Reform of the Structural Funds
EUROPEAN UNION
Committee
of the
Regions
The contribution
of the Committee of the regions
to the construction of Europe
Brussels, Mach 1998
Introduction
Introduction by the Chairman
1. "Agenda 2000" : for a stronger, broader Europe Statement by the President of the
European Commission, Mr Jacques Santer, on the Structural Funds
2. Instruments for achieving cohesion: the Structural Funds
3. Agenda 2000 and the future of structural policy - statement by Mrs Monika Wulf-
Mathies, member of the EC Commission
4. Interviews:
Mr Rembert Behrendt, State Secretary, Saxony-Anhalt, Germany
Mrs Bente Nielsen, Councillor, Arhus, Denmark
Mr Manuel Fraga Iribarne, President of Galicia, Spain
5. Impact and follow-up of Committee of the Regions opinions
Foreword
European structural policy is always regional policy. The regions are not merely on the
receiving end of this policy to ensure Europe's economic and social cohesion - rather, they play
a crucial role in helping shape it. They also claim responsibility for planning, decision-making
and practical implementation, not least because the European Union's subsidiarity principle
demands it. Moreover, we must be able to coordinate Community, national, regional and local
measures in this field and ensure that administrative decisions on structural aid are taken at a
level as close as possible to the citizen. This is a task in which the Committee of the Regions
wants to be actively involved.
Europe's economic diversity is nowhere more in evidence than in its regions and towns. This is
reflected in an emerging European economic and social area.
At the Committee of the Regions, one of the priorities we have set ourselves is to foster the
contribution of regions and towns to employment policy in order to boost the European
Union's economic and social cohesion.
Member States bear primary responsibility for employment policy. Local and regional
authorities must be given, or must retain, adequate scope to realize their job-promotion
initiatives. The Committee of the Regions supports them in these efforts.
Thanks to their closeness to the citizens, and their decentralized structure, local and regional
authorities are very well equipped to set up contacts and establish relations among the various
players involved in local development. They can also build up the contacts which are
fundamental to the success and efficiency of the territorial employment pacts.
At the same time, more regional and local responsibility in accordance with the subsidiarity
principle means more European solidarity. Regionalism for selfish aims, involving rich regions
and towns at the expense of those that are weaker is short-sighted and does harm to us all. It is
our task to give the weak the opportunity to grow strong. But the strong must also be able to
stay strong. The Europe of the regions in particular depends on cohesion based on solidarity.
"The Union's environment is changing fast, both internally and externally. It must set about
adapting, developing and reforming itself. Enlargement represents a historic turning point for
Europe, an opportunity which it must seize for the sake of its security, its economy, its culture
and its status in the world."
Commission President Jacques Santer
The Union's internal and external environment is undergoing rapid change. Even more than in
the past, it must focus on what is essential and give priority to areas where it can provide real
added value. In this connection, by virtue of its right of initiative, the Commission's role is of
crucial importance in steering Union policies in new directions. At the same time, the
Commission must rethink its work and improve its management, co-ordination and monitoring
capacities. In a wider and more diverse Europe, its role as defender of the Community interest
will be even more decisive than in the past. To succeed, it must reorganise and modernise.
The chapters of "Agenda 2000" on the challenge posed by enlargement form the
"comprehensive document" which the Madrid European Council requested of the Commission.
The document attempts both to explain the way the Commission has considered the various
applications for membership, the main issues raised by those applications and the timetable for
starting negotiations that appears most realistic. The document draws the main conclusions and
recommendations from these opinions and presents the Commission's views on initiating the
accession negotiation process. It also deals with the issues relating to enlargement that arise for
all applicant countries as well as the practical details in the initial phase of negotiations and the
strengthening of the whole pre-accession strategy.
On the basis of a comprehensive and objective evaluation of the extent to which the ten
applicant countries meet these criteria, the Commission recommends that accession negotiations
start with Hungary, Poland, Estonia, the Czech Republic and Slovenia. Cyprus has already
received assurances from the European Council that its accession negotiations will start six
months after the completion of the IGC, following the positive opinion from the Commission
in 1993.
The new financial framework put forward by the Commission is designed to enable the Union
to finance its essential requirements over the medium term: the cost of continuing to reform the
common agricultural policy, pursuing the priority goal of economic and social cohesion,
strengthening internal policies in fields where Community action can contribute towards growth
and employment, enhancing the pre-accession aid to applicant countries and absorbing the
impact of the first enlargement.
The Commission considers that these challenges can be met in budget terms within the ceiling
on own resources that will be reached in 1999, i.e. 1.27% of the Union's GNP.
The Commission notes that the financing system has been operating adequately and it foresees
no changes in the budget positions of the Member States which would be so far-reaching as to
demand a revision of the financing mechanism laid down in the 'own-resources' Decision of 31
October 1994. A fundamental review of own resources should be embarked upon once the
Union is faced with raising the present ceiling. If major changes then appear in the budget
positions of the Member States, the introduction of a generalised corrective mechanism,
including the British correction, could then be considered.
The Structural Funds - the financial framework for economic and social
cohesion
The European Council in Edinburgh decided to set the Union's budget for economic and social
cohesion at 0.46% of Union GNP by the end of the current financing period (1993-99). It will
be necessary to maintain this support during the next period (2000-06) to ensure the
harmonious development of the Union and to facilitate the necessary adaptation of human
resources. Despite the significant success of the cohesion policy in recent years, there is still a
long road ahead, in particular for employment: unemployment has not decreased significantly,
especially not in many of the less developed regions. Disparities have even widened. This
requires continuing financial support, on the one hand, for regions which are lagging behind
and regions in the process of restructuring and, on the other hand, for human resource
development.
Within the financial perspectives, ECU 275,000 million (at 1997 prices) would be set aside for
the Structural Funds and the Cohesion Fund, compared to ECU 200,000 million (at 1997
prices) for the period 1993-99. ECU 45,000 million would be set aside for enlargement.
In order to avoid serious absorption problems, overall transfers from the Structural and
Cohesion Funds should not exceed 4% of the GDP of any current or future Member State.
The pursuit of greater concentration, effectiveness and simplification of structural measures will
result in a reduction in the number of Objectives from seven to three, that is two regional
objectives and one horizontal objective devoted to human resources.
It is foreseen by 2006 that Objective 1 and 2 areas (definition: see below) will cover between
35% and 40% of the Union population, against 51% currently.
The total Structural Fund spending on regions eligible under Objective 1, including those
targeted by transitional measures, should account for approximately two thirds of the Structural
Funds for the fifteen Member States, i.e. a percentage comparable to the current programming
period.
The future Objectives
- Objective 1
For the less developed regions eligible under Objective 1, the Commission proposes strict
application of the GDP criterion by which assistance will only go to regions whose per capita
GDP is less than 75% of the Union average, thereby ensuring full overlap with the regions
aided by Member States under Article 92(3)a of the Treaty. Aid intensities will reflect the size
of the population, the gap between regional wealth and the Union average, and national wealth.
Additional support would be granted to regions with very high unemployment.
For those regions currently eligible under Objective 1 which come out above the 75%
threshold, a phasing-out mechanism must be defined. The particular situation of very remote
regions, for which a new Article and a protocol have been introduced into the Treaty, should be
dealt with within Objective 1. The most northerly regions with very low population density
which are currently eligible for Objective 6 and would not be eligible for Objective 1 will have
special arrangements.
As at present, the integrated approach to developing structurally backward regions should
continue, thus ensuring the co-ordination of Union structural assistance, including for the
development of human resources, agricultural structures, fishing and rural development.
Objective 2
For all the regions confronted with major economic and social restructuring needs, the
Commission proposes a "new" Objective 2. This would include areas affected by change in the
industrial, service or fisheries sectors, rural areas in serious decline because of a lack of
economic diversification, and urban districts in difficulty because of a loss of economic
activities.
Outside Objective 1 regions, almost a fifth of the population of the Union lives in regions
where the unemployment rate is above the Union average (10.9% in 1996). The number of
young unemployed still exceeds 30%. Problems are even more severe in cities, where
unemployment can be 30% to 50% in certain districts. Unemployment constitutes an under-
utilisation of manpower and a loss of growth potential for the Union.
As for Objective 1, Union intervention should combine all forms of structural support,
including in particular measures linked to human resources. This Objective will take particular
account of the unemployment rate, of the level and rate of change of industrial employment and
agricultural activity, including changes linked to fisheries, as well as the degree of social
exclusion. In the interest of simplification, this should result in a single programme by region.
The Commission is also proposing a geographical concentration on the worst affected areas and
a coverage as consistent as possible with the areas assisted by the Member States under Article
92(3)c of the Treaty.
As for Objective 1, the areas currently eligible for Objectives 2 and 5(b) which will no longer
be eligible under the future selection criteria should continue to benefit during a transitional
period from support which is limited financially.
Objective 3
The development of human resource activities, in particular through the interventions of the
European Social Fund, will be a key element both in the Objective 1 and 2 regions and
elsewhere. A new Objective 3 will apply to regions not covered by Objectives 1 and 2 in order
to help Member States adapt and modernise their systems of education, training and
employment.
In all Structural Fund human resource activities, a determined effort should be made to
modernise labour markets in accordance with the multi-annual plans for employment and the
new Title on employment introduced in the Treaty of Amsterdam.
Objective 3 will promote activity in four areas which complement the guidelines developed as
part of the European employment strategy, namely, accompanying economic and social change,
lifelong education and training systems, active labour market policies to fight unemployment
and combating social exclusion.
The Cohesion Fund
The Commission proposes that the Cohesion Fund be kept in its present form. The Member
States with a per capita GNP of less than 90% of the Union average which take part in the third
phase of EMU will remain eligible for assistance from the Fund. Since the Fund is country-
specific, this should enable Community support to continue covering the whole area of the less
prosperous Member States. Macro-economic conditionality should continue to apply. For those
countries taking part in the third phase of EMU, this means observing the terms of the Pact for
Stability and Growth and in particular the stability programmes. As regards the GNP criterion,
a mid-term review will take place in 2003.
The Cohesion Fund will pursue its financial support to trans-European transport networks and
projects in the environmental field.
The annual financial endowment of the Cohesion Fund for the present Member States will be of
the order of ECU 3,000 million per year at the beginning of the period 2000-06.
Providing structural support for enlargement
With the next enlargement of the Union, support from the Structural Funds and the Cohesion
Fund must apply to all the Member States which join. Union solidarity is fully justified for
these new democracies faced with major development needs, especially infrastructures,
including those for the environment, the productive sector and human resources.
An efficient implementation of structural policies requires the fulfilment of several conditions.
The applicant countries need time to adapt to the working of the Structural Funds. On that
basis, it is necessary to strengthen the pre-accession strategy so that, from the year 2000, a pre-
accession support is operating. From accession onwards, Structural Funds programmes and
Cohesion Fund projects will replace pre-accession aid, taking account of the absorptive
capacity of each country.
As a result, the Commission proposes allocating ECU 38,000 million to the new Member
States preceded by ECU 7,000 million for pre-accession during the period 2000-06 for the
Structural Funds and Cohesion Fund. Together, at the end of this period, the level of structural
transfers for enlargement would represent almost 30% of total Union structural funding.
Simplification and pursuit of greater efficiency
Making the Structural Funds more effective will require simplification of management, greater
flexibility, decentralisation in implementation and a clear division of accountability. The key
here is partnership between the Commission and the Member States in drawing up and
implementing Structural Fund operations.
The Commission proposing achieving simplification not only through fewer Objectives but also
fewer Community Initiatives, one programme by region, and where possible, more room for
manoeuvre for the committees monitoring the implementation of the Funds.
Greater efficiency will be sought by, on the one hand, more financial leverage, i.e. more
systematic use of financial instruments other than grants (cheap loans, loan guarantees, equity
participation) and, on the other, by allocating 10% of funds not earlier than at mid-term on the
basis of a region's relative performance. As a counterpart to the simplification process, Member
States will be required to assume greater responsibility in reaching established targets and in
accounting for the funds which they receive.
Agenda 2000
The future of structural policy
The European Commission's Agenda 2000 proposes a scenario for the future structural policy
of Europe. It aims to be both fair and balanced. Since the presentation of the document, a large
number of ideas and suggestions have been put forward by many players and these have
contributed to a fruitful discussion of the future of structural policy.
COR representatives have already taken a very active part in discussions of Structural Fund
reform, for instance at the cohesion forum in April. COR Commission 1 has carried these early
contributions further with the opinion drafted by Mr Fraga Iribarne and Mr Rembert
Berendt. The European Commission itself sets the following priorities for Structural Fund
reform:
Firstly: The European Commission believes that the Structural Funds will remain a vital
instrument for strengthening the economies of underdeveloped regions and promoting
economic and social cohesion in the Community. They will also target support for
economically backward regions, combating social exclusion and promoting structural changes
and the development of human resources. Agenda 2000 also lays down the framework for
helping newly acceding central and eastern European countries (CEEC) gradually integrate into
Europe's structural policy.
In setting up new programmes the aim will be:
- to promote job-creating and at the same time sustainable growth,
- to strengthen the ability of the regions to make adjustments and innovate,
- to combat unemployment by tapping additional growth potential and development of
human resources on a broad front.
Secondly: Strengthening economic and social cohesion under present conditions implies
making European structural policy even more effective and transparent, focusing on specific
topics and concentrating on specific geographical areas.
The common threads of the reform are therefore concentration, efficiency and simplification.
The challenge is to find ways of using available funds in a concentrated, coordinated manner
and backing this up with national and European policies on growth and employment.
Only when a programme is drawn up for Objective 2 regions selected on the basis of these
criteria can efforts be focused on future development prospects and no longer on the future of
the structural problem itself. The Objective 2 programme should accordingly be developed into
a strategic instrument for managing structural change and, by means of an integrated and cross-
disciplinary development blueprint, should promote forward-looking economic structures and
long-term, competitive jobs.
Securing an overall increase in the competitiveness of a region under the new Objective 2
programmes requires the following: coordinated measures on infrastructure and services
involving town and country; an overall strategy for industrial development, bearing in mind the
importance of localities in terms of landscape, tourism, culture and education; a sensitivity to
spatial planning implications.
The European Commission counts on the continuing support of the COR, particular in fleshing
out the partnership principle. The quality of structural policy will be enhanced by the large-scale
involvement of regional and local players in drawing up, implementing and evaluating the
programme. The European Commission will therefore endeavour to strengthen the partnership
principle in the new Structural Fund regulations to be presented in the spring of 1998. In so
doing it will also try to ensure that the unassailable principle of decentralization does not
become renationalization through the back door.
The new Structural Fund regulations will contain further simplified provisions on the drawing
up and implementation of programmes. The current planning procedure is too complicated and
slow. Too many players with ill-defined remits are involved in the drawing up and modification
of plans. In future there will therefore be a clear-cut distinction between the establishment of
objectives and priorities, along with the approval of programmes, on the one hand and the
implementation of programmes on the other. The regular provision of information and the
presentation of accounts by the Member States and the regions, the effective overhaul of
Member State monitoring systems, and practical evaluation should accordingly be in line with
the principle of decentralised programme implementation.
The COR proposes the drawing up of a mutually-agreed, structural aid contract specifying the
responsibilities of the players, the development objectives, areas of intervention, aid capacity,
funding levels, obligation to present reports and carry out monitoring tasks. These proposals
seem to me to be interesting and we shall be looking at them carefully when the time comes to
draw up the regulations.
In short, the opinions of the Committee of the Regions, e.g. the detailed opinion analysing the
effects of enlargement, and the excellent report on the future shape of European structural
policy, show that the COR is an effective and competent conduit for expression of the views of
local and regional authorities in the European debate.
Dr Monika Wulf-Mathies
Increasing the involvement of the local and regional authorities will make for a
more effective European structural policy
Interview with secretary of state Dr. Rembert Behrendt, European representative of the Land of
Saxony-Anhalt (Germany)
Question: Secretary of state, as one of the rapporteurs you were heavily involved in the
preparation of the Committee of the Region's opinion on the future of European structural
policy. How do you assess the outcome?
Secretary of state Dr. Rembert Behrendt: European structural policy is one of those areas in
which the impact of European policy is felt most directly at local and regional level. After all,
the sum involved is over ECU 250 billion, provided over a seven-year programme period by
the strongest Member States and used in the neediest regions and localities to overcome
underdevelopment and structural weaknesses, to improve infrastructure and combat
unemployment.
For a year we discussed all aspects of this very complex problem in an ad hoc working party
and surveyed local and regional experiences in all the Member States through a questionnaire.
The resultant opinion not only strikes a balance between the various interests involved, but also
contains some solid proposals for a reorientation of European structural policy. For me, the
overwhelming endorsement of the COR members is a convincing expression of European
solidarity, including towards those countries applying for membership. The opinion clearly
states that new Member States are to be included in European structural policy from the outset,
without enlargement being financed at the expense of the poorest and most problem-ridden
regions of the present Member States. Only in this way will it be possible to prevent European
solidarity within the present Union coming into conflict with solidarity towards new Member
States and regions.
Question: What are the key innovations suggested by the COR for the future shape of
European structural policy?
Secretary of state Dr. Rembert Behrendt: Our proposals are aimed above all at strengthening
regional and local involvement in planning, implementing and assessing the use of the
European Structural Funds. Within a firmly agreed European framework, the Member States
are to have sufficient freedom to adapting the use of the cohesion policy instruments flexibly to
local circumstances and to ensure that resources are used as efficiently as possible as part of an
overall strategy aimed at making the most of any special potential. For this, what is needed in
particular is to further develop the partnership principle by strengthening the monitoring
committees and to give the regional and local players a bigger say and more room for
manoeuvre. Programming could be made into a genuine single-stage procedure through
simplification. The practical implementation of financing should be on the basis of the relevant
national provisions, which are themselves subject to EU supervision. It is proposed that this
partnership be given tangible form through the conclusion of a support contract between the
European Commission, the Member State and recipient region; this contract would cover all
questions relating to the combined use of European, national and regional funds.
Interview with Mrs Bente Nielsen
Why is it so important for the Committee of the Regions to give its opinion on
Agenda 2000?
Because local and regional authorities play a major role in implementing the EU policies mooted
in Agenda 2000. Structural policy primarily focuses on development in the regions and local
communities. Agricultural policy has a profound influence on living conditions in rural areas. It
is difficult to imagine a reform of these policies which does not involve those directly elected at
a decentralized level. That is why the COR has to be visible in this debate.
The debate on the future of the EU is also about how to bring the EU closer to its citizens and
how to promote understanding as a means of strengthening cooperation. What counts here is
visible results - for example, whether Structural Fund support creates lasting jobs out in the
local community. It is on this point in particular that we have an enormous responsibility, being
the authorities which are closest to the citizens. We can build a bridge between the decisions
taken in Brussels and their impact on the regions and local communities - since we are the ones
who primarily have to translate the recommendations made in Agenda 2000 into action.
The opinion stresses the importance of a policy for rural districts. Do they
have special importance for the EU?
Balanced development should be promoted throughout the EU, not only in rural areas. On the
other hand, we have particularly highlighted rural districts when it comes to the common
agricultural policy. The necessary adjustments to farm aid may have serious consequences for
rural areas. The reforms must therefore be accompanied by action to facilitate their transition to
the new circumstances - broad-based action anchored in local needs and development
aspirations. This is why any strategy for rural areas should be coordinated at regional level in a
partnership between decentralized authorities, farmers and others. The demand for sustainable
development, a sound environment and healthy foodstuffs will become more pressing, and that
is the task we can take on.
What about enlargement of the Union? Is that not purely a matter of foreign
policy, i.e. the responsibility of governments?
It is much more than that. If the new member countries are to benefit from - and contribute to -
European cooperation, they must build up structures and capacity at a decentralized level to
administer the structural funds, implement EU legislation etc. This is where interregional
cooperation between local and regional authorities comes into its own. This exchange of
experience across national borders will assume even greater importance for European
integration in the future. That is why it is important to start forging ties with the applicant
countries right away.
1. One of the most striking things about the Fraga-Behrendt opinion is that
someone from a southern region was able to reach agreement with
someone from a German region and come up with surprisingly coherent
results. How was that possible?
First I must say that the assistance and cooperation of Mr Behrendt was especially useful. But
the basic reason why both the North and South were in agreement was the perception that
regional policy is not a mechanism for doling out subsidies but an aid to self-help. In short, we
both recognized that regional development measures must be embedded in sound strategies in
the face of increasing globalization and internationalization.
2. While it is clear that you and Mr Behrendt established a good working
relationship and both accepted the principles of solidarity and
effectiveness in regional policy, the opinion was still hotly debated in
the COR commission and plenary session. I would once again stress
that the opinion is that rare bird, a model of consistency.
In fact the opinion is something more than a juxtaposition or ragbag of amendments. Several
factors made this possible. One, the quality of our back-up teams which provided a technical
"filter" which was decisive when it came to accepting, reaching a compromise on or rejecting
amendments. Secondly, the active participation of members both in the commission and at the
plenary session made for a fair exchange of views and constructive agreements with the
common objective of a high-quality opinion on an important subject.
3. What, ultimately, do you expect from the opinion? Do you think it will
influence the Commission?
I do not doubt it. The contributions of the Committee of the Regions (like those of the
European Parliament and Economic and Social Committee) are gaining in prestige in the eyes of
the Community's decision-making bodies. Hence I think that this opinion will serve to ensure
that the concerns of the local and regional authorities are considered and taken into account in
the crucial period 2000-2006.
6. Opinion CdR 131/97 fin on the views of the regions and local authorities
on arrangements for European structural policy after 1999 - own-
initiative
Rapporteurs: Mr Behrendt (German) and Mr Fraga Iribarne (Spanish)
Commission 1
Gist of the background document, with specific reference to the framework for
economic and social cohesion
Agenda 2000 is a compilation of documents setting out the broad perspectives
for development of the European Union and EU policies beyond the turn of the century, the
impact of enlargement on the EU as a whole and the future financial framework beyond 2000,
taking account of the prospect of an enlarged Union. As the Committee of the Regions intends
to issue three opinions on matters related to Agenda 2000 - the others being "Agenda 2000: the
financing of the European Union after 1999 taking account of enlargement prospects and the
challenges of the 21st century" (CdR 303/97 rev.), which essentially covers the financial
aspects of the Commission document, and the own-initiative opinion on "The effects on the
Union's policies of enlargement to the applicant countries of central and eastern Europe (Impact
Study)" (CdR 280/97 rev.), which focuses entirely on the prospects for enlargement - this
opinion is solely concerned with the Agenda 2000 proposals on economic and social cohesion.
The document proposes that ECU 275 billion (at 1997 prices) be earmarked for
structural operations (under both the Structural Funds and the Cohesion Fund) in the new
programming period (2000-2006) as against ECU 200 billion in the current period (1993-
1999).
It provides that the total transfers from the Structural Funds and the Cohesion Fund to a
present or future Member State should not exceed 4% of its GDP.
With a view to greater concentration, efficiency and simplification of rules and
procedures, it is proposed that the present seven Objectives be reduced to three: two regional
Objectives and one horizontal Objective for human resources.
The document includes the expectation that by 2006 the population of the Union of 15
covered by Objectives 1 and 2 will be 35-40%, as against 51% now. The total amount of the
Structural Funds to be allocated to the Objective 1 regions (including regions covered by
transitional arrangements) should cover about two thirds of the Structural Funds available for
the 15 Member States. This corresponds to the average for the current programming period.
On the Cohesion Fund, it is proposed that it should retain its present form, and that the
criteria for assistance from the Fund should remain that the Member State in question should
have a GNP below 90% of the EU average and be taking part in the third phase of EMU. Since
the Fund will continue to be linked to national units, EU assistance may cover the whole area of
the most disadvantaged countries.
The part of the document covering simplification and greater efficiency makes the point
that more streamlined administration, greater flexibility, decentralized implementation and a
clear division of responsibilities are essential for making the Structural Funds more effective.
This should be done through a partnership between the Commission and the Member States,
which would undertake the preparation and implementation of Structural Funds activities. The
Commission proposes that the aforementioned simplification be achieved through common
objectives, but also proposes a reduction in the number of Community initiatives, and that for
the new programming period only one programme per region be drawn up. Finally, to ensure
greater financial effectiveness, it is proposed that 10% of the resources be allocated only half-
way through the period, on the basis of the regions' performance.
Gist of the opinion
The opinion presupposes that European structural policy is based on solidarity between
the Union's weaker and stronger Member States and regions, and that it will provide aid for
self-help over a limited period, in order to provide fertile soil for viable regional development.
At the same time, the Committee is at pains to stress that the main responsibility for achieving
the objective of economic and social cohesion lies with the Member States. European structural
policy is there to help the Member States and regions to achieve this objective, but it does not
absolve the Member States of their responsibilities.
The opinion makes both general and specific proposals on how European structural
policy should be formulated for the new programming period after 1999, set against the
background of local and regional experience, taking proper account of Agenda 2000's proposal
for improving economic and social cohesion.
The opinion underlines the urgent need to simplify rules and procedures for the coming
programming period. By way of example, it welcomes the proposal to make provision for only
one multiannual programme per region in the Objective 1 and 2 regions, provided that this
measure does not merely comprise a formal combination of existing measures but involves real
administrative simplification.
At the same time, the opinion warns against rashly deciding to replace the existing
funds with a single fund, as the various funds are to be regarded as an expression of the EU's
political priorities. Many desired effects can be achieved through harmonization of the rules and
procedures of the funds, and the establishment of an integrated procedure in cases where
several funds come into play in a programme. Also stressed is the need to strengthen
partnership at all stages - preparation and drawing up, implementation, assessment and
evaluation - of the programmes.
The Structural Funds are at present concentrated on four regional policy objectives,
which together account for 85% of financing: Objective 1 (about 70%), Objective 2 (about
11%), Objective 5b (4%) and Objective 6 (0.5%), and the three non-regional, horizontal
Objectives 3, 4 and 5a, which together account for 15% of the total funding.
The opinion proposes the following for the regional policy objectives in the new
programming period:
- continued support for Objective 1, based on strict application of the geographical
delimitation indicator (75% of EU average per capita GDP measured in purchasing power
parity terms). Objective 1 areas should continue to be defined mainly at NUTS II level, with
special arrangements to be made for the outermost regions and for the northern regions with
an extremely low population density;
- GDP should be retained as an indicator for delimitation of areas; other indicators could be
used alongside it, e.g. by enabling assisted regions which are exceptionally badly affected
by unemployment to receive additional aid;
- in order to prevent disruption of regional development which might compromise results
already achieved, the Committee advocates transitional arrangements for regions which
cease to qualify for support; the decisive criterion here should be the development problems
of the areas in question;
- Objective 2 should be retained in its present form, but targeted more specifically on
industrial change, the effects of globalization of the world economy on industrial regions
and the problems of conurbations.
The opinion proposes the following for the horizontal objectives in the new
programming period:
- that horizontal Objectives 3 and 4 be combined in a single horizontal objective, which should
aim to provide effective support for workers' adaptation to changed work processes and the
sustainable reintegration of the unemployed into the labour market;
- that the provisions of Objective 5a be extended and the objective be implemented
horizontally; if this objective is (partially) removed from the list of objectives of the
Structural Funds, steps should be taken to ensure that there is an orderly transition to the
succeeding instruments;
- at the same time a horizontal objective should be introduced - defined at NUTS III level - to
provide support for structural change in industrial regions and urban population centres.
The Committee rejects the Commission's proposal to reserve 10% of the funds for the
regions which are found in the mid-term assessment to have performed best, quite apart from
the fact that there is no indication of how such performance would be assessed. This tends to
blur the aim of simplification, transparency and management based on objective criteria.
On Community initiatives, the Committee agrees with the view in Agenda 2000 that
their number should be limited and their subject-matter simplified, and with the proposal to fix
a ceiling of 5% of the Structural Funds budget for allocation to the initiatives. It stresses
particularly that it should continue to be possible to provide support for smaller-scale projects,
and that the new generation of Community initiatives should include cross-frontier, trans-
national and inter-regional cooperation with the future Member States and their local and
regional authorities.
On pilot projects, it is emphasized that they should be retained, but that the
procedures for them should be radically altered and simplified in order to ensure the desired
results and a greater degree of transparency.
7. Opinion CdR 303/97 fin on Agenda 2000: the financing of the European
Union after 1999 taking account of enlargement prospects and the
challenges of the 21st century - COM(97) 2000 final - own-initiative
Rapporteur: Mr Behrendt (German) and Mrs Nielsen (Danish)
Commission 1
Gist of the background document, with specific reference to the financial
framework
Agenda 2000 is a compilation of documents setting out the broad perspectives for
development of the European Union and EU policies beyond the turn of the century, the impact
of enlargement on the EU as a whole and the future financial framework beyond 2000 taking
account of the prospect of an enlarged Union. Since the COR wishes to issue three opinions
on matters related to Agenda 2000 - the others being the own-initiative Opinion on "the views
of the regions and local authorities on arrangements for European structural policy after 1999"
(CdR 131/97 rev. 2), which concentrates mainly on the structural policy aspects of the
Commission document, and the own-initiative Opinion on "the effects on the Union's policies
of enlargement to the applicant countries of central and eastern Europe (Impact Study)" (CdR
280/97 rev.), which focuses entirely on the prospects for enlargement - this opinion is solely
concerned with the Agenda 2000 proposals relating to the financial framework.
The new financial framework is to find the EU's essential requirements over the next
few years: continued reform of the CAP and prioritizing of economic and social cohesion,
further consolidation of internal policies, development of pre-accession aid to the applicant
countries and financing of the expenditure resulting from the forthcoming enlargement.
Provision is made for a total budget of ECU 745.5 billion to fund EU tasks over the period
2000-2006.
It is proposed to earmark 44.2% of Community spending for the CAP, 36.9% for
strengthening economic and social cohesion and barely 7% for internal and external policies
respectively. A further 5.4% is earmarked for administrative expenditure and reserves.
The Committee takes the view that spending need not exceed the 1999 ceiling for own
resources, viz. 1.27% of EU GNP. Here the Commission seeks to observe the same financial
discipline for its own spending as applies to the Member States. It is assumed that economic
growth up to 2006, taking account of enlargement, will contribute approx. ECU 20 billion (at
1997 prices) in additional revenue. The Commission also assumes in the 1999 budget that
there will be a margin below the ceiling for own resources.
Since the financing system is considered to have operated satisfactorily and no major
changes are anticipated in the Member States' financial situations, there is deemed to be no need
to alter the existing financial machinery. However, the sources of own resources will
undoubtedly have to be revised once the Union has to raise the ceiling.
Of the ECU 275 billion earmarked for structural measures (Structural Funds and
Cohesion Fund - see information memo CdR 360/97 for further details) it is proposed to
apportion ECU 210 billion among the existing 15 Member States and to allocate ECU 45
billion to the new Member States from 2000 onwards. A further ECU 20 billion will be
distributed under the Cohesion Fund.
On agricultural policy, it is planned to press ahead with the 1992 reform and to
expand it in the shape of further adjustments ranging from price support to direct payments.
Concurrently, a consistent policy for rural areas is to be a dominant component in this process.
The targets set for the CAP are: improved competitiveness (internal and external), food
safety and food quality in the consumers' interests, reasonable living standards for farmers and
stable farm incomes, integration of environmental goals, promotion of sustainable agriculture,
alternative job and income opportunities for farmers and their families, and the streamlining of
EU legislation. A total appropriation of ECU 392.2 billion is earmarked for spending under the
reformed agricultural policy, which means that the CAP will remain the largest item of
expenditure in the EU budget (approx. 45% of total spending). The Commission concludes
that CAP requirements can easily be funded within the current guideline ceiling if the annual
increase is limited to 74% of GNP growth.
On enlargement, it is proposed to earmark ECU 21 billion (at fixed 1997 prices) for
pre-accession aid over the period 2000-2006 (ECU 3.5 billion for structural support within
agriculture, ECU 7 billion for the Cohesion Fund and as much as ECU 10.5 billion for the
PHARE programme).
Gist of the opinion
The COR warmly welcomes the Commission's attempt to provide a comprehensive
overview of financing requirements for the tasks connected with enlargement, guaranteeing the
EU's capacity to act and boosting European competitiveness, and hence job creation.
The COR also applauds the retention of an EU own resources ceiling of 1.27% of EU
GNP.
However, the COR regrets that Commission 4 wishes to decide, already at this stage,
that there is no need to change the EU own resources system. In the COR's view, such a
decision should await the outcome of the comprehensive report on the operation of the
financing system to be published in 1998.
The COR welcomes the Commission's proposal to fund structural policy
measures, in the case of both the present Member States and the applicant countries within the
existing ceiling for own resources, and the limitation of structural spending to 0.46% of EU
GNP. The COR also endorses the intention to concentrate aid on the neediest regions and on
the most serious problems. The budget estimates for structural policy measures show that
eastwards enlargement must not be at the expense of the neediest regions in the fifteen; the
proposal that Structural Fund and Cohesion Fund transfers should not exceed 4% of the
beneficiary Member State's GDP is seen as a preventive measure to ensure that absorption of
aid by the Member States poses no problem.
The COR supports the proposed geographical, financial and thematic concentration of
structural policy action and agrees on the need for transitional arrangements for regions which
will cease to receive aid under the new programming period. These transitional arrangements
must be framed so as to be consistent with the concentration principle. The COR therefore calls
for further details of the contents of such arrangements.
The Commission is also requested to explain and clarify the proposal to earmark a 10%
reserve of Structural Fund resources for allocation, on the basis of the half-way evaluation, to
the regions with the best performance. The COR is opposed to this proposal (see its Opinion
on future structural policy - CdR 131/97 rev. 2).
On agricultural policy, the COR calls on the Commission to flesh out, as soon as
possible, the proposal to finance horizontal and flanking measures within the framework of a
coherent policy for rural areas, which prioritises alternative employment opportunities and
social and environmental considerations. Fuller details of such action will make it possible to
assess the economic and social impact of the CAP reform.
Broadly, the COR welcomes the financial proposals for enlargement but advocates a
step-by-step approach, keeping pace with concrete progress in the enlargement negotiations.
Here the COR refers to inter-regional cooperation with central and eastern Europe as playing a
major role in the development of decentralized economic and administrative progress.