Cohesion policy was enshrined in the Treaties with the adoption of the Single European Act (1986). It is built on the assumption that redistribution between richer and poorer regions in Europe is needed in order to balance out the effects of further economic integration. Through three and soon four generations of Structural Funds programmes, the Union has invested around €480 billion in the ‘less favoured’ regions since 1988. Before enlargement, the main beneficiaries were Greece (42.6%), Portugal (35.2%), Ireland (26.7%), the new East German 'Länder' (18.9%), Italy (Mezzogiorno - 17.4%) and Spain (14.7%).
With the accession of ten new member states in 2004, the development gap between regions has doubled, bringing many former recipients above the 75% threshold. As a result, most beneficiaries of the cohesion policy are now located in central and eastern Europe (see table: Breakdown of Community aid to the new Member States 2004-2006).
Against this backdrop, the Third Report on Economic and Social Cohesion (see EURACTIV 19 Feb. 2004) called for a major overhaul of the cohesion policy in the context of the 2007-2013 budgetary debate. On 15 July 2004, the Commission proposed a new legislative package in order to concentrate Structural and Cohesion funds spending on Lisbon (innovation, growth, jobs) and Gothenburg (sustainable development) goals. Both the Council and the European Parliament came to an agreement on the controversial reform in June/July 2006 (see EURACTIV 4 July 2006).
As from 2007, the EU Cohesion policy will revolve around three new priorities or 'objectives:'
- Convergence (formerly Objective 1): support for growth and job creation in the least developed member states and regions. Regions whose per capita GDP is less than 75% of the EU average will be eligible (mostly regions from new member states), but temporary support (until 2013) will be given to regions where per capita GDP is below 75% for the EU-15 (the so-called 'statistical effect').
- Competitiveness and employment (formerly objective 2): designed to help the richer member states deal with economic and social change, globalisation and the transition to the knowledge society. Employment initiatives are to be based on the European Employment Strategy (EES) (adaptability of the workforce, job creation and accessibility to the labour market for vulnerable persons).
- Territorial co-operation: to stimulate cross-border co-operation in order to find joint solutions to problems such as urban, rural and coastal development, the development of economic relations and the networking of SMEs. A new cross-border authority will be set up to manage co-operation programmes.
In terms of financial resources, the European Council on 17 December 2005 allocated €307.6 billion to the cohesion policy for 2007-2013. 81.7% of that amount will serve Convergence regions, 15.8% will go to regions eligible under the Competitiveness priority, and 2.44% will remain for European Territorial Cooperation.
The legislative package adopted by the EP on 4 July 2006 to support these priorities, comprises one general and four specific regulations:
- The general regulation: common rules in programming, managing, controlling and evaluating the new cohesion policy; emphasis added on environmental and accessibility issues, and on the "partnership principle" that governs the whole policy.
- A regulation on the European Regional Development Fund (ERDF): to fund projects on research, innovation, environment, risk prevention, infrastructure in the least developed regions.
- A regulation on the European Social Fund (ESF): to target projects for employment, quality and productivity at work and social inclusion – in line with the European Employment Strategy.
- A regulation on the Cohesion Fund: to invest in environmental projects and trans-European networks in member states with a GNP of less than 90% of the Community average National income (e.g. the ten new member states, plus Greece and Portugal).
- A regulation on a new instrument, the European grouping of cross-border co-operation (EGCC): for cross-border projects.
Complementing the regulations, the Commission issued the Community Strategic Guidelines to help national and regional authorities make the most efficient use of the EU money and to connect their programming with the Lisbon agenda (see EURACTIV 17 July 2006). The document calls for investments in knowledge and information society, innovation, entrepreneurship, the environment and "creating more and better jobs."
All in all, with this new Cohesion policy, the Commission seeks to achieve:
- A more strategic approach to growth, socio-economic and territorial cohesion: whole programming process at EU, national and local level to be driven by a single political document (the Community Strategic Guidelines); an annual report of the Commission and member states to be debated by the European Spring Council in Spring;
- Simplification: reduced number of objectives and regulations; single-fund programmes; streamlined eligibility rules for expenses; more flexible financial management; more proportionality and subsidiarity regarding control, evaluation and monitoring;
- Decentralisation/ "ownership:" stronger involvement of regions and local players in the preparation of programmes (see the Communication "Cohesion Policy and cities: the urbain contribution to growth and jobs in the regions").
The Council of European Municipalities and Regions (CEMR) welcomes the strategic approach reflected from the new regulations and the Community Strategic Guidelines. However, the organisation regrets the lack of clarity of these guidelines regarding the "relationship between thematic and spatial targeting." On the partnership principle, it noted that "it remains to be seen whether this will translate into reality within each member state."
The European industrial and employers' confederation UNICE is especially satisfied with the earmarking for competitiveness-enhancing expenditure from the funding for cohesion policy, though remaining sceptic about member states and regional authorities' determination to implement this on the ground: "we are indeed concerned that, in the name of territorial cohesion, regional authorities may sidestep appropriate concentration of resources on research, innovation, networks and training, especially given that many regions allocate less than 0.5% of the GNP to R&D," said Jean-Paul Mingasson, UNICE General Adviser.
The European Trade Union Confederation (ETUC) welcomed the broad guidelines of the Commission's budget proposals for 2007-2013. ETUC particularly praised the new cohesion policy for its potential to contribute both to the Lisbon agenda and social cohesion, thus stressing the role of the European Social Fund (ESF) as a "privileged instrument for implementing the European Employment Strategy." Nevertheless, the confederation warned against the development of "a two-tiered Cohesion policy," due to the justified but sensitive difference of treatment between Convergence and Competitiveness regions.
On the occasion of the second reading negotiations between Parliament and Council on the cohesion policy regulations, a coalition of social and environmental NGOs (gathering, inter alia, Social Platform, BirdLife International, CEE Bankwatch Network, Friends of the Earth, WWF) insisted that sustainable development should be better integrated into all relevant articles of the regulations and ask for the development of a standard set of sustainable development indicators to be used for the evaluation of structural fund programmes.