Select Committee on European Communities Thirty-Third Report


The Environment of Russia and the New Independent States



The United Nations Economic Commission for Europe (UNECE)

  84.    The main role of the UNECE in respect of environmental developments in the NIS and Mongolia has been through its co­operative work with the OECD within the "Environment for Europe" process. This has involved the major initiatives of the Dob_íš (1991), Lucerne (1993) and Sofia (1995) Conferences (see paragraph 89 below), culminating in June 1998 with the fourth Conference in Århus, Denmark, which saw a three-day meeting of Environment Ministers and Heads of Delegations from 52 countries taking part. In Århus, they re-affirmed their commitment to the importance of regional, sub-regional and bilateral environmental co­operation in the whole of the UNECE area, and welcomed the further developments taking place within the area of the EU Tacis programmes, the Joint Statement of the Ministers of the Environment of the Central Asian Region (Almaty, April 1998) and the "Baltic Agenda 21" (Nyborg, April 1998). They also noted the commitment of the Central Asian Group to the preparation and implementation of a Regional Environmental Action Plan within their area.

  85.    The Århus Conference also marked the agreement of the UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, which embodies and in certain respects strengthens the terms of the EC Directive on Freedom of Access to Information on the Environment, on which this Committee reported in 1996.[34] A number of the NIS, including Ukraine, signed the Convention at Århus; at the time of reporting we understand the Russian Federation has not yet signed.

  86.    The European Environment Agency (EEA) has been playing a key part in the Environment for Europe process through its reports on the pan-European state of the environment. The first such report (prepared by the EEA Task Force in DG XI prior to the actual launch of the Agency) was produced in response to the Dob_íš Conference and published in 1995[35]; the Sofia Conference commissioned from the EEA a follow-up report, Europe's Environment: The Second Assessment[36], which was published to coincide with the Århus Conference.

  87.    The overall message from the EEA's new report is that although environmental pressures have been relieved, there has not as yet been a general improvement in the state or quality of the environment in Europe taken as a whole. The Århus Conference therefore resolved that the following areas should receive priority attention in the immediate future:

     Transport—where in general, government policies are failing to keep pace with the growth in traffic, which is therefore adding to the problems of air pollution, climate change[37], noise, congestion, and biodiversity and habitat loss.

     Agriculture—where much more needs to be done to reconcile environmental concerns with existing agricultural practices.

     Energy—where new efforts are needed to ensure that the available international instruments are implemented fully at the national level, and particularly in the fields of energy conservation, and the promotion and sustainable use of renewable energy resources.

     Chemicals—where further scientific evaluation of hazards and exposures, and of their impacts upon human health and on the environment is needed.

     Surface, Subterranean, Coastal and Marine Waters—where threats remain, despite the many efforts which have already been made.

     Soil Degradation—where serious problems continue, and where too little progress has been made in soil conservation and in the remediation of contaminated sites.

     Biodiversity—where the overall pressures continue to increase, and where the need for appropriate actions mentioned under the "Pan-European Biological and Landscape Diversity Strategy" section is particularly urgent.

  88.    The EEA report further recognises that existing mechanisms for co­ordination, monitoring, data collection, processing and management in the European region as a whole are still inadequate, and that high priority should now be given to these areas in order that decision-making should be better supported and that more reliable environmental information should be available to the public. The report calls for even closer co­operation between governments, organisations and existing information and observation networks, and particularly welcomed the initiative of the government of the Russian Federation to convene a special meeting during the first half of 1999 in Moscow, with a view to strengthening co­operation in these fields.

Organisation for Economic Co­operation and Development (OECD)

  89.    Under the aegis of the OECD and its Environment Directorate, ministers responsible for the environment throughout Europe met in 1991 at Dob_íš Castle in the then Czechoslovakia to discuss the question of the environmental restoration of Central and Eastern Europe, including what was then still the Soviet Union. As a result, an appropriate environmental action programme was drawn up, based upon principles already existent in western Europe, and supported by the World Bank, OECD and experts from the regions involved. A second meeting took place in 1993, in Lucerne, and this meeting endorsed the Dob_íš meeting and established machinery to implement it. This involved the setting up of the Environmental Action Programme Task Force (EAP Task Force), to facilitate work on the institutional aspects of environmental policy. The Secretariat of the EAP Task Force was to be provided by the OECD. At the same time, a Project Preparation Committee was formed to facilitate environmental investments, with its Secretariat being provided by the European Bank for Reconstruction and Development (EBRD). These bodies include members from across central, eastern and western Europe, plus the USA and Canada, the European Commission, international financial institutions and other international organisations. A further meeting in Sofia in 1995 advanced these processes and requested the second report from the EEA on the European environment (see paragraph 86). As this report did not include the central Asian countries of the NIS and Mongolia, a complementary report prepared by the countries in that region was also published in 1998 as "Central Asia; Environment Assessment". Both reports were presented to the Århus Conference.

  90.    The Århus Conference agreed to refocus the efforts of the EAP Task Force upon the NIS area, and welcomed the fact that as a result of operations so far, the increasing degree of co­operation, dialogue and sense of ownership meant that these trends should enhance developments in the future. Taking into account the dynamism of the EU enlargement process and the large resources which the European Commission, the Member States and the Applicant States will be devoting to it, the Conference agreed that the main focus of future EAP work should shift towards those Central and Eastern European countries and the NIS which are not part of the pre-accession process. In these countries, the need for external support for project preparation and implementation capacities, as well as for strengthening the operations of environmental funding, remain the greatest.

  91.    OECD work on the environment in the NIS and Mongolia is carried out through the Secretariat of the EAP Task Force, which it hosts. Over the last 5 years, the Secretariat has been involved to differing degrees in a number of Tacis-based projects on the environment, including the following:

     development of common environmental policies

     raising environmental awareness

     widening of the EAP

     establishment of the new Regional Environment Centres (RECs)

     project preparation capacity building in the Ukraine

     promotion of cleaner production in the NIS.

  92.    On the basis of this experience, OECD has been developing good practice guides and documents both for clients in central Europe and for donors which can provide technical assistance. Dialogue between the central European countries and the NIS has been encouraged during these activities, as a natural reaction to the end of the period artificially kept them together (as members of Comecon) was a heightened feeling of "separateness", which is only now beginning to lessen.

  93.    After Århus, it seems likely that budget cuts and reallocation of resources within the OECD will reduce the OECD contribution by about one third. The new work programme implies that the OECD's may decrease in the central and eastern European countries, but may increase in the NIS and Mongolia. The shortfall in OECD support for the central and eastern European countries seems likely to be taken up by the Regional Environment Centre at Szentendre, Hungary (see box), which has the appropriate resources at its disposal to provide these services.
The Regional Environment Centre (REC) was established in 1990 in Budapest (moving to Szentendre in 1996) as an umbrella organisation for NGOs throughout the Central and Eastern European Countries. It was part-funded through the Phare programme direct from DG 1A without the intervention of national governments. The rest of the funding came from the USA and other bilateral donor governments. The 1995 Phare enquiry[38] was told that the REC's objective had been to change the prevailing public attitude to the communist authorities from "request and wait" to one of active participation with business and governments in environmental policy and practice. The CEECs had been isolated not only from the West but from each other too. After the collapse of communism in the CEECs, the Centre saw itself as contributing to a vital task of breaking down mental barriers which had been built up over the preceding 40 years.

The World Bank

  94.    The International Bank for Reconstruction and Development (the World Bank) has in recent years been co­operating closely with the European Commission in relation to CEECs and former Soviet republics, including those in Central Asia, which in general means most of the areas covered by the Tacis and Phare programmes. The Bank feels that this co-ordination has been especially fruitful in the areas of helping its clients evaluate their needs with regard to the European Union accession process and also of helping their clients in the NIS to identify priorities as they develop their national environmental action plans (NEAPs). As part of these processes, in March 1998 the World Bank signed a Memorandum of Understanding[39] with the European Commission and the European Bank for Reconstruction and Development (EBRD), and the World Bank's Task Team Leaders have co-ordinated closely with Tacis-funded NEAP Co-ordinators at a country-level basis.

  95.    The main results of the existing levels of agreement between the World Bank and the European Commission (as set out in the Memorandum of Understanding) are the following:

     in view of the consistency of many pre-accession policy requirements and priorities, the World Bank intends to co-ordinate its financial assistance instruments with those of the EU and the EBRD, in order to provide for harmonised action and to facilitate strengthened co-operation. They will seek to implement programmes for the co-financing of suitable projects in the accession candidate countries;

     a mutually supportive approach will be sought, taking into account accession priorities, comparative advantages and complementarities;

     EU assistance initiatives and more particularly grants under the EU Phare and Tacis programmes will play an important catalytic role and, where possible, will be combined with financing from the International Financial Institutions (IFIs) and the private sector. This will relate to a number of priority fields, of which environmental protection measures (including where appropriate nuclear safety) is one of the most significant.

  96.    Rules have been agreed which will apply to instances of co-financing between the EU (including the Tacis programme) and IFIs, including the World Bank, which may be summarised as follows:

     the use of financing by the EU and the IFIs should not displace other funders, in particular market-based financing provided on reasonable terms and conditions;

     in public sector projects, financial contributions by the EU and IFIs should be complemented by contributions from the beneficiary counterpart; in all cases, combined EU and IFI funding would not exceed 90 per cent of the whole;

     in private sector projects, the contribution and financial exposure of the project sponsors should be sufficiently large to ensure their sustained interest in the success of the project;

     in infrastructure projects, the grant/loan mix will be based upon the principle of maximising economic benefits and cost-effectiveness. EU grants to be awarded for such projects must not exceed the financial contributions of all the IFIs and, in any case, 25 per cent of the total project costs;

     in the co-financing of industrial investments, the optimum combination of grants and loans will be tailored to the specific needs of the beneficiary enterprises (notably SMEs), giving special attention to the implementation of technical, environmental and other industrial standards and norms consistent with the EU acquis.

  97.    The continued successful co-ordination of activities between the IFIs, the World Bank and the EU is clearly of great importance. Equally, the co-ordination of these priorities with those of the partner countries concerned is vital. Appropriate co­ordinating procedures are therefore being established at all levels, as follows:

     regular contacts will be maintained at working level, in the EU delegations and the local IFI offices, with a view to monitoring implementation and ensuring the timely availability of funds;

     before discussing the priorities of EU financial support for the accession candidate countries with the national authorities of those countries, the EU will liaise with IFIs in order to identify co-financing for both upstream and investment opportunities;

     as appropriate, the European Commission will involve the IFIs in its discussions with national authorities on the terms and conditions for the implementation of co-financing opportunities, taking into account those investment priorities identified by these authorities.

  98.    Using these procedures, a list of potential projects or facilities representing the current "project pipeline" priorities of the IFIs, and which qualify for co-financing from the EU in 1998 and 1999 under the Phare and Tacis programmes, is first agreed in principle (including some projects involving the European Investment Bank —see paragraphs 107-8 below). These are then further investigated by the EU and the relevant IFI (and by the National Aid Co-ordinators in the case of the accession candidate countries). The list of projects needs constant revision, improving and updating, given the iterative and dynamic nature of the field.

The European Bank for Reconstruction and Development (EBRD)

  99.    The 1991 Bangkok Meeting of the International Monetary Fund and the World Bank determined that there should be co­operation between the EBRD and the European Commission in the field of technical assistance, an arrangement which has become known as the Bangkok Facility. The EBRD was the first international financial institution to promote environmentally sound and sustainable development, a direction which formed part of its founding agreement. Up to 1996, this proceeded upon a "project-by-project" basis, but since then there has been an institutionalised programme. The EBRD prepares annually indicative programmes on technical assistance needs for environmental projects, which are presented to the Commission and negotiated as a part of the following year's budget. This budget then has to be approved by DG 1A and by all 15 member states, which makes for a lengthy and top-heavy process, though since 1996 the Commission has agreed to the EBRD receiving each year an "envelope" containing a certain budget, on the understanding that the EBRD presents the Commission with the proposed annual programme in order to avoid duplication with other Commission activities in the field.

  100.    A relationship exists between the EBRD and the World Bank in the development field, though there is a difference between the two institutions' practice in relation to the national environmental action programmes. In general, policy dialogue is left to the World Bank, which consequently has a direct role in establishing national environmental action programmes. The EBRD, on the other hand, monitors these national programmes. Annual questionnaires are collected by the EBRD from the countries concerned which normally concentrate on four areas:

     the existence of established environmental funds for channelling the money collected in fees and fines

     the provision of taxes and penalties of financial incentives for energy and resource efficiency

     methods of pollutant reduction and their applications

     the use of clean technology.

The responses are then processed with a view to indicating levels of implementation in respect of national environmental plans. The EBRD Report for 1997 includes an overview of each of the Tacis countries in respect of these issues. Compared with the Phare countries (particularly the accession candidates), levels of environmental awareness and institutional capacity remain relatively low.[40]

  101.    The Charter of the EBRD requires the institution to "promote in the full range of its activities, environmentally sound and sustainable development". In this respect, the EU, through the Tacis programme, has provided the EBRD with grant funds and has contributed to EBRD's environmental work through financing technical co-operation activities to assist in the preparation and implementation of EBRD investments. In addition, technical co-operation funds in the environmental sector are also used to assist in the development of EBRD initiatives in policy related studies and for training programmes. By assisting the EBRD countries of operation to meet basic legal and regulatory requirements for investments, and by helping their institutions with investment analysis, as well as technical, economic, financial and environmental "due diligence", Tacis funds allow a greater up-take of investment by these countries than would otherwise be possible.

  102.    The EBRD has "Framework Contracts" with consulting companies (so far up to 1 mecu (£700,000)), financed from Tacis, to provide project preparation support in the municipal and environment sectors. These contracts (average value 35,000 ecu (£24,000)) have proved efficient in securing timely provision of short-term expert assistance requested often at short notice to the EBRD's clients, and they support environmental infrastructure preparation activities in the Tacis countries. Examples include:

     Pre-feasibility and feasibility studies (Belarus Water and Environment Programme; Moldova Chisinau Water and Waste Water Project)

     Technical, financial and legal reviews (St Petersburg Vodokanal Water Development Programme)

     Regulatory and legal framework reviews for private sector services (Ukraine Municipal Utilities Development Programme)

     Environmental management (Moscow Solid Waste Management Programme).

  103.    Multi-project facilities have also been developed by the EBRD as an instrument to finance private investment in municipal services, including projects in the water, district heating and the waste and recycling sectors. In the future, it is also envisaged that more emphasis will be given to the development of the credit-worthiness of municipalities, in order to increase the chances of investment opportunities. An existing example of this is the assistance given to the municipality of St Petersburg, aimed at the development of new investments in the water sector, a drinking water bottling plant and in real estate development in the central water treatment plant site.

  104.    The EBRD makes agreements with "Corporate Development Partners" in certain circumstances. These normally involve municipal infrastructure projects, frequently in the environmental field, where the EBRD would like to bring in certain expertise from a "western" private company (such as a private water utility) to work with the recipient water utility. This has been the case in Moldova and the Ukraine, and has brought about both transfer of know-how and the introduction of western management culture into the recipient organisation; financing is through technical co­operation funding. These arrangements can lead to long­term co­operation between the utilities involved, and may also contribute to the "People to People" aims of the Tacis programme (see paragraphs 128-31).

  105.    The environmental concerns of the EBRD do not lie solely with direct investment and lending, but also extend to the investment and lending activities of the EBRD's Financial Intermediaries (FIs). General guidelines have been prepared by the EBRD for an FI to follow, in order to assist it to adapt the EBRD environmental guidelines to local conditions. Framework contracts have been issued (totalling 1.6 mecu (£1.12 million)) under which consultants with environmental and financial expertise provide assistance to the EBRD's FIs. The average assignment is approximately 38,000 ecu (£26,600). Key staff of the FI are included at all stages of the individual assignment and a broad range of staff is trained, including where possible, the training units of the FI concerned.

  106.    In cases of emergency, the EBRD has the facility to approach Tacis for funds on an ad hoc basis, though the approval process is not guaranteed to be a rapid one. Where there is a large scale emergency (e.g. oil pipeline failures), the EBRD only has two donors which may be approached for funds on such a large scale—the European Union and Japan. Such approvals may be handled within DG1A, without having to go to all the Member States, which speeds up the process quite substantially. Normally, the EBRD would stick to 15-20 per cent of the total original "envelope" being reserved for emergencies.

The European Investment Bank (EIB)

  107.    The European Investment Bank, founded with the Treaty of Rome in 1958, is the larger of the two European public banks, with capital of 100 becu (£70 billion), as against the 20 becu (£14 billion) of the EBRD. It is in fact second only to the World Bank at the international scale. Under its treaty obligations, the EIB is used as the EU's development financing arm for specific countries outside the Union, and these include the CEECs. According to published data, approximately 30 per cent of the EIB's financing is used for environmental and "quality of life" projects.

  108.    At present, however, there is no specialised environmental unit at the EIB, though there is continuous co­ordination between departments on environmental matters which arise in the course of project appraisal. Such an approach can have the advantage that environmental considerations are incorporated early into the technical and economic appraisal of a project. At present the EIB is able to help finance environmental developments in the Phare countries, including the accession countries, but the Tacis countries do not as yet figure specifically in its activities. This situation is likely to continue for the time being[41]. It will therefore be up to the EU to provide the EIB with a suitable mandate to operate in the NIS, should that become policy The EIB has, however, been involved in the Joint Comprehensive Action Programme for the Baltic Sea since 1992, which encompasses joint work on environmental problems with "countries around the Baltic seaboard", though not specifically with the Russian Federation.


The Know How Fund generally

  109.    The United Kingdom Know How Fund (KHF) is the main instrument employed by the UK Government's Department for International Development (DFID) for the provision of funding assistance to the countries covered by this Report, and an increasing proportion of these funds are being devoted to environment-related projects, as has also been noted within the Tacis programme since 1996. A statement of UK government policy in these fields appeared in the 1997 White Paper, "Eliminating World Poverty: a Challenge for the 21st Century".[42] The main points of this strategy towards the countries in transition may be expressed as follows:

     the development of the enabling framework necessary for a return to economic growth

     a fully inclusive approach to economic management

     empowerment of individuals and groups through establishing secure rights, spreading skills and information to enable people to participate

     the integration of economic considerations into economic planning

     the integration of transition countries into global economic and political frameworks.

  110.    In the particular context of the environment, while the evidence suggests that decision-making processes in most of the countries of the region do not yet give adequate weight to environmental considerations and that governments may lack the will or the resources to tackle environmental problems which disproportionately affect their poorer citizens, a strategy for the sustainable development of the environment is considered essential, especially for the conservation of the physical environment. Consequently, the accepted environmental priorities within the KHF are:

     to strengthen the capacity of government at national and local levels to set and enforce environmental policy

     to analyse and act on the links between poor environments and health and livelihoods

     to invest in remedial measures in areas affected by poor environmental practice

     to invest in cost-reducing environmental improvements (eg in energy efficiency)

     to meet the obligations imposed by international agreements.

The Environmental Know How Fund

  111.    The United Kingdom Environmental Know How Fund (EKHF) has been jointly funded and managed by DFID and the Department for Environment, Transport and the Regions (DETR). In most respects it now functions as part of the KHF proper, though paying special attention to the environmental projects. The World Bank and the EBRD remain the main partners in promoting investment for environmental improvements in the partner countries and the EU has a particular role in assisting with the environmental aspects of the acquis for candidate countries.


  112.    There is a wide range of other bodies, international and domestic, public and voluntary, who are involved in providing technical assistance and know­how to the NIS. Among these, the Sub-Committee took evidence or received information from the European Environment Agency, the Environment Agency (England and Wales), English local authorities (through the Local Government International Bureau) and WWF-International. Local authority activities have already been referred to in connection with the Tacis City-Twinning Programme; some background on the other main bodies' activities follows.

The European Environment Agency (EEA)

  113.    The main role of the EEA in respect of the EU and the NIS is to produce objective, reliable and comparable information for those concerned with developing European environmental policy, and for the wider European public. Through the Tacis programme, the EEA is working to secure funding for up to date and reliable environmental information from the NIS for both the short and the long terms. The broad objective of the immediate requirements, to be implemented during 1998, is to provide the additional resources and technical assistance necessary for the NIS and the EEA to collaborate in activities under the aegis of "Environment for Europe" (see also paragraphs 84-88).

The Environment Agency (England and Wales)

  114.    The Environment Agency for England and Wales is involved in development activities in the NIS area, and this is a field which the Agency is seeking to expand. The Agency is currently engaged in the Russian Federation in projects concerned with Industrial Waste Management, in association with the State Committee for Environmental Protection and the Centre for Preparation of Implementation of International Projects on Technical Assistance (a Russian federal institution). These projects have involved technical assistance both in the Russian Federation (Moscow-based) and in the UK (Leeds-based), and form part of a co­operative programme between the SCEP and the World Bank. In addition, the Agency is involved in a Tacis-Tempus project in the Tomsk Oblast concerned with training future environmental regulators in that Oblast.

The World Wide Fund for Nature (WWF-International)

  115.    WWF-International has had an operational presence in the Russian Federation, Ukraine, Georgia and Mongolia during the last 10 years, working in partnership with national governments, NGOs and with European institutions. WWF has helped to fund extensive conservation projects in the NIS area, ranging from protected areas management and environmental education to policy development on biodiversity and public awareness initiatives. WWF has had various contacts with the Tacis programme over a number of years. It has always tried to engage EU programmes and institutions in terms of policy development and programming, though WWF experience up to the present time might suggest that it is not always easy to promote natural interaction between the NGO sector and the Tacis programme itself.

The Field Studies Council

  116.    Though originally founded to promote the development of environmentally-related field study in the UK, in recent years the amount of work which the Field Studies Council has completed in the CEECs and in the NIS area has increased considerably, and is now a significant part of the organisation's workload. It is currently working on small projects in the Russian Federation (Moscow and St Petersburg areas) and in Ukraine (the Donetsk area), variously funded by the Environmental Know How Fund, the British Council, the World Bank and the Charities Aid Foundation. Up to the present time, its applications to the Tacis Bistro programme have not been successful.

34   Council Directive 90/313/EEC on the Freedom of Access to Information on the Environment, OJ L158, 23 June 1990, p 56; House of Lords European Communities Committee, 1st Report, Session 1996-97, Freedom of Access to Information on the Environment, 12 November 1996, HL Paper 9; Economic Commission for Europe, Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, Århus, Denmark, June 1998. Back

35   Europe's Environment: The Dob_íš Assessment, European Environment Agency, Copenhagen, 1995. Back

36   European Environment Agency, Office for Official Publications of the European Communities, Luxembourg, 1998. Back

37   At the Environment Council meeting of 29 September 1998, the preparation of the EU Policy Document on Climate Change for the UN Framework Convention meeting on Climate Change, to held in Buenos Aires in November, dominated the proceedings. Back

38   See paragraph 1, footnote 3. Back

39   The text is reproduced with the World Bank's evidence at pp 103-5. Back

40   European Bank for Reconstruction and Development, Annual Report 1997, EBRD, London, 1998. Back

41   Communication to the Specialist Adviser from Max Messner, EIB, October 1998. Back

42   Cm 3789, DFID/HMSO, November 1998. Back

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries

© Parliamentary copyright 1999