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Brussels, 15 July 2004

Questions and answers on the reform of Cohesion Policy and the Structural Funds 2007-2013

Why do we need a new Cohesion Policy?

As stipulated in the Treaty, Cohesion Policy aims at reducing the disparities between EU regions and helping them better use their economic and human potential to achieve sustained growth. Enlargement of the Union to 25 Member States, and subsequently to 27, presents an unprecedented challenge for the competitiveness and internal cohesion of the Union.

For example, the economic development gap expressed in per capita GDP between the 10% of the population living in the most prosperous regions and the same percentage living in the least prosperous ones has more than doubled compared with the situation in EU15.

At the same time, the whole of the Union faces challenges arising from a likely acceleration in economic restructuring as a result of globalisation, trade opening, the technological revolution, the development of the knowledge economy and society, an ageing population and a growth in immigration.

Finally, economic growth in the EU has slowed appreciably since 2001. As a result, unemployment has risen again in many parts of the Union with all the social implications which this entails. As a springboard to the future, the Union should fully exploit the opportunities provided by the current trend towards recovery.

What are the new elements of the Commission proposal compared to the current system?

The Commission’s proposal aims at a more strategic, less bureaucratic, and better focussed approach in view of the Union’s economic and social challenges following enlargement.

More strategic: Cohesion policy is now linked to the Community’s long-term strategic priorities and to the annual debate in the Spring Council.

Less bureaucracy: Concentration of the budget, decentralisation of the funds management, proportionality of rules, less instruments and a simplified delivery system.

Better focused: geographical concentration on Member States and regions with greatest needs in the larger EU and on competitiveness (Lisbon-Strategy) and sustainable development (Gothenburg-Strategy).

Simpler management: What is in the proposals in concrete terms?

The new architecture proposed for Cohesion Policy provides for simpler programming, greater flexibility, less administrative burden and a renewed Cohesion Fund.

New architecture: the number of Objectives has been limited from 7 to 3, the number of funds involved from 6 to 3.

Programming simplified: one step in programming instead of two currently – the Community Support Framework and the Programme Complement are abolished.

Greater flexibility for authorities involved in the financial management of funds.

Eligibility rules are now defined at Member States level – except a limited number of exemptions - and an existing regulation on this issue has been abolished. Proportionality provides less obligations for administrations concerning programmes with a Community share of less than one third of the total.

The renewed Cohesion Fund is now part of multi-annual programmes instead of being decided project by project.

How does the Commission intend to calculate the allocation for Member States and regions?

The Structural Funds will be concentrated on the less-developed Member States and regions based on a transparent and justified allocation of resources and a common set of indicators. Compared to the current rate of 70% for the less developed regions, the proposed concentration rate of 78.5% for the new generation of programmes for these regions is even higher.

For the “Convergence” objective, allocations will be based on eligible population, national and regional prosperity and unemployment in the areas concerned. For the „regional competitiveness and employment“objective it will be based on eligible population, national and regional prosperity, unemployment and population density.

Why does the Commission propose the “regional competitiveness and employment” objective? Does it make sense to support rich EU regions?

Cohesion policy should address the EU economy and territory as a whole instead of being reduced to development aids just for the poor. It is a question of solidarity but also of underpinning the growth potential to the common benefit of all.

For all regions the Commission proposes therefore a strong concentration on the Lisbon and Gothenburg agendas. The Commission does not propose a zoning any more at Community level for regions outside the “Convergence” objective (as under the current Objective 2) because it has meant that concentration has been understood almost exclusively in micro-geographical terms. While the geographical concentration of resources in the worst affected pockets or areas must remain an essential part of the effort in the future, it must also be recognised that the prospects of such areas are intimately linked to the success of the region as whole.

Administrative capacities in the new Member States need to be strengthened? Do the regulations reflect this issue?

The new regulations put more emphasis on strengthening institutional capacity and the efficiency of public administration, in particular under the “Convergence” objective, including the capacity for managing the Structural Funds and the Cohesion Fund. Member States and regions may allocate resources in specific programmes to it, e.g. through technical assistance. Beyond this, interregional co-operation under the “European territorial co-operation” objective provides for the exchange of best practices between administrations.

Why is “rural development” not any longer part of Cohesion policy?

The Commission proposes to simplify and to clarify the role of the different instruments in support of rural development and the fisheries sector by grouping them in one single instrument under the Common Agricultural Policy designed to increase the competitiveness of the agricultural, enhance the environment and country side through support for land management the quality of life in rural areas.

This new instrument will continue to be deployed in such a way that the same degree of concentration is achieved as today on helping the less developed regions and Member States covered by the convergence programmes.

Outside the new instrument, Cohesion Policy would support the diversification of the rural economy and of the areas dependent on fisheries away from traditional activities.

How will the Commission safeguard the “URBAN” approach in the mainstream programmes?

Maintaining the important URBAN approach in the Structural Funds will be carried out in different ways: an integrated partnership with “urban” actors, specific eligibility for urban regeneration issues within the ERDF, possibility of global grants to decentralise the design and implementation of urban policy priorities.

The Commission intends to reinforce the place of urban issues by fully integrating actions in this field into the regional programmes. Regional programmes will need to indicate how urban actions are dealt with and how the sub-delegation of responsibilities to city authorities for these actions is organised.

How will the Commission avoid that Structural Funds are used for investments of enterprises which move business just from one region to another in the EU?

The proposed rules provide that “shopping structural funds” effects are excluded as much as possible. Supported enterprises moving towards another region have to pay back Structural Funds aids, if they do so before a period of 7 years. Specific obligations for the Member States and the Commission including information mechanisms are suggested in order to avoid “shopping Structural Funds”.

What is the background of the proposal for the “European grouping for cross-border co-operation (EGCC)”?

Member States and regional and local authorities have experienced important difficulties in carrying out and managing actions of cross-border co-operation, trans-national co-operation and inter-regional co-operation, within the framework of differing national laws and procedures.

This calls for appropriate measures at the Community level in order to reduce these difficulties. The EGCC will act on implementing programmes of cross-border co-operation co-financed by the Community. Recourse to the EGCC should be optional.

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