Commission proposes a new partnership for cohesion in the enlarged Union, Brussels, 18 February 2004

The European Commission today presented the Third Report on economic and social cohesion¹, which sets out its vision for cohesion policy in an enlarged Union for the period 2007-2013. The proposals follow those of last week on the Union's future budget which included a € 336 billion package for cohesion policy. The report contains concrete recommendations on how these resources should be used in order to narrow the economic gaps between Member States and regions and achieve faster growth and more sustainable development. The report will kick-off the discussions inside and outside the European institutions on the future of this major policy area.

Presenting the report, Michel Barnier, Commissioner responsible for regional policy and institutional reform, said: "The Union faces many challenges in the period ahead: the rise of new technologies, the quickening pace of economic change, immigration into our towns and cities from outside the Union. On top of this, our economic performance has faltered over recent years. Europe must respond to this situation. We need to involve all of the regions and people in generating wealth. And this is precisely what this proposal is all about : narrowing the gaps to achieve faster growth. Growth and cohesion are opposite sides of the same coin".

He added: "We are on the verge of a historic moment in the development of the European Union, with the re-unification of the continent. But this will result in a major widening of the gaps between rich and poor. Helping the poorest regions will be top priority for the next generation of European aid programmes. While most of the poorest regions are in the new Member States, we still need to continue to help the regions in the Fifteen where the process of catching-up is incomplete as well as many other declining urban or industrial areas or those with persistent natural handicaps where serious economic and social problems persist."

Following the Commission's proposal for the budget for the period 2007 to 2013² and in order to prepare the ground for a proposal for a new legislative framework for the Structural Funds later this year, the Third Report on Economic and Social Cohesion sets out the basic data and a new political blueprint for a reformed cohesion policy in the enlarged EU.

The report has four parts:

Cohesion, competitiveness, employment and growth situations and trends: The analysis shows that disparities in income and employment across the European Union have narrowed over the past decade, especially since the mid-1990s. But there are still important deficits to make up between the least well-off and the rest which will require a long-term effort.

The impact of Member State policies on cohesion: Public expenditure in the Member States averages 47% of GDP, a figure vastly superior to the budget of the Union of just over 1% of EU GDP, of which under half is for cohesion policy. The Member States carry major responsibility for providing basic services and income support. Despite its relatively small size compared to national public resources, EU cohesion policy performs a key role in tackling disparities because it is concentrated on investment and on the less developed regions.

Impact of community policies: competitiveness and cohesion. The different Community policies - environment, internal market, agriculture, competition and state aid - have the potential to increase the effectiveness of cohesion policy, for example, by taking explicit account of economic, social and territorial circumstances. The report shows that this is increasingly the case. This includes the increasing weight given to rural development in the CAP, the increasing importance given to provisions for services of general interest in networks policy and so on. "Today's report also highlights the key role cohesion should play in the next period in the new and simpler rural development policy", Franz Fischler, Commissioner for Agriculture, Rural Development and Fisheries said.

Impact and added value of structural policies: European programmes have helped directly to promote regional convergence and employment. For example, in the 20002006 period, the policy is adding some 3% to the capital stock in Spain, up to 9% in Greece and Portugal, 7% in the Italian Mezzogiorno and 4% in the eastern German Länder. The result is a significant narrowing of the gaps in key sectors such as transport where, for example, the coverage of the motorway network in the poorest Member States of the Fifteen now slightly exceeds that in the rest of the Union.

Conclusions and proposals

The Commission proposes a new architecture for EU cohesion policy, which is organised around three main priorities:

· Convergence: supporting growth and job creation in the least developed Member states and regions. First and foremost, this objective would concern those regions with per capita GDP less than 75% of the Community average³ At the same time, temporary support is proposed for regions where per capita GDP would have been below 75% of the Community average for EU15 (the so-called statistical effect). Modernising and diversifying the economic structure, extending and upgrading basic infrastructure, protecting the environment, reinforcing administrative capacity, improving the quality of labour market institutions, education and training systems and increasing human capital would be the major issues of co-financing of national and regional programmes. In addition, those Member States whose Gross National Product is below 90% of the Community average⁴ will be eligible for the Cohesion Fund. This will continue to finance transport and environmental programmes.

• Regional competitiveness and employment: anticipating and promoting change. The key objective of cohesion policy outside the least favoured Member states and regions would be twofold: First, through regional programmes, cohesion policy would help regions and the regional authorities to anticipate and promote economic change in industrial, urban and rural areas by strengthening their competitiveness and attractiveness, taking into account existing economic, social and territorial disparities.

Second, through national programmes, cohesion policy would help people to anticipate and to adapt to economic change, in line with the policy priorities of the European Employment Strategy (EES) by supporting policies aiming at full employment, improving quality and productivity at work, and social inclusion. "This will allow the Employment Strategy to be delivered on the ground, which is essential if the Union is to keep on track towards more employment, quality and productivity at work, social cohesion and equal opportunities", said Anna Diamantopoulou, Commissioner for employment and social affairs.

• European territorial cooperation: promoting the harmonious and balanced development of the Union territory. Building on the experience of the INTERREG Initiative⁵, the report recommends the continuation of action to promote the harmonious and balanced integration of the Union's territory by supporting co-operation at cross-border and transnational level. In principle, all regions along the external and internal borders, terrestrial as well as maritime⁶ would be concerned by cross-border co-operation. The key aim is to provide joint solutions to common problems between neighbouring authorities, such as urban, rural and coastal development and development of economic relations and networking of small and medium-sized enterprises.

The key principles of the delivery system for cohesion policy will be maintained such as strategic planning, decentralised management, systematic monitoring and evaluation. The report proposes important changes, including a new dialogue with the Council to help to ensure that cohesion policy is adjusted to the priorities set out under the Lisbon and Gothenburg agendas. Each year, the European Institutions would examine progress on the strategic priorities and results achieved on the basis of a report by the Commission summarising Member States' progress reports.

In terms of financial resources for the period 2007-2013, it is proposed to allocate €336.3 billion or 0.41% of the Union's Gross National Income (GNI) in support of cohesion (0.46% before the transfers to the rural and fisheries instruments).

On current estimates, around 78% of this amount would be for the "convergence" priority, some 18% for "regional competitiveness and employment" and around 4% on "European territorial cohesion".

Background

Solidarity among the peoples of the European Union, economic and social progress and reinforced cohesion form part of the Community's overall objectives of "reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions", as laid down in the Treaty establishing the European Communities. The instruments of solidarity, the Structural Funds and the Cohesion Fund, cover about one third of the EU budget (some €36 billion in 2004). The resources are delivered through multi-annual development programmes, managed jointly by the Member States, the regions and the Commission.

The first cohesion report was published in 1996 establishing the foundations for "Agenda 2000", the EU's political and financial framework for the period 2000-2006. The second report of 2001 launched the debate about cohesion policy after enlargement culminating in the present proposals of the Third report.

Full text of the report:

http://europa.eu.int/comm/regional_policy/sources/cohesion3_en.htm

For more information, visit this site:

http://europa.eu.int/comm/regional_policy/index_en.htm