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  In August 1987, the Commission presented to the Council a
  comprehensive proposal, the purpose of which was to improve the
  structure and operational rules of the structural Funds (European
  Regional Development Fund, European Social Fund, Guidance Section of
  the European Agricultural Guidance and Guarantee Fund) so as to
  clarify and rationalize their tasks in order to strengthen the
  Community's economic and social cohesion and, in particular, to reduce
  the backwardness of the least favoured regions. The proposal sought to
  ensure increased efficiency of the Funds and improved coordination of
  their activities.
  The European Council of 11, 12 and 13 February 1988 endorsed the
  Commission's general approach to rationalization of the Funds'
  objectives, concentration of their operations according to Community
  criteria and use of the programme method. In addition, it doubled the
  financial resources of the structural Funds as had also been proposed
  by the Commission and called for a framework Regulation to be adopted
  before 31 May 1988.
  In order to take account of the conclusions of the European Council
  and the amendments proposed by the European Parliament, the Commission
  has now amended its previous proposal and drawn up a new draft
  framework Regulation, with following main features :
  1.    Promoting the development and structural adjustment of the less-
        developed regions ("Objective No 1") ;
  2.    Converting the regions, frontier regions or parts of regions
        (including employment areas and urban communities) seriously
        affected by industrial decline ("Objective No 2) ;
  3.    Combating long-term unemployment ("Objective No 3") ;
  4.    Facilitating the occupational integration of young people
        ("Objective No 4") ;
  5.    With a view to reform of the common agricultural policy,
        a) speeding up the adjustment of agricultural structures and
        b) promoting the developement of rural areas
           ("objectives No 5a and No 5b").
                                   - 2 -
  1.    The ERDF is to perform its tasks by providing support in
        particular for :
  a)    productive investment,
  b)    the creation or modernization of infrastructures essential to
        the development or conversion of the regions, frontier regions
        or parts of regions, including employment areas and urban
  c)    measures to exploit the potential for internally generated
        development of the regions, frontier regions or parts of
        regions, including employment areas and urban communities,
  d)    studies or pilot schemes concerning physical planning at
        Community level, especially where frontier areas of Member
        States are involved.
  2.    The ESF is to support measures, notably through vocational
        training and employment aids, aimed at :
  a)    placing young people in jobs and combating long-term
  b)    providing workers with the vocational skills that promote
        stability of employment,
  c)    expanding employment opportunities.
  Such support is to take account of labour-market requirements and of
  the need for a consistent selection of the priorities laid down in
  Community and national employment policies.
  3.    Assistance under the EAGGF Guidance Section is to be geared to
        the following tasks :
  a)    strengthening and reorganizing agricultural structures,
        including those for the marketing and processing of agricultural
        and fishery products, especially with a view to reform of the
        Community's common agricultural policy,
  b)    converting agricultural production and fostering the development
        of supplementary activities for farmers in rural areas,
  c)    ensuring a fair standard of living for farmers,
  d)    helping to develop the social fabric of rural areas, to
        safeguard and protect the environment, to preserve the
        countryside, among other things by securing the conservation of
        natural agricultural resources, and to offset the effects of
        natural handicaps on agriculture.
                                   - 3 -
  *     Complementarity and partnership
  Community operations are to be such as to complement corresponding
  national operations. They are to be established through close
  consultations between the Commission, the Member States concerned and
  the competent authorities designated by the latter at regional, local
  or other level, with each party acting as a partner in pursuit of a
  common goal. The partnership is to cover the preparation, financing,
  monitoring and assessment of operations.
  *     Forms of assistance
  Financial assistance under the structural Funds, the EIB and the other
  existing Community financial instruments is to be provided in a
  variety of forms that reflect the nature of the operations to be
  carried out.
  In the case of the structural Funds, financial assistance is to be
  provided in one of the following forms :
  a)    part-financing of operational programmes,
  b)    part-financing by the Community of an aid scheme,
  c)    provision of global grants, as a general rule managed by an
        intermediary (regional development corporation or other) and
        allocated by it in the form of individual grants to final
  d)    part-financing of major projects,
  e)    support for technical assistance or studies in preparation for
  Where appropriate, Community assistance may consist in a combination
  of grants and loans in order to maximize the stimulus provided by the
  budgetary resources deployed, making use of financial engineering
  1.    Helping the less-developed regions to catch up
  The regions concerned by Objective No 1 are regions whose per capita
  GDP, on the basis of the figures for the last three years, is less
  than 75 % of the Community average. They also include Northern
  Ireland, the French overseas departments and other regions whose per
  capital GDP is close to that of the regions referred to above and
  which have to be included within the scope of Objective No 1 for
  special reasons.
  (An initial list of regions concerned by Objective No 1 is given in
  the Annex).
  The Council, acting by qualified majority on a proposal from the
  Commission and in consultation with the European Parliament is to
  review the list within five years of the date of entry into force of
  the Regulation.
  The Members States concerned by the list referred to above are to
  submit to the Commission their regional development plans, social
  action plans and details of measures to adjust agricultural
                                   - 4 -
  The Commission will examine the proposed plans and measures and will
  establish, in agreement with the Member State concerned, the support
  framework for Community structural operations.
  With a view to facilitating the programming of operations in the
  regions concerned, the Commission will, as a guide, share out between
  Member States for a period of five years 75 % of the commitment
  appropriations allocated to the ERDF for the purposes of Objective No
  2.    Assisting conversion in declining industrial regions
  The declining industrial regions concerned by Objective No 2 must
  satisfy the following criteria :
  a)    the average rate of unemployment must have been at least 15 %
        above the recorded Community average in the last three years for
        which statistics are available,
  b)    the percentage share of industrial employment in total
        employment must have exceeded the Community average in any of
        the last ten reference years,
  c)    there must have been an observable fall in industrial employment
        compared with the reference year chosen in accordance with point
  The following may also qualify for Community assistance :
  a)    areas which have experienced substantial job losses in certain
        specific industries over the last three years,
  b)    areas threatened with substantial job losses and covered by a
        restructuring plan in specific industries,
  with those losses resulting in a serious aggravation of unemployment.
  The list of areas is to be reviewed by the Commission every year.
  However, the assistance granted by the Community in respect of
  Objective No 2 in the various areas listed are to be planned and
  implemented on a three-yearly basis.
  The Commission will examine the plans proposed by the Member States to
  determine whether they are consistent with the objectives and policies
  adopted and will establish, in agreement with the Member State
  concerned, the Community conversion support framework for Community
  structural operations.
  3.    Combating long-term unemployment and assisting the occupational
        integration of young people
  The Commission will establish for a period covering a number of years
  general guidelines that set out and clarify the Community choices and
  criteria concerning action to combat long-term unemployment (Objective
  No 3) and to facilitate the occupational integration of young people
  (Objective No 4).
  The Member States are to submit their plans concerning these two
  objectives to the Commission, which will examine them and establish
  for each Member State the Community support framework for the
  attainment of those objectives.
                                   - 5 -
  4.    Assisting the adaptation of agricultural structures and the
        development of rural areas
  In tandem with reform of the CAP, the Commission intends to pursue and
  develop a set of operations connected with the accelerated adaptation
  of agricultural structures.
  The Member States concerned are to submit their development plans for
  rural areas to the Commission. These plans are to include in
  particular :
  -     a description of the rural development priorities and of the
        corresponding measures,
  -     an indication of the use to be made of assistance available
        under the different Funds, the EIB and the other financial
        instruments in implementing the plans.
  The Commission will examine the proposed plans to determine whether
  they are consistent with the objectives set and will establish, in
  agreement with the Member State concerned, the Community support
  framework for rural development.
  The part-financing of national aids and operational programmes is to
  be the preferred form of assistance.
  The commitment appropriations for the structural Funds taken together
  will be doubled in real terms between 1987 and 1993.
  A major effort will be made to concentrate budgetary resources on the
  less-developed regions covered by Objective No 1. The contributions of
  the structural Funds of these regions will be doubled in real terms by
  The Commission shall ensure that, in the framework of the additional
  resources for the regions covered by Objective No 1, a special effort
  will be undertaken for the least prosperous regions.
  The ERDF may devote up to 80 % of its appropriations to Objective No
  The rates of Community assistance granted by the Funds in respect of
  the various objectives are to be subject to the following ceilings :
  -     a maximum of 75 % of the total cost and, as a general rule, at
        least 50 % of public expenditure in the case of measures carried
        out in the regions eligible for assistance under Objective No 1,
  -     a maximum of 50 % of the total cost and, as a general rule, at
        least 25 % of public expenditure in the case of measures carried
        out in the other regions.
  Finally, the Commission intends to invite the Council to adopt
  transitional provisions in relation to existing rules.
                    Regions concerned by Objective No 1
  Spain :               Andalusia
                        Castile-la Mancha
                        Canary Islands
  France :              French overseas departments (DOM)
  Greece :              the entire country
  Ireland :             the entire country
  Italy :               Abruzzi
  Portugal :            the entire country
  United Kingdom :      Northern Ireland

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