness principles, including for innovative financial instruments.

6. The annual report prepared in 2021 shall contain consolidated information from annual reports concerning the period from 2014 to 2020 on all funding from the Regulations referred to in Article 50(2) of this Regulation, including external assigned revenues and contributions to trust funds, guarantees and a breakdown of spending by country, forms of Union funding, as set out in Article 27 of this Regulation, type of entity as referred to in Article 62 of the Financial Regulation for both direct and indirect management, commitments and payments. That annual report shall reflect the main lessons learnt and the follow-up to the recommendations of the external evaluative exercises carried out in previous years.

7. The Commission shall submit as part of the annual report detailed reporting on the financing and investment operations covered by the External Action Guarantee, and the functioning of the EFSD+, its management and its effective contribution to its objectives. It shall include the following elements:

(a)an assessment of the results contributing to the purpose and objectives of the Instrument and, where relevant, other funding instruments as laid down in Article 31(7);

(b)an assessment, on the basis of indicators in accordance with Articles 31(2) and 35(2), of the additionality and added value, the mobilisation of private sector resources including from SMEs, the type of private sector entities supported, the estimated and actual outputs and the outcomes and impact of the financing and investment operations covered by the External Action Guarantee under the EFSD+ on an aggregated basis, including the impact on decent job creation, and the eradication of poverty and on the way in which the specific socio-economic root causes of irregular migration and root causes of forced displacement are addressed; the assessment shall include an analysis of the risk measures and their impact on the financial and economic stability of the partners and a gender analysis of the operations covered based on evidence and data broken down by gender, country and sector where possible;

(c)an assessment of the compliance of the operations supported by the External Action Guarantee under the EFSD+ with the internationally agreed development effectiveness principles;

(d)an assessment of the leverage effect achieved by the operations covered;

(e)an assessment of the synergies and complementarity between operations covered by the External Action Guarantee under the EFSD+, including those referred to in Article 36, and other pillars of the External Investment Plan based on relevant existing reports, with particular regard to progress made on good governance, including in the fight against corruption and illicit financial flows, respect for human rights, the rule of law and gender-responsive policies, as well as the boosting of entrepreneurship, the local business environment and local financial markets;

(f)an assessment of the remuneration of the guarantees and of the implementation of Article 155(2) and (3) of the Financial Regulation;

8. An annual estimate of the overall spending related to climate action, desertification and biodiversity shall be made on the basis of the indicative programming documents adopted. The funding allocated under the Instrument shall be subject to an annual tracking system based on the methodology of the OECD, namely the ‘environmental markers’ and ‘Rio markers’, without excluding the use of more precise methodologies where these are available, integrated into the existing methodology for performance management of Union programmes, to quantify the expenditure related to environmental management and protection, climate action, desertification and biodiversity at the level of the action plans and measures referred to in Article 23 and recorded within evaluations and the annual report.

The Commission shall make available information on development cooperation in accordance with recognised international standards such as those from the ILO and the OECD and by using the framework for a common standard developed by the International Aid Transparency Initiative.

9. To ensure effective assessment of progress of the Instrument towards the achievement of its objectives, the Commission is empowered to adopt delegated acts in accordance with Article 44 to amend Annex VI to review or complement the indicators where considered necessary and to supplement this Regulation with provisions on the establishment of a monitoring and evaluation framework.

Article 42

Evaluation

1. The Commission shall evaluate the impact and effectiveness of its actions per area of intervention, and the effectiveness of programming, where appropriate by means of independent external evaluations. The Commission shall take due account of proposals by the European Parliament or the Council for independent external evaluations. Where applicable, evaluations shall make use of the good practice principles of the OECD Development Assistance Committee, seeking to ascertain whether the specific objectives have been met and to formulate recommendations with a view to improving future actions.

The Commission shall communicate the findings and conclusions of the evaluations accompanied by its observations and follow-up, to the European Parliament, to the Council and to the Member States. Evaluations may be discussed at the request of Member States pursuant to Article 45(7). The results shall feed into the preparation of programmes and actions and resource allocation. Those evaluations and follow-up shall be made publicly available.

The Commission shall, to an appropriate extent, associate all relevant stakeholders, including beneficiaries, civil society actors and local authorities in the evaluation process of the Union’s funding provided under the Instrument, and may, where appropriate, seek to undertake joint evaluations with the Member States and other partners with close involvement of the partner countries.

2. By 31 December 2024, the Commission shall submit a mid-term evaluation of the Instrument. It shall cover the period from 1 January 2021 until the launch of that evaluation. The mid-term evaluation shall be accompanied, if appropriate, by legislative proposals setting out necessary amendments to this Regulation.

3. The Commission shall carry out a final evaluation of the Instrument within the mid-term review of the following financial period. That evaluation shall analyse and assess the Union contribution to the achievement of the objectives of the Instrument, taking into account indicators measuring the results delivered and any findings and conclusions concerning the impact of the Instrument.

4. The mid-term and the final evaluations shall address efficiency, effectiveness, impact, sustainability, the added value, the scope for simplification, internal and external coherence, including complementarity and synergies, and the continued relevance of the objectives of the Instrument. Evaluations shall identify lessons learned. The evaluations shall assess the maximum amount of the External Action Guarantee laid down in Article 31(4) and include information on the added value of integrating previously separate instruments into one streamlined instrument.

The mid-term and final evaluations shall also contain consolidated information from annual reports on all funding governed by this Regulation, including external assigned revenues and contributions to trust funds, offering a breakdown of spending by beneficiary country, forms of Union funding, and involvement of Member States and relevant partners, commitments and payments, as well as a breakdown per geographic programmes, thematic programmes and rapid response actions, including the use of funds mobilised from the emerging challenges and priorities cushion, as referred to in Article 6.

The mid-term and final evaluations shall be undertaken for the specific purpose of improving Union funding. They shall inform decisions on the renewal, modification or suspension of the types of actions implemented under the Instrument.

5. In accordance with the specific reporting provisions in the Financial Regulation, by 31 December 2024 and every three years thereafter, the Commission shall evaluate, on the basis of an external evaluation, the use and the functioning of the External Action Guarantee, in particular its contribution to the overall objectives, the achieved results and additionality. The Commission shall submit that evaluation report to the European Parliament and to the Council. That evaluation report shall be accompanied by an opinion of the Court of Auditors. The evaluation report and the opinion of the Court of Auditors shall be made publicly available.

TITLE III - FINAL PROVISIONS


Article 43

Extension of geographic scope

1. In duly justified cases and where the action to be implemented is of a global, trans-regional or regional nature, the Commission may decide, within the relevant multiannual indicative programmes or within the relevant action plans or measures to extend the scope of actions to countries and territories not covered by this Regulation pursuant to Article 4 in order to ensure the coherence and effectiveness of Union financing or to foster regional or trans-regional cooperation.

2. The Commission may include a specific financial allocation to assist partner countries and regions to strengthen their cooperation with neighbouring Union outermost regions and with overseas countries and territories. To that end, the Instrument, may contribute, where appropriate and on the basis of reciprocity and proportionality as regards the level of funding from the Decision on the Overseas Association, including Greenland or the Interreg Regulation, or both, to actions implemented by a partner country or region or any other entity under this Regulation, by a country, territory or any other entity under the Decision on the Overseas Association, including Greenland or by a Union outermost region in the frame of joint operational programmes or to interregional cooperation programmes or measures established and implemented under the Interreg Regulation.

Article 44

Exercise of the delegation

1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article.

2. The power to adopt delegated acts referred to in Article 4(6) and (7), Article 6(5), Article 31(4) and (5), Article 35(10) and Article 41(9) shall be conferred on the Commission for the period of validity of this Regulation.

3. The delegation of power referred to in Article 4(6) and (7), Article 6(5), Article 31(4) and (5), Article 35(10) and Article 41(9) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

4. Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making.

5. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

6. A delegated act adopted pursuant to Article 4(6) and (7), Article 6(5), Article 31(4) and (5), Article 35(10) and Article 41(9) shall enter into force only if no objection has been expressed either by the European Parliament or to the Council within a period of two months of notification of that act to the European Parliament and to the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.

Article 45

Committee procedure

1. The Commission shall be assisted by the Neighbourhood, Development and International Cooperation Instrument committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011. The committee may convene in different formats in charge of specific areas of cooperation and intervention, such as geographic, thematic and rapid response actions.

2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

3. Where the opinion of the committee is to be obtained by a written procedure, that procedure shall be terminated without result when, within the time-limit for delivery of the opinion, the chair of the committee so decides or a simple majority of committee members so requests.

4. Where reference is made to this paragraph, Article 8 of Regulation (EU) No 182/2011, in conjunction with Article 5 thereof, shall apply.

5. The adopted decision shall remain in force for the duration of the adopted or modified document, action programme or measure.

6. An observer from the EIB shall take part in the committee’s proceedings with regard to questions concerning the EIB.

7. Member States may request the examination of any other matter concerning the implementation of the Instrument, in particular with regard to multi-annual programming documents including mid-term or ad hoc reviews and evaluations.

Article 46

Information, communication and visibility

1. The recipients of Union funding shall acknowledge the origin of those funds and ensure the visibility of the Union funding, in particular when promoting and reporting on the actions, and their results by highlighting the support received from the Union in a visible manner on communication material related to the actions supported under the Instrument, and by providing coherent, effective and proportionate targeted information to multiple audiences, including the media and the public.

Agreements concluded with the recipients of Union funding shall contain obligations in that respect.

2. The Commission shall implement information and communication actions relating to the Instrument, to actions taken pursuant to the Instrument and to the results obtained. Financial resources allocated to the Instrument shall also contribute to the corporate communication of and reporting on the political priorities of the Union, insofar as those priorities are related to the objectives of the Instrument.

3. The Instrument shall support strategic communication and public diplomacy, including the fight against disinformation, with a view to communicating the values of the Union as well as the added value of, and results achieved by, the Union’s actions.

4. The Commission shall make publicly available information on actions financed under the Instrument as referred to in Article 38 of the Financial Regulation, including as appropriate through a comprehensive single website.

5. The website referred to in paragraph 4 shall also include information on financing and investment operations and the essential elements of all External Action Guarantee agreements, including information on the legal identity of eligible counterparts, expected development benefits and complaints procedures, in accordance with point (h) of Article 38(3), taking into account the protection of confidential and commercially sensitive information.

6. Eligible EFSD + counterparts, in accordance with their transparency policies and Union rules on data protection and on access to documents and information, shall proactively and systematically make publicly available on their websites information relating to all financing and investment operations covered by the External Action Guarantee, relating in particular to the manner in which those operations contribute to the achievement of the objectives and requirements set out in this Regulation. Where possible, such information shall be broken down at project level. Such information shall always take into account the protection of confidential and commercially sensitive information. Eligible EFSD+ counterparts shall also publicise Union support in all information which they publish on financing and investment operations covered by the External Action Guarantee in accordance with this Regulation.

Article 47

Derogation from visibility requirements

Where security issues or political sensitivities may make it preferable or necessary to limit communication and visibility activities in certain countries or areas or during certain periods, the target audience and the visibility tools, products and channels to be used in promoting a given action shall be determined on a case-by-case basis, in consultation and agreement with the Union. Where rapid intervention is required in response to a sudden crisis, it is not necessary to produce a full communication and visibility plan immediately. In such situations, however, the Union’s support shall nevertheless be appropriately indicated from the start.

Article 48

European External Action Service clause

This Regulation shall be applied in accordance with Decision 2010/427/EU, in particular Article 9 thereof.

Article 49

Amendments to Decision No 466/2014/EU

Decision No 466/2014/EU is amended as follows:

(1)in Article 1, paragraph 5 is replaced by the following:

‘5.   The EU guarantee shall cover EIB financing operations signed during the period from 1 January 2014 to 31 December 2021.’;

(2)in Article 20, the second paragraph is replaced by the following:

‘By 31 December 2022, the Commission shall present to the European Parliament and to the Council a report on the application of this Decision.’;

(3)in Annex I, the last three paragraphs of point D are replaced by the following:

‘Within the overall fixed ceiling, the EIB governing bodies may decide, after consulting the Commission, to reallocate amounts within and between regions.’.

Article 50

Repeal and transitional provisions

1. Without prejudice to Article 31(8) of this Regulation, Regulations (EC, Euratom) No 480/2009 and (EU) 2017/1601 are repealed with effect from 1 August 2021 and Decision No 466/2014/EU is repealed with effect from 1 January 2022. The financial envelope for the Instrument shall finance the provisioning of the budgetary guarantees authorised under Regulation (EU) 2017/1601 and of guarantees and financial assistance authorised under basic acts whose provisioning is governed by Regulation (EC, Euratom) No 480/2009. Provisioning for such guarantees in and financial assistance to beneficiaries listed in the relevant Annex to the IPA III Regulation shall be financed from that Regulation.

2. The financial envelope for the Instrument may also cover technical and administrative assistance expenditures necessary to ensure the transition between this Regulation and the measures adopted under Regulations (EC, Euratom) No 480/2009, (EU) No 230/2014, (EU) No 232/2014, (EU) No 233/2014, (EU) No 234/2014, (EU) No 235/2014, (EU) No 236/2014, (Euratom) No 237/2014 and (EU) 2017/1601 and Decision No 466/2014/EU.

3. The financial envelope for the Instrument may cover expenditures related to the preparation of any future related Regulation.

4. If necessary, appropriations may be entered in the budget beyond 2027 to cover the expenditures provided for in Article 24(1), to enable the management of actions not completed by 31 December 2027.

Article 51

Entry into force and application

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union.

It shall apply from 1 January 2021.

This Regulation shall be binding in its entirety and directly applicable in all Member States.